Description of the programme

This research examines the role of financial education on retirement savings and specifically how individuals alter their stated retirement goals and planned savings behaviour as a result of participating in financial education seminars.

The Consulting Services division of TIAA-CREF (Teachers Insurance and Annuity Association—College Retirement Equities Fund) conducts Financial Education Seminars at educational institutions and other non-profit organisations across the United States. Seminars last about one hour and are open to all employees of these institutions, including administrative, technical, clerical and service workers as well as academic staff. The audience ranges from newly hired employees to pre-retirees and special seminars have been developed for female employees. The objective of these seminars is to provide financial information that would assist individuals in the retirement planning process.

The research project is based on seminars conducted from March 2001 to May 2002. A total of 36 seminars at 24 institutions along with 24 community-based seminars in eight different locations are included in the analysis.

In addition, the paper presents findings from other relevant studies and comments that relatively few studies have attempted to estimate the effectiveness of financial education programmes in altering retirement goals or retirement savings behaviour.

The study

The study uses quantitative methods with two surveys to assess the impact of the information provided in the seminars and the participants’ responses; one administered at the start of the seminar and the second at the end of the seminar before the participants leave.

Survey one collects baseline information on the age at which participants hope to retire and expected annual retirement income as a percent of their final working years’ income, together with the likelihood that they will achieve this goal, their commitment to the goal and background information on the type of pension plan and personal characteristics. Survey two asks if they have changed their retirement age goal or revised the level of retirement income they desire together with some detail on actions they might take based on their newly acquired financial information.

The study is based on a total of 633 usable responses in which participants completed both survey one and survey two. There is no information on the total number of participants and the response rate.

What are the outcomes?

• The study measured participants stated changes to retirement goals and planned retirement savings behaviour

Key findings

• Survey responses indicate that after an educational event, individuals might alter their retirement goals and/or change their retirement savings behaviour. A significant proportion (91%) of the respondents indicated that they had revised their goals and planned to modify their savings and investments. No information on confidence levels or statistical significance was presented for this finding.

Points to consider

• This area is of growing importance due to the reduction in defined benefit pension schemes in the UK and a greater emphasis on personal responsibility for retirement planning; however the study is rather old and has some limitations (see below).
• The extent to which these findings can be generalised is unclear, given that it focuses on one type of educational intervention in largely education establishments and other non-profit institutions in the U.S.
• Given that the organisation delivering the seminars is involved in this study (TIAA) there is potential for publication bias. The authors state that the sample is reasonably diverse but there is no analysis presented of its representativeness. While outcomes were measured using pre and immediate-post seminars there was no control or comparison group. Finally, the survey captures stated planned changes (Mindset) and not actual changed behaviour. There was no longer-term follow-up to assess behavior change and so it is not possible to assess whether changes in mindset led to changes in behavior.