Wharton Pension Research Council Working Papers


American's debt burden, retirement readiness, and the pandemic

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Working Paper

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This paper analyzes Americans’ perceptions of being debt constrained. We focus on which population subgroups reported feeling most debt constrained, how this perception was impacted by the COVID-19 pandemic, and how it relates to financial literacy and retirement readiness. To this end, we analyze two datasets, namely the 2020 and 2021 TIAA Institute-GFLEC Personal Finance Index files (P-Fin Index). The evidence shows that, prior to and during the pandemic, one in three American adults felt constrained by their debt. The percentage was even higher among vulnerable subgroups such as Black and Hispanic individuals, those lacking a bachelor’s degree, those with lower incomes, and those with low levels of financial literacy. Being debt constrained also has long-term financial consequences, as it is negatively linked to planning and saving for retirement. Finally, we show that financial literacy has a strong connection to both debt and retirement money management, confirming that financial knowledge is essential if people are to be able to manage their debt and build financial well-being.


debt, debt burden, financial literacy, retirement readiness, pandemic

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This research was supported by a grant from the TIAA Institute and the Pension Research Council/Boettner Center of the Wharton School at the University of Pennsylvania.

Copyright/Permission Statement

Findings and conclusions are solely those of the authors and do not represent the views of any institutions with which the authors are affiliated. ©2021 Hasler, Lusardi, and Mitchell.



Date Posted: 14 February 2022