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September 08, 2017 at 08:58 AM
Americans feel more financially secure than they did five years ago, despite financial literacy being low, according to a survey released Thursday by Financial Engines.
Almost half of Americans surveyed said they feel more secure than they did in 2012, but only 6% were able to pass a financial literacy quiz.
(Related: ‘Substantial Room for Improvement’ in Investors’ Financial IQ: AMG Funds)
- Over half underestimated the appropriate amount of life coverage for their situation.
- Nearly two-thirds didn’t know they can defer Social Security benefits until age 70.
- Less than a quarter are confident about claiming Social Security benefits at all.
“It’s not surprising that Americans are feeling better about their financial situations given low unemployment and a record-breaking stock market,” Andy Smith, senior vice president of financial planning at Financial Engines, said in a statement. “But as our quiz shows, there’s a persistent problem with financial literacy in this country. When it comes to your finances, poor decisions you make today can cost you for the rest of your life.”
Financial Engines found that people struggled most with questions about their long-term financial well-being. Subjects like Social Security, planning for health care in retirement and determining their life insurance needs were areas where they needed the most help.
When asked to estimate how much they would need for health care, three-quarters of those between ages 55 and 64 and nearly 60% of respondents closer to retirement guessed between $50,000 and $200,000.
