More Americans hurting financially amid pandemic – surveys

The COVID-19 pandemic is negatively impacting millions of Americans' financial situations, including saving for retirement, according to two surveys published Wednesday.

About half of the 1,902 U.S.-based retirement plan participants Edelman Financial Engines surveyed in August said they took actions detrimental to their long-term financial security due to the pandemic, a 50% increase from April. Nearly half of those actions (45%) directly harmed retirement accounts — like changing portfolio allocations, reducing savings rates and borrowing from their plan — while 30% increased outstanding debt and 21% reduced or depleted emergency savings, the survey found.

Nearly 1 in 3 workers (28%) said they previously accessed funds from their retirement plans and of those, 43% have done so multiple times, according to the survey. The pandemic is accelerating the trend, as 16% of workers said they're currently considering tapping into their accounts early, and 46% of those said the primary reason is related to the pandemic.

"It's troubling that so many Americans are turning to their retirement accounts for expenses unrelated to retirement, and that most are going to do it again," said Ric Edelman, the firm's founder, in a news release. "Their actions will harm their ability to achieve financial security in retirement."

Separately, nearly 60% of adults said they have experienced some kind of financial stress amid the pandemic, according to TIAA-CREF's annual inancial resiliency survey, which polled 3,040 Americans ages 25 to 70 with an annual household income of at least $40,000.

Among working respondents, 91% said that saving for retirement is a current financial goal, with 64% identifying it as a major goal.

But 60% of respondents reported that they are falling behind on retirement savings. Of those who do not feel on track with this goal, 30% said their progress has been directly affected by the pandemic, the TIAA survey found.

"Despite the financial struggles brought about by the COVID-19 crisis, Americans understand that having the foundation of a secure financial plan can bring stability and peace of mind – even in the most turbulent of times," said Doug Chittenden, head of client relationships at TIAA, in a news release. "A financial crisis like the one brought on by COVID-19 often leads to a moment of inflection and serves as an opportunity for people to consider their current financial status and future goals to make adjustments, as necessary."

As a result of the pandemic, 66% of respondents said they want to save more, while 65% said they place more importance on emergency funds and 59% placed more importance on having a source of guaranteed lifetime income once they have retired.

"This research shows that 56% of adults only consider the next 12 months when financial planning and this can hamper long-terms goals like retirement," said Snezana Zlatar, head of financial wellness advice and innovation at TIAA, in the news release.