Confidence in retirement security resilient amid COVID-19: RPT

Lori Lucas, President & CEO of Employee Benefits Retirement Institute, joins Yahoo Finance Live to discuss retirement confidence and outlook amid the pandemic.

Video transcript


KRISTIN MYERS: Time now for our Funding Our Future segment. And we bring you some surprising news. Despite the pandemic, a new survey shows retirement confidence is still high. We're joined now by Lori Lucas, president and CEO of the Employee Benefits Retirement Institute.

So Lori, I was quite surprised to see that so many folks, despite all of the financial turmoil that the pandemic caused, that so many are still so confident in their retirement and their retirement plans. What is fueling that confidence?

LORI LUCAS: Yeah, people are confident. Retirement confidence is higher even than it was a couple of years ago. It's at 72% of workers saying that they are somewhat or very confident about their retirement prospects. There's a dynamic there that many of these people did not lose their job, though you see a very different level of retirement confidence among people that did lose their job.

And the other thing is that the market did pretty well after the initial drop. And I think that also fueled confidence.

ALEXIS CHRISTOFOUROS: What about the way people view Medicare and Social Security? Social Security, of course, being a big part of a lot of folks' retirement savings. Did the pandemic change the way they feel about those federal programs?

LORI LUCAS: Yeah. We see that people are very focused on federal programs right now. There's a lot going on with these programs. It's been a high level of focus, but not a material change in their perspective year over year.

KRISTIN MYERS: Did many folks make adjustments to their retirement plans over the last year or so, considering that confidence is now higher than it was before the pandemic even hit? Were there any adjustments that had been made?

LORI LUCAS: Yeah, I think that what we saw was that, in terms of the retirees, people really stayed the course. And we often see that with workers as well. And keep in mind that the decline in the market was pretty concentrated. So normally, we don't see a ton of change unless there's a really prolonged decline. And because of the concentration of the decline, people were pretty good about staying the course. And I think that also contributed to their confidence because they were able to enjoy the market increases that followed.

ALEXIS CHRISTOFOUROS: What trips people up the most when it comes to saving for retirement? Is it the outstanding debts that they're trying to pay down? Is it the fact that there's just not enough left over at the end of the month to sock away for inevitable retirement?

LORI LUCAS: Well, what we find is that people that say that they are confident about their retirement, there's some pretty specific characteristics of those individuals. So people that are confident about their retirement, there's some demographic variables we see, like they are more likely to be married. They are more likely, obviously, to be employed. But a key variable also is that they are much more likely to not only have available an employer-sponsored retirement plan, but that they're participating in it.

And debt does factor in as well. A key variable we find both with worker retirement confidence and with retiree confidence in retirement is debt. That's a huge variable. Those that have an issue with debt, both as a worker, they find it hard to save for retirement and as a retiree, it really causes them a lot of stress in retirement.

KRISTIN MYERS: Lori, just really quickly, for those that aren't confident in their retirement-- I know that we've been talking a lot about those that are. Is there anything that can be done to perhaps change that?

LORI LUCAS: Yeah. Another key variable for confidence is that people either have taken steps to calculate how much they need in retirement or that they've actually had some experience with a financial planner or a financial advisor who has been able to help them.

So just even calculating how much you need in retirement is a good first step. And we also find that with retirees, those that are more comfortable in retirement have figured out a monthly spending plan. They're not constantly worrying and fretting about how much they should spend in retirement. They've got a plan that they're just executing on a regular basis. And it's a lot less stressful.

KRISTIN MYERS: All right, we'll have to leave that there. Lori Lucas, president and CEO of the Employees Benefits Retirement Institute, thanks so much for joining us for our Funding Our Future segment. Now, remember, Funding Our future is an alliance of organizations dedicated to making a secure retirement possible for all Americans.