Late-Career Unemployment Shocks, Pension Outcomes and Unemployment Insurance

Posted: 11 Feb 2021

See all articles by Samir Elsadek Mahmoudi

Samir Elsadek Mahmoudi

Georgia State University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: August 2020

Abstract

In response to unemployment shocks, older workers deplete their 401(k)s, particularly after the waiving of the early withdrawal penalty on unemployment-motivated withdrawals at age 55. This paper shows that Unemployment Insurance (UI) keeps older workers from depleting their 401(k) assets following job losses. UI also incentivizes older unemployed workers to delay claiming their Social Security (SS) benefits beyond the earliest age of eligibility, 62. Overall, UI enhances the retirement income of the individuals having a history of late-career layoffs by helping them preserve their 401(k) assets, the return on these assets and opt for a higher stream of SS benefits.

Keywords: Retirement savings, Private Pensions, Social Security and Unemployment Insurance

JEL Classification: G51, H24, H55, J14, J23, J65

Suggested Citation

Elsadek Mahmoudi, Samir, Late-Career Unemployment Shocks, Pension Outcomes and Unemployment Insurance (August 2020). Andrew Young School of Policy Studies Research Paper Series No. 21-01, Available at SSRN: https://ssrn.com/abstract=3783919

Samir Elsadek Mahmoudi (Contact Author)

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States

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