Richard Thripp A Survey of Investing and Retirement Knowledge and - - PowerPoint PPT Presentation

Richard Thripp

A Survey of Investing and Retirement Knowledge and Preferences of Florida Preservice Teachers

Dissertation Defense Education Ph.D., Instructional Design & Technology University of Central Florida November 7, 2019

Panel Introductions

• Dr. Richard Hartshorne, Committee Chair
• Dr. Debbie L. Hahs-Vaughn, Committee Member
• Dr. Bobby Hoffman, Committee Member
• Dr. Shiva Jahani, Committee Member
• Dr. Gary Mottola, External Committee Member

Richard Thripp, Doctoral Candidate

Introduction

• Preservice teachers
• Career has low pay and benefits
• Mostly female
• Financial knowledge?
• Retirement knowledge? Preferences?
• Prior research is limited
• Survey of 314 UCF preservice teachers

Problem

• Florida offers a choice between a defined-benefit

(DB) and defined-contribution (DC) retirement plan

• Research on preservice teachers’ financial

knowledge and preferences is lacking

• Teachers are financially disadvantaged
• Teachers’ financial knowledge influences students
• How little do they know? An open question

Purpose Statement

The purpose of this study was to investigate the knowledge and perceptions of Florida preservice teachers toward retirement plans, investing, and personal finance, including challenges they anticipate facing in retirement. This survey of preservice teachers provides a window into participants’ knowledge and financial futures, and supports the importance of financial education in teacher education programs.

Theoretical Framework

Financial Wellness Objective Measures Financial Satisfaction Financial Behaviors Subjective Perceptions

Financial Knowledge Financial Attitudes

Joo (2008)

Goal: A rich level of detail

Financial wellness is multi-faceted

Research Questions

• 1. What is the extent of Florida preservice teachers’ knowledge regarding

personal finance and investing, the Florida Retirement system, and retirement plans in general?

• 2. To what extent do Florida preservice teachers anticipate facing financial

challenges in funding their retirement and during retirement?

• 3. Is anticipated teaching career length predicted by DB–DC preference,

DB versus salary preference, or level of concern about not meeting Florida’s eight-year DB vesting period?

• 4. Is the investment allocation sophistication of preservice teachers

associated with financial knowledge, types of financial or retirement accounts owned, DB–DC preference, or demographic characteristics?

• 5. How do Florida preservice teachers compare to college students and

graduates ages 18–25 on financial, retirement, and investing knowledge?

Literature Review

• Lucey & Norton (2011): Preservice teacher knowledge is

limited; I borrowed retirement challenges items from here

• One-third of teachers prefer choosing investments (Chingos &

West, 2015), but are ill-equipped (Rhee & Joyner, 2019)

• Teacher retirement benefits are shrinking (Snell, 2012)
• Teacher financial knowledge and capacity to teach it are both

low (Way & Holden, 2009)

• Gender gaps  compounding disadvantages for women

Research Methods

• Non-experimental
• 39-item survey, mostly author-developed
• 314 UCF students in teacher education courses
• 205 Amazon Mechanical Turk participants
• Mostly quantitative, but with open-ended items
• Assessed knowledge, preferences, investing skill,

concerns, and more

Populations

• UCF preservice teachers* (N = 1,999):
• 87% female
• 57% White & non-Hispanic
• 71% major in elementary or early childhood education
• 76% complete degree within 4 years
• 20% first-generation students
• MTurk: U.S. college students/graduates ages 18–25

* Data from Dr. Orin Smith, Office of the Dean, personal communication, October 24, 2019

Sample: Preservice Teachers (n = 314)

Course

Sections Participants EDE 4223: Integrated Arts and Movement in the Elementary School 1 13 EDF 2085: Introduction to Diversity for Educators 3 29 EDF 2130: Child and Adolescent Development for Educators 1 28^ EDF 4603: Analysis and Application of Ethical, Legal, and Safety Issues in Schools 1 24 EME 2040: Introduction to Technology for Educators (Author’s Course) 2 42^ LAE 3414: Literature for Children 2 42 LAE 4314: Language Arts in the Elementary School 2 50 MAE 3310: Elementary Mathematics for Teaching I 1 21 RED 3012: Basic Foundations of Reading 1 17 SSE 3312: Teaching Social Science in the Elementary School 4 48

Total: 10 Courses 18 314

^ These participants received extra credit

Sample: Preservice Teachers

• 87% female
• 81% White
• 21% Hispanic among Whites; 23% overall
• 38.5% Minority
• 61.5% White & non-Hispanic
• Mean age = 23.5; 90% below Age 30
• 90% upper-level students

Sample: Preservice Teachers

Major n % M age

% Male % Minority

Elementary Education 216 69.7 23.96 6.6 39.0 Early Childhood Development & Education 30 9.7 22.90 31.0 Exceptional Education 13 4.2 20.62 23.1 Social Science Education 10 3.2 25.50 50.0 30.0 Art Education 8 2.6 21.63 12.5 75.0 Secondary Education 8 2.6 22.50 75.0 57.1 Music Education 6 1.9 21.50 16.7 16.7 Mathematics Education 4 1.3 * * * English Language Arts Education 2 0.6 * * * Science Education 1 0.3 * * * Other or Dual Major 12 3.9 22.33 41.7 41.7 Overall 310 100.0 23.52 11.4 38.4

Sample: MTurk (n = 205)

• Nationwide (7% Florida)
• 20% plan to become teachers
• 38% female
• 74% White
• 14% Hispanic among Whites; 14% overall
• 37% Minority
• 63% White & non-Hispanic
• Mean age = 23.1 (restricted 18–25)

Data Collection

• 86% in-person paper surveys (preservice)
• 14% Qualtrics (preservice) and 100% (MTurk)
• Paper vs. Web instruments nearly identical
• MTurk participants paid $1.00
• MTurk version omitted Florida items
• Extremely low missing data / attrition, except 20% of preservice

teachers skipped portfolio allocation exercise (difficult)

Instrument

• You have each been given a copy of the paper

instrument for preservice teachers

• Q21–Q24 and Q26–Q31 borrowed from others*
• Any questions to address from committee?

* (Peng et al., 2007; Lusardi & Mitchell, 2008; Lucey & Norton, 2011)

MTurk

Results: RQ1 Preservice Knowledge

• Very low; only 24% knew this was false:
• Buying a single company stock usually provides a safer return than a stock mutual fund
• 26% knew FL allows DB/DC choice
• 51% knew FL participates in Social Security
• 36% knew pensions have minimum vesting periods
• Low familiarity with major types of retirement plans
• Financial knowledge was lower than a national study
• Even when comparing to females ages 18–24

Results: RQ2 Retirement Challenges

• Preservice teachers know they may have to work

in retirement

• They are already anticipating low salaries and not

being able to afford discretionary contributions

• MTurk participants were more concerned about

student loans and credit card debt

“Bad” portfolios: 15% or more in money market or 30% or more in money market and bonds combined

Results: RQs 3–4

• Regressions unsuccessful at predicting preservice teacher

anticipated career length or “good” investment allocation

• Open-ended responses showed pensions often preferred as

commitment devices but immediate needs often come first:

• “I would rather know the money is set aside for once I retire than

take a chance at spending it along the way because it looks like I’m just being paid more.”

• “I’d rather be old and poor when I die knowing I had the capability

to provide everything my family could want or need than to die with more money than I would’ve needed for myself at an old age.”

Results: RQ5 MTurk Comparison

2.48 2.03 3.00 3.47 3.32 3.62

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 Employer IRA Social Security Familarity With Retirement Plans Preservice 18–25 MTurk

Statistically significant difference of composite score found with Mann–Whitney U test (p < .0001; z = –9.80)

Results: RQ5 MTurk Comparison

2.9% 10.5% 3.4% 15.1% 21.3% 35.5% 19.8% 53.3%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Brokerage 401(k), etc. IRA Any of 3 Possession of Accounts by Group Preservice 18–25 MTurk

Statistically significant difference for “Any of 3” found with chi-square test (p < .0001; φ = .406).

Results: RQ5 MTurk Comparison

29.0% 34.5% 26.6% 8.3% 1.6% 6.3% 15.6% 22.9% 24.9% 30.2%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 1 2 3 4 Financial Knowledge Composite Score Chart Preservice 18–25 MTurk

Statistically significant difference found with Mann–Whitney U test (p < .0001; z = –11.00)

MTurk did better even if adding a penalty for wrong answers (will add to dissertation if requested)

Results: RQ5 MTurk Comparison

31.59% 20.15% 26.34% 12.32% 9.63% 22.96% 22.70% 18.30% 24.87% 11.18%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% Money Market Bonds 2060 U.S. Stocks Foreign Stocks Mean Fund Contribution Percentages Preservice 18–25 (n = 208) Mturk (n = 205)

“Bad” portfolios: 15% or more in money market or 30% or more in money market and bonds combined

Results: RQ5 MTurk Comparison

17.3% 27.8% 82.7% 72.2%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Preservice 18–25 (n = 208) MTurk (n = 205)

"Good" or "Bad" Portfolio Allocation? Good Bad

Chi-square test: p = .011; φ = .126

Discussion

• Overall, the next generation of Florida teachers is not set

up for financial wellness due to a lack of knowledge, higher debts (Montalto et al., 2019; Scott-Clayton, 2018), and declining total compensation within the teaching field (Allegretto & Mishel, 2016).

• Gender inequities
• Need for financial education and/or fiduciaries
• DC preference common but ill-advised

Limitations

• No cognitive interviews
• Validity
• No pilot tests
• Layout and response issues
• MTurk comparability limited (e.g., gender)
• Instructors not solicited systematically
• Volunteer bias

Recommendations for Research

• Teacher financial illiteracy: Impacts on students?
• Longitudinal research
• More qualitative triangulation
• Extend to early-career teachers
• Explore past financial education and impacts
• Refine portfolio allocation exercise

Conclusion

• Developed useful survey instrument
• Novel methodology provided unique insights
• Preservice teachers have low financial literacy
• – Declining benefits  Retirement outcomes ↓
• Need for efficacious financial education
• Need to “nudge” into good choices and behaviors
• Need for regulation to put our best interests first

Committee Q&A

References

Allegretto, S. A., & Mishel, L. (2016, August 9). The teacher pay gap is wider than ever: Teachers’ pay continues to fall further behind pay of comparable workers. Retrieved from Economic Policy Institute website: https://epi.org/110964 Chingos, M. M., & West, M. R. (2015). Which teachers choose a defined contribution pension plan? Evidence from the Florida Retirement

• System. Education Finance and Policy, 10, 193–222. https://doi.org/10.1162/EDFP_a_00158

Lucey, T. A., & Norton, E. A. (2011). Understandings of retirement concepts among pre-service teachers. Citizenship, Social and Economics Education, 10, 14–26. https://doi.org/10.2304/csee.2011.10.1.14 Lusardi, A., & Mitchell, O. S. (2008). Planning and financial literacy: How do women fare? American Economic Review, 98, 413–417. https://doi.org/10.1257/aer.98.2.413 Montalto, C. P., Phillips, E. L., McDaniel, A., Baker, A. R. (2019). College student financial wellness: Student loans and beyond. Journal of Family and Economic Issues, 40, 3–21. https://doi.org/10.1007/s10834-018-9593-4 Peng, T.-C. M., Bartholomae, S., Fox, J. J., & Cravener, G. (2007). The impact of personal finance education delivered in high school and college courses. Journal of Family and Economic Issues, 28, 265–284. https://doi.org/10.1007/s10834-007-9058-7 Rhee, N., & Joyner, L. F., Jr. (2019, January). Teacher pensions vs. 401(k)s in six states: Connecticut, Colorado, Georgia, Kentucky, Missouri, and

• Texas. Retrieved from National Institute on Retirement Security website: https://www.nirsonline.org/reports/teacher-pensions-vs-

401k/ Scott-Clayton, J. (2018, January 10). The looming student loan default crisis is worse than we thought (Evidence Speaks Reports Vol. 2, No. 34). Retrieved from the Brookings Institution website: https://www.brookings.edu/wp-content/uploads/2018/01/scott-clayton-report.pdf Snell, R. K. (2012, January 31). Pensions and retirement plan enactments in 2011 state legislatures: National Conference of State Legislatures 2011 retirement legislation report. Retrieved from National Conference of State Legislatures website: http://www.ncsl.org/documents/employ/PensionEnactmentsSept30-2011.pdf Way, W. L., & Holden, K. C. (2009). 2009 outstanding AFCPE conference paper: Teachers' background and capacity to teach personal finance: Results of a national study. Journal of Financial Counseling and Planning, 20(2), 64–78.