Industry News

In July 2020, the Center for Retirement Research (CRR) released its issue brief, How Widespread Unemployment Might Affect Retirement Security.  Due to the effects of the COVID-19 coronavirus pandemic, the Bureau of Labor Statistics has estimated the U.S. unemployment rate at 11.1% as of June 2020, up from 4% in June 2019.  As a result, unemployment driven by the pandemic’s effect on the economy is expanding the national retirement crisis, which will likely increase in severity as unemployment at this degree continues.

The key findings include:

• Before the pandemic, 50% of households were at risk of being unable to maintain their pre-retirement standard of living in retirement.
• The rise in unemployment related to the pandemic’s effect on the economy has likely increased the share of households at risk from 50% to 55%.
• The impact of lower asset prices and interest rates would result in a larger increase.
• Those unemployed that were already at risk before the pandemic are experiencing a larger savings gap.

The report concludes, “These results underscore the need for policies that provide well-targeted assistance to employers and individuals aimed at preventing more people from becoming unemployed and getting those who are unemployed back to work quickly as the pandemic subsides.  The shorter the spell of unemployment, the less harm people will experience to their long-term retirement prospects.”

The report is available here.