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What is the impact of financial literacy on decisions to save for retirement? How can financial literacy tools be used to increase savings? See the results of surveys and studies by AARP, the Employee Benefit Research Institute and other experts.

AARP Studies and Surveys

Consumer Knowledge about Social Security Claiming Decisions and the Role of Certified Financial Planners

Experiences and knowledge of future beneficiaries and professional financial planners related to Social Security’s role in retirement income.

2014 Retirement Confidence Survey: A Secondary Analysis of the Findings from Respondents Age 50+

2014 Retirement Confidence Survey respondents age 50 and older share their views on their retirement expectations, preparations and experiences.

2013 Health Care Costs Survey

This AARP survey looked at the public’s awareness and concern about health care costs that people may incur during retirement. It also sought to determine whether or not non-retired adults are currently saving to cover health care expenses in the future.

2013 Retirement Confidence Survey: A Secondary Analysis of the Findings From Respondents Age 50+

A June 2013 analysis of the Employee Benefit Research Institute’s Retirement Confidence Survey with special attention to the 50+ population. The focus is on confidence in retirement preparedness, but it also examines perceptions of the amount needed for retirement, use of financial advice, concerns about debt, etc.

2012 AARP Bulletin Survey on Budgeting and Credit Card Use

The AARP Bulletin commissioned a nationwide survey in February 2012 to learn whether individuals are following a monthly budget and how they are using their credit cards and managing any credit card debt.

Livability Index

How livable is your community?

The Impact of Claiming Age on Monthly Social Security Retirement Benefits: How Knowledgeable Are Future Beneficiaries?

This 2012 survey of more than 2,000 adults ages 52 to 70 who are eligible for Social Security retirement benefits and who expect to claim benefits within the next 15 years, examines future beneficiaries’ knowledge of how their Social Security retirement benefits are determined, including how the age at which they claim benefits may affect their own benefits as well as the benefits available to their spouses or widows.

In addition, this July 2011 survey (PDF) includes additional financial literacy findings.

Reports and Surveys From Other Sources

Financial Literacy: What Works? Could It Be More Effective?

William G. Gale and Ruth Levine
A 2011 literature review providing an overview of some (somewhat dated) financial literacy-related surveys, data and educational initiatives.

The Financial Capability of Young Adults — A Generational View (PDF)

Gary R. Mottola
A March 2014 examination of data from the FINRA Investor Education Foundation’s National Financial Capability Study (State-by-State Survey) found that millennials are struggling financially. In particular, they exhibit a number of problematic financial behaviors, display low levels of financial literacy and express concerns about their debt. Low levels of financial literacy hamper most millennials, with only 24 percent of millennials able to answer four or five questions on a five-question financial literacy quiz correctly.

Claiming Social Security: A Critical and Complex Decision for Retirement Security (PDF)

A March 2014 Financial Engines survey of what influences Americans’ decision about when to claim Social Security, whether they know enough to navigate the complexities of this decision, and what types of education, messages and advisory services would be valuable to them as they approached this critical retirement planning decision.

How Do Non-Financial Factors Affect Retirement Decisions?

A 2016 article from Boston College’s Center for Retirement Research.  Financial factors clearly influence retirement decisions, as everyone would like to have sufficient income when they leave the workforce. But numerous studies find that such factors are only a small part of the story. Non-financial considerations clearly contribute to the decision to retire.

Are Americans of All Ages and Income Levels Shortsighted About Their Finances?

A 2015 article from Boston College’s Center for Retirement Research.  Americans today are increasingly responsible for saving a substantial portion of their income for retirement. A recent study, however, found that workers are primarily concerned about their ability to satisfy day-to-day needs, not future needs, even if they have their day-to-day finances under control or are financially literate. This brief asks whether this finding also applies at all ages and income levels.

Dog Bites Man: Americans Are Shortsighted About Their Finances

A 2015 article from Boston College’s Center for Retirement Research.  Americans are increasingly required to save more on their own for retirement. But human nature suggests they will focus more on day-to-day needs than on distant concerns, posing a barrier to saving for the long term. This brief explores whether respondents are more likely to focus on the future if they are less worried about day-to-day money issues or are more financially literate.

How Does Aging Affect Financial Decision Making?

A 2015 article from Boston College’s Center for Retirement Research.  With the shift from defined benefit pensions to 401(k) plans, the welfare of retirees increasingly depends on their ability to make sound financial decisions. This situation has raised concerns that the cognitive decline that comes with age could compromise the elderly’s decision-making ability and thereby their financial well-being. This brief, based on a recent study, addresses this issue using a unique dataset that follows a group of elderly individuals over time.

What Do Subjectiive Assessments of Financial Well-Being Reflect?

A 2015 paper from Boston College’s Center for Retirement Research.  Subjective financial assessments are used by social scientists as a measure of financial well-being and by households as the basis for action. Financial well-being, however, increasingly requires workers to build-up savings to meet hard-to-see future needs, specifically retirement, their children’s education, and paying off student loans. This paper analyzes data from the FINRA Investor Education Foundation’s 2012 Financial Capability Survey to test whether subjective financial assessments 1) primarily reflect day-to-day, rather than distant, financial concerns; 2) increasingly reflect distant concerns if the household’s day-to-day finances are in reasonably good shape; and 3) increasingly reflect distant concerns if the worker is financially literate.

How Financially Literate Are Women? An Overview and New Insights

A 2016 paper from the Global Financial Literacy Excellence Center at George Washington University.  When asked to answer questions that measure knowledge of basic financial concepts, women are less likely than men to answer correctly and more likely to indicate that they do not know the answer. In addition, women give themselves lower scores on financial literacy selfassessments than men. Both young and old women show low levels of financial literacy. Moreover, women for whom financial knowledge is likely to be very important — for example widows or single women — also know little about concepts relevant for day-to-day financial decisions. Even women in favorable economic conditions are less financially knowledgeable than men. The gender differences are present for very basic as well as more advanced measures of financial literacy and financial sophistication. This is important because financial literacy has been linked to economic behavior, including retirement planning and wealth accumulation. Women live longer than men and are likely to spend time in widowhood. As a result, improving women’s financial literacy is key to helping them prepare for retirement and promoting their financial security.

Financial Literacy and Economic Outcomes: Evidence and Policy Implications

A 2015 paper from the Global Financial Literacy Excellence Center at George Washington University. Using three simple questions, we have surveyed people in many countries to determine whether they have the fundamental knowledge of finance needed to function as effective economic decision makers. We show that levels of financial literacy are low not only in the United States but also in many other countries, including those with welldeveloped financial markets. Moreover, financial illiteracy is particularly acute for some demographic groups, especially women and the less-educated. These findings are important since financial literacy is linked to borrowing, saving, and spending patterns. We also offer new evidence on financial literacy among high school students drawing on the newly-released Programme for International Student Assessment implemented in 18 countries. Last, we discuss the implications of this research for policy.

Financial Knowledge and 401(K) Investment Performance: A Case Study

A 2015 paper from the Global Financial Literacy Excellence Center at George Washington University. We explore whether investors who are more financially knowledgeable earn more on their retirement plan investments compared to their less sophisticated counterparts, using a unique new dataset linking administrative data on investment performance and financial knowledge. Results show that the most financially knowledgeable investors: (a) held 18 percentage points more stock than their least knowledgeable counterparts; (b) could anticipate earning 8 basis points per month more in excess returns; (c) had 40% higher portfolio volatility; and (d) held portfolios with about 38% less idiosyncratic risk, as compared to their least savvy counterparts. Our results are qualitatively similar after controlling on observables as well as modeling sample selection. We also examine portfolio changes to assess the potential impact of the financial literacy intervention. Controlling on other factors, those who elected to take the Financial Literacy survey boosted their equity allocations by 66 basis points and their monthly expected excess returns rose by 2.3 basis points; no significant difference in volatility or nonsystematic risk was detected before versus after the survey. While these findings relate to only one firm, we anticipate that they may spur other efforts to enhance financial knowledge in the workplace.

Employee Financial Literacy and Retirement Behavior: A Case Study

A 2015 paper from the Global Financial Literacy Excellence Center at George Washington University. This paper uses administrative data on all active employees of the Federal Reserve System to examine participation in and contributions to the Thrift Saving Plan, the system’s defined contribution (DC) plan. We have appended to the administrative records a unique employee survey of economic/demographic factors including a set of financial literacy questions. Not surprisingly, Federal Reserve employees are more financially literate than the general population; furthermore, the most financially savvy are also most likely to participate in and contribute the most to their plan. Sophisticated workers contribute three percentage points more of their earnings to the DC plan than do the less knowledgeable, and they hold more equity in their pension accounts. Finally, we examine changes in employee plan behavior a year after the financial literacy survey and compare it to the baseline. We find that employees who completed an educational module were more likely to start contributing and less likely to have stopped contributing to the DC plan post-survey.

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Susan Reinhard is senior vice president and director of AARP Public Policy Institute. Read her latest blogs on family caregiving, healthy living, nursing and more. Read Susan's Blogs