Financial security varies, but Americans setting financial goals for 2021
In a year when much was outside of Americans’ control, many are taking steps to secure their financial future.
Despite a tumultuous year marked by a global pandemic, a contentious election and dramatic swings in the financial markets, many Americans report feeling confident about their financial security, although they are also re-evaluating their financial habits and goals as a result of the events of the past year.
Optimism increasing among some
Overall, half of Americans feel good about their financial security despite the major events of 2020, according to Country Financial’s November 2020 Security Index Report. Fifty-five percent of respondents rated their financial security positively, and those who feel positive about their financial security also largely felt confident about their ability to retire comfortably, pay for a child to attend college, and pay off debts. The report speculated this positive outlook could be linked to rising savings rates, progress on COVID-19 vaccines, and all-time highs in the stock market.
Still, a substantial portion of Americans aren’t as positive about their financial security, with 29 percent rating their financial security as fair and 13 percent saying their financial security is poor.
Bigger gap between financially secure and insecure
The gap between the financially secure and insecure has been exacerbated by the pandemic, according to the survey’s findings. About one-third of respondents said the pandemic has negatively impacted their financial security, while half said it has not impacted their financial security at all, and 8 percent said it has had a positive impact.
Those who feel less secure about their financial situation are much more likely to say COVID has had a negative impact on their financial security than those who feel more secure.
The election has also impacted how people feel about their financial security. Three in ten people feel less confident, while one in five say they are more confident. About one-third don’t expect the results of the election to have any impact on their financial situation and one in five don’t know.
According to the survey, the impact of the election is one area where Americans do not diverge based on their current financial security, although those who feel more financially secure are more likely to think the election will not have an impact on their financial security, while those who are less financially secure weren’t sure.
Spending decisions
Most Americans are comfortable with their spending decisions this year, but about 20 percent said they spent too much money on unnecessary purchases and 17 percent said they did not put enough money aside for an emergency. When asked what they are doing to improve their financial situation, about half of respondents said they are cutting back on unnecessary spending, 30 percent said they are paying down debts or making payments on time, and 27 percent said they are regularly putting money into savings. Nineteen percent said they are regularly contributing to a 401(k) or other retirement savings account while another nineteen percent said they have created a budget, and 15 percent said they are building an emergency fund.
Goals for 2021
Respondents ranked their top financial goals for 2021 as controlling spending, saving for an emergency, paying down credit card debt or student loan debt, or saving for retirement. Purchase-oriented goals were cited as well, with 13 percent hoping to buy a car and 11 percent planning to purchase a home.
“2020 has been a year unlike none other, with a global pandemic impacting so many Americans through health and financial uncertainty,” said Troy Frerichs, Vice President of Investment Services at Country Financial. “It’s encouraging to see many taking steps to improve their financial security. With a record economic decline, subsequent stock market selloff, high unemployment, and even a difficult election season, so many things were seemingly outside of Americans’ control in 2020. Yet our survey found many took steps to shore up their financial situations through things they can control such as cutting back on discretionary purchases, paying down debt or building their emergency savings. More importantly, many also indicated that these new financial habits will stick in 2021.”
The survey was conducted by Ipsos Public Affairs in early November, following the election, and included perspectives of 1,015 adults.
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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