Most retirement age Americans display a worrying lack of knowledge about what it takes to actually retire, with three in four failing to pass a quiz on how to make their nest eggs last throughout retirement.

The results of the quiz highlight the need to increase retirement income literacy among America’s retiring population. Financial advisors are in a position to move the needle by increasing their own knowledge about generating sustainable retirement income and passing information to clients.

America Gets An ‘F’

The new RICP® Retirement Income Literacy Survey from The American College New York Life Center for Retirement Income quizzed more than 1,200 Americans aged 60-75 with over $100,000 in assets other than their home. The results, even among this relatively well-off, retirement-aged cohort, are troubling.

The survey focused on several retirement income literacy areas, including inflation, Medicare, investments, long term care, life insurance, annuities, Social Security, pensions, and housing. The results of the survey cast a bright light on gaps in retirement income knowledge.

  • 74 percent failed the retirement income quiz, answering less than 60 percent of the questions correctly
  • 13 percent earned a D on the quiz, answering between 61-70 percent of the questions correctly
  • 8 percent got a C, answering between 71-80 percent of the questions correctly
  • 5 percent scored a B, answering between 81-90 percent of the questions correctly
  • Fewer than 1 percent received an A, correctly answering 91-100 percent of the questions correctly
  • The average quiz score was just 47 percent

“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,” said professor David Littell, JD, ChFC®, Retirement Income Program Co-Director 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.”

Take the quiz for yourself here.

The Advisor’s Role As An Educator

Financial planners and retirement advisors are in a unique position to be educators and contribute to the overall financial and retirement income literacy of America.

Most people who took the quiz (61 percent) felt they had a high level of knowledge about retirement income, but just one-third of those who said they were highly knowledgeable actually passed the quiz.

Advisors working with clients who are planning for retirement are in a position to properly educate clients on retirement income. By understanding the risks and challenges of creating sustainable retirement income, advisors can more confidently speak to how to navigate those hurdles through smart retirement income strategies.

Long term care is one area of concern highlighted by the survey, with 82 percent of the respondents saying that they do not expect most older Americans will have a need for long-term care, but in reality the majority of seniors will need some form of long term care.

“It is extremely hard to put a good retirement plan in place when consumers are not literate about the risks they face and how to solve for these risks,” said professor Jamie Hopkins, CLU®, RICP®, Retirement Income Program Co-Director at The American College of Financial Services. “For instance, the misunderstandings about long-term care shown in the survey indicate that people don’t understand the huge burden a long-term care event will have both on their finances and family.”

Become A Retirement Income Advocate For Your Clients

To learn more about the RICP® Retirement Income Literacy Survey and what you can do to become better versed in retirement risks and how to guide clients to a successful and sustainable retirement, you’re invited to join David Littell and Jamie Hopkins for a webcast discussing becoming retirement ready in America.

Littell and Hopkins, who spearhead the Retirement Income Certified Professional® (RICP®) designation program, will go over the survey findings and offer insights into how to increase retirement income literacy.

Retirement Webcast: Register Now

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