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Is COVID-19 a Retirement Story?


A recent paper was titled “COVID 19 Is Not a Retirement Story.” A week later, an article on said: “COVID-19 Is Most Certainly a Retirement Story.” So, which is it?

As it turns out, the former was authored by the folks at the Center for Retirement Research (CRR) at Boston College—who often have pretty negative things to say about the private retirement system—and the latter by Teresa Ghilarducci—who nearly always has something negative to say about the private retirement system (along with promoting her “Guaranteed Retirement Account” alternative).

The CRR paper basically concludes that COVID mostly didn’t impact retirement because Social Security continued chugging along (though time’s running out to address that projected deficit), because contributions to 401(k)s (mostly) continued without disruption, withdrawals from 401(ks) (mostly) didn’t surge (despite the SECURE Act’s expanded access provisions), and unemployment (which can, of course, impact all of the foregoing) “has not disproportionately hurt older workers.”

As for Ms. Ghilarducci, well, her “take” on the unemployment impact is less sanguine than the CRR take, but she also acknowledges as a positive note that we’ve not yet seen an acceleration in claiming Social Security benefits (thanks to the support of those stimulus checks/unemployment benefits). Not surprisingly, she pushes aside the market lift that left the average 401(k) balance 16.5% higher for older workers, dismisses contribution rates as “wobbly,” and focuses on the (relatively) small percentage of employers that did suspend matching contributions.[i] And, yes, slips in a “pitch” for her Guaranteed Retirement Accounts.[ii]     

The CRR report basically concludes that while COVID did no real damage to retirement, the problems that predated COVID remain, and on that point at least Ghilarducci’s Forbes article would seem to concur, albeit somewhat more stridently.

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For my part, COVID-19 is a retirement story—a story about having a retirement “plan”—or the lack thereof. It’s a story that serves as a reminder that, for many working Americans, these retirement savings plans are not only their retirement “plan,” they are often the (only) savings plan, and as such can provide a valuable buffer against financial calamity. It’s a reminder that employers’ commitment to these programs and their workers remains strong, even in the face of hardship.

But it’s a story that should also serve as a reminder that the security, the support, the “buffer against financial calamity” isn’t yet available to all working Americans—and thus, a reminder that we (all) need to continue to work, not only to support those who do have that option—but to continue to work to extend that option—that opportunity—to all working Americans.

[i] To do so, the article actually cites a comment from a Plan Sponsor Council of America snapshot survey that included a comment referring to the potential implications of no legislative relief on contribution timing (not a temporary suspension of match)—which has still not occurred.

[ii] If you’ve gotten a bit rusty on the basics of that proposal (in fairness, it continues to evolve), you might want to check out The Not-So-New Math of Teresa Ghilarducci’s ‘New’ GRA Proposal.