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Household Saving Behavior: The Role of Financial Literacy, Information, and Financial Education Programs


Annamaria Lusardi


The George Washington University School of Business; National Bureau of Economic Research (NBER)

February 2008


Abstract:     
Individuals are increasingly in charge of their own financial security after retirement. But how well-equipped are individuals to make saving decisions; do they possess adequate financial literacy, are they informed about the most important components of saving plans, do they even plan for retirement? This paper shows that financial illiteracy is widespread among the U.S. population and particularly acute among specific demographic groups, such as those with low education, women, African-Americans, and Hispanics. Moreover, close to half of older workers do not know which type of pensions they have and the large majority of workers know little about the rules governing Social Security benefits. Notwithstanding the low levels of literacy that many individuals display, very few rely on the help of experts or financial advisors to make saving and investment decisions. Low literacy and lack of information affect the ability to save and to secure a comfortable retirement; ignorance about basic financial concepts can be linked to lack of retirement planning and lack of wealth. Financial education programs can help improve saving and financial decision-making, but much more can be done to improve the effectiveness of these programs.

Number of Pages in PDF File: 43

Keywords: retirement planning, financial advice, financial security

JEL Classification: D91, D14

working papers series





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Date posted: February 16, 2008  

Suggested Citation

Lusardi, Annamaria, Household Saving Behavior: The Role of Financial Literacy, Information, and Financial Education Programs (February 2008). Available at SSRN: http://ssrn.com/abstract=1094102 or http://dx.doi.org/10.2139/ssrn.1094102

Contact Information

Annamaria Lusardi (Contact Author)
The George Washington University School of Business ( email )
School of Business and Public Management
Washington, DC 20052
United States
HOME PAGE: http://business.gwu.edu/faculty/annamaria_lusardi.cfm
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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