This report examines the relationship between financial literacy and retirement readiness. It also documents the state of longevity literacy among U.S. adults and examines the relationship between longevity literacy and retirement readiness as well.
Six years of data from the TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) clearly demonstrate that adults with greater financial literacy tend to have better financial well-being. This report shows that retirement readiness, a specific realm of financial well-being, likewise tends to be better among those with greater financial literacy. In addition, it shows that retirement readiness is also related to longevity literacy.
- Financial literacy and longevity literacy are both positively associated with retirement readiness.
- Retirees with high financial literacy were more likely to plan and save for retirement while still working compared to retirees with low financial literacy. The ultimate outcome being that those with high financial literacy tend to have a better financial experience in retirement. For example, they are more likely to report that their lifestyle in retirement meets or exceeds their pre-retirement expectations.
- Longevity literacy, like financial literacy, tends to be low among U.S. adults. Most lack a basic understanding of how long people tend to live in retirement.
- Retirees with strong longevity literacy more typically planned and saved for retirement while still working and now tend to experience better financial outcomes in retirement.