The Coronavirus Pandemic Impact on Retirement Readiness
It may take years to unravel the long-term effects of the coronavirus pandemic on retirement readiness.
Saving for retirement was challenging enough for most Americans before March 2020, when the coronavirus pandemic was declared a national emergency. As businesses shut down, people lost their jobs, and those who could continue working were likely working from home, many dealing with the impact of other shutdowns, such as school and childcare facility closures. The pandemic changed the way we interacted with our clients and one another. The U.S. Bureau of Labor Statistics reported that by the end of May 2020, 49.8 million Americans reported they had been unable to work at some point during the past four weeks because their employer had closed or lost business due to the pandemic.
More than two years later, we are collectively finding ways to move forward. For many, this new reality has involved finding new jobs. The Society for Human Resource Management (SHRM) reported that in 2021, more than 47 million Americans quit their jobs in a cultural shift prompted by the pandemic that’s been dubbed, “the Great Resignation.” If your financial organization has experienced staffing shortages, you’re not alone. You also may have found yourself helping more clients work through significant life events, such as earlier retirements or rollovers to new 401(k) plans or IRAs.
Over the next several months, we will be featuring stories in The Link newsletter on the pandemic’s impact on retirement readiness. This series is not for us to look behind us at what we may have lost; instead, it’s meant to help us look ahead. We want to support our business partners as we all navigate the continued impact of this pandemic. We want to continue to encourage and promote a healthy approach to retirement, health, and emergency savings for all ages, from the retiring Baby Boomer generation to the teenage Gen Z.
While the pandemic has been a shared global experience, we have not all had the same experience. Covid-19 took a harder physical, emotional, and financial toll on some of us than on others. To help clients who lost a loved one, we want to help them understand their beneficiary options if they inherited retirement assets. We also want to help prepare clients for possible regulatory changes that began with the passage of the SECURE Act in December 2019—including new RMD regulations and the potential enactment of retirement legislation dubbed “SECURE 2.0,”. These changes, if finalized, will directly affect the decisions your clients make now and in the future. We’re ready to assist you and your staff with additional educational opportunities, along with amended documents as they become necessary.
In our first article of the series, we explore repayments of coronavirus-related distributions, or CRDs. Your clients still have time to repay these distributions taken in 2020, but do you know how to report these repayments? Account owners who took these penalty-free distributions still have time to replenish their retirement savings that they may have had to draw from in 2020. Click here for more information on reporting CRD repayments.
