The financial cost of the pandemic is being seen beyond just markets and the economy in the everyday lives of working adults at the cost of their retirement accounts. The AARP has found that a quarter of all adults over the age of 24 had either stopped contributing to or had withdrawn savings from their retirement accounts during the pandemic, reports Yahoo Money.
Scaling back to look at those between the ages of 40 and 74, a Kiplinger study at the beginning of 2021 found that over half of Americans in this particular age group had borrowed or withdrawn money from their retirement accounts, with two-thirds reporting using the money for basic living expenses. The concern now is that the Great Resignation that is happening will further escalate those numbers, with individuals withdrawing money either for living expenses or to start new businesses.
Dennis Consorte, a small business expert, cautions, “with two in five Americans planning on starting a business this year, a good portion will likely pull from their retirement accounts to fund these ventures.”
Increasing inflation is driving up the cost of goods, and experts anticipate that increasingly large numbers of workers will either cease contributing to their retirement plans or will decrease their allocations to them. “With costs rising for everything and inflation eating away at wages, the masses may feel they have to pay themselves now rather invest in their future,” said Rafael Rubio, president of Stable Retirement Planners.
With half of Americans reporting that they are behind on their retirement savings, the future impacts could be huge. Most of the money that is taken from retirement accounts doesn’t get replaced, explained Greg McBride, chief financial analyst at Bankrate.
“Often those who are trying to get back on their feet financially have to rebuild emergency savings, pay down other debt, or repay family or friends they borrowed from before they can even start thinking about replenishing their retirement funds,” explained McBride.
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