Retirement income literacy lacking among older Americans
The American College of Financial Services has unveiled the findings from its 2023 Retirement Income Literacy Study, spotlighting a significant gap in retirement knowledge among older Americans.
Drawing from a survey of more than 3,765 individuals ages 50 to 75, the study found a concerning lack of knowledge, with participants garnering an average score of 31% on a retirement literacy quiz.
“In the U.S., with the exception of Social Security and the comparatively small number of workers with guaranteed pensions, saving for retirement is voluntary,” said Steve Parrish, professor of practice at the American College of Financial Services. “This requires the consumer to know how much to save, where to save it, and how much to draw down at retirement.”
According to the study, older Americans consistently underestimate their need for lifetime retirement income. Just one-fifth of respondents (22 percent) expected to live past 89, and a little more than one-quarter (27 percent) were able to correctly state the average life expectancy for a 65-year-old man.
The data showed literacy levels diverging along several demographic lines. Respondents with assets over $1.5 million scored significantly higher than those with less than $100,000 (50 percent versus 25 percent, respectively).
Education was another key factor, as participants with advanced degrees and college graduates tended to have higher scores.
Retirement income literacy scores tended to be higher among white and Asian respondents than for Black and Hispanic individuals. The financial gender gap also made itself felt in the survey, with men consistently scoring higher on the retirement knowledge scale than women.
The study also found a clear correlation between higher
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