The consequences of the pandemic are far-reaching. From wholesale changes, to how people work to how it’s changed perspectives and induces stress, the pandemic has left a mark on everyday life.
Some of these changes are here to stay, like new workplace practices, while others will pass. The pandemic-induced stress, however, appears to be sticking around for now. It is also shaping how people think about their retirement planning.
More than half of American workers are worried about their ability to pay and plan for retirement, according to a survey by TIAA, which focused on all aspects of financial planning from an employer and employee perspective in post-pandemic life.
Employers share in the skepticism. Many companies are unsure if current practices and standard target date funds will sufficiently meet the needs of workers. Companies are now rethinking date-funds as a result of what people have learned about financial vulnerabilities during and after a pandemic. The survey revealed other shared concerns among employers and their employees: Can employees generally save enough money and not outlive their benefits? Are employees receiving enough information about financial planning and taking full advantage of company benefits?
There’s a silver lining in all these concerns. Employees generally feel pleased with the level of their company’s contributions toward their retirement planning. At the same time, only about a third of the surveyed workers said their companies offered guaranteed lifetime annuities. Costs could be a big reason why this employee perk is only offered by about 43 percent of surveyed companies.
The lingering stress is compounded by recent economic developments, too. Growing inflation in everyday goods, commodities and in health care costs place an additional layer of stress. Investments in the up-and-down stock market are also flagged as a source of concern.
One possible solution that can reduce anxiety about retirement savings and boost one’s financial confidence, according to the survey, is through guaranteed lifetime income annuities, as sparse as these plans might be in the corporate world. Other plans can be subject to the whims of the market.
Annuity plans are immune to such fluctuations, but these plans come at a cost. An annuity plan is initiated with an upfront employee investment, which will need to be substantial. It will also require plenty of fees. In return, employees receive preset monthly payouts for life, even if payments outpace the employee’s investment or if the economy takes an unexpected and sudden turn in the wrong direction.
The survey revealed the current financial psyche of the employed. Ranked in order by highest priority, workers worry about saving for retirement, followed by paying debts, building emergency savings, saving for leisure, controlling spending and saving for a home and education.
With so much uncertainty in the world, it can be difficult to plot out a financial path that promises certainty and financial security for many years to come. Individuals can supplement their retirement savings and alleviate their stress about tomorrow with a home equity conversion loan*. Homeowners over the age of 62 qualify. The home equity conversion loan reimagines a traditional mortgage to give retirees access to a powerful financial asset during their transition to their next life chapter of retirement living.
A conversion mortgage eliminates monthly mortgage payments, boosting the homeowner’s retirement income without the need to move or sell. They can also stay put and continue to enjoy the low cost of living in their hometown.
Contact us to learn more about how to navigate retirement life by making the most out of the assets nearest you. Our team can share with you proven strategies to supplement your retirement accounts so you can live your retirement on your terms and at your pace.
*(1) at the conclusion of a reverse mortgage, the borrower must repay the loan and may have to sell the home or repay the loan from other proceeds; (2) charges will be assessed with the loan, including an origination fee, closing costs, mortgage insurance premiums and servicing fees; (3) the loan balance grows over time and interest is charged on the outstanding balance; (4) the borrower remains responsible for property taxes, hazard insurance and home maintenance, and failure to pay these amounts may result in the loss of the home; and (5) interest on a reverse mortgage is not tax-deductible until the borrower makes partial or full re-payment. This material is not from HUD or FHA and has not been approved by HUD or any government agency.
Premier Mortgage Resources is not affiliated with or an agency of the federal government. Please consult your tax advisor. All opinions expressed by Loan Officer, are Loan Officer’s opinions and do not reflect the opinions of PMR.