|by Rodney Brooks, USA TODAY|
In survey after survey, Americans have not scored well on retirement literacy tests. But a new survey of Americans ages 60 to 75 says 80% failed a retirement income literacy test.
The results of the poll, released today by the
They were asked 38 retirement literacy questions on basics, such as
"We're not surprised by the fact that people don't know a lot about retirement income planning," says
It's not the first survey to raise concerns about Americans' retirement readiness. The 2011 report "Financial Literacy and Retirement Planning in
Retirement literacy and planning is critical today more than ever because Americans are on their own when it comes to retirement. Company pension plans have largely been replaced by company-sponsored 401(k) plans and Individual Retirement Accounts.
"I'm not surprised that most Americans have low levels of retirement income literacy. And in many ways, can we blame them?" asks personal finance guru and author
"Most Americans — of all ages — didn't have the best financial role models in their parents," she says. "Nor do we get any formal training or teaching in the area of investments,
Among the highlights of the new report:
•Only 1 in 4 have a written financial plan, even though a written plan leads to better financial planning and financial decisions.
•A significant minority have never tried to figure out how much they need to accumulate to retire securely.
•Only 31% know that
•More than half underestimate the life expectancy of a 65-year-old man, which suggests they may not realize how long their assets must last.
•Only 54% realize that
"I see many people who lack critical knowledge about financial products and investing in general," says
"Without a solid financial education, the average investor is at the mercy of his or her financial adviser," she says. "This leaves them more susceptible to being placed into inappropriate investments (with high commissions to the adviser) as well as outright fraud. I encourage my clients to attend continuing education classes at their local colleges or high schools to shore up their financial knowledge. This can help increase confidence and reduce some of the stress surrounding retirement planning."
"There were too many questions about insurance and investments and not enough questions about retirement income," he says. Still, he was positive about the survey. "I would say this is a good start," Dalton says.
Khalfani-Cox was still taken aback. "I was surprised by the fact that about 1 in 3 older Americans haven't even tried to figure out how much money they would need in retirement," she says. "Even if someone doesn't have a financial adviser, there are scores of calculators and online tools to help you at least ballpark your retirement needs.
"Given this reality, I wonder if many of these pre-retirees and retirees have simply given up doing any real analysis and planning and opted instead to either cross their fingers or stick their heads in the sand and hope for the best," she says. "Obviously, neither strategy will get them to a secure retirement."
She said there is more than enough blame to go around: "I certainly don't completely blame the 50+ crowd for their lack of financial knowledge," she says. "The survey's findings also speak to the poor job that many financial advisers must be doing with their clients. How can you claim to help someone plan for retirement if the client literally does not have a written plan? That's inexcusable!"