“Is the death benefit from a life insurance policy owned by an individual considered income tax-free?”
This is one of 38 questions posed by the American College of Financial Services in a retirement literacy quiz. The ACFS presented this quiz to over 1,200 retirement-age U.S. adults who have at least $100,000 in household assets. Other quiz questions focus on when distributions must be made from an IRA, when a reverse mortgage must be repaid, and other retirement income-specific questions.
Follow the link to take the ACFS Retirement Income Literacy Quiz.
What were the results of ACFS’ initial quiz? Less than one percent of all participants earned an A, five percent earned a B, eight percent earned a C, and 13 percent earned a D. Of all the quiz participants, almost 75 percent failed in their knowledge of retirement finances. Of all 1,200+ quiz participants, approximately 61 percent claimed to have a ‘high’ level of retirement income literacy. However, of those 61 percent, only one-third of those claims resulted in a passing grade.
Notable topics that were answered incorrectly by multiple quiz participants include the following, among others:
Social Security strategies;
The purpose and parameters of a life annuity;
Long-term care coverage
Jamie Hopkins, co-director of the Retirement Income Program at ACFS, shared this perspective: “People who understand this better have better retirements because they had better planning in place.” (MarketWatch, May 2017) Having a good understanding of retirement income concepts and strategies will give you the insight you need to maximize your golden years.
Of course, you probably don’t have to be a financial expert to plan well for retirement. However, building a strong relationship with a trusted financial advisor can give you the insight you need to plan well for retirement. A financial advisor should be able to inform you on what investment practices best match your financial goals. They can answer questions, provide you with the right information, and walk with you along the way.
At American Portfolios Denver we use evidence-based investing to help investors on their journey towards financial independence. We believe in helping investors understand the ‘why’ behind certain investment types, how to gauge their risk tolerance, and what investing decisions may help maximize their investment returns.
Did you take the ACFS Retirement Income Literacy Quiz? If so, would you like to speak with someone about your results? Schedule a time to discuss your Retirement Income Literacy Quiz results with an advisor.