Premium
EARLY WITHDRAWALS FROM RETIREMENT ACCOUNTS DURING THE GREAT RECESSION
Author(s) -
Argento Robert,
Bryant Victoria L.,
Sabelhaus John
Publication year - 2015
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/coep.12064
Subject(s) - taxable income , economics , shock (circulatory) , consumption (sociology) , recession , ricardian equivalence , demographic economics , labour economics , monetary economics , macroeconomics , fiscal policy , medicine , social science , accounting , sociology
Early withdrawals from retirement accounts are a double‐edged sword, because withdrawals reduce retirement resources, but they also allow individuals to smooth consumption when they experience demographic and economic shocks. Using tax data, we show that preretirement withdrawals increased between 2004 and 2010, especially after 2007, but early withdrawal rates are substantial (relative to new contributions) in all those years. Early withdrawal events are strongly correlated with shocks to income and marital status, and lower‐income taxpayers are more likely to experience the types of shocks associated with early withdrawals and more likely to have a taxable withdrawal when they experience a given shock . ( JEL G23, H24, H31)