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Today's multifaceted and dynamic financial environment requires a high level of individual financial literacy to ensure that sound financial behaviors are the norm. Unfortunately, many individuals have limited knowledge regarding financial issues and are ill prepared to make sound financial choices. The purpose of this article was to benchmark and then determine if graduating business students' perception of their retirement planning familiarity, motivation, and preparedness improved after taking a semester-long course in Personal Risk Management and Insurance (PRMI). We discovered that business students were more financially literate than nonbusiness students and that business students' familiarity with retirement plans and personal level of readiness to make retirement planning decisions improved significantly after taking the principles class. Specifically, we showed that only 15.8 percent and 42.3 percent of the nonbusiness and business control students, respectively, felt adequately prepared to make retirement decisions, while 82 percent of the business students who completed the PRMI class felt prepared. Ex post, graduating seniors who were exposed to coursework covering life-cycle risks and options to treat those risks perceived that they are leaving college with a better ability to meet the financial challenges that await them. Last, we showed that significant differences existed in retirement plan and investment familiarity based on gender. Our findings provide support for including financial literacy as a general education requirement at colleges and universities. INTRODUCTION Financial decision making for individuals has become more complex for several reasons. Many employers have adopted choice-based total compensation plans, which increase flexibility but also place more decision-making responsibility on employees. Financial services, markets, and risks have become more intricate, and as a result, managing personal finances has become more demanding. Demographic shifts are creating economic challenges and baby boomers are expected to stress the retirement system and consume large amounts of costly health care. Today's multifaceted and dynamic financial environment requires a high level of individual financial literacy to ensure that sound financial behaviors are the norm. Unfortunately, many individuals have limited knowledge regarding financial issues and are underprepared to make judicious financial choices. The purpose of this article was to benchmark college student retirement planning familiarity, motivation, and preparedness and then determine if students' perception of their level of readiness to make retirement decisions improved after taking a semesterlong course that focused on strategies and treatments for managing life-cycle risks. A survey was administered to senior level business students in four different sections of a Principles of Risk Management and Insurance class (PRMI), with two classes taking the survey at the beginning of the semester (control group) and the other classes at the end of the semester (treatment group). Additionally, two nonbusiness courses were surveyed to expand the scope of the study and provide a more accurate benchmark. Several important and major findings were discovered. First, we discovered that business students in general were more familiar with retirement plans and had a higher level of personal readiness to make retirement decisions than their nonbusiness contemporaries. Second, our findings showed that business student familiarity with retirement plans and personal level of readiness to make retirement decisions improved significantly after taking the PRMI class. We showed that only 15.8 percent and 42.3 percent of the nonbusiness and business control students, respectively, felt adequately prepared to make retirement decisions, while 82 percent of the business students who completed the PRMI class felt prepared. Ex post, business students who were exposed to coursework covering life-cycle risks and options to treat those risks perceived that they are leaving college with a better ability to meet the everyday financial challenges that await them. … |
