Survey Reveals Some Americans Are Using Their Retirement Funds To Cope With COVID-19 Pandemic

A new survey reveals that more than a quarter of employed and recently employed adults in the U.S. have already used their retirement savings to cope with the coronavirus pandemic. Less than a quarter of millennials have also tapped their savings to support their needs during the crisis.

Bankrate.com released on Wednesday the results of the survey, showing that at least 31 million Americans have fallen back on their retirement savings to scratch out a living during the pandemic. According to Bankrate chief financial analyst Greg McBride, more than 1 in 4 working or recently unemployed households with retirement savings has either used their savings for immediate income or plans to do so.

“This is most pronounced among younger households, who may miss out on decades of future compounding if forced to turn their retirement savings during these trying times,” said McBride.

Out of the 1,326 adult Americans who participated in the survey, 13% said they were already using their 401(k)s and IRAs as an immediate source of income while 14% said they’re planning to do so. Half of those who have lost their jobs since Jan. 1 also revealed that they had already dipped into their retirement funds to cope with their current situation.

Sixty-two percent of those who have used their retirement funds said it was because of a loss of income, while 33% said they simply wanted to keep more cash on hand. 20% cited the need for extra expenses. Eighteen percent also cited the need to help adult family members financially, 17% cited additional debt, and 2% cited other reasons such as unemployment, loss of matching funds from employers, food costs, and maternity leave.

Eighteen percent of the respondents also said they had to reduce their retirement contributions due to the pandemic. Those who were laid off were also found to be more than twice as likely to reduce their contributions than those who were able to secure their employment. Among the employed, 22% admitted reducing their retirement contributions, too.

Bankrate also revealed that 38% of millennials and 45% of Generation Z who have retirement savings have already tapped part of their savings to offset their lost income since the pandemic. That is far greater than the 8% of Generation X and 10% of boomers who have tapped theirs.

The U.S. has some $30 million stashes in retirement accounts.