Financial Fragility, Financial Resilience, and Pension Distributions

Insights Report
Research Dialogue

Does planning for economic shocks, saving for short-term emergencies, and enhancing financial knowledge, reduce the likelihood of becoming financially fragile?


Financial resilience refers to how well people are prepared to respond to economic shocks that threaten their economic security. To gauge financial resilience and its effects, this study’s authors developed an eight-question index that indicates how prepared households are to respond to economic shocks. They then tested whether people with higher scores on the index had better economic outcomes during the past three years when the Covid-19 pandemic significantly affect millions of Americans.

Key Insights

  • The average household’s financial resilience remained quite stable during the pandemic.
  • More financially resilient households were less likely to be financially fragile.
  • Resilient households were more likely to take their pension account payouts as retirement annuities, instead of lump sums.
  • Greater financial literacy was associated with better information about one’s pension plan and pension plan payout choices.

Policies and programs that enhance financial resilience are likely to help older households withstand unexpected shocks.


The resilience index compiled for this study uses data collected from 2,279 individuals between 2020 and 2022 as part of the Understanding America Study, a nationally representative online panel study fielded by the University of Southern California.

Table: Financial Resilience index and components in the UAS, by year


Robert Clark

North Carolina State University

Olivia S. Mitchell

University of Pennsylvania and NBER

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