The coronavirus pandemic destroyed retirement plans for millions of Americans, many of whom tapped into savings accounts earlier than expected as the crisis forced an unprecedented shutdown of the nation's economy.
While most Americans expect to retire around age 66, a new study published by Real Estate Witch this week found that some 40% of baby boomers had put their retirement plans on hold due to the pandemic.
About 35% of survey respondents said they tapped their retirement savings in order to make ends meet during the pandemic, spending roughly 44% of what they had squirreled away. Boomers said they spent slightly more, reporting that 46% of their savings had been used during the pandemic.
"Boomers who plan to retire within the next decade face the steep challenge of making up for severe shortfalls in their retirement funds," the study said.
The youngest boomer will turn 55 this year, leaving little time to make up the extra retirement cash – especially considering the pandemic forced millions to retire early. A Pew Research study found that 3.2 million more boomers retired in the third quarter of 2020 compared to the same period in 2019, likely due to the historically high unemployment rate.
The average American has about $250,813 stashed away for retirement – well below the recommended figure of $465,000. Boomers have an average of $296,064 saved for retirement, 36% below the recommended level.
Respondents who said they spent their retirement fund reported using between $10,000 and $14,999, but close to one in five reported spending more than $25,000 from their retirement savings.
Most Americans also drastically curtailed the amount of money they were contributing to retirement accounts during the pandemic: According to the study, most individuals reduced their contributions by about 3%. But about 66% of respondents said they plan to resume their typical contribution level once the pandemic fully subsides.
"As more members of the United States’ aging population transition into retirement, the nation faces the risk that its elderly population will face financial hardship in their later years — an issue that was exacerbated by the pandemic’s widespread financial strain," the study said.
Still, some Americans actually benefited from the pandemic, which brought vast gyrations to the stock market: Some 2.7 million individuals age 55 or older – most of them affluent and White – are considering retiring early due to stock-market windfalls, government data shows.