COVID-19 has caused millions of job losses in the United States, which then resulted in income shocks and financial hardships. To fulfill immediate needs, many households opted to withdraw funds from retirement accounts. However, making early withdrawals from retirement accounts could mean a significant reduction in retirement savings that may undermine financial security upon retirement. This study seeks to first examine factors that mediate the relation between job loss and retirement withdrawals, then to test if financial literacy is a moderator of the indirect effects. The proposed study will utilize a longitudinal dataset, collected by the Social Policy Institute at Washington University in St. Louis, which surveyed a sample of 5,000 nationally-representative respondents at quarterly intervals over five waves. This survey collected information on a series of indicators of household financial health that have significant implications for retirement account withdrawals, including income, assets, subjective financial well-being, and a wide array of other sociodemographic characteristics. Propensity score analysis is conducted in this study. Stabilized weights constructed using propensity scores are applied to estimate the indirect effects of job loss on early withdrawals and the moderation effect of financial literacy on the indirect effects.

Accepted Oral Presentation