NEW YORK, April 15, 2021 /PRNewswire/ -- More than half of U.S. adults consider their household finances to have changed significantly due to the COVID-19 pandemic, according to a new survey by TIAA. Nearly one third of all Americans (29%) say they are worse off and approximately one quarter (24%) report that they are better off financially.
Notably, 37% of households making less than $50,000 per year describe themselves as worse off because of the pandemic. In stark contrast, only 15% of households making more than $100,000 a year describe themselves as worse off.
Survey suggests the pandemic's deceleration holds different promises for those who consider themselves better or worse off
The TIAA survey found those who have taken a financial hit during COVID-19 worry the downward trend will continue, with 57% believing nothing will change or that their finances will continue to worsen over the next year. Meanwhile, 61% of those who say they are financially better off since the start of the pandemic expect their household finances to improve in the next year.
Of those surveyed, adults between the ages of 45 to 64 were much more likely to say they are worse off because of the pandemic, compared to those under age 45. Nearly 40% of those between the ages of 45 to 64 say they are worse off financially this year compared to last year, while only about one quarter of those under age 45 say they are worse off due to COVID-19.
"Across nearly all metrics, from physical health to personal finances, COVID-19 has disproportionately affected lower income Americans. We are also seeing that the pandemic has taken a particularly hard hit on mid- and late-career Americans," said Snezana Zlatar, senior managing director and head of financial wellness advice and innovation at TIAA. "As we emerge from the crisis, stakeholders must work together to help improve financial wellness for all Americans by helping them create emergency funds and plan for a secure retirement."
Those earning less than $50,000 per year are most uncertain about their financial futures
Key findings from the survey also exposed the financial uncertainty among Americans who are making less than $50,000 per year. When restrictions are lifted, Americans across the board overwhelmingly want to make up for "lost time," but those who have suffered financially since last year are more likely to say they have "no idea" how they will pay for their post-COVID-19 plans. On top of that, those making less than $50,000 are more likely to be unsure if they will save or spend more money moving forward.
While all Americans have an appetite to do more post COVID-19, the survey revealed that Americans will be able to participate at varying degrees, with lower-income Americans least likely to participate in a post-COVID-19 spending boom. As COVID-19 decelerates:
- Those making more than $50,000 per year are more likely planning to take a vacation, shop at locally owned stores, dine-in at restaurants and work from home than those making less than $50,000 per year.
- Those making more than $50,000 per year are more likely saving and budgeting for visits with friends and family than those making less than $50,000.
- Nearly half of U.S. adults making more than $100,000 per year plan to take at least three or more vacations once society returns to normal; in contrast, more than one third of respondents making less than $50,000 per year do not plan to, or do not know if they will, take any vacations as COVID-19 subsides.
Americans making less than $50,000 annually are more likely to spend their stimulus check
When asked about how they plan to spend a federal stimulus check, more than half of U.S. adults who are worse off financially since the pandemic say they would use the money to cover daily expenses, such as buying groceries or paying bills. Conversely, more than one third of U.S. adults said they would invest their stimulus payment in a savings or retirement account, though those who are financially better off (37%) are more likely to do so than those worse off (28%).
The TIAA survey found that the pandemic has created a change in mindset regarding what's important about managing personal finances. Prior to the pandemic:
- Only about 35% of U.S. adults reported having an emergency fund.
- More than half of those making less than $50,000 said they've never created an emergency savings fund, saved more money for retirement, or worked with a professional financial advisor for guidance on savings and retirement.
Today, most Americans (nearly 75% who are better off and nearly 70% who say they are worse off) say they have placed a greater importance on creating an emergency savings account going forward. Americans also want to save more for retirement (72% for those who are better off and 60% for those who are worse off).
The survey found clear wealth disparities on issues related to saving and planning for the future:
- 44% of households making less than $50,000 a year say it is unlikely they will be able to save more for retirement going forward; in contrast, 72% of those making more than $100,000 say it is likely they will save more for retirement.
- Nearly 70% of those making less than $50,000 say they are still unlikely to work with a professional advisor, likely due to extra costs.
Lifetime income is also increasingly important, the TIAA survey found. Now, 73% of Americans, especially those who are financially worse off, say having guaranteed monthly income for the rest of their lives is significantly more important than having a particular dollar amount of retirement savings at the time of retirement. As a point of comparison, in a previous TIAA Financial Resiliency Survey conducted in July 2020, only 44% of Americans making between $40,000 and $74,000 per year said that having a source of guaranteed lifetime income contributes most to financial resiliency.1
To see the full survey results, click here.
KRC Research conducted the TIAA Financial Habits study using an online survey of 1,003 Americans ages 18 and over, living in the United States. The study was fielded between February 19-22, 2021. Completed interviews are weighted by age, sex, region, race and education to ensure reliable and accurate representation of the total U.S. population.
With an award-winningi track record for consistent investment performance, TIAA (TIAA.org) is the leading provider of financial services in the academic, research, medical, cultural and government fields. TIAA has $1.3 trillion in assets under management (as of 12/31/2020)ii and offers a wide range of financial solutions, including investing, banking, advice and education, and retirement services.
This material is for informational or educational purposes only and does not constitute fiduciary investment advice under ERISA, a securities recommendation under all securities laws, or an insurance product recommendation under state insurance laws or regulations. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on the investor's own objectives and circumstances.
Investment products may be subject to market and other risk factors. See the applicable product literature or visit TIAA.org for details.
Any guarantees are backed by the claims-paying ability of the issuing company.
Investment, insurance and annuity products are not FDIC insured, are not bank guaranteed, are not deposits, are not insured by any federal government agency, are not a condition to any banking service or activity, and may lose value.
TIAA-CREF Individual & Institutional Services, LLC, Member FINRA, distributes securities products. Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association of America (TIAA) and College Retirement Equities Fund (CREF), New York, NY. Each is solely responsible for its own financial condition and contractual obligations.
©2021 Teachers Insurance and Annuity Association of America-College Retirement Equities Fund, 730 Third Avenue, New York, NY 10017
1 TIAA, Financial Resiliency Survey, October 2020
i The Refinitiv Lipper Fund Awards are based on the Lipper Leader for Consistent Return rating, which is a risk-adjusted performance measure calculated over 36, 60 and 120 months. Lipper Leaders fund ratings do not constitute and are not intended to constitute investment advice or an offer to sell or the solicitation of an offer to buy any security of any entity in any jurisdiction. For more information, see lipperfundawards.com. Lipper Fund Awards from Refinitiv, ©2020 Refinitiv. All rights reserved. Used under license. The Award is based on a review of risk-adjusted performance of 39 companies for 2016, 36 for 2017, 35 for 2018 & 2019, and 30 for 2020. The award pertains only to the TIAA-CREF mutual funds in the mixed-asset category. Without such waivers ratings could be lower. Past performance does not guarantee future results. For current performance, rankings and prospectuses, please visit TIAA.org.
ii Based on approximately $1.3 trillion of assets under management across Nuveen affiliates and TIAA investment management teams as of 12/31/2020.