Social Stratification and Choice-Based Policy Programs: The Case of Early Withdrawal of Retirement Savings during the Great Recession

Access to emergency funds during times of need is increasingly dependent on a "choice-based" retirement system in the United States. This study examines the operation of this choice-based retirement system across a socioeconomically stratified population impacted by the Great Recession. Using data from the Panel Study of Income Dynamics collected between 2005 and 2011, we first assess how socioeconomic status shapes access to different types of retirement plans. We then examine the varied pathways that lead to the early withdrawal of retirement savings. The results depict a multistage selection process through which socioeconomic resources structure the process of withdrawal. This occurs first through the availability of retirement funds and the makeup of the retirement portfolio and then through the likelihood of hardship. The results also reveal the importance of education in getting access to retirement savings during a hardship. The general implications for choice-based programs are discussed.