The Capitalist Investor - Episode 80

About 69 million Americans now say Covid prompted them to change their retirement timing. That’s up slightly from 68 million as of May 2020. Mark and Derek discuss what has impacted people’s retirements that caused people to push back their retirement. What caused this? What decisions were made that forced this? Are you one of these people?

Outline of This Episode

  • [1:10] Covid-19 has hurt some Americans’ confidence in making their retirement goals
  • [5:35] Retirement savings have been disrupted
  • [8:28] The best 20 days of 2020
  • [11:20] Why do workers and retirees feel less confident
  • [17:50] Three parts of this study we find interesting about feeling less confident

The Covid-19 pandemic has hurt some Americans’ confidence in meeting their retirement goal date on time.

Was fear the cause of making some bad behavioral financial errors? How we think, financial planning issues, and emotional reactions when the market fluctuates, especially downward, is the result of 1/3 of Americans retiring later. Perhaps panic is to blame?

Retirement savings have been disrupted.

In December 2020, 22-million people stopped putting new money into their retirement accounts because of panic. Times were tough, but Americans lost the opportunity to buy in while the S&P was at rock bottom. As of March 2021, 14-million Americans have continued to pause their contributions. Making these mistakes will not bring in high returns over the long run. Was the pandemic a financial wake-up call that prompted Americans to rethink how they plan for their futures?

The 20 best days of 2020

Remember how many great days we had after March 23, 2020 where the market may have been up 3%, 5%, in a day? If you rode with the market, not making any changes at all, from January 1st – December 31st, 2020, your account would have been up around seven and a half percent. If those good days were missed, or most of those good days, Americans were completely crushed.

Why do workers and retirees feel less confident?

Distressed confidence, health care costs, and pre-existing conditions. We also look at lower household income, debt, people living paycheck to paycheck, savings, and investments. How confidence relating to finances and the pandemic has brought light to their financial issues. The study also provides us some alarming numbers of people without retirement savings, is the thought to only rely on social security?

Three parts that we find interesting about feeling less confident in this study.

  • One: Married versus not married
  • Two: College degrees
  • Three: Those feeling the most negative effects are women and pre-retirees

Retirement aspirations are strong

Despite savings challenges, many Americans still have big hopes for their golden years.

Of those surveyed, 56% said they see retirement as a new chapter in life, while 21% said it’s a time for rest and relaxation.

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