Financial Literacy, Retirement Preparation and Pension Expectations in the Netherlands

33 Pages Posted: 6 Jun 2011 Last revised: 2 Apr 2023

See all articles by Rob J. M. Alessie

Rob J. M. Alessie

University of Groningen; Netspar; Tilburg University - Center for Economic Research (CentER)

Maarten van Rooij

De Nederlandsche Bank; Netspar

Annamaria Lusardi

Stanford University - Stanford Institute for Economic Policy Research

Multiple version iconThere are 3 versions of this paper

Date Written: June 2011

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.

Suggested Citation

Alessie, Rob J. M. and van Rooij, Maarten and Lusardi, Annamaria, Financial Literacy, Retirement Preparation and Pension Expectations in the Netherlands (June 2011). NBER Working Paper No. w17109, Available at SSRN: https://ssrn.com/abstract=1857812

Rob J. M. Alessie (Contact Author)

University of Groningen ( email )

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Netspar

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Tilburg University - Center for Economic Research (CentER)

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Maarten van Rooij

De Nederlandsche Bank ( email )

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Netherlands

HOME PAGE: http://www.dnb.nl/en/onderzoek-2/onderzoekers/overzicht-persoonlijke-paginas/dnb150127.jsp

Netspar ( email )

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Netherlands

Annamaria Lusardi

Stanford University - Stanford Institute for Economic Policy Research ( email )

366 Galvez Street
John A. and Cynthia Fry Gunn Building
Stanford, CA CA 94305
United States

HOME PAGE: http://siepr.stanford.edu/people/annamaria-lusardi

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