COVID-19 Labor Market Shocks and Withdrawals From Retirement Accounts: Understanding the Moderating Role of Financial Knowledge

IF 2.5 3区经济学 Q3 BUSINESS

Journal of Consumer Affairs Pub Date : 2025-02-04 DOI:10.1111/joca.12616

Sunwoo Lee, Kyoung Tae Kim, Sherman D. Hanna

{"title":"COVID-19 Labor Market Shocks and Withdrawals From Retirement Accounts: Understanding the Moderating Role of Financial Knowledge","authors":"Sunwoo Lee, Kyoung Tae Kim, Sherman D. Hanna","doi":"10.1111/joca.12616","DOIUrl":null,"url":null,"abstract":"<div>\n \n <p>We explored the relationship between COVID-19 labor market shocks and the likelihood of hardship withdrawals or plan loans from retirement accounts, which could significantly impact workers' retirement savings. We found that about 14% of working-age respondents took a hardship withdrawal or plan loan. Those reporting a COVID-19 labor market shock had odds of a hardship withdrawal as much as 3.8 times as high as otherwise comparable respondents who did not have a shock. Additionally, we found that the relationship to a COVID-19-related labor shock was moderated by the objective and subjective financial knowledge of individuals, suggesting a potential role for financial education in alleviating retirement risks. A notable finding is that respondents exhibiting financial knowledge overconfidence were more likely to take a plan loan or a hardship withdrawal than those with appropriate levels of confidence or low levels of confidence. This study offers important insights for policymakers, educators, and practitioners.</p>\n </div>","PeriodicalId":47976,"journal":{"name":"Journal of Consumer Affairs","volume":"59 1","pages":""},"PeriodicalIF":2.5000,"publicationDate":"2025-02-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Consumer Affairs","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/joca.12616","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"BUSINESS","Score":null,"Total":0}

引用次数: 0

Abstract

We explored the relationship between COVID-19 labor market shocks and the likelihood of hardship withdrawals or plan loans from retirement accounts, which could significantly impact workers' retirement savings. We found that about 14% of working-age respondents took a hardship withdrawal or plan loan. Those reporting a COVID-19 labor market shock had odds of a hardship withdrawal as much as 3.8 times as high as otherwise comparable respondents who did not have a shock. Additionally, we found that the relationship to a COVID-19-related labor shock was moderated by the objective and subjective financial knowledge of individuals, suggesting a potential role for financial education in alleviating retirement risks. A notable finding is that respondents exhibiting financial knowledge overconfidence were more likely to take a plan loan or a hardship withdrawal than those with appropriate levels of confidence or low levels of confidence. This study offers important insights for policymakers, educators, and practitioners.

查看原文本刊更多论文

求助全文

约1分钟内获得全文求助全文

来源期刊

Journal of Consumer Affairs Multiple-

CiteScore

4.60

自引率

17.90%

发文量

期刊介绍： The ISI impact score of Journal of Consumer Affairs now places it among the leading business journals and one of the top handful of marketing- related publications. The immediacy index score, showing how swiftly the published studies are cited or applied in other publications, places JCA seventh of those same 77 journals. More importantly, in these difficult economic times, JCA is the leading journal whose focus for over four decades has been on the interests of consumers in the marketplace. With the journal"s origins in the consumer movement and consumer protection concerns, the focus for papers in terms of both research questions and implications must involve the consumer"s interest and topics must be addressed from the consumers point of view.