New data show few Americans have borrowed from retirement during pandemic
A survey last month from Kiplinger and digital wealth management company Personal Capital found that 60% of respondents had taken some form of withdrawal from their IRA or 401(k) during the coronavirus pandemic, but new data suggests those numbers were a bit high.
What's new: Kiplinger has since amended its results and reports that just "a third of respondents took a distribution or loan from their retirement account."
Driving the news: Those numbers better align with a new report from the Investment Company Institute, which tracks retirement plan assets.
- "A strong majority (65 percent) of US individuals did not take financial actions as a result of COVID-19," ICI's survey finds.
- The other 35% took a variety of actions, namely using emergency savings and credit cards.
What they're saying: "The survey findings are consistent with the data ICI has published throughout the pandemic based on actions reported by recordkeepers to defined contribution (DC) retirement plans," ICI says. (Defined contribution plans are mainly 401(k)s and similar plans rather than pensions.)
- Through the first three quarters of 2020, ICI's data found that 3.4% of plan participants took withdrawals from their DC accounts, including 1.2% who took hardship withdrawals.
- DC plan recordkeepers identified 4.4% of DC plan participants who took CARES Act coronavirus-related distributions.
- At the end of September 2020, 15.4% of DC plan participants had loans outstanding.
The bottom line: "Together, these two sets of data—the self-reported actions from the survey and the administrative recordkeeper data based on actual DC account activity—contradict claims that large numbers of savers turned to withdrawals or loans from retirement plans in response to COVID-19 financial stress," ICI analysts say in their report.
- "To the contrary, Americans appear to have placed a high priority on preserving their retirement savings."