Money knowledge and retirement planning in Japan, the US and Germany

Interest, inflation, diversification. How does knowing the basics of money, often called financial literacy, relate to how people live? Here we look at research from the US, Germany and Japan, and then at an analysis that pools experiments from around the world.

What we know

A review centered on the US

Annamaria Lusardi and Olivia Mitchell pulled together research from many countries, treating financial knowledge as something people build by investing in themselves. Across many studies, people with higher financial literacy tend to save more, hold more wealth and plan for retirement.

Germany

In a German household panel survey (SAVE), basic financial knowledge tended to be weaker among women, people with fewer years of education and people in the former East Germany. Financial knowledge was positively related to planning for retirement. The study used a statistical method, an instrumental variable based on the financial knowledge of people in the same region, to get closer to a causal estimate.

Japan

A study using a 2010 survey by Osaka University found that many people in Japan answered “I don’t know”, and that financial literacy tended to be lower among women, younger people, people with lower incomes and people with less education. People with higher financial literacy were more likely to have a plan for retirement saving.

In the 2022 survey by Japan’s Central Council for Financial Services Information, covering 30,000 people aged 18 to 79, the share of correct answers across 25 questions was 55.7%, about the same as before. For household management questions it was 50.7%, little changed from 51.0% in 2016 and 52.3% in 2019.

Does financial education change knowledge and behavior?

Tim Kaiser and colleagues pooled 76 randomized controlled trials from 33 countries with more than 160,000 people. Financial education raised financial knowledge and improved behaviors such as saving. The size of the effect was similar to that of educational interventions in other fields.

How to read it

• Most of the US, German and Japanese findings are correlational. People who know more tend to plan more, but a simple comparison cannot tell whether knowledge leads to planning or whether people who think about planning go on to learn. The German study uses an instrumental variable to get closer to cause, but that method rests on assumptions.
• The causal evidence comes from the meta-analysis of financial education. Even so, it shows better knowledge and behaviors like saving, not any particular level of income or wealth.
• The Japanese survey is descriptive. The scores describe where things stand, not what causes them. Results from the 2025 survey have not yet been confirmed.
• Research describes averages. It does not predict any one person’s future.

Taken together, the research points the same way on one thing: money knowledge can be learned, and learning it improves both knowledge and behavior.

A small step today

• Use the app habit “Studied for 30 minutes” on money basics, such as how interest, inflation and diversification work. Free materials and courses from public bodies are a good start, with no one trying to sell you a product.
• Apply one thing you learned to your own finances. For example, with “Tracked spending”, look at your biggest spending category from last month.
• Start a retirement plan by writing one line: around what age, and what you will need. Paired with “Paid myself first”, knowledge turns into action.

This article does not recommend any financial product.

Sources

• [D1] Lusardi & Mitchell (2014) The Economic Importance of Financial Literacy: Theory and Evidence. Journal of Economic Literature.
• [D2] Bucher-Koenen & Lusardi (2011) Financial literacy and retirement planning in Germany. Journal of Pension Economics and Finance.
• [D3] Sekita (2011) Financial literacy and retirement planning in Japan. Journal of Pension Economics and Finance.
• [D4] Central Council for Financial Services Information (2022) Financial Literacy Survey 2022.
• [D5] Kaiser, Lusardi, Menkhoff & Urban (2022) Financial education affects financial knowledge and downstream behaviors. Journal of Financial Economics.