Financial satisfaction dives as workers and retirees face pandemic losses

A new survey of financial satisfaction recorded its largest quarterly drop ever this year, one measure of how profoundly the coronavirus pandemic, worsening across the United States, has affected the financial standing of Americans and retirement planning.

The American Institute of CPAs’ Q2 2020 Personal Financial Satisfaction index (PFSi) showed a 55% drop from the previous quarter. AICPA said the drop was the largest ever in the history of the index, which uses a variety of data sources to capture whether and how U.S. residents are feeling more financial pleasure than pain.

AICPA said the downturn was most dramatically affected by a rise in underemployment, where a current job doesn’t fully utilize a worker’s skills.

“Underemployment is plaguing workers around the world. Although there are no global statistics yet, the phenomenon is expected to grow as the economic crisis around the world deepens, said economist Roger Gomis of the International Labor Organization,” according to a recent Associated Press report.

Also contributing to the drop in financial satisfaction was a steep decline in AICPA’s CPA Outlook Index, a measure of year-ahead expectations from in-house executives for their companies and the economy more broadly. AICPA said the decrease was fueled by rising pessimism about the health of the economy in the coming year.

The AICPA’s Q4 2019 index had marked a new high for the seventh time in the last ten quarters, driven in large part by stock market gains.

Meanwhile, The Senior Citizens League has released a new survey showing how the COVID-19 crisis has affected older Americans. Nearly half of the respondentS—48%—said they had gone without certain essential items, including food, disinfectants and personal protective equipment.

The Senior Citizens League survey also captured how deeply the virus crisis had affected retirement savings—45% of respondents said their savings had dropped significantly and forced efforts to reduce spending.

“Our survey suggests that almost half of the nation’s retirees may not have the resources needed to cope with COVID-19,” Mary Johnson, a Social Security and Medicare policy analyst for The Senior Citizens League, said in a statement. Johnson added: “The ability to withstand major downturns in the economy is particularly important in retirement, yet extraordinarily difficult for today’s retirees and those nearing retirement.”

The pandemic’s affect on financial satisfaction and retirement planning has also broadly touched millennials and Gen Z. A June 2020 survey from Travis Credit Union in Vacaville, California, showed 8 out of 10 respondents reported feeling stress or anxiety about saving money.

“In the face of the Covid-19 pandemic and an economic recession, Millennials and Gen Zers are learning the importance of having these funds tucked away for a rainy day,” the Travis CU survey said. “Three out of four say that the impact of coronavirus has changed their saving habits and that it will continue to shape their financial habits going forward.”

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• Pandemic sinks Americans’ personal financial satisfaction

Mike Scarcella is a senior editor in Washington at Law.com. Contact him at mscarcella@alm.com and follow on Twitter @MikeScarcella.