Potential Impacts of the Great Recession on Future Retirement Incomes

Barbara A. Butrica, Richard W. Johnson, and Karen E. Smith

Abstract — This study examines the long-run effects of the Great Recession on future retirement incomes for working-age adults using a microsimulation model. We estimate that the recession will reduce average age-70 annual incomes by four percent. Retirement incomes will fall most sharply for those workers who were youngest when the recession began. They are most likely to have lost their jobs and the impact of lower wages will accumulate over their entire careers. High-income retirees with the most to lose will also see substantial absolute income declines, but their losses are not particularly large when measured relative to their projected incomes.

Keywords: retirement income, unemployment, recession, Social Security, pension, wealth, labor earnings