Retirement-aged American’s didn’t not fair well, or we might say failed miserably, on a basic retirement income literacy quiz conducted by The American College. The RICP® “Retirement Income Literacy Survey” provides a great insight into the financial knowledge of retirement aged Americans. Retirement-aged Americans face a large number of very important financial decisions and have a great need to understand basic retirement income strategies in order to preserve their assets in retirement.
Only 20% of those surveyed passed the retirement income quiz, and passing required 61% of questions to be answered correctly. Only a total of 2% scored better than 80%, and a total of 7% scored better than 70%. The survey included over a thousand retirement-aged American’s, aged 65-75 with at least $100,000 of investable assets, were included in the survey.
To make matters worse, retirement-aged Americans were overly confident in regards to their financial literacy. 97% stated they were “very knowlegeable” or “somewhat knowlegeble” about saving for retirement. Nearly all of those surveyed felt “moderately confident” that they would have a successful retirement and over half felt “well-prepared” to meet their retirement income needs. That confidence is obviously not built on a foundation of financial literacy.
It is important to point out two-thirds of the people included in the survey have a relationship with a financial advisor. The study does not define what “a relationship” entails, but does specify that nearly all of those with an advisor meet with their advisor at least annually. Only one out of four indicated they have a written retirement plan. The survey overview highlights written retirement plans as of the best opportunities to increase the retirement income literacy.
Make sure you work with your clients and motivate them to go through the process of preparing a financial plan. This process will be highly beneficial for your clients, helping them understand important financial concepts and strategies, and lead them down the path of financial security. Fundemental planning is a great place to start, and creating plans that include important retirement and insurance illustrations can be completed in under two hours using Silver Financial Planner. For highly-detailed planning, Golden Years helps you counsel your retired or pre-retired clients about cash flow, distribution and tax implications.
