Wealth Gap Widens: COVID-19 Has Exacerbated Economic Inequality in the U.S., According to New TIAA Survey

Notably, 37% of households making less than $50,000 per year describe themselves as worse off because of the pandemic. In stark contrast, only 15% of households making more than $100,000 a year describe themselves as worse off.

Survey suggests the pandemic's deceleration holds different promises for those who consider themselves better or worse off

The TIAA survey found those who have taken a financial hit during COVID-19 worry the downward trend will continue, with 57% believing nothing will change or that their finances will continue to worsen over the next year. Meanwhile, 61% of those who say they are financially better off since the start of the pandemic expect their household finances to improve in the next year.

Of those surveyed, adults between the ages of 45 to 64 were much more likely to say they are worse off because of the pandemic, compared to those under age 45. Nearly 40% of those between the ages of 45 to 64 say they are worse off financially this year compared to last year, while only about one quarter of those under age 45 say they are worse off due to COVID-19.

'Across nearly all metrics, from physical health to personal finances, COVID-19 has disproportionately affected lower income Americans. We are also seeing that the pandemic has taken a particularly hard hit on mid- and late-career Americans,' said Snezana Zlatar, senior managing director and head of financial wellness advice and innovation at TIAA. 'As we emerge from the crisis, stakeholders must work together to help improve financial wellness for all Americans by helping them create emergency funds and plan for a secure retirement.'

Those earning less than $50,000 per year are most uncertain about their financial futures

Key findings from the survey also exposed the financial uncertainty among Americans who are making less than $50,000 per year. When restrictions are lifted, Americans across the board overwhelmingly want to make up for 'lost time,' but those who have suffered financially since last year are more likely to say they have 'no idea' how they will pay for their post-COVID-19 plans. On top of that, those making less than $50,000 are more likely to be unsure if they will save or spend more money moving forward.

While all Americans have an appetite to do more post COVID-19, the survey revealed that Americans will be able to participate at varying degrees, with lower-income Americans least likely to participate in a post-COVID-19 spending boom. As COVID-19 decelerates:

Americans making less than $50,000 annually are more likely to spend their stimulus check

When asked about how they plan to spend a federal stimulus check, more than half of U.S. adults who are worse off financially since the pandemic say they would use the money to cover daily expenses, such as buying groceries or paying bills. Conversely, more than one third of U.S. adults said they would invest their stimulus payment in a savings or retirement account, though those who are financially better off (37%) are more likely to do so than those worse off (28%).

Looking Ahead

The TIAA survey found that the pandemic has created a change in mindset regarding what's important about managing personal finances. Prior to the pandemic: