Changes in Retirement Savings During the COVID Pandemic
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pensions
retirement
pandemic
Economics
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Abstract
This paper documents changes in retirement saving patterns at the onset of the COVID-19 pandemic. We construct a large panel of US 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 relative to prior years, and we compare these results to changes in savings patterns during the Great Recession. We find that, unlike during the Great Recession, contributions by individuals to retirement savings vehicles did not meaningfully decline. Additionally, driven by the suspension of required minimum distribution rules, IRA withdrawals substantially declined in 2020 for those older than age 72. Finally, likely due to the partial suspension of the early withdrawal penalty, employer-plan withdrawals increased for those under age 60.
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This research embodies work undertaken for the staff of the Joint Committee on Taxation, but as members of both parties and both houses of Congress comprise the Joint Committee on Taxation, this work should not be construed to represent the position of any member of the Committee. The views expressed in this paper are not necessarily those of the US Department of the Treasury. The authors declare that they have no relevant financial interests that relate to the research described in this paper.