American adults have hit a new bottom in basic financial knowledge.<\/p>\n
On topics like spending, borrowing, investing, and retirement, US adults correctly answered only 47% of questions on the TIAA Institute\u2019s 2026 test,<\/a> the lowest score in the index’s 10-year history.<\/p>\n Even more alarming, the share of Americans with very low financial literacy has grown from 20% to 25% since 2017.<\/p>\n \u201cThat’s not statistical noise,\u201d Surya Kolluri, head of the TIAA Institute, told Yahoo Finance.\u00a0 \u201cIt’s a measurable, growing segment of the population that lacks the foundational knowledge to handle routine financial decisions with confidence.\u201d<\/p>\n And they\u2019re getting the wrong answers across the board. \u201cThis isn’t a single weak spot,\u201d he added. \u201cIt’s a widening gap across the full landscape of everyday financial decision-\\ making.\u201d<\/p>\n Financial stress, more choices take a toll <\/p>\n There are several factors contributing to this year\u2019s slump.<\/p>\n Kolluri attributes some of it to immediate financial stress supplanting bandwidth for learning.<\/p>\n \u201cWhen a third of American adults struggle to make ends meet in a typical month, survival mode takes over,\u201d he said.<\/p>\n And when they do try to get a grip on these money matters, many adults turn to social media. That \u201cfinancial content is engaging but rarely educational,\u201d he said.<\/p>\n Meanwhile, the financial decisions many people are staring down, say, when to claim Social Security, what investments to pick for a 401(k) account, or the best way to pay down a loan, \u201care getting harder and compounded with more product choices, more individual responsibility for retirement, and higher stakes at younger ages,\u201d Kolluri said.<\/p>\n Low financial literacy comes with a price <\/p>\n Adults with very low financial literacy are four times more likely to struggle making ends meet and four times more likely to lack a month of emergency savings, according to the researchers.<\/p>\n On retirement specifically, Americans are flunking, averaging about two correct answers out of six basic questions. Only 7% were able to correctly answer five or six of the retirement-related questions. More than a third answered just one or none correctly.<\/p>\n \u201cGetting those wrong doesn’t just cost money,\u201d Kolluri said. \u201cIt shapes decades of life.\u201d<\/p>\n Younger adults land the lowest scores <\/p>\n More than one-third of Gen Zers are stuck in the very lowest knowledge category, and women consistently score below men across nearly all areas of personal finance.<\/p>\n Men averaged 50% of correct answers compared with 44% among women. Gen Z averaged just 38% correct \u2014 far below Gen X (49%) and baby boomers (54%). More than 1 in 3 Gen Z adults fall into the very lowest knowledge category.<\/p>\n Not a good omen. \u201cThey\u2019re doing so at the exact moment life starts demanding answers: student loans, first paychecks, whether to enroll in a 401(k),\u201d Kolluri said. \u201cLow financial literacy at that life stage sets a trajectory that’s difficult to reverse.\u201d<\/p>\n The rewards of financial savvy <\/p>\n Here\u2019s why financial education matters: Among those who scored high on retirement questions, for example, more than 8 in 10 save for retirement on a regular basis and 70% feel confident they will have enough money to live comfortably throughout retirement, according to the data.<\/p>\n \u201cThe demands on Americans’ financial knowledge have never been higher,\u201d said Kolluri. \u201cOur research finds their knowledge has never been lower. That collision is what makes this moment so urgent.\u201d<\/p>\n Want to test your own knowledge? See how you score on these questions from the test.<\/p>\n 1. Akiko has $1,000 in savings that earns a 2% rate of return over the course of the year.\u00a0 The inflation rate during the year is 3%. Which statement is true?\u00a0<\/strong><\/p>\n A. She can afford to buy fewer things at the end of the year<\/p>\n B. She can afford to buy more things at the end of the year<\/p>\n C. It\u2019s not clear whether she can afford to buy more things or fewer things at the end of\u00a0 the year<\/p>\n 2. Which statement about investing is correct?\u00a0<\/strong><\/p>\n A. Investing in the stock of a single company is typically safer than investing in a mutual\u00a0 fund that holds shares of many companies in multiple industries<\/p>\n B. Investing in a mutual fund that holds shares of many companies in multiple industries is typically safer than investing in the stock of a single company<\/p>\n C. Investing in the stock of a single company and investing in a mutual fund that holds shares of many companies in multiple industries are typically equally safe<\/p>\n 3. Which statement about Social Security is false?<\/strong><\/p>\n A. The amount someone receives in Social Security benefits depends upon his\/her earnings during the last two years of full-time employment.<\/p>\n B. A worker receives Social Security benefit payments if he\/she becomes disabled before retiring.<\/p>\n C. Social Security benefit payments will continue as long as an individual is alive, no matter how long he\/she lives.<\/p>\n 4. On average, Medicare and other government programs cover how much of an individual\u2019s healthcare expenses in retirement?<\/strong><\/p>\n A. Over 90%.<\/p>\n B. About 2\/3.<\/p>\n C. About 1\/2.<\/p>\n Answers: 1. A 2. B 3. A 4. B<\/p>\n Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including “Retirement Bites: A Gen X Guide to Securing Your Financial Future,<\/a>” “In Control at 50+: How to Succeed in the New World of Work<\/a>,” and “Never Too Old to Get Rich.” Follow her on Bluesky<\/a> and X<\/a>.<\/p>\n Sign up for the Mind Your Money newsletter<\/strong><\/a><\/p>\n Click here for the latest personal finance news to help you with investing, paying off debt, buying a home, retirement, and more<\/strong><\/a><\/p>\n Read the latest financial and business news from Yahoo <\/strong><\/a>Finance<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"American adults have hit a new bottom in basic financial knowledge. 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