This Brilliant Idea Can Make Everyone Better With Money, Older Americans Say

Polls consistently show that older Americans regret a lot of things — working too much, choosing the wrong partner, not taking care of their health, and so on.

There are also often financial regrets, such as not having saved enough and investing too little for retirement.

This last regret has many reasons: everything from the burden of school loans, the crushing cost of housing, the education of children, etc. The same goes for the fact that most employers these days don’t offer pensions, which puts even more pressure on workers to fund their own retirement.

It’s probably too late for many seniors to worry about their finances. But when asked about it by the Social Security Administration (SSA), they have an idea that can help future generations of retirees do better than them.

This idea is obvious: financial literacy should be taught in school. The SSA cites data showing that four-fifths of adults – 80% – wish they had been required to take a semester or year-long course focused on personal finance when they were in high school. He also said that 84% of those approaching retirement age (60+) said “spending and budgeting” should be taught in schools, and even more, 88%, think that these courses should be a condition of graduation.

“Lifetime financial education can be a useful tool in preparing for retirement,” says Beth Bean, senior vice president, research and impact, National Endowment for Financial Education, in a Social Security Administration blog post.

Learning financial literacy isn’t – or shouldn’t be – difficult. Some of the basics include things like creating a budget, living within your means, putting something aside each month, using credit wisely, and having a diversified long-term investment outlook. There are more basics, of course.

Perhaps one of the most important things future retirees can learn is common sense. I know a young woman who, when she turned 18 about ten years ago, received a $100,000 inheritance. She quickly got out and blew it on a car. I guess she didn’t realize that cars depreciate by the time you drive them off the lot and cost a ton to insure and maintain. If she had invested that $100,000 in, say, the S&P 500 SPX index,
-1.79%
at the time, it was now worth around $270,000. And in 30 years when she will approach retirement? Sigh.

The elders are right. Financial literacy is a big issue. Indeed, with Social Security under pressure – its trust fund set to run out in 2034, which would lead to a sharp reduction in benefits – teaching future retirees how to manage their money better could provide a buffer against future problems.

But it’s a tall order. Only 15 states have currently committed to “guaranteeing that all high school students complete a stand-alone course in personal finance at least one semester before graduation,” reports NextGen Personal Finance (NGPF), a dedicated group. improving financial literacy. The group has set a lofty goal to ensure that “by 2030, all American high school students are guaranteed to take at least one semester-long personal finance course before graduation.”

Meanwhile, the SSA has other data worth exploring:

  • In its financial wellness survey conducted during the COVID-19 pandemic, 85% of respondents confirmed that some part of their personal finances causes them stress. For 31% of respondents, this concern was “to have enough savings for retirement”.

  • In that same survey, 70% said they had made financial adjustments due to the COVID-19 pandemic. Of this group, 27% have increased their contributions to their emergency savings, retirement savings or other savings or investments. By comparison, 21% dipped into emergency savings or borrowed from their retirement savings.

The financial stress revealed by the Social Security Administration is worth exploring a bit more. While 85% of respondents indicated financial stress during the pandemic, the figure is undoubtedly high today for yet another reason: the highest rate of inflation in four decades, which has eroded the value of all savings available to older people. Simply put, when inflation is high, retirees need to dip into their assets faster to make ends meet.

The expiration of federal aid programs that have helped Americans cope during the pandemic is adding further pressure on senior citizens’ finances. The CARES (Coronavirus Aid, Relief, and Economic Security Act) law allowed direct payments to individuals, generous monthly rebates for families with children and extended unemployment benefits for laid-off workers, but that ended two years ago. years – before inflation skyrocketed. equipment. For cash-strapped seniors, it has been one thing or another.

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