By Heather Morton
April is Financial Literacy Month. Financial literacy focuses on the specific knowledge and concepts consumers need to manage their money and build wealth, depending on an individual’s situation.
It may mean learning how to create and manage a household budget, learning how to invest money for retirement, or participating in one-on-one coaching and counseling to determine how to buy a house or start a business. It also can be part of an overall strategy to increase economic security for lower-income families.
Demonstrating that adults often struggle with being financially literate regarding retirement planning, Fidelity Investments recently conducted its first Retirement IQ Survey, to gauge the average American’s knowledge on retirement planning. For example, the survey asked “Roughly how much do many financial professionals suggest people save by the time they retire?” Two-thirds of the survey respondents underestimated how much they need to save for retirement.
The Retirement IQ Survey results are not alone. Recent surveys by the Insured Retirement Institute found that less than a quarter of baby boomers and members of Generation X reported feeling confident they will have enough savings to last throughout their retirement years.
While most state legislation in recent years has focused on increasing financial education for children in K-12, more bills are focusing on adults. Of the more than 90 bills pending in the 2017 legislative session to date, nearly half of the bills address financial education directed at adults.
For example, Arkansas H.B. 1404 clarifies the administrative responsibilities of the treasurer of state regarding the Achieving a Better Life Experience Program, including conducting outreach and engaging in financial educational activities with individuals with disabilities, stakeholders within the community of individuals with disabilities, and their support system.
If enacted, Colorado S.B. 125 will allow certain people who have been exonerated of crimes to receive lump-sum payments. This is compensation owed to them by the state provided the exonerated person (i) notifies the state court administrator, the governor, and the General Assembly of such election in writing; (ii) completes a personal financial management instruction course; and (iii) acquires and commits to maintain a qualified health insurance plan.
In 2016, Virginia legislators enacted S.B. 124, requiring the Department of Corrections to offer prisoners, before release, the opportunity to participate in a transition program to include advice for job training opportunities, recommendations for living a law-abiding life and financial literacy information.
In 2015, Maine legislators provided ongoing funding to the office of aging and disability services program within the Department of Health and Human Services for the operation of personal financial management assistance programs for senior citizens, to assist older people with maintaining their financial independence and avoiding financial exploitation. The same year, Virginia enacted legislation directing the Department of Social Services, in consultation with the Virginia Employment Commission and Virginia Community College System, to develop and implement a plan under which citizens receiving public assistance will be provided information on free financial literacy courses.
If you want to take a more hands-on approach to encouraging financial literacy, mark your calendar for April 3-7 for National Retirement Planning Week 2017 and join dozens of state and federal lawmakers helping to educate consumers about financial literacy and the importance of saving for retirement.
This year’s theme, Rethink Retirement, emphasizes the importance of planning for holistic retirement and the value of working with a financial adviser to reach retirement goals. Participation is easy through the website RetireonYourTerms.org.
For the past three years, the National Retirement Planning Coalition, composed of educational, consumer advocacy, and financial services organizations, has used the National Retirement Planning Week to encourage the ongoing effort to help Americans plan for retirement. The coalition, under the leadership of the Insured Retirement Institute, is committed to educating Americans and making retirement planning a national priority.
Heather Morton is a program principal in Fiscal Affairs. She covers financial services issues for NCSL.