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Financial Literacy and Retirement Readiness

 Kristin Jackson
Family and Consumer Sciences/4-H Agent
Jefferson County

Financial Literacy is having the knowledge you need to make wise financial decisions. Recent research has found that financial literacy is related to retirement savings and retirement readiness.  As America shifts from pension plans seen in the 1980s to defined contribution plans (ex. personal accounts or 401(k)s), financial literacy is becoming more important.  Today, most people must successfully set aside the amount of money needed for retirement with little to no help from their employers.  Hence, it is easy to get off track and wait too long to start saving for retirement.
Check with your employer to see if they offer retirement planning assistance. Photo Credits: Kristin Jackson, Jefferson County

Individuals who do not plan for retirement retire with 50% less wealth than those who do plan for retirement. In order to plan for retirement successfully, you must calculate and save the amount of money needed to maintain your lifestyle after you stop working.  As a rule of thumb, the amount of money received from Social Security is not enough to live comfortably during retirement.  The average monthly payment for a retired worker is $ 1,178.10 a month or $ 14,137.20 annually.  However, not all retirees receive the amount above; some people receive less money.  For this reason, it is necessary to plan ahead.

Some questions you can ask yourself to determine if you are prepared for retirement are:
1.Will I be debt-free?
2.What will my living expenses look like after I retire?
3.Will I receive a pension?
4.How much will I get from Social Security?
5.How much savings will I need?
6.Is my portfolio diversified?
A reputable financial planner can help find answers to the questions above and alert you to other things of which you should be aware.

Sources for locating a financial advisor include:
•Your employer’s Human Resources Department
•The Financial Planning Association, 1-800-647-6340, www.fpanet.org
•National Association of Personal Financial Advisors,1-800-366-2732, www.napfa.org
•Society of Financial Service Professionals, 1-888-243-2258, www.financialpro.org
For more in-depth articles on specific retirement preparedness topics, visit the University of Florida’s IFAS Extension EDIS site, http://edis.ifas.ufl.edu/topic_retirement.  As Dr. Michael Gutter, University of Florida Family, Youth, and Community Sciences Department, emphasizes when discussing savings, “some is better than none.”  So stop waiting and start saving today!


Jump$ tart.  (2011). Jump$ tart Coalition Frequently Asked Questions. Retrieved 5 April 2011 from http://www.jumpstart.org/faq.html

Rooij, Maarten van, Lusardi, Annamaria and Alessie, Rob, (2009), Financial Literacy and Retirement Planning in the Netherlands, DNB Working Papers, Netherlands Central Bank, Research, Department, http://econpapers.repec.org/RePEc:dnb:dnbwpp:231

Social Security Administration.  (2011). Monthly Statistical Snapshot, February 2011. Retrieved 5 April 2011 from http://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/

Are you ready to retire? (2008). ConsumerReports.org. Retrieved 5 April 2011 from http://www.consumerreports.org/cro/money/retirement-planning/retirement-readiness-quiz/overview/retirement-readiness-quiz.htm

Living Well in the Panhandle

Permanent link to this article: http://leon.ifas.ufl.edu/newsletters/2012/04/12/financial-literacy-and-retirement-readiness/