Financial literacy and retirement preparation in the Netherlands

Abstract

We present new evidence on financial literacy and retirement preparation in the Netherlands based on two surveys conducted before and after the onset of the financial crisis. We document that while financial knowledge did not increase from 2005 to 2010, in 2010 significantly more individuals report having thought about their retirement. Using information on financial conditions and financial knowledge of relatives, we find a positive causal effect of financial literacy on retirement preparation. Employing the panel feature of our dataset, we show that the effect of financial knowledge on retirement planning is bound to be positive.JEL CODES: D91, D80

Financial Literacy and Retirement Planning in Switzerland

“…Table 1 shows that exactly 50% of the respondents in our sample answered all three financial literacy questions correctly. The share of respondents who could correctly answer all three questions is similar to that documented by Bucher-Koenen and Lusardi (2011) for Germany (53%) and by Alessie et al (2011) for the Netherlands (45%). This is surprising given that our survey was implemented through telephone interviews-in contrast with the survey for Germany (paper and pencil) and the Netherlands (Internet)-and that previous telephone-based surveys in OECD countries have been characterized by substantially lower shares of respondents answering all questions correctly, e.g., 30% as documented for the United States by Lusardi and Mitchell (2011a).…”

“…We confirm the findings of Alessie et al (2011) for the Netherlands, Almenberg and Säve-Söderbergh (2011) for Sweden, BucherKoenen and for Germany, and Sekita (2011) for Japan. All these studies document a significant income gap and gender gap in financial literacy.…”

“…Table 2 documents a strong correlation between financial literacy and education: Only 27% of respondents with primary or lower secondary education as their highest degree answer all questions correctly compared to 69% of respondents with a university degree. These results mirror the findings for the Netherlands by Alessie et al (2011). With respect to employment status we find that respondents with wage employment have substantially higher levels of financial literacy (54% all correct) than respondents who are not employed (41%) and retired respondents (42%).…”

Financial literacy, financial advice, and financial behavior

“…Bannier and Neubert (2016b) extend this research by showing that selfassessed financial knowledge associates with riskier investments (in discount certificates, hedge funds), while objectively measured financial literacy correlates 17 Unlike in the DHS and SHARE surveys, replies in the PHF and SAVE datasets stem from one individual per household. As described in Bucher-Koenen and Lusardi (2011), SAVE draws on a randomly chosen household member who has information on the household's finances. Thus, the individual completing the questionnaire is not necessarily the household head.…”

Endogenous Financial Literacy, Saving, and Stock Market Participation

“…-increases in the level of income -increases in the level of education -decreases in the degree of risk aversion 1 Analyses from Alessie et al (2011), Almenberg and Säve-Söderbergh, (2011), Crossan et al (2011), Bucher-Koenen and Lusardi (2011), Fornero and Monticone (2011, Klapper andPanos (2011), Lusardi andMitchell (2011b) and Sekita (2011) cover, respectively, Netherlands, Sweden, New Zeland, Germany, Italy, Russia, United States and Japan. Evidence from United States on the effect of financial literacy on planning and wealth accumulation is also contained in Lusardi and Mitchell (2007) and evidence from Italy on the effect of literacy on portfolio diversification is contained Guiso and Jappelli (2009). Moreover, the field of study is, even in this case, also relevant: in fact, Christiansen et al (2007) find that individuals with higher education in economics-related disciplines are, all things considered, more likely to invest in the stock market.…”