Financial Literacy and Retirement Planning in the United States
We examine financial literacy in the United States using the new National Financial Capability Study, wherein we demonstrate that financial literacy is particularly low among the young, women, and the less-educated. Moreover, Hispanics and African-Americans score the least well on financial literacy concepts. Interestingly, all groups rate themselves as rather well-informed about financial matters, notwithstanding their actual performance on the key literacy questions. Finally, we show that people who score higher on the financial literacy questions are also much more likely to plan for retirement, which is likely to leave them better positioned for old-age. Our results will inform those seeking to target financial literacy programs to those in most need.
The research reported herein was conducted pursuant to a grant from Netspar. Additional support was provided by FINRA Investor Education and the Pension Research Council and Boettner Center at the Wharton School of the University of Pennsylvania. The authors thank Chris Bumcrot and Judy Lin for help with the data and Agar Brugiavini for very helpful comments. Useful comments were also provided by participants at the April 2010 Mathematical and Statistical Methods for Actuarial Sciences and Finance conference in Ravello, Italy, and participants in the December 2010 Financial Literacy around the World conference at Collegio Carlo Alberto, Turin, Italy. The authors also thank Ben Rump for excellent research assistance and Audrey Brown for editorial support. Opinions and errors are solely those of the authors and not of the institutions with which the authors are affiliated. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Lusardi, Annamaria & Mitchell, Olivia S., 2011. "Financial literacy and retirement planning in the United States," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(04), pages 509-525, October. citation courtesy of