A major policy concern in the United States is the economic well-being of older low and moderate income (LMI) households. Increases in life expectancy, changes in pensions (for example the shift from defined benefit to defined contribution plans), and changes in government programs mean that individuals must now plan for their retirements and become better managers of their assets and debts. The aging of the population also implies that there will be more households facing these challenges in the future. For this reason, it is important to have a better understanding of how the transition from work to retirement affects retirement well-being of LMI households, and how the management of retirement resources can shape the ability of LMI individuals to maintain their standards of living for 30 or more years. Important determinants of planning for retirement and managing resources in retirement are peoples’ financial literacy levels, as well as their ability to use financial knowledge in making important decisions shaping well-being throughout retirement.
Using a grant funded by the Institute of Consumer Money Management, researchers from North Carolina State University, George Washington University, and the University of Pennsylvania are conducting eight research projects to investigate the relationship between financial literacy and financial well-being in retirement for low- and moderate-income retirees. The projects have overlapping timelines and will take place over four years.
Research Projects
- How do transitions from work to retirement affect the well-being of LMI households?
- Since the investigators already have access to the HRS and have used this survey in prior projects, research on this project can begin in year 1 of the grant.
- We also have early access to the most recent (2018) wave of the NFCS.
- Expected completion would be in year 3.
- Deliverables will include at least one research article to be submitted to an appropriate academic journal, and one Issue Brief aimed at policymakers. To promote dissemination, we also plan to create a short podcast describing our findings that can be disseminated via social media.
- Factors driving financial well-being among African Americans
- We have early access to the most recent (2018) wave of the NFCS.
- As we are conducting the P-Fin Index in partnership with the TIAA Institute, we have access to the proprietary dataset.
- Expected completion would be in year 3.
- Deliverables will include at least one research article that will be submitted to an appropriate academic journal and one Issue Brief aimed at policy makers.
- Trends in LMI household income during retirement
- Since the investigators already have access to the HRS and have used this survey in many past projects, research on this project can begin in year 1 of the grant. Researchers also have access to the latest NFCS data.
- Expected completion would be in year 4 to allow the investigators to follow retirement income for as many years as possible.
- Deliverables will include at least one research article that will be submitted to an appropriate academic journal and one issue brief aimed at policy makers.
- Distribution choices from retirement plans
- The investigators have access to both the NLS and HRS and they have used these surveys in past projects. In addition, the investigators have done prior research using this type of modelling. Thus, research on this project can begin in year 1 of the grant.
- While this research project will be completed in year 3, we anticipate that a working paper will be produced in year 2.
- Deliverables will include at least one research article that will be submitted to an appropriate academic journal and one issue brief aimed at policy makers.
- Evaluating the effectiveness of behaviorally-informed financial education programs
- The program will be developed in the third year
- The primary deliverables will be a research paper, an Issue Brief, and a toolkit making the program available to others.
- Survey of Pre-Retirees
- The survey will be fielded during the second half of year 1.
- The primary deliverable of the new data collection will be an input to this project overall and provide new insights not available in other surveys. However, we also anticipate that the findings from the survey will also help in designing recommendations and solutions to help LMI better prepare and manage scarce resources in retirement.
- Survey of older Americans in the retirement window
- The survey will be fielded during the year 2.
- The primary deliverable of the new data collection will be an input for other projects; however, we also anticipate that the findings from the survey will help design programs targeted to LMI in retirement.
- Capstone Workshop
- The conference will be held during the last quarter of year 4 of the project.
- We will provide an Executive Summary of key findings from the conference within three months of the event. This will be suitable for a Press Release and research papers will be posted online and made publicly available.