The impact of the coronavirus pandemic on U.S. retirement readiness using middle-of-the road risk assumptions appears to be manageable, according to projections by the Employee Benefit Research Institute.

EBRI estimates that the $3.68 trillion aggregate retirement deficit for all U.S. households age 35-64 will increase by 4.5% or $166.2 billion if market losses for the year are equivalent to first-quarter 2020 losses, a risk assumption that EBRI defines as intermediate.

Under EBRI’s pessimistic scenario, that in which market losses are equivalent to those experienced in the 2007-2009 financial crisis, the retirement savings deficit would rise by 11.2% or $412.8 billion.

If market losses for the year are half of first-quarter 2020 losses — a scenario that EBRI defines as optimistic — the aggregate retirement deficit would increase by 2.6% or $96.3 billion, according to EBRI’s calculations.

EBRI’s projections take into account potential market losses as well as layoffs, possible termination of small defined contribution plans, suspensions of defined contribution employer matches, and employee use of coronavirus-related hardship withdrawals and loans. Using its retirement security projection model, it examines six possible scenarios for the current crisis, each with three different assumptions: optimistic, intermediate and pessimistic.

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