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Financial Literacy and Retirement Planning in Germany

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  • Tabea Bucher-Koenen

    ()
    (MEA, University of Mannheim)

  • Annamaria Lusardi

    ()
    (Dartmouth College)

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    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.

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    Bibliographic Info

    Paper provided by Center for Research on Pensions and Welfare Policies, Turin (Italy) in its series CeRP Working Papers with number 109.

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    Length: 33 pages
    Date of creation: Mar 2011
    Date of revision:
    Handle: RePEc:crp:wpaper:109

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    Related research

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

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    Cited by:
    1. Frank Erp & Niels Vermeer & Daniel Vuuren, 2014. "Non-financial Determinants of Retirement: A Literature Review," De Economist, Springer, Springer, vol. 162(2), pages 167-191, June.
    2. Fort, Margherita & Manaresi, Francesco & Trucchi, Serena, 2012. "Banks Information Policies, Financial Literacy and Household Wealth," IZA Discussion Papers 6989, Institute for the Study of Labor (IZA).
    3. Spataro, Luca & Corsini, Lorenzo, 2013. "Endogenous financial literacy, saving and stock market participation," MPRA Paper 44342, University Library of Munich, Germany.
    4. Dick, Christian D. & Jaroszek, Lena M., 2013. "Knowing what not to do: Financial literacy and consumer credit choices," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 13-027, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    5. Alessie, Rob & Angelini, Viola & van Santen, Peter, 2013. "Pension Wealth and Household Savings in Europe: Evidence from SHARELIFE," Working Paper Series, Sveriges Riksbank (Central Bank of Sweden) 265, Sveriges Riksbank (Central Bank of Sweden).
    6. Elsa Fornero & Chiara Monticone & Serena Trucchi, 2011. "The effect of financial literacy on mortgage choices," CeRP Working Papers, Center for Research on Pensions and Welfare Policies, Turin (Italy) 121, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    7. Barrett, Alan & Mosca, Irene & Whelan, Brendan J., 2013. "(Lack of) Pension Knowledge," IZA Discussion Papers 7596, Institute for the Study of Labor (IZA).
    8. Antonia Grohmann & Roy Kouwenberg & Lukas Menkhoff, 2014. "Financial Literacy and Its Consequences in the Emerging Middle Class," Kiel Working Papers, Kiel Institute for the World Economy 1943, Kiel Institute for the World Economy.
    9. Bucher-Koenen, Tabea, 2011. "Financial Literacy, Riester Pensions, and Other Private Old Age Provision in Germany," MEA discussion paper series, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy 11250, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    10. Fernando Alexandre & Luís Aguiar Conraria & Pedro Bação & Miguel Portela, 2011. "A Poupança em Portugal," GEMF Working Papers, GEMF - Faculdade de Economia, Universidade de Coimbra 2011-19, GEMF - Faculdade de Economia, Universidade de Coimbra.
    11. Wobker, Inga & Lehmann-Waffenschmidt, Marco & Kenning, Peter & Gigerenzer, Gerd, 2012. "What do people know about the economy? A test of minimal economic knowledge in Germany," Dresden Discussion Paper Series in Economics, Dresden University of Technology, Faculty of Business and Economics, Department of Economics 03/12, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
    12. Annamaria Lusardi & Olivia S. Mitchell, 2013. "The Economic Importance of Financial Literacy: Theory and Evidence," CeRP Working Papers, Center for Research on Pensions and Welfare Policies, Turin (Italy) 134, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    13. Miller, Margaret & Reichelstein, Julia & Salas, Christian & Zia, Bilal, 2014. "Can you help someone become financially capable ? a meta-analysis of the literature," Policy Research Working Paper Series, The World Bank 6745, The World Bank.
    14. Paul Gerrans & Craig Speelman & Guillermo Campitelli, 2014. "The Relationship Between Personal Financial Wellness and Financial Wellbeing: A Structural Equation Modelling Approach," Journal of Family and Economic Issues, Springer, Springer, vol. 35(2), pages 145-160, June.

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