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When I First Learned about Retirement: Financial and Retirement Concept Recognition among College Students

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Abstract

It has long been argued that financial literacy education should begin in childhood or adolescence, but little is currently known about the ages at which individuals come to understand basic retirement and financial planning concepts. The primary goal of the present investigation is to provide data that reflect the reported ages at which key general and technical retirement planning concepts are acquired. A secondary goal is to identify individual difference dimensions—including one’s financial literacy level and early parental learning experiences—that are associated with the age at which key concepts are reportedly acquired. Retrospective reports obtained from a sample of 646 college students revealed that an understanding of general concepts was widespread and took place during the pre-teen and early teenage years. Understanding of the technical concepts was suboptimal, however. Nearly half of the sample were unfamiliar with most of the technical terms. Among those who were familiar with the technical concepts, learning reportedly occurred later in adolescence. Understanding of both sets of concepts was linked to higher financial literacy scores and saving lessons learned during childhood from one’s parents. Results have implications for financial literacy intervention programs designed to target children, adolescents, and young adults.

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Notes

  1. Our working assumption here was if parents cultivated an environment conducive to saving, children would have been more open to learning about concepts related to finances and retirement planning.

  2. It is acknowledged that a degree of error may be introduced for any one individual by asking respondents to report a broad band educational period. That is, a student who learns about compound interest in high school at the age of 17 would be assigned an age score of 15.5 years, which under-represents the age of learning. However, by aggregating scores to create means, these under-representations would in all likelihood be offset by corresponding over-representations of other students. Therefore, to the extent that deviations surrounding the measure of central tendency is random, the mean should serve as an unbiased representation of participants’ age.

  3. These 76 individuals were not demographically different from the remainder of the sample, as all participants were men and women of roughly the same age, work status, and educational background. However, those who failed both foils had significantly lower mean scores on the OECD financial literacy measure compared to those who did not, t(720) = 2.83, p = .01. Although this does not increase faith in the validity of responses from participants who did not fail both foil items, it does suggest that those who did may have been responding on the basis of demand characteristics as a way to compensate for their perceived lack of knowledge.

  4. In the analyses reported in this paragraph, the parental influences scale and OECD financial literacy measure were dichotomized as a way of conveniently reporting mean ages for the acquisition of general and technical concepts. However, analyses based on continuous versions of these two scales were also calculated. The Pearson correlations between the (non-dichotomized) parental influences scale and general and technical concepts were −0.19 (p < .01) and −0.08 (p = .055), respectively. Furthermore, the correlation between the OECD literacy measure and the general and technical concepts was −0.18 (p < .01) and −0.10 (p < .05), respectively.

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Authors and Affiliations

  1. Department of Psychology, Oklahoma State University, Stillwater, OK, 74078, USA

    Janet L. Koposko & Douglas A. Hershey

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  1. Janet L. Koposko
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  2. Douglas A. Hershey
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Correspondence to Douglas A. Hershey.

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Koposko, J.L., Hershey, D.A. When I First Learned about Retirement: Financial and Retirement Concept Recognition among College Students. Curr Psychol 35, 540–548 (2016). https://doi.org/10.1007/s12144-015-9319-9

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  • DOI: https://doi.org/10.1007/s12144-015-9319-9

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