Saving, investing, and planning for retirement
can be an exercise in futility if an individual lacks the know-how that is
required to be successful. While many people may not have the desire or
wherewithal to become retirement experts themselves, they must be able to
recognize and rely on sound advice.
Key to having a meaningful discussion with an
advisor and having the confidence to make an informed decision is a baseline
level of financial literacy, which unfortunately is lacking among people
preparing for retirement.
Only
30 percent were able to answer correctly the ‘Big Three’ financial literacy
questions developed by Drs. Annamaria Lusardi and Olivia S. Mitchell, which are
designed to test an understanding of compound interest, the impact of
inflation, and risk diversification. The ‘Big Three’ financial literacy
Health has emerged as the new frontier in
retirement security. The miracles of modern science and improvements in
nutrition in recent decades have made longer life expectancy the norm rather
than the exception.
Inspiring people to make the link between
health, wealth and well-being as they age is critical to ensure future
retirement preparedness. While most people consider themselves to be in ‘good’
or ‘excellent’ health today, that is unlikely to remain the case for the rest
of their lives because many are failing to take the necessary steps to maintain
good health.
There
is a clear correlation between workers who take steps to maintain good health
and a person’s sense of retirement readiness. Workers who engage in all five of
the five healthy behaviors identified in the survey achieve an ARRI score of
7.4 – a medium score – compared to those who engaged in none of the behaviors
scoring 4.6 – a low score.
One of the key findings of this year’s survey
is the widespread desire to remain in and enjoy one’s own home in retirement.
Making this possible could involve relatively minor home modifications to help
people live independently.
Seventy
percent of respondents say that remaining in their own home is either
‘extremely’ or ‘very’ important to them as they grow older.
Globally,
the most commonly cited feature or device is bathroom modifications (43
percent) followed by home security systems (39 percent) and age-friendly furniture
and panic buttons to call emergency services (both 37 percent).
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