Financial Literacy and Retirement Planning in Germany

27 Pages Posted: 18 Apr 2011  

Tabea Bucher-Koenen

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA)

Annamaria Lusardi

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

Multiple version iconThere are 3 versions of this paper

Date Written: January 31, 2011

Abstract

We examine financial literacy in Germany using data from the SAVE survey. We find that knowledge of basic financial concepts is lacking among women, the less educated, and those living in East Germany. In particular, those with low education and low income in East Germany have little financial literacy compared to their West German counterparts. Interestingly, there is no gender disparity in financial knowledge in the East. In order to investigate the nexus of causality between financial literacy and retirement planning we develop an IV strategy by making use of regional variation in the financial knowledge of peers. We find a positive impact of financial knowledge on retirement planning.

Keywords: financial sophistication, retirement planning, life-cycle savings, financial education, East Germany

JEL Classification: D91

Suggested Citation

Bucher-Koenen, Tabea and Lusardi, Annamaria, Financial Literacy and Retirement Planning in Germany (January 31, 2011). Netspar Discussion Paper No. 01/2011-020. Available at SSRN: https://ssrn.com/abstract=1810479 or http://dx.doi.org/10.2139/ssrn.1810479

Tabea Bucher-Koenen (Contact Author)

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA) ( email )

Amalienstrasse 33
Munich, 80799
Germany

HOME PAGE: http://mea.mpisoc.mpg.de/

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

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