Changes in Retirement Savings during the COVID Pandemic

19 Pages Posted: 1 Apr 2022 Last revised: 20 Jun 2022

See all articles by Elena Derby

Elena Derby

Government of the United States of America - Joint Committee on Taxation

Lucas Goodman

U.S. Department of the Treasury

Kathleen Mackie

Joint Committee on Taxation

Jacob Mortenson

Joint Committee on Taxation, US Congress

Multiple version iconThere are 2 versions of this paper

Date Written: April 27, 2022

Abstract

This paper documents changes in retirement saving patterns at the onset of the COVID-19 pandemic. We construct a large panel of U.S. tax data, including tens of millions of person-year observations, and measure retirement savings contributions and withdrawals. We use these data to document several important changes in retirement savings patterns during the pandemic years relative to the years preceding the pandemic or the Great Recession. First, unlike during the Great Recession, contributions to retirement savings vehicles did not meaningfully decline. Second, driven by the suspension of required minimum distribution rules, IRA withdrawals substantially declined in 2020 for those older than age 72. Third, potentially driven by job-separation induced leakage and suspension of the early withdrawal penalty, employer-plan withdrawals increased for those under age 60.

Keywords: retirement saving, covid, tax policy

JEL Classification: G51, H24, J32

Suggested Citation

Derby, Elena and Goodman, Lucas and Mackie, Kathleen and Mortenson, Jacob, Changes in Retirement Savings during the COVID Pandemic (April 27, 2022). Available at SSRN: https://ssrn.com/abstract=4072053 or http://dx.doi.org/10.2139/ssrn.4072053

Elena Derby

Government of the United States of America - Joint Committee on Taxation ( email )

441 2nd st SW
Washington, DC 20002
United States

Lucas Goodman

U.S. Department of the Treasury ( email )

1500 Pennsylvania Avenue
Washington, DC 20220
United States

Kathleen Mackie

Joint Committee on Taxation ( email )

Room 1625 Longworth House Office Building
Washington, DC 20515
United States

Jacob Mortenson (Contact Author)

Joint Committee on Taxation, US Congress ( email )

502 Ford House Office Building
Washington, DC 20515
United States

HOME PAGE: http://www.jacobmortenson.com

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