38 Questions May Show You How Much You Know About Finance

Why It Matters:

  • Americans in or approaching retirement think they know more than they do about retirement income.
  • About 75% of those surveyed failed a recent test of retirement knowledge.
  • Only 17% of women could pass the 38-question test.

Chase Squires tkc.profilePicture Written by: Chase Squires | Transamerica
March 25, 2019

2-3 Min readClock Icon

From cable stations dedicated to business news to self-help books and magazines, financial information is everywhere. So Americans are pretty up to speed on retirement and investment strategies, right?

Maybe not. A 38-question quiz could change how you feel about your own financial acumen.

A new survey from the American College of Financial Services, a nonprofit accredited college, found 74% of participating Americans failed its quiz about financing retirement. Only 5% got 81% or more of the questions correct.

The Retirement Income Literacy Survey claims to be a comprehensive survey exploring the drawdown phase of American retirement. More than 1,200 Americans between 60 and 75 years old with at least $100,000 in assets participated.

“Over the next 12 years, an estimated 10,000 Baby Boomers will reach the age 65 every day,” said David Littell, Retirement Income Program co-director at the college. “More and more Americans are retiring, but so few understand basic facts and strategies when it comes to ensuring that their retirement is a comfortable one. The results of this survey are alarming.”

  • Of the 61% who claimed to have a high level of financial literacy, only a third passed.
  • Only 17% of women passed the quiz. But men can’t claim much better; only 35% of them passed.
  • Of the participants with a graduate degree, 60% failed.
  • Only 20% of people with less than $1 million in savings passed, but among those with more than a million bucks, only half passed.

Questions probed Americans’ understanding of retirement savings, investments, inflation, long term care, Social Security, and more.

Sample questions:

  1. If you had a well-diversified portfolio of 50% stocks and 50% bonds that was worth $100,000 at retirement, based on historical returns in the United States the most you can afford to withdraw each year is about ____ plus inflation to have a 95% chance that your assets will last for 30 years.

  2. True or false: Taking a portion (20-40%) of a retirement portfolio and buying a life annuity can protect against the uncertainty of life expectancy, ensuring that a basic level of spending is available throughout retirement.

  3. To maximize the safe withdrawal rate from a portfolio over a 30-year retirement period, it is best to hold ___ in equities throughout retirement.

    (Answers, according to the American College of Financial Services: $4,000; true; 50%-60%, or 25%-35% depending risk profile)

Think you got it down? Take the test and compare your results to others online.

The American College of Financial Services was founded in 1927 and is the nation's largest nonprofit educational institution devoted to financial services, offering financial planning designations including the Retirement Income Certified Professional (RICP®), Chartered Life Underwriter (CLU®), Chartered Financial Consultant (ChFC®), and the Certified Financial Planner (CFP®).

Transamerica is not affiliated with the American College of Financial Services.

Things to Consider:

  • Take the test online. It may open your eyes.
  • The breakdown of results may help uncover areas you need to brush up on.
  • Even people who think they have a strong grasp of financial literacy may not.



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