sealPurdue News

May 2001

Researcher: Education lacking in retirement planning

WEST LAFAYETTE, Ind. – Research from Purdue University indicates there are large numbers of Americans who are undereducated when it comes to retirement planning.

Sharon DeVaney, a professor of consumer sciences and retailing, specializes in personal financial management over the life course and economic security in retirement. She and research assistant Yi-Wen Chien used data from the 1998 Survey of Consumer Finances to examine factors influencing the amount people put into tax-deferred savings plans, either through their employer or an individual retirement account or Keogh plan. The study was funded by a grant from the American Association of Retired Persons' Andrus Foundation.

"There is a lack of agreement in the public and private sectors on whether workers are saving enough for retirement," says DeVaney. "It makes sense that if we can get an accurate picture of who is saving, we will then be able to pinpoint who isn't saving and target those people for extra information."

DeVaney's research results, which were published in the Journal of Financial Services Professionals, showed nine factors as significant predictors for participation in a defined contribution plan and 13 factors that pointed to investment in an IRA or Keogh plan.

"For both types of savings, there was a positive relationship between the amount saved and taking more financial risk, being married, having more education, being a professional, owning a home, the amount of non-financial assets and spending less than last year's income," DeVaney says. "From this we can surmise that people who are overly conservative with their money, who are not white collar and who are less educated are going to be less likely to be saving adequately for their retirement."

So the question becomes how to reach these people with the financial information they need?

"I think there's more and more of a push to provide education at work because people aren't getting it anywhere else," DeVaney says. "There is a lot of good information available on the Internet, but the consumer needs to be able to distinguish between useful information and a sales pitch."

DeVaney suggests workers look for low-cost or free resources in their own communities, such as workshops or seminars available through cooperative extension programs. She also recommends employers make a special effort to have easily understandable materials and resources available, and that it's a good idea to pay special attention to younger staff members who are not only new to the company, but new to the work force as well.

"Retirement is usually the last thing on a young person's mind when he or she starts a first job, but it's really important to understand the benefits of beginning to save early," DeVaney says.

CONTACT: Sharon DeVaney, (765) 494-8300,

Compiled by J. Michael Lillich, (765) 494-2077,

Purdue News Service: (765) 494-2096;

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