Even though most of them think they are
Sometimes it’s easy to fake it until you make it. But what if you don’t actually make it?
Most Americans believe they are financially prepared for retirement, according to a survey from The American College of Financial Services. As more baby boomers hit retirement age, the survey shows they don’t know as much as they think they do when it comes to finances in the golden years.
“More and more Americans are retiring but so few understand basic facts and strategies when it comes to ensuring that their retirement is a comfortable one,” says David Littell, a retirement expert at The American College of Financial Services. “The results of this survey 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 asked more than 1,200 60- to 75-year-olds about financial planning. When it comes to major money decisions on everything from health care to long-term investing, many boomers didn’t have a clue what they were talking about.
Sharp divide among gender, class
If you’re a man with more than $1 million in assets, you’re much more likely to know how to handle your financial future than women and those with less than $1 million.
According to the survey, only 17 percent of women passed the quiz, while 35 percent of men did. Along with that, nearly half of respondents with assets over the $1 million mark passed, while only one-in-five Americans who make less than that passed.
“The drastic demographic differences are unsettling because all Americans — regardless of background — deserve to live out their retirement comfortably,” Littell says. “This divide underscores how important it is for everyone to plan ahead.”
It wasn’t just in terms of sex or income — only 9 percent of respondents without a college degree were able to pass the quiz, while 40 percent of those with a degree passed.
Lack of literacy is huge problem
Experts say financial literacy should start young, both from parents and from schools. If children received an education in money the same way they do science and math, it sets them up later for long-term financial success, both throughout their young careers all the way through retirement.
But a lack of financial education is apparent in the Fidelity survey. Those who passed the quiz were 46 percent more likely to have a long-term care plan in place and more than one-third feel like they can manage their investments throughout retirement.
“With more and more Americans entering into retirement each year, there is a premium on retirement literacy,” Littell says. “The time is now for retirees and pre-retirees to gain the knowledge they need to make smart decisions for a financially secure retirement. It is critical to have a plan in place in order to ensure you are on track for secure retirement years.”
Retirement savings has long been a battle not just for older Americans, but young ones, too. More than mortgages, credit card debt, and student loan debt, saving for retirement is the biggest cause of financial stress. Even with mounting stress, we still can’t manage to save for retirement because of the career setbacks we’re facing.
Article last modified on May 18, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Boomers Aren’t Ready for Retirement - AMP.