U.S. retirement index slips and 682,400 seniors are behind on their mortgages

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The United States fell one spot to rank 17th among developed countries in Natixis Investment Managers’ 2021 Global Retirement Index, with Iceland leading the rankings for the third year in a row. The ninth annual report provides an overview of the relative financial security of retirees in 44 countries.

Separately, a survey of 401 (k) participants found that the pandemic contributed to the financial stress of young workers more than older workers, and a federal report determined that nearly 700,000 seniors were behind on their payments. mortgage loans in July, raising concerns about a possible spike in homelessness among older Americans.

Here is the last one Barron overview of retirement news and research.

United States slips one spot in pension rankings

In a survey of 750 individual US investors, Natixis found that 41% think they will “need a miracle” to comfortably retire and 34% think retirement might never be an option. Additionally, 49% avoid thinking about the security of their retirement because the challenge seems too daunting, and 59% think they will have to work longer than they originally planned, according to the report.

Survey respondents had a median retirement savings of $ 350,000, compared with a median of $ 65,000 for all Americans, according to the report.

The economic consequences of the pandemic, such as rising public debt, rising inflation, and low interest rates on investment vehicles, make many Americans feel that “their dreams of retirement move away, ”according to the report.

“The pandemic has exacerbated financial inequalities and accelerated long-term trends that are eroding the outlook for retirement security for many,” said Jim Roach, senior vice president of retirement strategies at Natixis, which claims to have $ 1,400 billion. dollars in assets under management.

To rank countries according to retirement security, the GRI examines 18 indicators grouped into four categories:

● Material well-being — Material means living comfortably in retirement. The United States ranks 26th in this category. ● Finance in retirement — Access to quality financial services to help preserve the value of savings and maximize income (11th in the United States) ● Access to quality health services (17th in US) ● Quality of life — A clean, safe environment in which to live (US ranked 21st.)

After Iceland, the following six countries also retained their position from 2020, with Switzerland coming in second, followed by Norway, Ireland, the Netherlands, New Zealand and Australia. . Germany moved up two places to place eighth.

Survey: Young workers feel financial stress

Younger workers are much more likely than older workers to be so stressed about their finances that they struggle to complete their jobs, according to a survey by Schwab Retirement Plan Services. The survey found that 44% of Generation Z workers said financial worries hurt their performance at work, compared to 38% of Millennials and 24% of all workers.

Catherine Golladay, director of Schwab Workplace Financial Services, said the “stressful environment” created by the pandemic has had a disproportionate impact on young workers as they “are just starting their careers in a time of upheaval at home and on. the workplace – new health and safety challenges associated with the rapid expansion of virtual offices and dramatic fluctuations in our economy and markets. ”

In early April, Schwab surveyed 1,000 active participants in 401 (k) plans in companies with 25 or more employees, as well as an additional 100 Gen Z participants. The survey defined Gen Z as workers aged 21. at 24, while Millennials were 25. 40 years old, Generation X was 41-56 years old and baby boomers 57-70 years old.

Only 10% of baby boomers experienced financial stress that affected their performance at work, compared to 20% of Gen X. Young workers were more likely to predict that Covid-19 would delay their retirement, with 35% of millennials saying so, versus 32% of Gen Z, 20% of Gen X and 13% of Baby Boomers.

Gen Z savers are the most likely to say they don’t know which investments to select in their 401 (k) plans, with 51% of them, compared to 32% of older participants.

The survey found that Gen Z and Millennials were significantly more interested in annuity options in their 401 (k), the ability to buy fractions of fund shares, and ESG investment options that take into account environmental, social and corporate governance issues.

Of Gen Z participants, 45% said they would like to be able to purchase annuities as part of their plan, compared to 52% of Millennials, 39% of Gen X, and 26% of Baby Boomers. As for wanting more ESG options, it was 41% for Gen Z, 43% for Gen Y, 29% for Gen X and 12% for Baby Boomers. Among Gen Z, 41% wanted the opportunity to buy fractions of shares, compared to 39% of millennials, 25% of gen X and 13% of baby boomers.

CFPB: nearly 700,000 seniors behind on their mortgage

According to the US Consumer Financial Protection Bureau, about 4.4% of seniors with a mortgage are behind on their payments, with non-white homeowners and those earning less than $ 25,000 a year the most likely to be late. of payment.

In July, about 682,400 homeowners aged 65 and over were behind on their mortgage payments, and another 236,000 who were up to date had no confidence that they would be able to make their next month’s payment, according to the CFPB.

The number of seniors in default appears to be on a downward trend, however, briefly surpassing one million homeowners in the summer of 2020 and last February, according to the agency.

The CFPB report cites data from the Census Bureau’s Household Pulse Survey, an online survey assessing the economic and social impacts of Covid-19 on U.S. households. About 19,400 seniors responded to the survey from June 23 to July 5, including 5,800 homeowners.

Only 2.7% of white seniors with mortgage payments said they were late in July, compared to 10% of non-whites. Likewise, 3.4% of seniors with mortgages and incomes of $ 25,000 or more were in arrears, compared to 17.7% of those with lower incomes, according to the CFBP.

Among seniors who were late, 52.4% reported living in a household of three or more, while 39.4% lived with someone else and 8.2% lived alone. Children are present in 33% of these households and 20.4% of these owners say they sometimes or often lack sufficient food during the week.

About 36% of seniors who default on their mortgage said job loss by a household member was the main cause. Additionally, 12.2% of seniors who have fallen behind on their mortgage payments say they are likely to be foreclosed. This is in addition to the 188,700 seniors who are in arrears with rent payments and risk eviction, the CFPB said.

BARRON RETIREMENT GATHERINGS

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