Almost three in 10 respondents said in a recent survey that they have decreased their retirement savings or stopped saving due to the economic pain of covid-19.
A large percentage of consumers have also pulled money out of savings, according to a FinanceBuzz survey published in August, CNBC reported.
About 30 percent of people saving for retirement withdrew from retirement accounts over the last 60 days, according to a MagnifyMoney survey published in May which polled 1,239 Americans with retirement accounts. They took out $6,757, on average.
More than half pulled out money to cover expenses and 26 percent did so because of a job loss.
The reason for tapping savings accounts is loss of income or fear of losing income, said Stephen Brobeck, a senior fellow at the consumer advocacy group Consumer Federation of America.
“People think they may be laid off, they may lose hours, and they don’t have any short-term savings or an emergency fund, or it’s a very inadequate one,” Brobeck said, according to CNBC.
The overall unemployment rate fell 1.8 percentage points in August to 8.4 percent, the U.S. Bureau of Labor Statistics reported on Sept. 4. An August improvement in government hiring was largely due to temporary census workers.
That’s an improvement from the 14.7 percent jobless rate in April when government-imposed shutdowns sent millions of workers home or into unemployment.
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However, the August jobless rate is highest among Black people (13 percent) compared to whites (7.3 percent), Hispanics (10.5 percent) and Asians (10.7 percent).
The $600-a-week federal subsidy to unemployment benefits that helped households make ends meet only lasted until the end of July.
More 134 million U.S. adults reported having difficulty paying the usual household expenses over the previous seven days, according to a U.S. Census Bureau survey conducted in August.
There are 196.89 million people in the U.S. age 21 or older, according to U.S. demographic statistics.
That could mean close to 70 percent of U.S. adults are having trouble making ends meet.
Almost 30 million people are collecting unemployment benefits and more than 1 million file new applications each week.
The bottom 20-percent of earners (those earning less than $490 a week) saw a 20-percent unemployment rate in May, according to a paper published by University of Chicago economists.
By comparison, the top 20 percent of earners (those making more than $1,631 a week) saw a 3.8-percent increase in unemployment.
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The rich have survived the crisis relatively unscathed while those at the bottom have suffered income disproportionately, said Christine Benz, the director of personal finance at Morningstar.
The withdrawal of retirement savings probably indicates a “two-track economy,” she said.
Those who have savings to draw on in the covid economy can count their blessings.
Forty-five percent of workers laid off or unemployed because of covid-19 crisis could not last a month off their savings, according to a new study published by SimplyWise, Fox Business reported.