Robert M. La Follette School of Public Affairs
Monday, March 8, 2010

Thanks to federal grant, Holden to co-direct financial literacy research

Professor Karen Holden is pleased to find that she will be working during her retirement — and that her efforts will help more Americans secure their own retirements. Holden will serve as co-principal investigator for a financial literacy research grant the campus Center for Financial Security received. The U.S. Social Security Administration has awarded the Center for Financial Security first-year funding of $1.48 million as one member of the administration's new Financial Literacy Research Consortium. Boston College and the RAND Corporation also will house research centers under this consortium.

La Follette School photo by Bob Rashid, 2005
 Karen Holden
 Pamela Herd La Follette School photo by Bob Rashid, 2005
 Geoffrey Wallace

"A large part of the center's mission will be to produce materials that help members of the public understand the role of Social Security benefits and their own responsibility to save money for their retirement," says Holden, who retired in July after 30 years on campus. "UW-Madison's interdisciplinary Center for Financial Security will conduct and disseminate applied research on financial literacy and consumer behavior to help Americans plan their futures."

Holden's own research looks at two ends of the age spectrum: the effects of social security and pension policy on economic status after retirement and widowhood, and on financial education for young children.

"Financial literacy is a lifelong process that can begin as early as reading literacy and continue throughout life," says La Follette School faculty affiliate J. Michael Collins, assistant professor of consumer science. He is director of the campuswide Center  for Financial Security, a partnership that includes the La Follette School, the School of Human Ecology, the Institute for Research on Poverty, the Waisman Center, and the Center for Demography and Aging.

"Financial literacy is shaped by cognitive development and life circumstances as people move from education into careers and, eventually, retirement. The FLRC-supported research takes this life-course perspective," Collins says.

Two other La Follette School professors are funded under the five-year grant. Geoffrey Wallace will examine the adequacy of retirement savings and correlates of changes in adequacy over time. Pamela Herd will look into how people's education, cognition and psychological resources affect financial literacy skills by using data from the Wisconsin Longitudinal Study, a long-term study of a random sample of 10,317 men and women who graduated from Wisconsin high schools in 1957.

The special emphasis of the Social Security Administration grant includes financial issues for families in transition and people with disabilities and their caregivers; financial decision-making by older adults; financial knowledge among vulnerable populations; and the role of education, counseling and coaching in overcoming financial literacy deficits. "We expect this research to have implications for consumer behavior, public policy and financial-planning professionals, increasing understanding of how to better prepare for retirement and to increase security over economic cycles and through personal financial shocks," Holden says.

Holden gets into retirement rhythm, October 5, 2009, La Follette School News

Financial security center receives Social Security Administration award, October 7, 2009, University of Wisconsin-Madison News