Americans who say they expect to “never retire” are more likely than others to score low on a measure of financial knowledge, a new study shows.
https://news.osu.edu/why-saying-youll-never-retire-may-be-a-warning-sign/?utm_campaign=omc_science-medicine_fy24&utm_source=reddit&utm_medium=social
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Published in Financial Services Review: [https://openjournals.libs.uga.edu/fsr/article/view/3584](https://openjournals.libs.uga.edu/fsr/article/view/3584)
Abstract:
We extend previous research on factors related to workers stating that they would never retire, by analyzing the impact of financial knowledge variables on the expectation. The never retire rate is related to objective financial knowledge, with a 20% rate for those who missed all questions, compared to 12% for those who answered all questions correctly. We find a similar pattern between subjective knowledge and the never retire rate. Using logistic regressions, we find that survey respondents who missed questions for objective financial knowledge are more likely to choose a never retire response than those who do not miss any questions. We also find that overconfident respondents are more likely to give a never retire response than underconfident respondents. Our results have implications for financial education and policies related to retirement, as well as for research on retirement adequacy.
Or maybe it’s because we see the writing on the wall. Social security will be gone by the time we retire, and all we will have is whatever is in our savings and 401k to live on.
In other words: 12% of workers with excellent financial knowlege think they’ll never retire.
Seems like a useless or bad faith study if you apply the logic to other subjects.
‘Financial education’ is just a buzzword to blame poor people for being poor. Knowing how stocks work doesn’t raise the minimum wage.
It’s hard to acquire financial knowledge when a positive-feedback loop of increasingly efficient fiscal extraction has been focused on your every activity your entire life
On the other hand,
If you are doing something you truly enjoy doing while making money, why would you stop just because you reach a certain age?
Find something you love and you will never have to work again.
I don’t think there is a causal relationship between the two, nor do they even correlate. It may even be that those who score more highly on measures of financial knowledge are simply better at lying to themselves, or are more likely to have accepted economic fictions like the “trickle down” theory.
(Hey, I just noticed — “trick” is literally part of its name haha)
Interpretation of this result in the linked press release is wild. First they round 18.73% to 20% rather than 19 and 11.73 to 12. Then they don’t acknowledge that people that get 0, 1, and 2 questions out of 3 on the Objective Financial Knowledge questions all get roughly 18% stating that they’re never retiring (18.73%, 17.4%, and 18.32% respectively). Additionally, how valid is a 3 questions measure for assessing financial knowledge when a plurality of the sample (48%) score perfectly?
You don’t need a lot of info on the stock market, 401ks, compounding interests, diversification… when you’re broke.
No amount of “max out your 401k match” and VOO tips change things for someone who is, for whatever reason, not in a position to save money.
Newsflash. People who have less money know less about money.
I have some relatives in their 70s asking how to buy stocks. I told them 30 years ago to buy but they didnt want to ‘lose money’. I hate to say it but its too late for you to buy stocks at 70. Wrong decade to start getting financially literate.
I have a few older relatives who said they never expected to retire, then a few years later, lo and behold, they have retired!
The way exponential growth works is unintuitive to a lot of people, and so they’ve seen their interest compounding slowly most of their adult life, not realizing it will eventually accelerate.
Gaining knowledge requires experience and too many Americans do not get the chance to experience saving money much less investing it.
I am objectively well off. A data scientist young in career making a little above median for my age and position.
I invest, I have a good portfolio.
I would be confident about my future if I had these things in 1995.
Because in 1995, my parents, immigrants from Brazil without high school education, were making as much as I am now when adjusted for inflation, working manual labor in construction.
Maybe expecting working folks with little money and lots of bills to understand the workings of investment and retirement strategies is a bit misguided. For myself, a small time investor e.g. maxing out my IRA each year and CD accounts, I will never have occasion to learn about higher risk investing, trust funds, or even tax-free inheritance. People want to tell me to learn about something I will never need?
Even I wanted to take higher risks, I can’t afford the losses when they happen. Thankfully, for the present, I will collect social security soon. Without it, I’m kind of screwed, as are many.
“Bro just start investing bro”
The stock market isn’t real and will probably be dead by the time I’m 80. Social security will be drained. I will have no option but to work until I am dust.
Granted, I love my job and I don’t mind working. But that’s the reality of it.
Feel sorry for them to miss out on the greatest time “retirement” in their life.. because they will never find “significance”!