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At the same time many health care workers are battling COVID-19 on the front lines, their retirement readiness and overall financial wellbeing have weakened, according to TIAA Institute's 2020 Healthcare Sector Financial Wellness Survey, which surveyed perspectives of health care workers from physicians to nurses to administrative workers.
Nearly half of survey respondents said their financial condition has worsened since the outset of the pandemic, and 38 percent said they feel less confident that they will have enough money to live comfortably in retirement.
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As such, many health care workers expect to have to work longer, with 45 percent saying they believe they now will have to work beyond the age of 67.
Fundamental changes in health care operations as a result of COVID-19 have had substantial impacts both on health care institutions and their workforces, the survey found.
Discretionary procedures were delayed as the pandemic took hold, resulting in revenue losses as well as furloughs and layoffs in some sectors of the industry, while others experienced large increases in work hours.
This uncertainty has impacted financial confidence among the health care workforce. The majority of health care workers (90 percent) are retirement savers, including two-thirds who are saving through a defined contribution plan, the survey found.
But despite high levels of saving among the sector's workforce, retirement planning and confidence have been impacted by the pandemic. About one-quarter of those who were saving for retirement reported that they have decreased the amount they are contributing, and 7 percent have discontinued contributions completely.
Confidence in investment choices has diminished somewhat since the onset of the pandemic among health care workers. Before the pandemic, 32 percent expressed confidence that their retirement savings were invested appropriately, while 13 percent were not confident. Now, only 18 percent are very confident in their investment choices and 22 percent are not confident.
In addition, a substantial portion of health care workers are making adjustments to their retirement savings investments. About 30 percent have changed their investments since the start of the pandemic, with 19 percent decreasing their equity exposure and 9 percent increasing it. Younger workers were more likely to increase their equity exposure, while older workers were more likely to decrease it, the survey found.
While some health care workers are adjusting their retirement savings contributions and investments, nearly one-third said they have become less confident they are saving adequately for retirement, especially those who have decreased their contributions.
The survey speculated short-term financial necessity is driving the reduction or discontinuation of retirement contributions among some health care workers. Three-quarters of respondents said they had emergency savings prior to COVID-19, and one-third of these have used at least some of it.
Health care workers also have doubts about their ability to cover medical expenses in retirement. Thirty-five percent of health care workers surveyed said they are not confident they will have enough money to cover out-of-pocket medical expenses, including premiums, co-pays and deductibles during retirement. Sixty-two percent are not sure they will be able to pay for long-term care if they need it.
"Those providing urgent medical care today understand better than most the inherent uncertainty about one's future health and what this can mean for medical expenses, so it is especially concerning, and sadly ironic, that one-third of those working in health care are not confident they will have enough money to take care of out-of-pocket medical expenses during retirement," said Paul Yakoboski, Senior Economist with the TIAA Institute.
About one-third of savers over 60 think they will annuitize some of their retirement savings while a similar percentage do not expect to annuitize. The survey highlighted this as a disconnect because almost three-quarters of respondents placed a high priority for their retirement on not outliving financial assets.
Other priorities included securing financial security for a surviving spouse or partner, maintaining their standard of living throughout retirement, having income that is insulated from financial market decreases, maintaining control of investments and leaving an inheritance.
"A low cost annuity would address health care workers' top financial priorities for managing personal finances during retirement," said Yakoboski. "Nonetheless, only 22% think they will annuitize any of their retirement savings; 54% are not sure. These findings reinforce the need for greater education around annuities and how they can be a cornerstone of a confident and secure retirement."
Kristen Beckman is a freelance writer based in Colorado. She previously was a writer and editor for ALM's Retirement Advisor magazine and LifeHealthPro online channel. She also was a reporter for Business Insurance magazine covering workers compensation topics. Kristen graduated from the University of Missouri with a degree in journalism.
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