Abstract Economists are beginning to
investigate the causes and consequences of financial
illiteracy to better understand why
retirement planning is lacking and why so many
households arrive close to retirement
with little or no wealth. Our review reveals that
many households are unfamiliar with
even the most basic economic concepts needed to
make saving and investment decisions.
Such financial illiteracy is widespread: the young
and older people in the United States
and other countries appear woefully under-informed
about basic financial computations,
with serious implications for saving, retirement
planning, mortgages, and other
decisions. In response, governments and several nonprofit
organizations have undertaken
initiatives to enhance financial literacy. The experience of
other countries, including a saving
campaign in Japan as well as the Swedish pension
privatization program, offers insights
into possible roles for financial literacy and saving
program. Paper available here
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