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Keynote: Investing and Retirement Knowledge and Preferences of Preservice Teachers


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Keynote presentation by Dr. Richard Thripp on July 15, 2020 at the International Conference on Humanities, Social and Education Sciences (iHSES).

See full video of presentation here (57 min.):

Investing and Retirement Knowledge and Preferences of Preservice Teachers

New teachers are facing lower pay and less generous retirement benefits than the prior generation, yet their financial and retirement knowledge, concerns, and preferences have received little attention. To investigate these areas, I developed a 39-item survey instrument and administered it to 314 preservice teachers in undergraduate teacher education courses at the University of Central Florida, who were primarily female elementary and early childhood education juniors and seniors ages 18–25. Florida public employees are offered an unusual choice between a traditional pension plan and a defined-contribution plan similar to a 401(k) in which they can select their own investments, and 54% of surveyed preservice teachers preferred the 401(k)-like plan structure. However, their preferences may be ill-advised, given that in a mock portfolio allocation exercise intended to assess retirement investing sophistication, preservice teachers directed more than half their retirement money to low-risk money market and bond funds, which will likely underperform stocks over several decades. Furthermore, they anticipated that low salaries will impede their ability to save for retirement. For comparison, I also administered the survey to 205 U.S. college students or graduates ages 18–25 on the Amazon Mechanical Turk platform for $1.00 each. Worrisomely, preservice teachers had significantly lower financial knowledge and retirement investing sophistication. These findings suggest a need for financial education targeting Florida preservice teachers, particularly given that the Florida Retirement System substantially cut its benefits in 2011.

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Keynote: Investing and Retirement Knowledge and Preferences of Preservice Teachers

  1. 1. Dr. RichardThripp Investing and Retirement Knowledge and Preferences of PreserviceTeachers July 15, 2020 International Conference on Humanities, Social and Education Sciences
  2. 2. 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.
  3. 3. ISTES Free E-Book
  4. 4. Background •Social Security in the United States •Retirement Plans •Investing •Personal Finance
  5. 5. Introduction •Preservice teachers, University of Central Florida •Career has low pay and benefits •Mostly female •Measured financial knowledge •Measured retirement knowledge and preferences
  6. 6. Why? •Wage gap •Gender gap •Limited prior research •Importance of financial literacy • “Trickle-down” knowledge •Insights into behavioral economics •Florida has interesting retirement plan
  7. 7. How? •Developed questionnaire with expert insights •Mainly delivered on paper in-person to classes •314 of UCF’s preservice teachers surveyed •Also surveyed 205 young adults throughout USA on Amazon MechanicalTurk for comparisons
  8. 8. Where? * Includes 35 students in fully- online courses
  9. 9. When? •Summer 2019 (n = 161) • Accelerated courses • At end of Summer A, beginning of Summer B courses • 12-week courses •Fall 2019 (n = 153) • First few weeks of full semester
  10. 10. Research Methods •Non-experimental •39-item survey, mostly author-developed •314 UCF students in teacher education courses •205 Amazon MechanicalTurk participants •Mostly quantitative, but with open-ended items •Assessed knowledge, preferences, investing skill, concerns, and more
  11. 11. GuidingTheoretical 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
  12. 12. 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?
  13. 13. 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
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  19. 19. Page 6 “Bad” portfolios: 15% or more in money market or 30% or more in money market and bonds combined
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  23. 23. 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
  24. 24. Sample: PreserviceTeachers (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 toTechnology 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 forTeaching 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
  25. 25. Sample: PreserviceTeachers 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 0 31.0 Exceptional Education 13 4.2 20.62 0 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
  26. 26. Sample: MTurk (n = 205) •Nationwide (7% were in 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)
  27. 27. 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)
  28. 28. MTurk
  29. 29. 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
  30. 30. 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
  31. 31. Results: RQ2 Retirement Challenges • “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.” • “Because I don’t trust myself to save enough” • “Because I’m horrible at saving money” • “I prefer salary increase because I can save at my own pace while also being more comfortable in current finances.” • “Salary seems to be more beneficial immediately” • “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.”
  32. 32. Results: RQs 3–4 • RQ3: Failed to predict anticipated career length • RQ4: Succeeded at predicting “good” investments • Age was the only significant predictor (older = better investor)
  33. 33. Results: RQ5 MTurk Comparison
  34. 34. 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
  35. 35. Limitations •No cognitive interviews • Validity •No pilot tests • Layout and response issues •MTurk comparability limited (e.g., gender) •Instructors not solicited systematically • Volunteer bias
  36. 36. Recommendations for Research •Teacher financial illiteracy: Impacts on students? •Longitudinal research •Qualitative triangulation •Extend to early-career teachers •Explore past financial education and impacts •Refine portfolio allocation exercise
  37. 37. 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
  38. 38. Call for Collaborators •Qualitative responses not yet analyzed •Every paper survey is scanned to PDFs •I have all the data in a large SPSS file, including transcripts of all qualitative responses •There is a lot we could do with this • if interested
  39. 39. Q&A
  40. 40. Key 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: 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. Lucey, T. A., & Norton, E.A. (2011). Understandings of retirement concepts among pre-service teachers. Citizenship, Social and Economics Education, 10, 14–26. Lusardi, A., & Mitchell, O. S. (2008). Planning and financial literacy: How do women fare? American Economic Review, 98, 413–417. 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. 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. 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: 401k/ Scott-Clayton, J. (2018, January 10). The looming student loan default crisis is worse than we thought (Evidence Speaks ReportsVol. 2, No. 34). Retrieved from the Brookings Institution website: 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: Way, W. L., & Holden, K. C. (2009). 2009 outstandingAFCPE 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.