Financial Literacy and Financial Sophistication Among Older Americans

32 Pages Posted: 4 Nov 2009 Last revised: 26 Nov 2011

Olivia S. Mitchell

University of Pennsylvania - The Wharton School; National Bureau of Economic Research (NBER)

Annamaria Lusardi

George Washington University - Department of Accountancy; National Bureau of Economic Research (NBER)

Vilsa Curto

National Bureau of Economic Research (NBER)

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Date Written: November 4, 2009

Abstract

This paper analyzes new data on financial literacy and financial sophistication from the 2008 Health and Retirement Study. We show that financial literacy is lacking among older individuals and for the first time explore additional questions on financial sophistication which proves even scarcer. For this sample of older respondents over the age of 55, we find that people lack even a rudimentary understanding of stock and bond prices, risk diversification, portfolio choice, and investment fees. In view of the fact that individuals are increasingly required to take on responsibility for their own retirement security, this lack of knowledge has serious implications.

Suggested Citation

Mitchell, Olivia S. and Lusardi, Annamaria and Curto, Vilsa, Financial Literacy and Financial Sophistication Among Older Americans (November 4, 2009). Pension Research Council Working Paper No. 25. Available at SSRN: https://ssrn.com/abstract=1499844 or http://dx.doi.org/10.2139/ssrn.1499844

Olivia S. Mitchell (Contact Author)

University of Pennsylvania - The Wharton School ( email )

Philadelphia, PA 19104-6365
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Annamaria Lusardi

George Washington University - Department of Accountancy ( email )

George Washington University School of Business
Washington, DC 20052
United States

HOME PAGE: http://business.gwu.edu/profiles/annamaria-lusardi/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Vilsa Curto

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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