Microsoft Word Ed Horwitz Post Dissertation Fina docx

 Retirement Preparedness Best Practices 
 
The three proposed retirement preparedness best practice behaviors for examination are: 
(a) calculating retirement savings needs, (b) owning an individual retirement plan, and (c) 
owning stocks or other securities outside an employer retirement plan. Each of these best 
practice behaviors are supported in historical literature as to their associations with positive 
outcomes for retirement, and are posited to result from higher levels of financial literacy. Those 
with higher levels of financial literacy are found more likely to follow recommended financial 
practices (Kotlikoff & Bernheim, 2001; Hogarth & Hilgert, 2002; Robb & Woodyard, 2011).   
 
Retirement planning is an important part of arriving at retirement prepared. Effective 
retirement planning requires the consumer to make calculations regarding their savings needs for 
retirement while considering future longevity, apply discount rates, estimate investment returns, 
diversify portfolios, project future earnings, account for inflation, calculate estimated pension 
values, and consider Social Security benefits, in order to formulate and execute optimal savings 
and consumption plans (Lusardi & Mitchell, 2007a, 2007b). Higher levels of financial literacy 
are needed to navigate the many complex financial decisions and to plan effectively for adequate 
retirement savings (Lusardi & Mitchell, 2009). Financial literacy has been found to be a key 
determinant of planning, making retirement calculations, and accumulating greater wealth 
(Lusardi, 2003; Lusardi & Beeler, 2007; Lusardi, 2008; Lusardi & Mitchell, 2007a; Lusardi & 
Mitchell, 2009). Lack of retirement planning has historical results similar to lack of retirement 
saving; therefore, failure to do either has been associated with lower levels of wealth 
accumulation (Lusardi & Mitchell, 2011; Lusardi, 1999).  
 
Owning the financial products associated with effective retirement savings and wealth 
accumulation could clearly be considered a best practice behavior (Hilgert, Hogarth, & Beverly, 
2003). Higher levels of wealth have been associated with higher levels of financial literacy, 

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where wealth was defined as the sum of several financial savings products, including certificates 
of deposit, bonds, stocks, IRAs, and Keoghs (Lusardi, 2008). An individual with higher levels of 
financial literacy should understand the need to own the products designed for long-term savings 
and for providing inflation protection in order to achieve greater wealth accumulation. In 
addition to employer-based retirement plans such as a 401(k), those who are more financially 
literate understand the importance of supplementing long-term savings. Therefore, it is a 
personal choice and behavior of the individual to look outside employer retirement plans in order 
to accumulate more wealth for retirement needs.