Ameriprise Financial manages assets worth over $970 billion. Their January 2021 survey included over 3,000 Americans between the ages of 30 and 70, who had at least $100,000 in assets to invest. How did the pandemic affect their income during the pandemic? While the pandemic took a toll on the economy, for investors and savers that toll, according to the survey was uneven to nonexistent. Survey results were:
- 63% said their income was not impacted at all
- 25% said they are earning less during the pandemic
- 10% said their income actually increased
What about spending habits during the pandemic and moving forward?
- 45% reduced their spending
- 25% actually made big ticket purchases, paid large expenses, and made expensive home improvements
- 30% expect to remain cautious and frugal with their money going forward
- 25% anticipate spending more money on usual on things they had to postpone, once COVID-19 is in the rearview mirror,
How the Pandemic Changed Attitudes
Over 60% of the investors said that protecting their assets and planning for the uncertainty of future crises are far more importantnow than before COVID-19 took everything down. About 45% also believe their shift in priority will be long-lasting.
The scary lessons of COVID-19 have caused new focus on growing savings and investments and retirement. Highlights:
- 25% of investors are planning to increase the amount in their long-term investments in 2021.
- 63% of the investors who failed to maintain an emergency savings fund before the pandemic have either put one in place or plan to do so soon.
- 44% said they have created a will and
- 30% are discussing finances more with their spouses (25%), children (30%) and siblings (23%).
Retirement Plans Not Seriously Affected by COVID-19
For survey responders who planned to retire, nearly 70% said their goals have not changed. A few (18%) pushed their retirement plans ahead of originally scheduled, and for 83% the decision was voluntary. Interestingly, only 13% of those who had a retirement date scheduled reported that COVID-19 delayed their retirement plans.
Safety Concerns Driving Investors and Savers
Even though the pandemic has not affected everyone the same way across the country, “it has been a wake-up call to everyone,” said Ameriprise’s VP of Financial Advice Strategy Marcy Keckler. COVID-19 prompted extraordinary financial conditions and convinced even those who were already on solid financial footing to stop procrastinating and take actions they had previously delayed.
Finally, over 80% of investors who used a financial advisor reported that the pandemic reinforced how important it was to work with one. Nearly 40% who had no financial advisor thought that working with an expert could help them weather the next crisis. In fact, 30% have begun using a financial advisor during the pandemic or intend to do so soon.
Not surprisingly, people across all age groups said that health and safety were the top reasons behind their shift in financial priorities. Over 70% said that the pandemic has caused a new focus on keeping their family safe.