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This cool idea could help people make better money, says older Americans


Surveys regularly show that older Americans regret many things – working too much, choosing the wrong partner, not taking care of their health, etc.

There are also often financial regrets, such as not saving enough and investing little for retirement.

This ultimate regret has many reasons: Everything from the burden of tuition loans, housing costs, parenting and more. So given the fact that most employers today do not offer pensions, this puts even more pressure on workers to fund themselves in retirement.

Now it may be too late for many seniors to do much about their financial problems. But when asked about this by the Social Security Administration (SSA), they had an idea that could help the next generation of retirees do better than them.

The idea is easy to understand: Financial literacy should be taught in schools. SSA cites data showing that four out of five adults—80%—wish they were required to complete a semester or year-long course focused on personal finance while they were in high school. It also said that 84% of those approaching retirement age (60 and older) said “spending and budgeting” should be taught in schools, and even more, 88%, thought courses like should be a graduation requirement.

“Lifelong financial education can be a useful tool to prepare for retirement,” Beth Bean, senior vice president, research and impact, National Endowment for Financial Education, said in a post. posted on the Social Security Administration blog.

Learning financial literacy is not—or shouldn’t be—difficult. Some of the basics include things like budgeting, living within your means, setting aside something each month, using credit wisely, and having a diversified, long-term investment outlook. There’s more to the basics, of course.

Perhaps one of the most important things future retirees can learn is just basic common sense. I know a young girl who, when she turned 18 about a decade ago, was given $100,000 as part of her inheritance. She quickly went outside and blew it on a car. I guess she didn’t understand that those cars depreciate as soon as you drive them out of the lot, and cost a lot of money to insure and maintain. For example, if she puts that 100,000 in the S&P 500
SPX,
-1.79%

back then, now it would be worth about $270,000. And 30 years from now when she’s about to retire? Sigh.

The old man was right. Financial literacy is a big deal. Indeed, with Social Security under strain — its Trust Fund is expected to run dry by 2034, which should lead to a sharp drop in benefits — the teaching of retirees in better managing their money in the future can be a preventative measure against future problems.

But it’s a tall order. Only 15 states are currently committed to “ensure that all high school students take an independent Personal Finance course for at least one semester before graduation,” the report said. NextGen Personal Finance (NGPF), a group dedicated to improving financial literacy. The team has set the lofty goal of ensuring that “By 2030, all U.S. high school students will be guaranteed to take at least one semester-long Personal Finance course prior to graduation.”

Meanwhile, the SSA has other data worth exploring:

  • In it financial welfare poll conducted during the COVID-19 pandemic, 85% of respondents confirmed that part of their personal finances is causing them stress. For 31% of respondents, that concern is “having enough savings for retirement.”

  • In the same poll, 70% said they had made financial adjustments due to the COVID-19 pandemic. In that group, 27% increased their contribution emergency savings, retirement savings, or other savings or investments. By comparison, 21% use emergency savings—or borrow from retirement savings.

The financial stress revealed by the Social Security Administration is worth exploring a bit more. If 85% of respondents said financial stress during the pandemic, that number is certainly increasing today for another reason: the highest inflation rate in 4 decades, has eroded the value of any savings the senior has. Simply put, when inflation is high, retirees need to withdraw assets faster to cover their living expenses.

Adding to the pressure on senior finance is the expiration of federal aid programs that have helped Americans weather the pandemic. The Coronavirus Aid, Relief, and Economic Security (CARES) Act allows for direct payments to individuals, generous monthly discounts for families with young children, and an extension of unemployment benefits. jobs for laid-off workers, but that money ran out two years ago—before inflation skyrocketed. For cash-strapped seniors, it’s one thing or another.

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