One in five retirement plan participants is delaying their retirement as a result of the pandemic, a MetLife study showed.
This decision to postpone retirement is driven primarily by financial reasons, MetLife said, with respondents citing the top reasons for the delay as a continued need for a monthly income (31%) and that the pandemic has impacted their ability to save (23%).
On the reverse side, one in 10 retirement plan participants said the pandemic has actually caused them to retire sooner. Those who say the pandemic is leading them to retire earlier are most often doing so because of a pandemic-related change in perspective. Nearly one-third (31%) say they are retiring early because of a new perspective that “life is too short.” Nearly one-quarter (23%) say they are retiring early because of a desire to spend more time with loved ones or to have more free time for themselves.
Two-thirds of respondents said the stock market’s volatility in the early days of the pandemic made them anxious about their 401(k) plan. Those who plan to retire in the next five years were more likely to agree (70%) compared to those who are not ready to retire but starting to plan (62%).
Baby boomers require a better understanding of their company’s 401(k) plan options – and more specifically, fixed income annuities. While most boomers claim to be very (53%) or somewhat (37%) aware of their company’s 401(k) plan options, only half (47%) said they were aware of their company’s income annuities offering (meanwhile, 26% responded “I’m not sure,” and 28% said they were unaware).
When asked, only 16% of respondents correctly identified what a fixed income annuity is, 30% incorrectly described it as an investment account, and only 28% correctly identified it as an insurance product. Nearly one in five (17%) flat out said they did not know which facts about fixed income annuities are true.
With this in mind – and on the heels of the SECURE Act’s passing in December 2019 – many plan sponsors are taking this moment to reflect on how they can adjust their retirement offerings to help their plan participants feel financially stable.
MetLife’s research found that:
- 78% of plan sponsors are re-evaluating their retirement offerings because of the pandemic.
- 54% of plan participants agree they would consider institutional income annuities if their company offered them.
- Three-quarters (76%) of plan participants say they would better understand the benefits of income annuities if they received monthly statements via lifetime income disclosures.