From Yahoo Finance: 2025-06-12 05:00:00

Most American adults struggle with basic retirement-related questions. A report revealed that most failed a quiz on Social Security benefits, Medicare coverage, and more. On average, quiz takers got 2 out of 6 questions correct. Lack of knowledge about these topics is concerning, as it impacts financial planning for retirement.

Many Americans mistakenly believe Medicare covers all expenses, leading to surprises about premiums. Understanding the complexities of programs like Social Security and Medicare is crucial for financial planning. Having a grasp of retirement concepts can help prevent running out of money in old age.

Financial literacy is essential for making informed decisions about retirement. Only 28 states mandate financial education for high school students. Starting retirement savings early is crucial due to the impact of compounding. Knowing average life expectancy is key for planning retirement finances.

Understanding the financial implications of retirement decisions is crucial. People who grasp concepts like average longevity are more likely to plan for spending into their 90s. Unrealistic expectations about retirement longevity can lead to poor decisions, like claiming Social Security benefits too early.

Financial literacy increases as retirement becomes more relevant. Many save for retirement through default investments like target-date funds in employer-provided accounts. This simplifies saving for retirement, but knowledge gaps can result in investment mistakes outside of these accounts.

Retirement planning often focuses on saving a specific amount, but translating that number into a sustainable lifestyle is challenging. Preparing for decades of living costs post-retirement requires careful planning. Financial decisions become more relevant as individuals progress through different life stages.

Lack of financial knowledge can hinder retirement planning efforts. Educating individuals on retirement concepts is crucial for making informed decisions. Financial literacy requirements in high school and employer-provided financial education can help bridge the knowledge gap.



Read more at Yahoo Finance: Americans flunk retirement literacy quiz. Here’s why it matters.