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Researchers Identify Four Strategies to Improve Financial Literacy

WINDSOR, Conn., April 29, 2013 — In recognition of April being Financial Literacy Month, LIMRA asked 2,000 Americans a series of ten multiple-choice and true/false questions to gauge their knowledge of basic financial and retirement topics.

Few Americans Get an A

The study found that only one in eight Americans correctly answered at least nine questions, and more than a third (36 percent) failed, answering no more than half of the questions correctly.

“As Americans are required to take greater responsibility for their retirement saving, the issue of financial literacy becomes increasingly important,” said Alison Salka, corporate vice president and director LIMRA Retirement Research. “Our study confirms what previous studies have shown – people need more help understanding financial concepts.”    

Based on the quiz results, LIMRA categorized 27 percent of consumers as having a high level of financial literacy; more than half fell into the mid-level range; and one in five consumers displayed a low level of financial literacy (chart).

Men are more likely than women to have a high level of financial literacy, 31 percent and 23 percent, respectively. Older consumers scored higher on the test than younger consumers — nearly 4 in 10 consumers age 55 and older have a high level of financial literacy compared to just 21 percent of consumers under age 55. 

The study found that Americans who worked with a financial professional, had a college education and more than $100,000 in household assets were also more likely to have a higher financial literacy.

Consumers Rate Their Financial Knowledge

LIMRA also asked consumers to rate their own knowledge of investments and financial products. Actual quiz results are compared to the self-reported knowledge results to provide greater insight into the realities of consumer financial literacy.

“Interestingly, consumers’ self-reported knowledge of investments and financial products doesn’t necessarily match their scores,” noted Salka. 

One in four consumers believes they are “not at all knowledgeable” about investments and financial products, yet nearly 60 percent of those consumers actually answered 5 to 7 quiz questions correctly.  The survey revealed only few Americans (six percent) rate themselves as “very knowledgeable.”  But almost a third of those who identified themselves as “very knowledgeable” scored poorly based on quiz results.

Four Strategies to Improve Financial Literacy 

LIMRA has identified four ways that financial institutions, schools, employers and the government can help Americans improve their financial knowledge: 

  1. Educate Early. Twenty four states have some type of financial literacy requirement for K-12 education. Those who are exposed to financial education in high school tend to have higher savings later in life. Our research found that younger people are inclined to overestimate their financial knowledge; earlier education could help bring their actual knowledge level up to their perceptions.  
  2. Educate at Work. Basic concepts taught in school should be reinforced and expanded upon through worksite education programs. Many programs currently focus on transactional activities – how to enroll in a health or retirement plan, how to select investments, etc. A more holistic approach that includes multiple sessions on life planning topics like saving, debt, insurance, and retirement can be very helpful.
  3. Acknowledge and Address Differences. Men and women have different perceptions of their knowledge and different knowledge levels. Men are more likely to rate themselves as very knowledgeable. Differences in confidence levels, as well as actual knowledge levels, should be addressed as part of a targeted education program.
  4. Communicate Resources. Make people aware of the many resources available to them, whether through a website, financial institution, organization, or advisor. There are many ways to be educated; help people connect with the one that works best for them.

“Everyone wants to make good decisions and retire with security.” commented Salka.  “It is important that we all work together to help Americans improve their financial knowledge and make responsible decisions about systematic savings and retirement planning. This will help more people enjoy the retirement lifestyle they desire.”



LIMRA Contacts:

Catherine Theroux, 860-285-7787,


LIMRA, a worldwide research, consulting and professional development organization, is the trusted source of industry knowledge, helping more than 850 insurance and financial services companies in 73 countries increase their marketing and distribution effectiveness. Visit LIMRA at


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