Wharton Pension Research Council Working Papers

Document Type

Working Paper

Date of this Version



This paper examines data on financial sophistication among the U.S. older population, using a special-purpose module implemented in the Health and Retirement Study. We show that financial sophistication is deficient for older respondents (aged 55+). Specifically, many in this group lack a basic grasp of asset pricing, risk diversification, portfolio choice, and investment fees. Subpopulations with particular deficits include women, the least educated, persons over the age of 75, and non-Whites. In view of the fact that people are increasingly being asked to take on responsibility for their own retirement security, such lack of knowledge can have serious implications.

Working Paper Number



At least one co-author has disclosed a financial relationship of potential relevance for this research. Further information is available online at http://www.nber.org/papers/w17863.ac

Copyright/Permission Statement

All findings, interpretations, and conclusions of this paper represent the views of the authors and not those of the Wharton School or the Pension Research Council. © 2012 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.


The research reported herein was conducted pursuant to grants from the U.S. Social Security Administration (SSA) to the Financial Literacy Center and the Michigan Retirement Research Center funded via the Financial Literacy Research Consortium and the Retirement Research Consortium. Additional support was provided by the Pension Research Council and Boettner Center at the Wharton School of the University of Pennsylvania, and the FINRA Investor Education Foundation. We are grateful to Richard Derrig for sharing his PRIDIT code.

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Economics Commons



Date Posted: 28 June 2019