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Retirement Planning > Spending in Retirement > Lifestyle Planning

COVID-19 Didn’t Change Older Americans’ Retirement Expectations: Study

By Ed McCarthy

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What You Need to Know

  • Seventy-six percent of older adults said their financial situation remained the same in 2020, EBRI found.
  • Half of older workers and 72% of retirees remained confident that they would live a comfortable retirement..
  • No particular group reported that their work was significantly more affected by COVID-19 than other groups.

The COVID-19 pandemic affected older Americans’ work and financial situations significantly.

According to the University of Michigan’s 2020 Health and Retirement Study of individuals over 50, about 60% of respondents reported that their work was affected by the COVID-19 pandemic. Fifty-five percent of them had to stop work entirely, 15% lost their job permanently and roughly 20% percent indicated that their work became harder or more risky or dangerous.

Given those responses, a natural conclusion would be that working older Americans would have adjusted their retirement expectations. For instance, they could have pushed their anticipated retirement age to a later date or delayed their planned Social Security claiming age. But according to recent research by Zhikun Liu, a senior research associate with the Employee Benefit Research Institute, those adjustments didn’t occur. 

Less Financial Impact Than Expected

In the research issue brief, “Staying Optimistic: Older Americans’ Retirement Expectations Remain Uninterrupted Despite COVID-19 Impact,” Liu notes that despite “a natural upward trend for elderly Americans to anticipate a later and later retirement age longitudinally based on the HRS survey from 1992 to 2020, statistical tests demonstrated little relationship between this natural tendency to delay retirement and the COVID-19 pandemic impact.”

In terms of the respondents’ finances, 76% stated that their financial situation remained the same and 60% indicated that their household spending did not change in 2020.

“The results of this study imply that elderly American adults’ retirement expectations remain uninterrupted despite enduring through the COVID-19 impact on their work and financial situations in 2020,” Liu writes.

It’s an intriguing finding that’s supported by EBRI’s 2021 Retirement Confidence Survey. In that study, “half of the workers and 72 percent of retirees reported that COVID-19 did not change their confidence in their ability to have a comfortable retirement,” Liu writes.

Resilience a Pleasant Surprise

Another finding was that results didn’t vary much among the different wage groups — no particular group reported their work was significantly more affected by COVID-19 than other groups.

That’s surprising, Liu writes, because the popular view was “that individuals with higher socioeconomic status tend to have more resources that may be utilized to cope with COVID-19- related stresses. However, from the average percentage point of view, no wage group in this HRS survey wave claimed that COVID-19 had a considerably greater impact on their job than other groups.”

The contrast between the pandemic’s reported impact on older adults’ work and financial situations versus the lack of adjustments in their retirement expectations and Social Security claiming plans was “a little surprising” at first, Liu explains. 

“We had heard both sides of the ‘presumptions’ before conducting our research. On one hand, the negative impact of COVID-19 on older Americans’ work and financial situations was significant. So, it is natural to assume that these participants would change their retirement expectations to a later age. On the other hand, all of us of course have heard lots of news about the Great Resignation (or reshuffling) at the beginning of 2022.” In the early stages of the research, Liu was curious to see whether older Americans were also expecting to retire earlier after the COVID shock, but the responses showed that was not the case.

“That was kind of surprising to me, but a good surprise,” he says. “Not only does this result demonstrate the resiliency of older Americans’ retirement expectations, but it also gives us a hint that there were some other factors, instead of the COVID shock, that were dictating the trend of these participants’ retirement expectations.” Future research could help identify those factors, he adds. 

Ed McCarthy is a freelance financial writer who holds the certified financial planner and retirement income certified professional designations.

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