Do You Have the Knowledge to Retire Successfully?

Do You Have the Knowledge to Retire Successfully?

Dec 18, 2015

The American College RICP® Retirement Income Literacy Survey, conducted in July 2014, evaluated the readiness of baby boomers to retire. The survey included 1,016 households with adults between the ages of 60 and 75 who had at least $100,000 in household assets, excluding their primary residence. A total of 1,019 pre-retirees were interviewed.

The questionnaire was developed to include 38 knowledge questions regarding the most pertinent retirement planning issues. These questions were developed with the input of retirement income planning researchers and practitioners, and topic areas from the Retirement Income Certified Professional®(RICP®) education program. Personal questions regarding race, gender, and confidence were also included in the survey. Several retirement income topics were covered in the survey, including: general retirement planning, the ability to maintain one’s lifestyle, retirement income generation, annuities, Social Security, life expectancy, death of a spouse, taxes, inflation, housing decisions, medical insurance, and long-term care planning.

The survey found that only roughly 20% of respondents could score 61% or better (60% and below is a failing grade). Yet 40% of survey respondents indicated that they were “highly confident” that they were financially prepared for retirement. Over 50% indicated that they were “somewhat confident” that they were prepared for retirement. Only 3% of respondents admitted that they are not confident that they are prepared for retirement.

Here are some areas of concern:

  1. More than half underestimated the life expectancy of a 65-year-old man. This suggests that they may not realize how long their assets have to last. 
  2. Only 30% understood that it is more effective to work two years longer, or defer Social Security for two years, than to increase contributions by 3% for five years just prior to retirement.
  3. When asked about issues dealing with the early death of a spouse and life insurance, respondents scored an average of 2%. The failure to understand the risks associated with an early death of a spouse on retirement income planning can put the surviving spouse and an entire family unit at risk.
  4. 25% of respondents knew that 70% of the population is going to need assistance in the activities of daily living at some point, and only 35% realized that family members end up providing services or paying for some long-term care costs.
  5. A significant majority of respondents have never tried to figure out how much they need to accumulate to retire securely, yet, one of the keys to financial security in retirement is accumulating enough money to at least fund basic needs.

Given the survey performance results, retirement income literacy needs drastic improvement. Working with a professional financial advisor can significantly improve your chances of a successful retirement.

If you would like to take the 38 question knowledge portion of the retirement readiness survey go to:


Julie Cole


CFP®, FLMI, Annuity Product Manager

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