Research Briefs for Financial Educators: Retirement, Financial Literacy, Online Calculators, Well-Being

By Barbara O’Neill, Ph.D., CFP®,

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Photo by Mohammad Danish from Pexels

Personal finance research informs high-quality financial education briefings, publications, and 1:1 financial counseling sessions with clients. Below are findings and implications for practice from four recent studies:

Retirement Savings. The 2022 Retirement Confidence Survey from the Employee Benefit Research Institute (EBRI) found that 19% of U.S. workers have less than $1,000 in savings and investments and 27% have less than $10,000 vs. 33% with balances of $250,000 or more. Among those without a retirement savings plan, nearly 2 in 3 (62%) have less than $1,000 saved vs. 7% for workers with a plan. Fewer than half (45%) of workers have tried to calculate how much money they will need to live comfortably in retirement.

  • Implications: Study results show big disparities in retirement savings accumulation. In addition, savings plans (IRA or a defined contribution or defined benefit plan) are clearly a valuable resource for wealth accumulation. At all savings amount ranges above $50,000, the percentage of those with savings plans far exceeded those without. These results indicate the importance of retirement planning topics (e.g., calculating savings need) in financial education programs and the importance of enrolling workers in employer retirement savings plans.

Financial Literacy Impacts. This study by Mitchell and Lusardi explored the impact of financial literacy (measured by three questions) on retirement preparedness behaviors. Results indicated that respondents who were deemed financially literate (less than 40% of the sample) had higher credit scores, performed better in tasks such as choosing the best health insurance plan, and had a lower likelihood of being financially fragile.

  • Implications: Results from this study clearly indicate that financial literacy can enhance financial decision-making, financial security, and resilience and be protective against financial errors. For example, respondents that answered the three questions correctly were less likely than others to report being unable to cover an unexpected $2,000 expense. Financial education should be made widely available to U.S. residents of all ages.

Online Calculators. This study by staff at the American Association of Individual Investors examined differences in output from retirement calculators from 10 sources. Three “personas” were tested: early- and mid-career and near-retirement. They found many differences in both the inputs that each calculator requested (e.g., Social Security benefits) and the output they provided (e.g., balances at the start of retirement).

  • Implications: Given substantial differences in online calculators, financial practitioners should advise clients to apply the “Rule of Three” and use at least three online calculators to estimate their retirement savings need. Clients can then compare the outputs to determine a reasonable range of numbers with which to make decisions.

Economic Well-Being. The ninth annual Survey of Household Economics and Decision-Making (SHED) survey by the Federal Reserve found that self-reported financial well-being increased to the highest rate (78% doing okay or living comfortably) since the survey began in 2013, as did the share of adults (68%) who could cover a $400 emergency expense. Nearly one-fourth of homeowners with a mortgage refinanced in 2021 and 12% of borrowers were behind on payments in 2021, a decline from 17% who were behind in fall 2019.

  • Implications: The SHED study provides valuable insights into Americans’ financial well-being in late fall 2021 when data were collected. Results indicate that financial health improved following the onset of the COVID-19 pandemic. Many U.S. households were recipients of advance child tax credits and stimulus payments. Financial practitioners should be alert for signs of financial stress now that those payments have gone away in 2022.

Economic well-being of U.S. households in 2021 (2022). Washington, DC: Federal Reserve System

Important differences exist among retirement calculators (2022). AAII Journal, 64(5), 19-22

Mitchell, O.S. & Lusardi, A. (2022). Financial literacy and financial behavior at older ages. Pension Research Council Working Paper WP2022-01

Results from the 2022 Retirement Confidence Survey (2022). Washington, DC: Employee Benefit Research Institute




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