We conducted a community-based randomized controlled trial (RCT) to evaluate the impact of an intervention to promote retirement saving among low- and moderate-income, predominantly Spanish-speaking Hispanics, who do not have access to an employer-sponsored retirement account. Our educational intervention provided participants with key information in Spanish related to financial planning for retirement and made use of “behavioral nudges” to encourage participants to open a government-sponsored retirement saving account, my Retirement Account (myRA). Among 142 participants (70 and 72 in control and treatment groups, respectively), we found a significant Difference in Differences (DD) on the proportion of those who opened a myRA. In the treatment group 14% of participants opened myRA, while none in the control group did. Results from a DD regression showed that after controlling for observable and unobservable characteristics through our design as an RCT, the effect of our intervention was 12%. When we restricted our sample to those participants who had a bank account at some point in the study, we found that the effect of our intervention was higher (17%). We also found that our intervention was effective in increasing self-reported knowledge related to retirement saving and preparedness.
This is a preview of subscription content, access via your institution.
Buy single article
Instant access to the full article PDF.
Price excludes VAT (USA)
Tax calculation will be finalised during checkout.
The compound interest question used when measuring financial knowledge/literacy is the following: Suppose you had $100 in a savings account and the interest rate is 20% per year and you never withdraw money or interest payments. After 5 years, how much would you have on this account in total? 1. More than $200; 2. Exactly $200; 3. Less than $200; 4. Don’t know; 5. Refuse to answer.
This study had a caveat since the sample was small and not representative of the population of employees.
The Video “Una Nueva Manera de Ahorrar en La Salle Cleaners” (A new way to save in La Salle Cleaners) was accessed in YouTube and played during the workshop. The video was all in Spanish (or with Spanish subtitles when there was something said in English). This video is no longer available in YouTube.
For example, through a Facebook experiment, Blanco and Rodriguez (2018) find that the message “Many Hispanic women like you have a plan for retirement” is more effective that a standard message and one focus on the family to get Hispanic women interested in learning more about retirement savings. Thus, the more effective message was used in our educational intervention. See message in the selected slides of the workshop presentation included in Online Appendix 1.
We sent a text message at 5 months that reminded participants specifically to open a retirement account before the 6 month deadline.
All complete materials related to our educational intervention are available upon request.
All oral presentations given during our workshops were given in Spanish by a native Spanish speaker, where all participants previously expressed that they were proficient with oral communication in Spanish. All workshop documents were available in Spanish and English, where those participants that felt more comfortable reading and writing in English received the English version per their request.
Note that this website was updated in the Spring of 2018 to take out information on myRA since this program is no longer available. We also changed some of the links of available resources since some of the links we included in the website initially were no longer available. This website was used for another related project conducted by Blanco and Rodriguez (2018).
Our block randomization approach is similar to the one used by Duru et al. (2010), who conduct a randomized controlled trial of a faith-based physical activity program. We use Sealed Envelope available online to create a randomization list for the different groups. Information on groups randomization was not shared with community partners or participants (https://www.sealedenvelope.com/simple-randomiser/v1/lists).
Only 4 participants in each group expressed at the second workshop that they contributed to a retirement saving plan different than myRA in a monthly basis (6% of our sample). As a robustness check, we conducted our analysis restricting the sample to those who were not saving in another retirement saving plan during the time of the study and found the same results.
It is important to note that in our main analysis we did not count people who opened a myRA during the second workshop in the data analyses since it will bias the results.
Please refer to Dew and Xiao (2011) for further discussion on the development and validation of this scale. See Table A2 in Online Appendix 1 for the questions used in this scale.
Follow-up surveys are very similar to baseline surveys and are available upon request.
We describe next the control variables we use in our estimations: age (30 to 64), gender (male = 1, female = 0), nativity status (foreign born = 1, native born = 0), educational attainment (no primary education = 0, primary education completed = 1, high school completed = 2, college or more completed = 3), Spanish native speaker (equal to 1, zero otherwise), speaks no English or poorly (equal to 1, zero otherwise), Mexican origin (equal to 1, zero otherwise), employment status (employed part-time, full-time, or self-employed = 1, unemployed, incapacitated, homemaker, retired, student = 0). We use the financial strain indicator developed and validated by Hilton and Devall (1997). Refer to Online Appendices 2 and 3 for the survey questions in English and Spanish from which we construct these variables.
For power calculations we use STATA command “power twoprop” for the dichotomous variable (open myRA, and “power twomeans” for the continuous variables (RKI and M-RKI).
Note that in this part of the analysis, where we show the DD in Table 4, we are assuming a value of zero for those participants we were unable to reach via phone at the one week and one and three months follow-up and who did not attended the second workshop[ (completers and non-completers are considered). For the DD of the RKI we are using data for participants who attended both workshops (completers only).
In this part of the analysis, where we estimate the DD regression, we only consider those participants that attended both workshops (only completers).
Our last workshop for the collection of baseline data and deliver of intervention among treatment participants took place on March 11 of 2017, which gives us more than three months before the announcement on the termination of the myRA program. The announcement came out in July of 2017, and at that time you could no longer open a myRA account, but you could continue to contribute to the account.
For more information on this refer to the California State Treasurer page https://www.treasurer.ca.gov/scib/.
Al-Bahrani, A., Weathers, J., & Patel, D. (2019). Racial differences in the returns to financial literacy education. Journal of Consumer Affairs,53(2), 572–599. https://doi.org/10.1111/joca.12205.
Arellano, M., & Hahn, J. (2007). Understanding bias in nonlinear panel models: Some recent developments. Econometric Society Publication,3, 381. https://doi.org/10.1017/CBO9781139060035.
Barcellos, S., & Zamarro, G. (2019). Unbanked status and use of alternative financial services among minority populations. Journal of Pension Economics and Finance. https://doi.org/10.1017/S1474747219000052.
Benartzi, S., & Thaler, R. H. (2007). Heuristics and biases in retirement savings behavior. The Journal of Economic Perspectives,21(3), 81–104. https://doi.org/10.1257/jep.21.3.81.
Beshears, J., Choi, J., Laibson, D., & Madrian, B. (2013). Simplification and saving. Journal of Economic Behavior and Organization.,95, 130–145. https://doi.org/10.1016/j.jebo.2012.03.007.
Blanco, L., Aguila, E., Gongora, A., & Duru, O. (2017). Retirement planning among Hispanics: In God's hands? Journal of Aging & Social Policy, 29(4), 311–331. https://doi.org/10.1080/08959420.2016.1272161.
Blanco, L., & Rodriguez, L. (2018). Delivering information about retirement saving among Hispanic women: Two Facebook experiments. Behaviuoral Public Policy. https://doi.org/10.1017/bpp.2018.33.
Carr, N. A., Sages, R. A., Fernatt, F. R., Nabeshima, G. G., & Grable, J. E. (2015). Health information search and retirement planning. Journal of Financial Counseling and Planning,26(1), 3–16.
Choi, J., Laibson, D., Madrian, B., & Metrick, A. (2006). Saving for retirement on the path of least resistance. In E. McCaffrey & J. Slemrod (Eds.), Behavioral public finance: Toward a new agenda (pp. 304–351). New York: Russell Sage Foundation.
Clark, R. L., Hammond, M., Morrill, M. S., & Khalaf, C. (2017). Nudging retirement savings: A field experiment on supplemental plans. NBER Working Paper No. 23679. https://doi.org/10.3386/w23679.
Clark, R. L., Morrill, M. S., & Allen, S. G. (2012). The role of financial literacy in determining retirement plans. Economic Inquiry,50(4), 851–866. https://doi.org/10.1111/j.1465-7295.2011.00390.x.
Colby, S. L. & Ortman, J. M. (2015). Projections of the size and composition of the U.S. population: 2014 to 2060. U.S. Census Bureau. Retrieved from https://www.census.gov/content/dam/Census/library/publications/2015/demo/p25-1143.pdf.
Collins, M., & Urban, C. (2016). The role of information on retirement planning: Evidence from a field study. Economic Inquiry.,54(4), 1860–1872. https://doi.org/10.1111/ecin.12349.
Cunningham, J. A., Kypri, K., & McCambridge, J. (2013). Exploratory randomized controlled trial evaluating the impact of a waiting list control design. BMC Medical Research Methodology. https://doi.org/10.1186/1471-2288-13-150.
Dew, J. P., & Xiao, J. J. (2011). The financial management behavior scale: Development and validation. Journal of Financial Counseling and Planning,22(1), 43–59.
Duflo, E., & Saez, E. (2003). The role of information and social interactions in retirement plan decisions: evidence from a randomized experiment. The Quarterly Journal of Economics,118(3), 815–842. https://doi.org/10.1162/00335530360698432.
Duru, O., Sarkisian, C., Leng, M., & Mangione, C. (2010). Sisters in motion: A randomized controlled trial of a faith-based physical activity intervention. Journal of the American Geriatrics Society,58(10), 1863–1869. https://doi.org/10.1111/j.1532-5415.2010.03082.x.
Fernandes, D., Lynch, J. G., & Netemeyer, R. G. (2014). Financial literacy, financial education, and downstream financial behaviors. Management Science,60(8), 1861–1883. https://doi.org/10.1287/mnsc.2013.1849.
Fertig, A., Lefkowitz, J. & Fishbane, A. (2015). Using behavioral science to increase retirement savings: A new look at voluntary pension contributions in Mexico. Ideas42. Retrieved from https://www.ideas42.org/wpcontent/uploads/2015/11/I42_571_MexicoPensionsReport_ENG_final_digital.pdf.
Fontes, A. (2011). Differences in the likelihood of ownership of retirement saving assets by the foreign and native-born. Journal of Family and Economic Issues,32(4), 612–624. https://doi.org/10.1007/s10834-011-9262-3.
Greene, W. (2002). The bias of the fixed effects estimator in nonlinear models. Working Paper, New York University. Retrieved from https://people.stern.nyu.edu/wgreene/nonlinearfixedeffects.pdf.
Hetling, A., Postmus, J. L., & Kaltz, C. (2016). A randomized controlled trial of a financial literacy curriculum for survivors of intimate partner violence. Journal of Family and Economic Issues,37(4), 672–685. https://doi.org/10.1007/s10834-015-9479-7.
Hilgert, M., Hogarth, J., & Beverly, S. (2003). Household financial management: The connection between knowledge and behavior. Federal Reserve Bulletin, 89(7), 309–322.
Hilton, J., & Devall, E. (1997). The family economic strain scale: Development and evaluation of the instrument with single- and two-parent families. Journal of Family and Economic Issues,18(3), 247–271. https://doi.org/10.1023/A:1024974829218.
Hopkins, J., & Littell, D. (2016). Retirement income planning literacy in America: A method for determining retirement knowledgeable clients. Journal of Financial Planning,18, 44–47.
Hung, A., Meijer, E., Mihaly, K., & Yoong, J. (2009). Building up, spending down: Financial literacy, retirement savings management, and decumulation. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1520203.
Kim, K. T., & Lee, J. (2018). Financial literacy and use of payday loans in the United States. Applied Economics Letters,25(11), 781–784. https://doi.org/10.1080/13504851.2017.1366635.
Lusardi, A., & de Bassa Scheresberg, C. (2013). Financial literacy and high-cost borrowing in the United States. NBER Working Paper Series No. 18969. https://doi.org/10.3386/w18969.
Lusardi, A., Keller, P. A., & Keller, A. M. (2009). New ways to make people save: A social marketing approach. NBER Working Paper No. 14715. https://doi.org/10.3386/w14715.
Lusardi, A., & Mitchell, O. (2011a). Financial literacy and planning: Implications for retirement wellbeing. NBER Working Paper No. 17078. https://doi.org/10.3386/w17078.
Lusardi, A., & Mitchell, O. (2011b). Financial literacy and retirement planning in the United States. Journal of Pension Economics and Finance,10(4), 509–525. https://doi.org/10.1017/S147474721100045X.
Lusardi, A., & Mitchell, O. S. (2017). How ordinary consumers make complex economic decisions: Financial literacy and retirement readiness. Quarterly Journal of Finance. https://doi.org/10.3386/w15350.
Lusardi, A., Mitchell, O., & Curto, V. (2010). Financial literacy among the young. The Journal of Consumer Affairs,44(2), 358–380. https://doi.org/10.1111/j.1745-6606.2010.01173.x.
Payne, S., Yorgason, J., & Dew, J. (2014). Spending today or saving for tomorrow: The influence of family financial socialization on financial preparation for retirement. Journal of Family and Economic Issues.,35(1), 106–118. https://doi.org/10.1007/s10834-013-9363-2.
Prudential. (2014). The Hispanic American financial experience. Retrieved October 4, 2018, from https://www.prudential.com/media/managed/hispanic_en/prudential_hafe_researchstudy_2014_en.pdf.
Rabinovich, L., Peterson, J., & Smith, B. A. (2017). Hispanics’ understanding of Social Security and the implications for retirement security: A qualitative study. Social Security Bulletin,77(3), 1–14.
Rhee, N. (2013). Race and retirement insecurity in the United States. National Institute on Retirement Security. Retrieved from https://www.nirsonline.org/wp-content/uploads/2017/07/race_and_retirement_insecurity_final.pdf.
Richman, K., Sun, W., Sena, J., & Chun, S. (2015). Significance of gender for Latina/o savings and retirement. Notre Dame, IN: Institute for Latino Studies, University of Notre Dame.
Suresh, K. (2011). An overview of randomization techniques: An unbiased assessment of outcome in clinical research. Journal of Human Reproductive Sciences,4(1), 8–11. https://doi.org/10.4103/0974-1208.82352.
Thaler, R. H., & Sunstein, C. R. (2008). Nudge: Improving decisions about health, wealth, and happiness. New Haven, CT: Yale University Press.
United States Federal Reserve. (2019). Report on the economic well-being of U.S. households in 2018. Retrieved October 4, 2018, from https://www.federalreserve.gov/publications/files/2018-report-economic-well-being-us-households-201905.pdf.
van Rooij, M., Lusardi, A., & Alessie, R. J. (2012). Financial literacy, retirement planning, and household wealth. The Economic Journal,122(560), 449–478. https://doi.org/10.1111/j.1468-0297.2012.02501.x.
We thank our community partners, the Mexican American Opportunity Foundation (MAOF) and New Economics for Women (NEW), for all their support during the design, data collection, and implementation stages of the project. We thank specially Isaias Hernandez and Raul De la O from MAOF, and Leticia Andueza and Magdalena Cervantes from NEW. We also thank Central City Neighborhood Partners (CCNP) for letting us use their facilities for this study. We also thank myRA Outreach Office for their support to this project, specially to Ingrid Taylor. We acknowledge Ana Francisca Silva, who was the project coordinator, for her excellent work. We thank Michael Ong and Thomas Rice for their useful comments to our manuscript, and to William Humphrey for his research assistance. Dr. Luisa R. Blanco received support for this project from NIA-funded Grant 3P30AG021684-15:S1, 2016–17 Research Supplement to Promote Diversity in Health-Related Research through the University of California, Los Angeles (UCLA) and Charles Drew University (CDU), Resource Centers for Minority Aging Research Center for Health Improvement of Minority Elderly (RCMAR/CHIME). Pepperdine’s Office of Provost also provided funding for this study. The contents of this paper are solely the responsibility of the authors and do not necessarily represent the official views of the NIH. All errors are our own.
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Electronic supplementary material
Below is the link to the electronic supplementary material.
Rights and permissions
About this article
Cite this article
Blanco, L.R., Duru, O.K. & Mangione, C.M. A Community-Based Randomized Controlled Trial of an Educational Intervention to Promote Retirement Saving Among Hispanics. J Fam Econ Iss 41, 300–315 (2020). https://doi.org/10.1007/s10834-019-09657-9
- Behavioral nudges
- Financial knowledge