April is National Financial Literacy Month in the United States. The need for more consumer awareness of financial matters has recently been highlighted in a new working paper by Annamaria Lusardi and Olivia S. Mitchell, where they survey and evaluate the literature on financial knowledge. They show that around the world, many people are not able to make simple financial calculations, which lead them to fail to plan and save for retirement, make suboptimal decisions about when to claim Social Security benefits, and draw down their retirement assets too soon. The authors conclude: “While the costs of raising financial literacy are likely to be substantial, so too are the costs of being liquidity-constrained, over-indebted, and poor in retirement.”
You can download the paper for free here (registration required).
For more on Financial Literacy Month: http://www.financialliteracymonth.com/; http://en.wikipedia.org/wiki/Financial_Literacy_Month