An ongoing financial literacy study found that many newly hired workers rely on friends, colleagues and family when making decisions about participating in employer-sponsored retirement savings plans (such as 401Ks), even though many of them say their employers provide sufficient information on these workplace retirement account options.
Annamaria Lusardi, director of the GWSB Financial Literacy Center, said the findings highlight the necessity of teaching people about finances, such as retirement savings, at work.
“It’s extremely hard to reach the adult population,” said Lusardi at the second in a six-part Financial Literacy Seminar Series she organized at GWSB this fall. “Finding this population at work is incredibly important.”
The seminar series – a joint initiative of GWSB and the Federal Reserve System’s Board of Governors – is designed to bring together academics, practitioners, policy makers and other experts to present and discuss cutting-edge research on financial literacy. The seminars are being offered bi-weekly through the fall.
The study of what influences new workers to participate in employer-sponsored retirement plans is being undertaken by Robert Clark, an economist at North Carolina State University. Clark presented some preliminary findings at GWSB last week.
“There’s a lot of room for financial literacy and financial education in the workplace,” said Clark.
Among Clark’s other findings:
_ More than one-quarter (27.7 percent) of workers who didn’t participate in their retirement savings plans said their budgets covered their living expenses and left no room for retirement savings.
_ Workers are more likely to contribute if their employers offer a matching contribution, or if they are automatically enrolled in their retirement savings plans instead of having to “opt-in.”
Clark’s research project is being done under the auspices of the Financial Literacy Center, a joint center of the Rand Corp., Dartmouth College and The Wharton School.
Posted by gwsb on October 25, 2011 | Filed under: GWSB News.