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Financial Literacy, Retirement Preparation and Pension Expectations in the Netherlands

Rob Alessie (), Maarten van Rooij () and Annamaria Lusardi ()

No 17109, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We present new evidence on financial literacy and retirement preparation in the Netherlands based on two surveys conducted before and after the onset of the financial crisis. We document that while financial knowledge did not increase from 2005 to 2010, significantly more individuals planned for their retirement in 2010. At the same time, employees' expectations about the level of their pension income are high compared to what retirement plans may realistically provide. However, financially knowledgeable employees report lower expected replacement rates and acknowledge higher levels of uncertainty. Moreover using instrumental variables estimates for financial knowledge, we find a positive effect of financial literacy on retirement preparation. Employing the panel feature of our dataset, we show that financial knowledge has a causal impact on retirement planning. Our findings suggest that the formation of pension expectations might be an important mechanism contributing to the impact of financial literacy on planning.

JEL-codes: D14 D91 (search for similar items in EconPapers)
Date: 2011-06
Note: AG
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Published as “ Financial Literay, Retirement Preparation and Pension Expectations in the Netherlands, ” joint with Rob A lessie and Maarten van Rooij , Journal of Pension Economics and Finance , October 2011, vol. 10(4), pp. 527 - 545.

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Working Paper: Financial Literacy, Retirement Preparation and Pension Expectations in the Netherlands (2011) Downloads
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