Financial Literacy and Retirement Planning: New Evidence from the Rand American Life Panel
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Abstract
The present paper introduces a new dataset, the Rand American Life Panel (ALP), which offers several appealing features for an analysis of financial literacy and retirement planning. It allows us to evaluate financial knowledge during workers’ prime earning years when they are making key financial decisions, and it offers detailed financial literacy and retirement planning questions, permitting a finer assessment of respondents’ financial literacy than heretofore feasible. We can also compare respondents’ selfassessed financial knowledge levels with objective measures of financial literacy, and most valuably, we can investigate prior financial training which permits us to identify key causal links. By every measure, and in every sample we examine, financial literacy proves to be a key determinant of retirement planning. We also find that respondent literacy is higher when they were exposed to economics in school and to company-based financial education programs.
Key Findings
- By every measure, and in every sample examined, financial literacy proves to be a key determinant of retirement planning.
- Financial literacy is higher when respondents were exposed to economics in school and to company-based financial education programs.
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Paper ID
WP 2007-157Publication Type
Working Paper