Trust, Financial Literacy, and Financial Behaviors: Shaping Retirement Security

We extend the literature on the importance of trust for financial behaviors by examining trust, financial literacy, and financial behavior related to retirement security. Using the Health and Retirement Study, we show that Trust in Financial Institutions aligns with behaviors supportive of retirement security, while Trust in Government Programs does not. We further document racial/ethnic differences: for White respondents, Trust in Financial Institutions relates positively to retirement outcomes, but not for Blacks or Hispanics. Moreover, Trust in Government Programs among minority households is linked to reduced stockholding and lower wealth accumulation. These findings inform efforts to strengthen retirement security.