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As the coronavirus pandemic ravages the economy, retirement savings plans are taking a hit — and the damage may last long after COVID-19 has been eradicated.

The stock market's plunge has reduced the savings accrued in 401(k) and other retirement plans, and that, combined with unemployment, corporate cost-cutting and incentives to dip into those accounts could delay retirement for many individuals.

"This is a big setback," said Richard Barrington, senior financial analyst at, which conducted a survey last month of 1,000 individuals ages 45 to 64 on the status of their retirement plans. "We're in fairly early days yet, and this looks like it will have a decades-long impact."

The Russell 3000 index, a benchmark for the entire U.S. stock market, found that $3.8 trillion in retirement savings were gone by April 3, a drop of 25%, although that rebounded some this month.

The survey, which took place less than a month into widespread lockdowns across the country, originally had planned to ask how much people had saved for retirement. But ended up analyzing the impact of COVID-19 on a subset of 500 people, Barrington said.

The results, he said, "ended up being a big eye opener to us."

The survey found that 36.4% of individuals in the age group 20 years from retirement said their plans to retire now would be delayed.

Employers are temporarily suspending 401(k) contributions, and 43.8% of individuals surveyed reported losses of at least 10%. Half that number said losses were more than 20%, Barrington said.

Another 25% don't know how their investments are doing, and 12% were "too scared to look."

"That sounds humorous, but also it's kind of serious," Barrington said. "That's 37% of people within 20 years of retirement age who don't know what their investments are doing in this crisis. It's like flying blind in stormy weather."

Stocks continued a rebound on Monday, as some states announced plans to roll back lockdown orders and reopen businesses, despite the U.S. COVID-19 death toll exceeding 50,000.

On April 23, the Labor Department updated its unemployment figures, estimating 26.5 million people in the United States had filed claims in the past five weeks.

The survey found that 37.4% of workers nearing retirement either lost their jobs or some of their income. Of those who reported losing their job or some income in the survey, 29.4% expected to dip into their retirement savings to make ends meet. The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, passed on March 27, temporarily waives a 10% penalty for withdrawing investments of up to $100,000 for those before age 59.5, Barrington said. But future investments, he said, will be making up for losses, not adding to savings.

"The problem is you're still taking money out of the market," he said. "It's going to take people years to potentially put that money back in."

And it's not just defined contribution plans impacted. Social Security, funded by payroll taxes, and defined-benefit pension plans, often in government jobs, could face financial problems, wrote Richard Johnson, director of the Program on Retirement Policy at the Urban Institute, in an April 8 blog post called, "Seven Ways the COVID-19 Pandemic Could Undermine Retirement Security."

Many of those plans already are reeling from the 2008 recession.

"Most plans still haven't recovered more than a decade later, and many states have cut benefits for recently hired public employees," he wrote. "Pension plans in both the private and public sectors weren't as well funded in 2019 as they were in 2008, so financial losses could have a bigger impact today."

Amanda Bronstad is the ALM staff reporter covering class actions and mass torts nationwide. She writes the email dispatch Critical Mass. She is based in Los Angeles.



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Amanda Bronstad

Amanda Bronstad is the ALM staff reporter covering class actions and mass torts nationwide. She writes the email dispatch Class Actions: Critical Mass. She is based in Los Angeles.