COVID-19: Financially Navigating the Economic Downturn
With the current pandemic and its various impacts continuing to be felt around the world. U.S. workers have seen negative impacts to their finances and savings.
Now, I suspect we’ve all have either experienced to some degree or know someone who has been negatively impacted by the economic downturn resulting from this virus.
Today….Catherine Collinson, president of nonprofit Transamerica Center for Retirement Studies, is here to discuss findings from their recent survey.
So Catherine….considering the implications of the pandemic to people’s financial security……could you share some of your survey’s findings as it relates to retirement security amid COVID-19?
In mid- to late April, we conducted a survey and found that almost 6 in 10 workers (58 percent) had already experienced some sort of impact on their employment situation. These impacts include: reduced work hours (29 percent), reduced salaries (17 percent), layoffs (16 percent), furloughs (11 percent), and early retirement (5 percent). Of course, the downturn is far from over and more have been impacted.
Yes Catherine…..these figures are pretty deflating….to say the least. And as you’ve noted, many people have had their employment status impacted.
So…what are some of the financial options people have been pursuing to navigate through these challenging times?
When asked what sources of funds they have used or think they would rely on, 56 percent of workers indicated savings, which was the most-often mentioned response. Other funding sources mentioned include credit cards, unemployment benefits, and CARES Act stimulus money.
Well…with few exceptions, most people today are taking a sizable hit financially. So…I would suspect retirement savings are being impacted substatntially as well….right?
Saving for retirement is not easy under any circumstances—and the pandemic and economic downturn have made it that much more difficult.
Our survey found that among Millennial workers a concerning 33 percent plan to or have dipped into their retirement savings. By comparison, only 15 percent of Generation X and 10 percent of Baby Boomer workers have dipped into their retirement savings or plan to do so.
For some, dipping into retirement savings may be the best possible alternative – or the least of all evils, especially if considering the need to take on high interest rate credit card debt. But be sure to do your homework and explore all possible alternatives before doing so. Dipping into retirement accounts can severely inhibit the long-term growth of your nest egg.
Well again…stating the obvious…..this all sounds pretty grim. So…any chance there’s an up or bright side to any of these findings?
Yes, despite this discouraging situation, there are things that people can do to financially navigate these difficult times and prepare for the future. Taking small steps can be empowering.
Specifically, if you aren’t already, engage in financial planning to gain a full understanding of your financial situation. Having a solid understanding of your sources of income, your expenses, and debt can help you identify opportunities and possible trade-offs, if needed. Setting forth a financial plan can add clarity, help to address uncertainty, and help you prepare for life’s curveballs—which we’re all encountering these days. If you feel that you’re not yet proficient in personal finance, learn as much as you can. Knowledge is power.
Yeah….That’s for sure!
Well thanks…as always, for your insight and perspective Catherine….and here’s also hoping everyone stays safe and healthy during these uncertain times.
And that’s all the time we have here today on ClearPath – Your Roadmap to Health. Wealth
This is Al Waller on WYPR, your NPR news station.
Thanks for listening.