Staying in control of finances helps workers and retirees charge ahead
2020 Wells Fargo Retirement Study indicates planning mindsets are helping workers and retirees remain financially confident.
In Ron Pate’s job as a senior executive at a Fortune 500 utility company, he has helped keep electricity and gas flowing for millions of Illinois residents. During his 40-year career, Pate often advised his team to “be flexible, act quickly, and adapt as the environment changes. The big picture goals won’t change, but the path to reaching them will.” Pate said he employed a similar strategy while preparing for the next big change in his life — retirement. Pate and his wife Kathryn have worked closely with Wells Fargo Advisors Financial Advisor Melissa Watson, especially in recent months as the COVID-19 pandemic changed the investment landscape.
“You make a plan, and try to stick to that plan,” Pate said of his investment strategy while planning for retirement. “Sometimes you just have to adjust as conditions change.”
While conditions have certainly changed for workers and retirees this year, the 2020 Wells Fargo Retirement Study found a majority of workers and retirees believe there is an optimism and resilience concerning the current state of their financial lives, despite the challenges presented by COVID-19 and its impacts on the economy.
In the study, which annually examines the attitudes and savings of working adults and retirees, 35% of workers reported being impacted by the pandemic and having an unmanageable amount of debt, and 10% of baby boomers said they felt they would never be able to retire.
Nonetheless, positivity prevailed. The study, conducted in August, found 92% of workers feel they can positively impact their financial situation based on the decisions they make. One of those decisions: pensions and social security are becoming less popular income sources for retirees in the baby boomer generation, as well as for Gen Xers and millennials, according to the study
“Individual investors are now largely responsible for saving and funding their own retirement, so disruptive events and economic downturns can impact their outlook,” said Nate Miles, head of Retirement for Wells Fargo Asset Management. “The good news is, for many of today’s workers, there is still time to save and prepare.”
Pensions becoming a thing of the past
The pandemic has forced many individuals to reevaluate their financial status and become more aware of their overall savings, financial situation, and retirement planning, the study said. Among all workers, the study reported, planning is on the rise: Those who say they have a planning mindset increased from 35% last year to 38% in 2020.
The Pates join the 50% of retirees who reported in the study that they have a detailed plan. Most of the Pates’ planning occurred over the last five years, which means it also took place in the midst of the dramatically shifting financial landscape of the pandemic. Pate said Watson advised him not to overreact to market turmoil early in the pandemic, and he followed that advice. He adjusted his investments only slightly during recent months.
About the Survey:
On behalf of Wells Fargo, The Harris Poll conducted 4,590 online interviews including 2,660 working Americans age 18-76 whose employment was not impacted by COVID-19, 725 Americans age 18-76 whose employment was impacted by COVID-19, 200 high-net-worth American workers age 18-76, and 1,005 retired Americans, surveying attitudes and behaviors around planning their finances, saving, and investing for retirement. The survey was conducted from Aug. 4 – Aug. 24, 2020. Working Americans are 18-76 and working full time (or at least 20 hours if they are working part time) or are self-employed and whose employment has not been impacted by COVID-19. Americans whose employment was impacted by COVID-19 are age 18-76 and selected that they personally experience at least one of the following due to the coronavirus pandemic: laid off from a job, furloughed from a job, started working a reduced or staggered schedule, been given a zero-hour schedule, or taken a pay cut. High-net-worth workers are age 18-76 and have at least $1 million in household investable assets. Retired Americans self-identified as retired regardless of age. All respondents are the primary or joint financial decision-maker for their household. Data are weighted where necessary by age by gender, race/ethnicity, region, education, income, marital status, employment, household size, and propensity to be online to bring them into line with their actual proportions in the population.
Investment products and services offered through Wells Fargo Advisors, a trade name used by Wells Fargo Clearing Services, LLC Member SIPC, a registered broker-dealers and non-bank affiliate of Wells Fargo & Company.
Wells Fargo Asset Management (WFAM) is the trade name for certain investment advisory/management firms owned by Wells Fargo & Company. These firms include but are not limited to Wells Capital Management Incorporated and Wells Fargo Funds Management, LLC. Certain products managed by WFAM entities are distributed by Wells Fargo Funds Distributor, LLC (a broker/dealer and Member FINRA).
This material is for general informational and educational purposes only and is NOT intended to provide investment advice or a recommendation of any kind—including a recommendation for any specific investment, strategy, or plan. PAR-1020-01584