Wharton Pension Research Council Working Papers
 

Title

Saving and the Effectiveness of Financial Education

Document Type

Working Paper

Date of this Version

1-1-2003

Abstract

In this paper, I examine the financial situation of older households. In addition, I examine whether employers’ initiatives to reduce planning costs via retirement seminars have an effect on workers’ saving. Using data from the Health and Retirement Study, I first show that many families arrive close to retirement with little or no wealth. Portfolios are also rather simple, and many families, particularly those with low education, hold little or no high-return assets. I further show that seminars foster saving. This is particularly the case for those with low education and those who save little. By offering financial education, both financial and total net worth increase sharply, particularly for families at the bottom of the wealth distribution and those with low education. Retirement seminars also increase total wealth (inclusive of pension and Social Security) for both high and low education families. Taken together, this evidence suggests that retirement seminars can foster wealth accumulation and bolster financial security in retirement.

Comments

The published version of this Working Paper may be found in the 2004 publication: Pension Design and Structure: New Lessons from Behavioral Finance.

Working Paper Number

WP2003-14

Copyright/Permission Statement

©2003 Pension Research Council of the Wharton School of the University of Pennsylvania. All Rights Reserved

Acknowledgements

The author thanks Rob Alessie, Patty Anderson, Steve Donahue, Al Gustman, Amy Harris, David McCarthy, Joe Piacentini, Doug Staiger, and especially Olivia Mitchell for suggestions and comments. Nicholas Duquette and Crandall Peeler provided excellent research assistance. The research was supported by the U.S. Department of Labor, Employee Benefits Security Administration, the Michigan Retirement Research Center, and TIAA-CREF. Expressed opinions are solely those of the author

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Date Posted: 04 September 2019