Employee Financial Literacy and Retirement Plan Behavior: A Case Study / Robert Clark, Annamaria Lusardi, Olivia S. Mitchell.

Format:

Book

Author/Creator:

Clark, Robert.

Contributor:

National Bureau of Economic Research.

Lusardi, Annamaria.

Mitchell, Olivia S.

Series:

Working Paper Series (National Bureau of Economic Research) no. w21461.

NBER working paper series no. w21461

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Employee Financial Literacy and Retirement Plan Behavior

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2015.

Summary:

This paper uses administrative data on all active employees of the Federal Reserve System to examine participation in and contributions to the Thrift Saving Plan, the system's defined contribution (DC) plan. We have appended to the administrative records a unique employee survey of economic/demographic factors including a set of financial literacy questions. Not surprisingly, Federal Reserve employees are more financially literate than the general population; furthermore, the most financially savvy are also most likely to participate in and contribute the most to their plan. Sophisticated workers contribute three percentage points more of their earnings to the DC plan than do the less knowledgeable, and they hold more equity in their pension accounts. Finally, we examine changes in employee plan behavior a year after the financial literacy survey and compare it to the baseline. We find that employees who completed an educational module were more likely to start contributing and less likely to have stopped contributing to the DC plan post-survey.

Notes:

Print version record

August 2015.