Financial Literacy and Retirement Planning in Australia

Abstract

(w) +61 2 9385 3096 (f) +61 2 93851883; Abstract We implement a customized survey to a representative sample of 1,024 Australians to examine the relationship between financial literacy and retirement planning. Overall we find aggregate levels of financial literacy similar to comparable countries with the young, least educated, unemployed and those not in the labor force most at risk. However, unlike the international norm, we find that financial skills increase with age. The role played by the Australia's mandatory private retirement arrangements, system of defaults, and interactions with the means-tested safety net pension at older ages remain open questions. Acknowledgements: The authors are grateful for generous funding. Agnew acknowledges support from the Wharton's Pension Research Council (PRC) and the Global Center for Financial Literacy (GCFL). Bateman and Thorp acknowledge financial support under ARC DP1093842. The Chair of Finance and Superannuation (Thorp), UTS, receives support from the Sydney Financial Forum (through Colonial First State Global Asset Management), the NSW Government, the Association of Superannuation Funds of Australia (ASFA), the Industry Superannuation Network (ISN), and the Paul Woolley Centre for the Study of Capital Market Dysfunctionality, UTS. In addition, the authors thank Pureprofile and the staff of the Centre for the Study of Choice (University of Technology Sydney) for their generous assistance with the development and implementation of the internet survey. Finally, the authors thank Mariya Theiviasingham and Edward Wei for their excellent research assistance.