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Overcoming the Saving Slump

How to Increase the Effectiveness of Financial Education and Saving Programs

Overcoming the Saving Slump

How to Increase the Effectiveness of Financial Education and Saving Programs

The great majority of working Americans are unprepared to face the difficult task of planning for retirement. In fact, the personal savings rate has been holding steady at zero for several years, down from 8 percent in the mid-1980s. Overcoming the Saving Slump explores the many challenges facing workers in the transition from a traditional defined benefit pension system to one that requires more individual responsibility, analyzing the considerable impediments to saving and evaluating financial literacy programs devised by employers and the government.

Mapping the changing landscape of pensions and the rise of defined contribution plans, Annamaria Lusardi and others investigate new methods for stimulating saving and promoting financial education drawing on the experience of the United States as well as countries that have privatized their welfare systems, including Sweden and Chile. This timely volume pinpoints where human resources departments, the financial industry, and government officials have succeeded—or failed—in bridging the way to a new retirement system. As the workforce ages and more pensions disappear each second, Lusardi’s findings will be invaluable for economists and anyone facing retirement.

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Economics and Business: Business--Business Economics and Management Studies

Education: Education--Economics, Law, Politics

Political Science: Public Policy

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Awards
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Reviews

“Financial literacy is increasingly important in a world where individuals from all economic strata, rather than institutions, are being given a significantly greater role in financial decision making over the life course. Lusardi’s approach is balanced, innovative, and insightful, drawing perspectives from law, economics, marketing, and sociology, as well as American and international experiences in these domains. This book is well written and will be of interest to a wide variety of readers.”

Gary Engelhardt, Syracuse University

“Rather than simply reporting on the savings slump, Lusardi assembles a remarkable collection of researchers focused on halting this slide. Rather than limiting their attention to a single solution, they explore a wide range of prescriptions from social marketing and financial education, to product design, policy changes, and process innovations. Lusardi and her collaborators exemplify how careful scholarship can inform an important challenge facing our society.”

Peter Tufano, Harvard Business School

“This book tells you everything you want to know about financial education and how it can be used to improve financial decisions. It draws on different scientific disciplines, uses evidence from many countries, and discusses the main findings and puzzles in the literature. Indispensable for anyone who is interested in better financial decision making.”

Arie Kapteyn, Director, RAND Labor and Population

Table of Contents

Preface

Introduction
Annamaria Lusardi

Part 1. The Shift from Defined Benefit to Defined Contribution Pensions and Financial Regulation

1. The Changing Landscape of Pensions in the United States
James M. Poterba, Steven F. Venti, and David A. Wise

2. Do Workers Know about Their Pension Plan Type? Comparing Workers’ and Employers’ Pension Information
Alan L. Gustman, Thomas S. Steinmeier, and Nahid Tabatabai

3. The Trilateral Dilemma in Financial Regulation
Howell E. Jackson

Part 2. Portfolio Choice, Life-Cycle Funds, and Annuities

4. Red, Yellow, and Green: Measuring the Quality of 401(k) Portfolio Choices
Gary R. Mottola and Stephen P. Utkus

5. Life-Cycle Funds
Luis M. Viceira

6. Understanding the Role of Annuities in Retirement Planning
Jeffrey R. Brown

Part 3. Improving Financial Education and Saving Programs

7. New Ways to Make People Save: A Social Marketing Approach
Annamaria Lusardi, Punam Anand Keller, and Adam M. Keller

8. Adjusting Retirement Goals and Saving Behavior: The Role of Financial Education
Robert L. Clark and Madeleine D’Ambrosio

9. Financial Education in High School
LewisMandell

10. Learning from Individual Development Accounts
Michael Sherraden and Ray Boshara

Part 4. Learning from the United States and Other Countries

11. Learning from the Chilean Experience: The Determinants of Pension Switching
Olivia S. Mitchell, Petra E. Todd, and David Bravo

12. Learning from the Experience of Sweden: The Role of Information and Education in Pension Reform
Annika Sundén

13. Learning from the Experience of Organisation for Economic Co-operation and Development Countries: Lessons for Policy, Programs, and Evaluations
Barbara A. Smith and Fiona Stewart

List of Contributors
Author Index
Subject Index