In the interview, she examines the results of a study the Center for Retirement Research released last year showing that 40% of U.S. households have in fact more than $400 in emergency money, a figure that's been widely reported. Credit card and loan debt, however, offset the higher amount.

Another paper the Center published — in March of this year — which Munnell discusses, found that, shockingly, baby boomers ages 51 to 56 have fewer assets in their 401(k) accounts than do younger boomers.

As for older Americans who have lost their jobs because of financial fallout from the coronavirus, Munnell suggests: Don't take Social Security early, and withdraw money from a 401(k) account only as a last resort. If unsuccessful in finding a new job, consider borrowing money from parents or adult children, she says.

Munnell recently published a paper, "Social Security's Financial Outlook: The 2020 Update in Perspective," based on the 2020 Trustees Report, released in late April. Though the report was written before COVID-19 hit, Munnell writes that the outbreak is "unlikely to fundamentally alter the long-term financial status of the [Social Security] program." The Trust Fund reserve is expected to run dry in 2035, unchanged from last year's projection.

The professor concludes the paper noting that once the pandemic "subsides, stabilizing Social Security's finances should be a high priority to restore confidence … and to assure working Americans that they will receive the income they need in retirement."

ThinkAdvisor interviewed Munnell by phone on April 22. The wide-ranging conversation covered some large companies' suspension of 401(k) matching programs and the bad luck of millennials getting hit by two huge financial crises just as they've begun their careers. They have little saved.

Here are highlights of our interview:

Broadly, what are your thoughts about the pandemic's economic fallout?

You won't be able to find a place where something good is happening. The key thing is how long does this go on? If it's over in another three months, then we could bounce back. If it drags on and on, then it can be much more severe.

"Congress missed the boat," you write, in enacting the CARES Act relief legislation. That is, it should have offered to compensate employers to continue to pay workers instead of laying them off and "making unemployment insurance so attractive." What's your thinking behind this?

There are two reasons to try to maintain the employee-employer relationship. One: It's better for the employee to know that he or she has a continued link to his or her employer. It reduces anxiety and, in the U.S., is an important way of maintaining health insurance. Two: In terms of getting the economy moving again, to have everyone frozen in place [keeping their jobs] is much better than tossing them out into the unemployment insurance line and having all those work relationships disrupted.

Is it too late to start such a program?

No. It's being discussed. This is still a real alternative that really merits consideration because although we have lots of people on unemployment insurance, there are still 80 million that have some link to their employers.

Wouldn't it pose a big issue of how much to compensate employers?

That's the thing that would be argued about: Would the government pay 65%, 75%, 85%? Congress would have to hammer that out. But the point is to pay a substantial amount.

Do you see this plan being a partisan issue? 

I've been involved as a hanger-on in terms of conversations about this. Apparently, conservatives like it, liberals like it, labor union people like it. So it seems that it's something everyone could agree on.

How would it be executed, specifically?

You'd kind of reverse the payroll tax system — that way, you'll get money to companies quickly.

Would America be the first to do this?

No. Denmark, the U.K. and other [countries] have done it.

A Pew Research Center survey in March showed that 47% of Americans have only enough emergency money to cover three months' expenses. Other surveys show that many consumers are three paychecks away from being unable to pay bills and have only $400 in emergency savings. The Center for Retirement Research published a study about this issue last July. Please discuss.

One survey said that 40% of people don't have $400 to turn to in an emergency. We did a more detailed survey ["Why Are So Many Households Unable To Cover a $400 Unexpected Expense?"- July 2019] showing that they actually have more [emergency cash] than that, but they also have credit card bills [and outstanding loans]. Once you net out those two, you get back to that 40%.

In view of the pandemic, what are the implications of this?

A lot of people don't have any financial flexibility at all. And if they've now lost their job, I can't even imagine the anxiety they must be experiencing at this time.

A study the Center published this past March explored "Why Do Late Boomers Have So Little Retirement Wealth?" So are baby boomers ages 51 to 56 financially unprepared for retirement?

They've been covered by 401(k) plans their whole work-life, but their 401(k) assets are actually lower than younger-age cohorts. That's pretty shocking to us. We haven't yet figured out why this has happened.

In light of the pandemic, several big companies, including Amtrak, Best Buy and Marriott, have suspended their 401(k) matching programs, you point out. Why did they hit their employees with that during the pandemic? 

Every company has come under pressure in some way. Either sales have totally dried up — like in the airlines and hospitality sectors — or sales have fallen off. You can [counter that] by freezing wages, going to a furlough situation, and then finally, layoffs. But you can also try to cut back on some things, and this is where suspending 401(k) matching comes in. It's a relatively benign step to [try to] preserve liquidity.

What should employees do if their company has suspended 401(k) matching?

Not doing anything is the best thing. Consider the match a sort of bonus. You're still being allowed to defer taxes on your contributions and earnings until retirement. So it's a good deal. Keep with it. Don't cut back. Ideally, Congress might say, put more money in; but I think these are such hard times that not doing anything is the best thing.

If the "recession drags on" and companies don't resume matching, you write, "there might be fewer employees who'll participate in 401(k)s."

Yes, that's true.

Even before the pandemic, many millennials were not participating in 401(k) plans; and they had little in savings overall, you noted in an interview with me on [January 30, 2018]. What's the status of millennials' savings now?

They're in a predicament. I feel so bad for young people who early in their careers have been hit by shocks twice — the 2008-2009 financial crisis and then this one. In the [former], they were coming out of school, had [incurred] a lot of student debt, and there were no jobs. It seems like whenever they work up a head of steam, they get slammed. Young people coming out of college now are going to enter this morass, too. I feel very worried about them.

Is it smart for older people who lose their jobs because of the pandemic to sign up to receive Social Security early?

I think they'll want to try to find another job, though it will be pretty chaotic out there. If they can't find a job, they'll grab onto Social Security. The good thing is that Social Security is there. While everything else is in chaos, it's paying checks to retired people and disabled people. So that's a positive.

What's the downside of a now-jobless older person signing up for Social Security early?

They will, unfortunately, lock themselves into a lower benefit than if they retired later.

What's a better option for them?

Go for unemployment insurance, wait for your $1,200 check, ask your parents or [adult] children for a loan. Try to get by without taking money out of your 401(k) if you can. If you can't, Congress has made it easier for you by not imposing the 10% penalty and 20% withholding [tax] at the time you take it out.

So withdrawing assets from a 401(k) should be the last resort?

Yes because you'll need that money. As it was, before the pandemic people weren't going to have enough money in retirement. So the pandemic is only going to make things worse.

When we talked two years ago, you argued that taxes should be raised to fix the Social Security system shortfall. What are your thoughts now?

I still believe that. I was looking at the 2020 Trustees Report that just came out today. The shortfall in Social Security is about $16 trillion. So I thought, from wherever we're getting all this other money [for relief], why don't we also get the $16 trillion into the Trust Fund and not have to worry about it!

Is that realistic?

No!

What fixes need to be made to the Social Security system?

The sentiment has changed from "How much do we cut back Social Security benefits and how much money should we put in?" to "We want to preserve what we have and maybe expand a little bit and find the revenues to do it?" That's the Democrats' thinking.

What's President Trump's thinking?

He's not going to do anything, he said.

Are you still advocating taxing pension plan contributions?

Yes, for those who have defined benefit plans, though there are so few of those in the private sector these days.

Some other financial experts have said that because many pensions have made risky investments, future payments may be reduced or in jeopardy. Your thoughts?

Private defined benefit plans are better funded than public plans. We look at state and local plans, which are where most of the defined benefit plans are. Yes, they're going to be hurt. But there isn't [anyone] on a defined benefit plan in the public sector who won't be paid [during] the next few years. Right now there are so many [other] immediate problems. We can worry about [longer-term ones] when we've got the virus under control and the economy opened.

Read more: 

• Should cash-strapped seniors claim Social Security early? Kotlikoff weighs in
• 3 vital best practices for retirement plan advisors navigating uncertain times
• Trump's move to cut payroll taxes would gut Social Security, say critics