Americans nearing and in retirement don’t know enough about retirement income planning according to a new survey by The American College of Financial services, as roughly 75% of survey respondents failed the 38-question retirement planning quiz. (The quiz can be taken here.) The research surveyed a total of 1,244 Americans between February 16, 2017 and March 1, 2017. The literacy rate survey had a sampling error at the 95% confidence level of +/- 2.8%. According to David Littell, the Retirement Income Program Co-Director at The American College, “the results are alarming and a stark reminder of the need to be prepared for the decades in retirement when you are not earning a steady stream of income.” The survey, which asked Americans between the ages of 60 and 75 with at least $100,000 in investable assets a variety of literacy, attitudinal, and planning questions, is actually a follow-up from a 2014 survey in which the literacy results yielded similar results.

Not only did most Americans fail the quiz, only 6% of respondents were able to score an A or B on the quiz, 91% to 100% and 81% to 90% correct respectively. Despite the poor performance on the quiz, Americans continued to report high levels of perceived self-knowledge. For instance, almost two-thirds of the respondents (61%) stated that they were highly knowledgeable about retirement planning. However, only 33% of the self-identified highly knowledgeable respondents were able to pass the literacy quiz. This overconfidence in perceived knowledge could lead to retirement planning problems, as many believe they know more than they do when it comes to retirement planning.

Demographics played a huge role in literacy rates according to the survey. For instance, roughly 35% of male respondents passed the quiz, while only 17% of female respondents passed the quiz. This is very troubling as women often face a number of additional retirement planning risks that their male counterparts do not face as frequently. For instance, women tend to have longer life expectancies than men, meaning they will have a longer retirement period. A longer retirement brings with it a slew of issues such as more exposure to inflation, increased chance of long-term care needs, and a higher probability of outliving one’s savings.

Full Content: Forbes

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