In May 2020, as the COVID-19 pandemic was gaining momentum in many countries and the status quo was replaced with stay-at-home mandates, we conducted online interviews with 3,479 retirement savers across five countries, chosen to represent a range of different retirement systems: Australia, Ireland, the Netherlands, the United Kingdom and the United States. The survey for this year’s Global Retirement Reality Report (GR3), led in conjunction with international market research firm YouGov, was intended to capture saver sentiment in the midst of the coronavirus crisis.
Similar to other studies that have published this year, we found that the current climate amplifies the extremes, increasing vulnerability for some while maintaining optimism for others. Divides along gender and generational lines suggest that people are getting squeezed from all angles. With a global population in the grips of these vises — exacerbated stress, increased societal and gender polarity and delayed personal milestones — how do we achieve retirement happiness in 2020?
This survey is the first of two installments, intended to monitor sentiment during the coronavirus crisis and provoke conversation around redefining retirement happiness.
Survey-takers were asked to what extent the following negatively impacted their confidence with regard to being financially prepared for retirement (ordered by impact, determined by the persistence of the answer in each country’s top three concerns):
1. Uncertainty about my retirement plans
2. No spare money to save for retirement
3. Lack of trust in retirement savings plans
4. Complexity of retirement savings plans
5. COVID-19 situation (38% cited high impact on preparedness in both Australia and Ireland)
6. Medical expenses (39% cited high impact on preparedness in the US)
7. Mortgage debt and housing costs
8. Financial dependency of children or elderly family members
9. Short-term debt, loans and credit card bills
Interestingly, known expenses like housing costs, family support or short-term debt ranked as the lowest concerns, possibly because these items could be planned and, to a degree, controlled. The issues raising the greatest anxiety offered more existential threats: uncertainty, scarcity, institutional distrust.
Concern about COVID-19-related consequences falls in the middle, potentially reinforcing the idea that the coronavirus crisis isn’t the problem, but the magnifier, increasing existing retirement security concerns.
At State Street Global Advisors, we believe that a well-diversified retirement savings strategy can help address the feelings of destabilization that savers are facing across the globe. Beginning with a carefully considered investment menu and thoughtful plan design, bolstered by participant communication proficiency and informed by public policy expertise, our global team can help foster conversations around retirement readiness for both employers and employees.
Let’s use this present moment to prepare for our collective future, championing changes that ease existing pressures and pursuing a balance between financial flexibility and security in retirement.
i US Government Accountability Office, “Retirement Security: Low Defined Contribution Savings May Pose Challenges,” May 5, 2016. https://www.gao.gov/products/GAO-16-408
ii US Bureau of Labor Statistics, “Employment Situation Summary,” June 5, 2020. https://www.bls.gov/news.release/empsit.nr0.htm
iii The Wall Street Journal, “What ‘Women’s Work’ Looks Like Now,” October 14, 2019. https://www.wsj.com/graphics/what-womens-work-looks-like/
iv Brandwatch, “30+ Brands Consumers Are Praising for Their Efforts Around COVID-19,”as of March 26, 2020. https://www.brandwatch.com/reports/covid-19-brands/view/
The views expressed in this material are the views of SSGA Defined Contribution as of July 1, 2020, and are subject to change based on market and other conditions.
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EXP: July 31, 2022