The Role of Financial Literacy in Determining Retirement Plans

41 Pages Posted: 18 Dec 2010 Last revised: 24 May 2023

See all articles by Robert L. Clark

Robert L. Clark

North Carolina State University - Poole College of Management

Melinda Sandler Morrill

North Carolina State University - Department of Economics

Steven G. Allen

North Carolina State University - Poole College of Management

Date Written: December 2010

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.

Suggested Citation

Clark, Robert L. and Morrill, Melinda Sandler and Allen, Steven G., The Role of Financial Literacy in Determining Retirement Plans (December 2010). NBER Working Paper No. w16612, Available at SSRN: https://ssrn.com/abstract=1727865

Robert L. Clark (Contact Author)

North Carolina State University - Poole College of Management ( email )

Hillsborough Street
Raleigh, NC 27695-8614
United States
919-515-5560 (Phone)
919-515-5564 (Fax)

Melinda Sandler Morrill

North Carolina State University - Department of Economics ( email )

Raleigh, NC 27695-8110
United States
9195150331 (Phone)

HOME PAGE: http://www4.ncsu.edu/~msmorril

Steven G. Allen

North Carolina State University - Poole College of Management ( email )

Hillsborough Street
Raleigh, NC 27695-8614
United States
919-515-6941 (Phone)
919-515-5073 (Fax)

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