Retirement: How the pandemic hurt many American nest eggs

The widespread financial burden from the pandemic forced some Americans to cut their retirement plans and long-term investments, a new poll found.
Some tampered with their retirement accounts or reduced their savings while others paid off stock investments, a move many later regretted, according to a survey of 1,000 non-retired Americans by Real Estate Witch, which is owned by Clever Real Estate.
"Unfortunately, people seemed to be making bad decisions," said Dr. Francesca Ortegren, data scientist at Clever Real Estate, told Yahoo Money, "although they were probably necessary at the moment."
Read more: This is how your retirement income is taxed
As of March 2020, more than a third of Americans have searched their retirement plans to make ends meet, according to the survey.
During the coronavirus pandemic in New York City, December 11, 2020, people wait for groceries in the St. Clements Food Pantry. REUTERS / Carlo Allegri
Those who withdraw have used an average of 44% of their balance, and more than 1 in 6 said they spent more than $ 25,000 on their retirement savings.
Ortegren called the amounts paid out "shocking".
Read more: 3 important factors to consider when planning your retirement
"People have been taking money out of their retirement funds to fund their daily finances," she said, "and that was something that was worrying."
The initial panic caused by the pandemic plunged the stock market into a nosedive in March last year. Amid the uncertainty, 3 in 10 respondents who had invested took money from the stock market and the average person sold 43% of their holdings during the pandemic.
The majority (46%) cited the move as a solution for a short-term injection of funds, followed by the availability of cash in an emergency (40%) and the desire to make a safer investment (35%). Other reasons included a desire to make a riskier investment (35%), cash to fund a big purchase (34%), and a fear of volatility (30%).
The seller's remorse soon set in as markets rebounded to pre-pandemic highs. Three out of five people who got rid of stocks regretted their decision. Millennials had the greatest regrets, with nearly two-thirds wishing they would keep their stock investments; Almost 3 out of 5 boomers regretted their decision to cash out shares.
YF Plus
Many Americans who suffered income losses reduced their savings opportunities for their long-term goals. Pension contributions were cut by an average of 3%, according to the study.
Baby boomers, who do not have the luxury of making up for lost time, have reduced their pension contributions by 5%. Generation X has cut its pension contributions the most, by 11%, while Millennials have cut by 1%, according to the survey.
Read more: How to Manage Your Post-Pandemic Spending
However, nearly two-thirds of Americans plan to increase their post-pandemic pension contributions to make up for lost time once life returns to normal. Another third plan to contribute to other investments. Only 9% plan to further reduce their pension contributions once the pandemic subsides.
"I think there will be a subset of people who will start saving more just in case something like this happens again," said Ortegren. "You'd think that would open a lot of people's eyes, but behaviors are hard to change, that's for sure."
The Yahoo Money sister site Cashay has a weekly newsletter.
Stephanie is a reporter for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @SJAsymkos.
The increase in the number of visitors to the national park increases costs and leads to reservation obligations
Annuity Expert: Investing in crypto can make the 401 (k) more engaging and relevant
Here are the companies that vaccinate employees
'What is really important?' Pandemic spurs the search for change for some workers
Pension Professional: Here's a "neat thing" to do if you get social security early
Click here for more personal finance tips, guides, and news
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube and reddit.

You should check here to buy the best price guaranteed products.

Last News

Iskra Lawrence shares side-by-side photos of herself before and after weight gain: 'We are all so much more than our bodies'

'Vanderpump Rules' Star Lala Kent May Be Moving Out of Randall Emmett's With Her 7-Month-Old Baby

This is where rents are rising the most. Hint: it’s NOT New York or San Francisco

Auto sector blasts Mexico's move to legalize imported used cars

Lt. Gov. McGeachin releases email with Idaho AG’s public records advice. What’s it say?

16 Things McDonald's Employees REALLY Hate That Customers Do, And 5 Things They REALLY Love