Financial literacy awareness programs’ impact on retirement savings patterns seems to be headed in a positive direction. Numerous studies on financial literacy awareness conclude that such education efforts do, indeed, have a significant impact on retirement preparedness. However, other studies have found no clear correlation, showing that financial literacy education has changed behavior 0.1% of the time, the indicator of success. However, with financial literacy awareness programs still in their relative infancy, one could argue that the jury is still out on the long-term effectiveness of these programs.
However, a recent study in the Journal of Financial Planning, cited in Forbes, endorses the idea that financial literacy awareness does significantly impact retirement preparedness. However, the results aren’t super-encouraging. It turns out that recent efforts to boost financial literacy awareness may be falling on somewhat deaf ears — or the message just isn’t translating as well as it should. Only 26% of the respondents were able to pass the quiz with a score of 60% or higher. Conducted by the American College of Financial Services, the quiz asked a series of questions around retirement, financial planning, and other financial preparedness topics designed to determine Americans’ retirement readiness and literacy rates. The research consisted of data collected from approximately 1,200 Americans ages 60-75 with at least $100,000 in investable assets. As Forbes aptly points out, that excludes most lower-income cohorts.
The 38-question quiz asked questions on 12 different topics, including taxes, Medicare, Social Security and retirement plans like 401ks. Respondents scored highest on the questions pertaining to Medicare (while also indicating the most concern about changes). Female respondents seemed most concerned about how Medicare changes would impact their financial security. The lowest scores had to do with questions on annuity products.