Financial Incapability in America
The U.S. Treasury Department, the President’s Advisory Council on Financial Literacy, and the FINRA Investor Education Foundation has discovered through a survey what Mr. ToughMoney and others could have told them for free: Americans are pretty much financially incapable.
- Only 42 percent of all working Americans have ever tried to figure out how much they need to save for retirement. (I guess that’s our job, to figure it out for them.)
- Just 51 percent of Americans between the ages of 45 and 59 have attempted to calculate how much they must accumulate to retire. (What are they waiting for – you tell me?)
- Only 51 percent of survey respondents have a retirement plan at work and just 28 percent have retirement accounts separate from their workplace plan. (I wonder how many own flat screen TVs and have car payments?)
- 17 percent of the survey respondents did not know whether their retirement funds were invested in stocks or stock mutual funds. 37 percent were unsure if their assets were invested primarily in a life-cycle or target-date fund. (But I’ll bet that a far larger percentage can name the channel, day, and time of the broadcast of their favorite sitcoms.)
- While 66 percent of individuals who are not yet retired acknowledged receiving Social Security benefit statements, most said they did not use that information to make decisions about when to retire or when to sign up for benefits. (What the heck do these people do – wake up one day and say to themselves “I think today I’ll have some breakfast, read the funnies, and then retire.”)
And to top it all off, the survey participants were asked some basic questions about interest rates, inflation, bonds, mortgages, and financial risk. Only 30% could correctly answer questions about inflation, interest rates, and risk, and a mere 10% answered all questions correctly.
Let’s just call it what it is: Financial literacy fail.
What is even more frightening is the disconnect between actual knowledge and self-perception. For example, 50% of those surveyed gave themselves the highest score on managing checking accounts and credit cards. However, one-quarter of these self-appointed geniuses reported incurring late fees, overdraft fees, and over-limit fees on their own accounts. Heya!
By now you are probably thinking “Why should I care about these dopes? I know what I’m doing.”
This is why you should care: These financial illiterates vote and they love politicians who will spend your tax dollars.
Sorry about that.