How financially illiterate are Americans?

A article in the NYTs says “Many people are not aware IRAs exist.”  Can that be true? I bet it is.

One survey reports the median worker has only $955 saved for retirement. Another says 1 in 5 Americans over 50 has no retirement savings.Some people push for a national IRA with auto enrollment because people don’t have access at work. 

I find that curious because as you know there are individual IRAs, ROTH IRAs, SEP IRAs (Simplified Employee Pension), Solo 401(k) and a Simple IRA. Of course there is the good old brokerage account and annuities too.

The TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) highlights that financial literacy in the U.S. has hit a decade-low. U.S. adults correctly answered an average of just 47% of the basic personal finance questions on the index.

Some observers take this point of view. “The problem isn’t that Americans don’t care—in fact, surveys show a strong desire to learn—but rather that the financial landscape has grown increasingly complex while formal education has struggled to keep pace.” 

Do you agree with that? Did you learn what you know about financial matters through formal education, or did you exercise initiative and educate yourself? Needless to say, all we need to know is readily available with reasonable effort and awareness. These days you don’t even have to do individual searches, you can have an AI tool do the initial work. 

My 50 years of trying to educate workers about retirement, 401k, social security and health care coverage tells me it’s not lack of formal education (although I support that), it is absolutely a lack of caring about such issues, a lack of trying to be aware and an inability to focus on longer term issues and goals.

When was the last time you ignored something you truly cared about?