Most adult adults are stumbled at the main pension -related issues.
This states a new report by George Washington University of the TIA Institute and Global Financial Literacy Center. Most quizzes bombed a lot of time when they asked six questions about social security benefits, Medicare coverage, employment pension savings, ensuring lifelong income and life expectancy in retirement.
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On average, they correctly answered two of the six questions. But is it surprising?
“Social security and Medicare decisions are not as simple and require people to gather quite a lot of information to prepare a plan,” said Annamaria Lusardi, co-author of the report and senior collaborator of the Stanford Institute of Economic Policy (Siepr). Limited ”.
Interesting about your retirement knowledge? Take a truncated quiz below.
For example, many Americans expect Medicare to cover all its costs. “For them, shock that it is not,” said Surya Colluri, head of the Tiaa Institute at the Yahoo Finance. “And then another surprise is that if their income is high, they will pay higher contributions for Medicare part B and prescription drug benefits.”
“Decisions on Social Security and Medicare are not that simple,” said Annamaria Lusardi, co-author and senior collaborator at Stanford’s Institute of Economic Policy (SIEP) (photo here) (Photo of the TIAA Institute)
Why financial literacy is important: people who scare pension concepts are more likely to not get their money better.
Not surprisingly, many of us are not lacking. Only about 28 states have financial literacy requirements to allow high school students to complete their studies. This is usually a course of one semester involving topics such as budgeting, saving and debt management.
The real problem begins when someone starts work. I wait for the pension savings account to start or about a year, whether it will have a lifelong consequences of saving for pension. Can you tell the compound? “One of the places that can influence is if employers offer this education when young adults join the company,” Kolluri said. “It’s a great time.”
It’s good to know how many years you have to save. Only a third of the Americans knew that an average US 65 -year -old would live around 19 to 84, and a 65 -year -old woman, about 22 years to 87, said the report said.
Find out more: How much should I save 50?
Yahoo Finance told Yahoo Finance, referring to the bead how many years you may need to finance when you get off the workforce, is the most important, Michael Finke, Property Management Professor and Director of the American College of Financial Services Granum Financial Security Center.
“Those who understand the average longevity are 54% more inclined to plan the cost of 90 and delay to tap Social Security checks,” said a co-author of a new study whose main study is the financial planning of longevity.
“Those who unrealistically expected retired longevity are much more prone to the fact that they plan to claim social security income benefits under 65,” he added.
Read more: What are the retirement age of social security, 401 (K) and Ira withdrawal?
“The main obstacle to people to answer these questions correctly is that they have not sat down and thought about what they would need when retiring and what they might seem in the situation,” Yahoo Finance told Jeremy Burke, senior economist at the University of Economic and Social Research at the University of Southern Califoria. “As people approach retirement, they tend to pay a little more attention to it. It is very demanding that many people try to think in 30 years, what their financial situation will look like.”
He is in place. I really didn’t go into a passing idea and I was open to get my employer plan when I was 30 years old, paying a fine and tax, and never looked back. This is so far when I am about what can be worth today.
Usually people become more knowledgeable in finances because it becomes more and more benevolent. “Such decisions about whether I should give money to an individual pension account (IRA) become important when you have enough money to delay IRA or when you get your first job and make a decision to save 401 (K),” said Finke. “It becomes obvious only when we are forced to see the suitability of that choice in our lives.”
Find out more: What are 401 (k)? Rules and how it works.
Then many people also have many people saving in retirement, using unprotected investments such as Target-Date funds that do not need any knowledge of their financial sorcerer.
Almost 7 out of 10 employees save automatic investments in accounts provided by their employers, which do not require they to do something, Finke said. “Basically, when it comes to saving a pension, we bubbles wrapped the experience of employees when it comes to saving.”
This is a good thing in a variety of ways, but adhesive things are when they invest out of 401 (K) and tend to make investment mistakes because they are not as knowledgeable as needed, he added.
You have a question about retirement? Personal finance? Is anything related to a career? Click here to drop the Kerry Hannon note.
The next point in the pension planning is that when people think about whether they have sufficiently saved for retirement, everything is about their own number, Finke said. “This is the total amount of savings you have in your retirement account, but this figure means nothing to anyone because it is so difficult to translate numbers into lifestyle.”
I agree. Being 401 (K) a millionaire sounds like gloomy things, but what does it really mean when you may be three decades of living after retirement?
“Just saying that people are too stupid to make good financial decisions is not the right way to help people better choose,” said Finke.
Kerry Hannon is a senior journalist at Yahoo Finance. She is a career and retirement strategist and 14 books including future “Retirement bites: Gen X CEO, how to secure your financial future,” “Controlling 50 and more: How to Wait in the New World World ” and “never too old to get rich.” Follow her further Bluesky.
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