Most online quizzes are relatively mindless, promising to reveal what
vegetable, sandwich or rock band best represents your personality. That was not
the case for a short online test given to more than 14,000 people in 15
countries this year. It revealed just how unprepared a good chunk of the world
is for retirement.
The three-question test, given as part of The Aegon Retirement Readiness
Survey 2018, measured how well people understand basic financial concepts. Many
of the participants failed the quiz, with big potential consequences for their
Beyond the sobering lack of financial literacy, there was some rather
curious data in Aegon’s annual survey, published this week. For example, some
20 per cent of workers surveyed in China envisioned spending retirement with a
robot companion. But before we get to that, take a look at this question, which
only 45 per cent of people around the world got right:
"Do you think the following statement is true or false? Buying a
single company stock usually provides a safer return than a stock mutual fund.”
The possible answers? True, false, do not know and refuse to answer.
Sixteen per cent of people got it wrong. “Do not know” was chosen by 38
per cent. In the US, 46 per cent of workers got it right. (The answer, in case
you were wondering, is false.)
It was an inflation question that had the highest percentage of wrong
answers, however. More than 20 per cent of workers failed to grasp how higher
inflation hurts their buying power. Given that declining health was the
most-cited retirement worry, at 49 per cent, and healthcare is an area with
high cost-inflation, well, that makes the subject something the older
generation should have sorted.
The survey asked workers - about 1,000 per country, but none in the
Middle East, what global trends would affect their retirement plans. “Reduction
in government retirement benefits” was the most popular answer worldwide,
chosen by 38 per cent globally. The countries most worried about cuts to
government benefits were Brazil and Hungary, at about 53 per cent.
Across the board, though, workers did not seem to recognise the huge
impact that basic changes in the labour force, technology and the climate will
probably have on their retirement plans, says Catherine Collinson, president of
the nonprofit Transamerica Center for Retirement Studies and executive director
of The Aegon Center for Longevity and Retirement.
“It makes me wonder about the extent to which people are naive about the
magnitude of the disruption in our world, and the level of change that has not
only occurred, but is imminent,” says Ms Collinson. “Is it that people don’t
see it coming, or is it so overwhelming that people are in denial?”
Many workers may well be in denial about how long they can actually
work. The survey found workers generally plan to retire around age 65. “The
sobering reality is that 39 per cent of retirees globally retired sooner than
planned,” according to the report. “Of those, 30 per cent stopped working
earlier than they had planned for reasons of ill health, and 26 per cent due to
unemployment / job loss.”
And those robots? The survey asked about “ageing friendly modifications
or devices” people envisioned having in their homes.
Thirty-five per cent of workers in India, 34 per cent of workers in
Turkey and 18 per cent in the US figured ageing could include video monitoring
devices. Then there are the robots, which 20 per cent of Chinese workers see
coming in retirement, compared with 6 per cent of American workers.
The report is intended as a call to action, says Ms Collinson.
Recommendations include working financial literacy into educational
curriculums, promoting a more positive view of ageing and allowing universal
access to retirement savings arrangements.
With the traditional “social contract” between government, employers and
individuals crumbling, “the sooner we roll up our sleeves and get to work, the
sooner we will be able to identify and implement solutions,” she says. Whether
that’s in public-private partnerships or implementing more findings from the
field of behavioral finance, “inaction is really the enemy.”
here for the original article from The National.