Retirement Planning and Financial Literacy
It seems obvious that a good grasp of basic financial concepts is an important skill to have when planning one’s retirement. After all, how can one be expected to execute a long-term financial strategy when lacking the education in elementary financial matters?
A study has found that many American households are unfamiliar with even the most basic economic concepts needed to make sensible saving and investment decisions. While the low levels of financial literacy are troubling in and of themselves, policymakers are most concerned because of the potential implications of financial illiteracy for economic behavior.
The study also reveals that people over the age of 50 who are more financially knowledgeable are also much more likely to have thought about retirement. The reverse is then true. Those who are not financially knowledgeable are far less likely to have thought about retirement. This is important, because Americans in the older age groups command an annual income which accounts for the majority of the wealth distribution in this country.
Other studies have demonstrated that financial literacy is particularly low among the young, women, and the less-educated. Interestingly, these groups rate themselves as rather well-informed about financial matters, despite their poor performance on key literacy questions. And not surprisingly, people who score higher on the financial literacy questions are also much more likely to plan for retirement.
A lack of financial literacy opens the door to abuse from those looking to target the elderly. Older consumers whose financial literacy skills have declined may be particularly vulnerable to the sale of unsuitable investments, not to mention fall prey to scammers and financial hackers.
This is one of the bigger reasons why it is so important to invest time, learning about financial literacy — to help protect yourself from anyone looking to con you.
If you are educated in a subject, it’s much harder to be taken advantage of. It is an investment of time and energy that cannot only protect you, but pay dividends as time goes on.
Retirement strategies are more important than ever with uncertainties abounding in the financial quarter. “A day late and a buck short” is not the situation you want to find yourself in when it comes time to venture off into your golden years. A sound and sensible investment strategy is the best defense against risky and potentially disastrous financial decisions.
There are many private and public organizations at local, state, and national levels that offer tools and programs to help people build financial literacy skills which can help them make good decisions and to pursue ongoing financial stability.
IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
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David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC