The Role of Financial Literacy in Determining Retirement Plans
Workers nearing retirement face many important, and often irreversible, choices. We collected detailed demographic and financial literacy data on over 1,500 workers nearing retirement at three large companies to assess how individuals are planning for retirement. Many respondents display limited knowledge and understanding of public and company-provided retirement benefits. Controlling for basic demographics and wealth, we find that misconceptions about eligibility ages and plan generosity influence workers' expected age of retirement. Although retirement-related decisions will affect workers' wellbeing for the remainder of their lifetimes, many do not possess enough basic financial knowledge to confidently make optimal choices.
Document Object Identifier (DOI): 10.3386/w16612
Published: THE ROLE OF FINANCIAL LITERACY IN DETERMINING RETIREMENT PLANS ROBERT L. CLARK1, MELINDA SANDLER MORRILL2 and STEVEN G. ALLEN3,† Article first published online: 28 JUN 2011 DOI: 10.1111/j.1465-7295.2011.00390.x © 2011 Western Economic Association International Issue Economic Inquiry Economic Inquiry Volume 50, Issue 4, pages 851–866, October 2012
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