Building Better Retirement Systems in the Wake of the Global Pandemic

Mitchell, Olivia S.

doi:10.3386/w27261

Cited by 24 publications

(17 citation statements)

References 31 publications

(8 reference statements)

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“…All aspects of the lives of people around the world are impacted due to the pandemic. Salary cuts and layoffs are prevalent, and people have started withdrawing money from their retirement savings (Mitchell, 2020). In the USA, in January and February 2020, the number of people claiming the unemployment allowance ranged between 200,000 and 280,000.…”

Section: Introductionmentioning

confidence: 99%

Does financial literacy reduce financial fragility during COVID-19? The moderation effect of psychological, economic and social factors

Chhatwani

Mishra

2021

IJBM

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PurposeThe present study examines the linkage between financial literacy and financial fragility during COVID-19. It further examines if financial literacy has a differential impact on financial fragility based on psychological (financial confidence), economic (wealth) and social (race) factors.Design/methodology/approachThe authors used nationally representative data of the American working age-group. They collated six different datasets collected at different time-periods to conduct the present study. Based on 2,202 observations, they conducted logistic regression analyses to test the proposed relationships.FindingsThe authors find that financial literacy reduces the odds of being financially fragile by 9.1%. Furthermore, they find that financially literate consumers having high financial confidence are less financially fragile during COVID-19. Besides, the adverse impact of financial literacy on financial fragility is more for consumers having more than less wealth. The interaction with race is not significant, suggesting that financial literacy cuts across racial boundaries.Practical implicationsFinancial fragility is an important factor having numerous deleterious consequences. The authors’ study found that financial confidence, psychological factor and wealth economic factor enhances the negative effect of financial literacy on financial fragility. Banks and financial institutes can develop mechanisms to infuse confidence in individuals during the pandemic to reduce their financial fragility. Policymakers and governments may increase awareness related to debt management practices and design financial literacy interventions to reduce financial fragility among individuals.Originality/valueThe study is one of the initial studies to examine the antecedents of financial fragility. Based on a time-lagged data, the authors’ study examines the linkage between financial literacy and financial fragility. Though scholars have investigated financial literacy and its implications, scholarly work in this domain during COVID-19 is at best limited. The study contributes to the literature by testing the effects of boundary conditions that can change financial literacy's impact on financial fragility.

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Section: Introductionmentioning

confidence: 99%

Does financial literacy reduce financial fragility during COVID-19? The moderation effect of psychological, economic and social factors

Chhatwani

Mishra

2021

IJBM

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“…57 In response, there is likely to be growing demand for annuities, deferred income annuities, tontines (whereby fund subscribers receive an annuity during their lifetime, the amount of which increases as the overall number of payees declines through death), and a raft of related, innovative products. 58 However, longevity risks involve not only the length of life but also health; diversity in ageing and the number of additional years spent in poor health raises the risk of high medical and care costs and represents another growing insurance market. Such variation points to a need to combine wealth and health products.…”

Section: Health Policymentioning

confidence: 99%

The longevity economy

Scott

2021

The Lancet Healthy Longevity

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The fact that people are on average living healthier, longer lives than previously has the potential to be positive for the economy, offsetting the negative economic effects of an ageing society. A longevity economy will see a shift in the mix of sectors in the economy, with both health and education expanding further and new financial products arising. Such an economy has the potential to contribute to growth in gross domestic product through employment and human capital. Shifting to a longevity economy requires less reliance on policies stated purely in terms of age, and more extension of existing policies aimed at diverse needs and circumstances to older age groups. This shift will be needed to counter inequality within age groups. A life course perspective is also required, to ensure a focus on intergenerational equity and a better understanding of the needs of older individuals that are not health driven.

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“…The COVID-19 pandemic has wrought not only profound damage to peoples' health around the world but also to households' finances (Achou et al 2020, Lusardi et al, 2020, Mitchell 2020). The short-term economic impacts for spending, debt, and unemployment have been recently examined by numerous researchers and policymakers (e.g., Baker et al 2020, Hanspal et al, 2020.…”

Section: And Orly Sadementioning

confidence: 99%

Longevity Perceptions and Saving Decisions During the Covid-19 Outbreak: An Experimental Investigation

2021

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We experimentally study individuals' perceptions about and advice to others regarding retirement savings and annuitization during the pandemic. Many people recommend that others save more for retirement, but those most affected by the pandemic tell others to save and annuitize less. We investigate two possible channels for this result and show that the pandemic does not substantially alter optimism regarding survival probabilities. Hence, we conclude that economic factors are driving our results. Consequently, some financial ramifications of the COVID-19 outbreak are yet to be revealed, as the pandemic is having longer-term effects on peoples' willingness to save and annuitize.

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Building Better Retirement Systems in the Wake of the Global Pandemic

Cited by 24 publications

References 31 publications

Does financial literacy reduce financial fragility during COVID-19? The moderation effect of psychological, economic and social factors

Does financial literacy reduce financial fragility during COVID-19? The moderation effect of psychological, economic and social factors

The longevity economy

Longevity Perceptions and Saving Decisions During the Covid-19 Outbreak: An Experimental Investigation

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