The world isn’t prepared for retirement
It’s not just America. New data show people all over the globe don’t understand basic concepts of investment and inflation.
Most online quizzes are relatively mindless, promising to reveal which vegetable, sandwich or rock band best represents your personality. That was not the case for a short online test given to 16,000 people in 15 countries this year. It revealed just how unprepared a good chunk of the world is for retirement.
The three-question test, given as part of the Aegon Retirement Readiness Survey 2018, measured how well people understand basic financial concepts. Many of the participants failed the quiz, with big potential consequences for their future security.
Beyond the sobering lack of financial literacy, there were some rather curious data in Aegon’s annual survey, published on Tuesday. For example, some 20% of workers surveyed in China envisioned spending retirement with a robot companion. But before we get to that, take a look at this question—which only 45% of people around the world got right:
Q. Do you think the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund.”
The possible answers? True, false, do not know and refuse to answer.
Sixteen percent of people got it wrong. “Do not know” was chosen by 38%. In the U.S., 46% of workers got it right. Good for you, America—though Germany beat you handily. (The answer, in case you were wondering, is false.)
It was an inflation question that had the highest percentage of wrong answers, however. More than 20% of workers didn’t grasp how higher inflation hurts their buying power. Given that declining health was the most-cited retirement worry, at 49%, and health care is an area (in the U.S., especially) with high cost inflation, well, that makes the subject something older folks should have down cold…