Unemployment, Financial Literacy, and Retirement: Evidence From National Data Before and During COVID-19 Pandemic
DOI:
https://doi.org/10.33423/jabe.v26i4.7180Keywords:
business, economics, retirement, state-level unemployment rate, financial literacyAbstract
Unemployment rates changed dramatically and peaked at 14.7% in April 2020 in the United States. The labor market force might affect households’ retirement differently before and during the COVID-19 pandemic. By utilizing 2018 and 2021 datasets, the study mainly contributes to the following insights related to retirement decisions. First, the current study finds a positive correlation between state-level unemployment rates and retirement. Second, this study finds that both objective and subjective financial literacy, financial confidence, age, and households without a child or a financially dependent child are positively associated with retirement in both pre-pandemic and during the pandemic. Financial market participation, financial risk, and income drop are negatively associated with retirement in pre-pandemic and during the pandemic. We find different significant results regarding the annual income, savings, and the number of children in a household before and during the pandemic. The findings extend the literature on unemployment and retirement. Financial professionals and the government will apply the empirical findings to the practice.
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