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Do you know how much longer the average 65-year-old American can expect to live? Or what share of retirees’ health care costs Medicare typically pays?
If not, join the club. (And to find out, see below.)
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For the latest edition of their annual survey measuring U.S. adults’ financial knowledge, the TIAA Institute and the Stanford-based Global Financial Literacy Excellence Center (GFLEC) included five questions testing respondents’ “retirement fluency” — what they know about core retirement topics such as Medicare, Social Security and workplace savings plans.
The result? A failing grade. Fewer than 40 percent of the nearly 3,900 people age 18 and over who participated in the January 2024 online survey answered three or more of the multiple-choice retirement questions correctly. On average, respondents got two answers right; 1 in 5 got none right.
On the broader, 28-question survey covering a range of money topics, the average rate of correct answers was 48 percent, consistent with past editions of the annual Personal Finance Index. GFLEC and the TIAA Institute, a research arm of financial services firm TIAA, have jointly produced the study since 2017.
The implications are far from academic. According to the report, people with low financial literacy are considerably more likely to be constrained by debt and financially fragile (meaning they could not come up with $2,000 to cover an unexpected need). Those who scored well on the retirement fluency test were more confident about living comfortably in their golden years.
“Now, more than ever, financial literacy is crucial to addressing our very real retirement savings gaps,” said Thasunda Brown Duckett, CEO of TIAA, in a statement on the findings. “This report shows that if we’re going to improve retirement outcomes, we have to start by improving our understanding of how to save and how long our retirements will be.
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