### Most Americans Struggle with Basic Retirement Knowledge, Survey Reveals
A recent report from the TIAA Institute and George Washington University’s Global Financial Literacy Excellence Center highlights a concerning gap in Americans’ understanding of retirement essentials. On average, adults answered only two out of six basic questions correctly, covering topics like Social Security, Medicare, retirement savings, and life expectancy. Annamaria Lusardi, co-author of the report, noted that many underestimate how complex Social Security and Medicare decisions can be, leading to inadequate retirement planning. For instance, many wrongly assume Medicare covers all healthcare costs, only to face unexpected expenses—especially higher-income individuals who pay increased premiums for Medicare Part B and prescription drugs.
### Financial Literacy Impacts Retirement Security
The study underscores a direct link between financial literacy and long-term financial well-being. Those who grasp retirement concepts are better positioned to avoid outliving their savings. However, financial education remains lacking—only about half of U.S. states mandate financial literacy courses for high school graduation. Surya Kolluri of the TIAA Institute emphasized that employers could play a crucial role by offering financial education when employees first join the workforce, as delaying retirement savings even briefly can significantly impact long-term wealth due to compounding. Additionally, many Americans underestimate life expectancy in retirement, with only a third aware that a 65-year-old man typically lives to 84 and a woman to 87—a critical factor in planning for sustained income.
### Key Takeaways for Better Retirement Preparedness
Experts stress the importance of early and informed retirement planning. Michael Finke of The American College of Financial Services highlights the need to estimate post-retirement financial needs accurately. With misconceptions about Medicare, Social Security, and life expectancy prevalent, proactive education—whether through schools, employers, or personal research—is essential. As retirement systems grow more complex, improving financial literacy could help Americans make smarter decisions, ensuring they don’t fall short when they need their savings the most.
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