THE IMPACT OF THE PANDEMIC ON THE PROSPECTS FOR RETIREMENT AND ANNUITY MARKETS
By George A. (Sandy) Mackenzie
The COVID-19 pandemic has had a devastating impact on the United States and the rest of the world. As of late April 2021, the United States was mourning the loss of close to 600,000 lives, with a large but still untallied number of long-haulers: people who are expected to suffer the disease’s side effects for years to come, if not for the rest of their lives. The pandemic has also led to an economic crisis that in some ways parallels the Great Recession of 2008. This essay addresses the economic and financial effects of the pandemic, and more specifically its impact on retirement security. As the essay will explore, the pandemic has had a major impact on the markets for retirement income products, and in particular on the market for annuities, especially the market for single premium lifetime annuities. To set the stage for the discussion of the impact of the pandemic on retirement security, the essay begins with a section on the macroeconomic and financial effects of the pandemic and policy responses. The essay then examines the pandemic’s impact on retirement income, before turning to a discussion of the pandemic’s impact on the market for annuities and other lifetime income instruments. The essay ends with recommendations for public policy and suggestions for future research. Because of the importance of overall economic and financial policy for the prospects for lifetime income, this concluding section addresses broad economic and financial policy issues, as well as issues more germane to retirement security and lifetime income.
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About the Author
George (Sandy) MacKenzie is a consulting economist and former editor of the Journal of Retirement.