The COVID pandemic has impacted the economy on a global scale and transformed our world as we once knew it. But one of the hardest-hit sectors was and still is the US pension industry. As well as halting retirement plans, it has also forced a growing number of retirees to freeze or lower their retirement age just to get by. Continue reading to familiarize yourself with the different ways in which the ongoing COVID pandemic has affected the US pension industry.
Decrease in the value of assets
Financial markets around the world were hit hard when the COVID pandemic struck. Between February and April 2020, as the virus was sweeping its way across the globe, the world experienced a stock market crash. While we may be recovering at a snail’s pace, the value of assets remains relatively unchanged. Companies with pension plan assets invested in the financial market, for example, saw the value of their assets decline while their pension plan liabilities increased, impacting their liquidity in the long run.
Rise in pension administration software
Pension administration software was designed to provide third-party administrators with the tools they need to administer pension benefits. Cloud based pension software has seen a rise in demand as more and more businesses look to de-risk fund management. By investing in the IntelliPlan software from Procentia, businesses can automate manual processes, protect employee data, and allow for regulatory changes.
The COVID pandemic forced those approaching their mid-60s to consider early retirement. With the vast majority of people retiring between March and October 2020 doing so due to job losses, health concerns, and lifestyle changes, many didn’t even have a say in how they waved goodbye to their working life. There is a substantial difference between wanting to retire early and being forced to do so due to unforeseen circumstances. If anything, it has highlighted the need to plan ahead and prepare for the worst. Whilst the likelihood of a second global pandemic in the near future is rare, it is not impossible.
As well as early retirement, the COVID pandemic also prompted a dramatic surge in employees opting for late retirement. With the virus impacting the finances of almost everyone on the planet, a growing number of people had no choice but to delay their retirement plans until a later date. This was mainly due to a lack of savings to tide them over during the uncertain course of the pandemic. A number of younger employees also admitted to feeling financially unprepared for their upcoming retirement.
Importance of retirement planning
The ongoing COVID pandemic has highlighted the importance of retirement planning. With a growing number of people forced to alter their priorities, many are wishing that had begun the process sooner. Retirement is one of life’s greatest milestones. As a result, it can take time to adjust to a new way of life. With the median private pension amount barely enough to cover daily expenses, contributing to your pension fund as early as possible is key to guarantee a comfortable retirement. Retirement planning can also be a saving grace during periods of ill health or the sudden onset of a serious illness. With a sufficient savings pot to support you if the worst happens, you can relax knowing you have put plans in place to finance your future.
Ageing in place
With the COVID pandemic highlighting the stark reality of care homes and assisted living facilities, more Americans are looking to spend their retirement in the comfort of their own home. In order to do so, however, there are a number of factors you must consider beforehand. With the past year wreaking havoc on our finances, a growing number of retirees are simply unable to afford the costs associated with running a home. This includes any lasting mortgage payments, property tax, insurance, and maintenance fees. As well as considering your mobility now, you must also consider how it will affect your day-to-day life in the future. Your home may need to be renovated to ensure it is suitable for you in the event you develop a number of age-related health conditions. Renovations may include a stairlift, bath seat, ground floor bedroom, bed step stool, grab bars, and a ramp.
The COVID pandemic has transformed our lives in countless ways. From the travel industry to the oil and gas industry, people have been forced to make a series of long-lasting life changes just to survive the year. The US pensions industry has also undergone a series of changes including a decrease in the value of assets, a rise in pension administration software, retirees considering early or late retirement, the increased importance of retirement planning, and a sharp incline in the number of retirees choosing to age in place.