take stock of financial plans

It’s time to take stock of financial plans two years into the COVID-19 pandemic

As the country emerges from the COVID-19 pandemic, it is time to take stock of financial plans.

The pandemic and corresponding economic uncertainty caused major stress for Americans in the last two years. It led many people to reevaluate or veer from established plans. Some are just fatigued from thinking about their finances.

Anxiety remains, especially for people who have yet to retire.

According to the 2022 Retirement Risk Readiness Study from Allianz Life, 63% of pre-retirees fear running out of money more than death. At the same time, just 46% of retired respondents expressed the same fear.

The survey, conducted in February, asks three groups about retirement: pre-retirees (those 10 years or more from retirement); near-retirees (those within 10 years of retirement); and those who are already retired.

People who have yet to retire are more worried than people who have already retired.

Just 68% of pre-retirees said they are confident that they can support their future financial goals. This is fewer people than last year when 75% of pre-retirees expressed confidence in their ability to meet future financial goals.

People who have already retired are feeling better about their finances – 89% of retired respondents said they feel confident about funding their future financial goals. With the uncertainty from the pandemic subsiding, retirees are more relaxed than they were last year.

Retirees are also less worried about a potential market downturn, health care costs, and the rising costs of living than they were last year.

Retirees are less worried about retirement risks than last year.

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Market downturns (47%, down from 65% in 2021)

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Health care costs (43%, down from 73% in 2021)

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The rising cost of living preventing them from enjoying retirement (41%, down from 59% in 2021)

While retirees’ comfort with their financial picture appears positive, it could lead to complacency in retirement planning. The guidance of a financial professional can help retirees review and maintain their financial plan.

People who are still working – balancing career, family, and savings – are more anxious about their futures than people who have already retired.

More pre-retirees than retirees are worried about having enough money to do all the things that they want in retirement, as well as the cost of living increasing and limiting their ability to afford necessities.

During the pandemic, many people who are still in the workforce took financial actions that could put their futures at risk. They reported taking money out of investment accounts in favor of cash, reducing the amount of money saved in retirement accounts and spending too much money on non-necessities.

What decisions did you make about your finances during the COVID-19 pandemic? 

34%

“Taking money out of my investment account (i.e., 401k, IRA) and moving to cash”

39%

“Reducing the amount I was putting into my retirement accounts”

54%

“Spending too much money on non-necessities”

Pre-retirees did express the desire to improve their financial decision-making.

Around half of pre-retirees said they intend to make a formal financial plan with a financial professional or were interested in purchasing a financial product that provides a guaranteed source of retirement income, like an annuity.

Meeting with a financial professional could calm some of those concerns about the ability to support financial goals for people who are still working. It could also aid in creating plans to compensate for poor financial decisions made during the pandemic.

*Allianz Life conducted an online survey, the 2022 Retirement Risk Readiness Study, in February 2022 with a nationally representative sample of 1,000 individuals age 25+ in the contiguous U.S. with an annual household income of $50k+ (single) / $75k+ (married/partnered) OR investable assets of $150k.

Allianz Life Insurance Company of North America does not provide financial planning services.