Stanford Initiative for Financial
Decision-Making
Just three questions. Give it a try here.
Results are pretty discouraging.
Can you pass a basic financial literacy test?
We can’t control what others do and we can’t stop misfortune from striking. But we can control our own actions. Those who are financially prudent will most likely enjoy success, even if events don’t always go their way.
QUINNSCOMMENTARY 
Try this quiz on Retirement Literacy.
On average, respondents answered just 2.2 questions correctly, or 37% of the questions. Fifteen percent of adults surveyed couldn’t answer a single question correctly.
https://www.benefitnews.com/news/most-americans-get-these-retirement-questions-wrong-can-you-do-any-better?
TIAA Retirement Literacy Questions:
Which statement about Social Security is false?
Choose one of the following
Top of Form
1. The amount someone receives in Social Security benefits depends upon his/her earnings during the last two years of full-time employment.
2. A worker receives Social Security benefit payments if he/she becomes disabled before retiring.
3. Social Security benefit payments will continue as long as an individual is alive, no matter how long he/she lives.
4. Don’t know.
On average, Medicare and other government programs cover how much of an individual’s health care expenses in retirement?
Choose one of the following
Top of Form
1. Over 90%.
2. About 2/3.
3. About 1/2.
4. Don’t know.
Bottom of Form
Latisha plans to start saving for retirement by setting aside $2,000 this year. Her employer offers a 401(k) plan and fully matches a worker’s contributions up to $5,000 each year. Under which scenario does Latisha have the largest amount in retirement savings at year-end?
Choose one of the following
Top of Form
1. She contributes $2,000 to the 401(k) plan and invests the money in a mutual fund that earns a 5% return during the year.
2. She contributes $2,000 to an IRA (individual retirement account) and invests the money in a mutual fund that earns a 5% return during the year.
3. It does not matter—she will have the same amount of year-end savings either way.
4. Don’t know.
Susan worries about living a long life and running out of money. What is the best way for her to address that possibility?
Choose one of the following
Top of Form
1. Buy an annuity.
2. Buy life insurance.
3. There is nothing she can do about this.
4. Don’t know.
Bottom of Form
What is the likelihood that a 65-year-old will eventually need some type of long-term care services?
Choose one of the following
Top of Form
1. About 30% (3 in 10).
2. About 50% (5 in 10).
3. About 70% (7 in 10).
4. Don’t know.
Bottom of Form
On average in the U.S., how long will a 65-year-old [man/woman] live?
Choose one of the following
Top of Form
1. About 14 more years (age 79)/About 17 more years (age 82).
2. About 19 more years (age 84)/About 22 more years (age 87).
3. About 24 more years (age 89)/About 27 more years (age 92).
4. Don’t know.
Bottom of Form
Congrats! Only 7% of investors in the TIAA’s survey answered five or more retirement fluency questions correctly.
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This same quiz has been around for more than a decade. Earlier versions were by Professors Olivia Mitchell and Annamarie Lusardi. I have been highlighting these results as part of most of my discussions with folks who think corporations should invest more financial education as part of their financial wellness program.
My position was, is, and will continue be what it has been. The results are so bad that they do not justify greater employer resource allocation to financial education. The results are so bad – the actual level of financial literacy is so bad – that investing resources in financial education is throwing good money after bad.
I chuckle when folks suggest that people understand their QDIA default investment (a target date fund), or that the 401k should add private equity or crypto, or whatever…
Makes no sense to invest more there – especially true for corporations where the median tenure of American workers has been less than five years for the past seven decades.
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It seems inconceivable to me that only 29 % got them all correct (like I did). They were incredibly easy questions.
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Actually, only 1 of the 3 was specifically financial, the first 2 were basic math. I’m guessing that is why the small number of people who got it all right.
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Interestingly enough, I had my 16 year old son take the quiz; I was highly pleased that he got a 100- in spite of not really knowing what a Mutual fund was. I needed that; maybe there is hope for him in the future. Based on my observations of his school assignments in high school, I wasn’t sure…..
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I also aced the questions, but I concur with James2 comments above. The first two were definitely basic math computations. Most of the kids graduating these days are unable to perform basic math skills. It is a sad commentary on the education system. Further, in my view, most of the younger adults probably had no economics or business curriculums in their formative years.
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