Since many individuals are required to manage their own retirement portfolios, policy levers that aid in retirement planning and saving have become increasingly important.
Research suggests financial literacy levels, particularly among the young, are extremely low and those with higher levels of financial literacy are more likely to participate in the stock market, plan for retirement, and possess the financial sophistication that leads to higher interest in savings accounts. Since starting to save for retirement earlier has the potential to generate long-term gains, does financial literacy education during formative teenage years increase long-run retirement savings? To address this question, this paper tests whether required high school financial education improves retirement savings for adults ages 25–40.
- Among the overall population, there is no evidence financial education in high school improves the likelihood of having a retirement account, having a non-retirement savings account, or owning a home.
- There is no clear evidence that such education decreases stress related to retirement savings, increases the likelihood of planning for retirement, or reduces the likelihood of borrowing from one’s retirement account.
- Since prior research finds high school financial education improves credit and debt outcomes, priority topics should include budgeting, credit, debt and saving for emergencies before addressing retirement savings.