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Policy Options for Cutting Retirement Plan Leakages

Teresa Ghilarducci (), Siavash Radpour (), Bridget Fisher and Anthony Webb ()

No 2016-03, SCEPA policy note series. from Schwartz Center for Economic Policy Analysis (SCEPA), The New School

Abstract: Financial necessity is an important reason low-wage households are more likely to make pre-retirement withdrawals from their 401(k) plans. However, an increase in the tax penalty on early withdrawals may increase rather than discourage withdrawals, and a prohibition on withdrawals may decrease contributions. To ensure that all households both contribute to retirement plans and remain invested, retirement policy should both mandate contributions and prohibit pre-retirement withdrawals. Finally, if households are prohibited from using retirement savings to buffer pre-retirement shocks, policy interventions will be required to increase the financial resilience of working-age households.

Keywords: Retirement; 401(k); GRA; Social Security (search for similar items in EconPapers)
JEL-codes: D63 E21 H55 J26 J32 (search for similar items in EconPapers)
Pages: 4 pages
Date: 2016-04
New Economics Papers: this item is included in nep-age and nep-mac
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