July 25, 2014
Being a ‘thief of your own wallet’ is how the Dutch describe those who overspend and thereby undermine their financial wellbeing. A new study by Olivia S. Mitchell, Wharton Professor of Insurance/Risk Management and Applied Economics/Policy and Director of the Pension Research Council, coauthored by Annamaria Lusardi of George Washington University, shows that we all do this, not just the Dutch!
Many Americans lack an understanding of interest rates, inflation, and diversification. Without proper financial knowledge, people make poor informed financial decisions. Unsurprisingly, this leads them to undertake more borrowing, engage in less saving, and overspend on fees.
Click here to read more at ProjectM-Online
July 22, 2014
July 16, 2014
July 11, 2014
The Pension Research Council is pleased to announce that the Federal Reserve Office of Employee Benefits has rejoined the Council as a Senior Partner of the Council for 2014. Read the full press release here.
July 10, 2014
A new working PRC paper titled “Financial Knowledge and 401(k) Investment Performance” reports that more financially knowledgeable investors can anticipate earning 130 basis points more per year in their 401k plans compared to their less sophisticated peers, even after adjusting for risk.
The research is authored by Robert Clark of North Carolina State University, Annamaria Lusardi of George Washington University, and Olivia S. Mitchell, Professor of Insurance/Risk Management and Applied Economics/Policy and Director of Wharton’s Pension Research Council. It finds that “the significantly higher risk-adjusted annual expected returns of 130 basis points for the best versus the least knowledgeable confirm that financial literacy can contribute” to better retirement saving..
The study concludes that, since “financial knowledge does appear to help people invest more profitably, this may provide a rationale for efforts to enhance financial knowledge in the population at large.”
Click here to read a discussion of the work at ThinkAdvisor.com
July 3, 2014
July 2, 2014
Mark Iwry, senior adviser to the Secretary of the Treasury and deputy assistant secretary for retirement and health policy, recently announced new regulations that help retirees do a better job managing their 401(k) withdrawals. The new rules allow plan sponsors to offer retirees payout lifetime income streams, while protecting people from running afoul of the minimum distribution requirements. Financial advisers will need to take a good look at these for their clientele.
Click here to read more at InvestmentNews.com