The Role of Financial Literacy in Determining Retirement Plans

Robert Clark, Melinda Morrill and Steven Allen

No 16612, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: J14 J26 J32 (search for similar items in EconPapers)
Date: 2010-12
Note: AG LS
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Citations: View citations in EconPapers (5)

Published as 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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