April is Financial Literacy Month, which provides an opportunity to focus on the complexity that an aging America faces as they transition to their golden years. Discover how financial literacy can help you secure a fruitful retirement here.
At Johnson Wealth and Income Management, we understand the unique challenges that Iowa retirees face and are committed to helping our clients achieve financial success.
As a retiree or soon-to-be-retiree, you’ve worked hard your entire life to build a more secure financial future. However, navigating the complexities of retirement planning can be overwhelming. It’s important to have a solid understanding of financial literacy to help ensure you’re making informed decisions.
What is Financial Literacy?
Financial literacy, defined as knowledge of fundamental financial concepts and the ability to do simple financial calculations, is a key skill required to ensure adequate financial protection in older age.
Issues such as how much to save for retirement, how to help protect ourselves and our families from fraud, and helping loved ones manage their assets can be daunting for library staff tasked with directing patrons to reliable information.
Why is Financial Literacy Important for Iowa Retirees?
From learning about tax strategies to what savings accounts you should be contributing to, financial literacy is crucial for managing factors that could affect your golden years – and your wallet. It is important to plan and save enough to provide adequate income in retirement while trying to avoid high levels of debt that might result in bankruptcy, defaults, and foreclosures.
As you near retirement age, the need for understanding your finances increases as they face many important, and often irreversible, choices. Therefore, becoming more financially literate before retirement can help prevent older people from falling into hardship.
For example, people may overspend or withdraw too much money from their retirement accounts too soon. Additionally, not understanding tax laws and healthcare options can result in unexpected expenses and reduce retirement income. According to a financial literacy survey, lack of financial literacy cost 15% of adults at least $10,000 in 2022.
How much did lack of financial literacy cost people last year?
According to a National Financial Educators Council survey, “If we generalize the results to represent all of the approximately 254 million adults who live in the U.S., lack of financial literacy cost Americans a total of more than $436 billion in 2022.”
Benefits of Financial Literacy
Whether it’s managing your retirement income or planning for healthcare expenses, having a strong foundation in financial literacy can help you make better choices.
Avoiding Mistakes: Seemingly innocent financial decisions may have long-term implications that cost individuals money or impact life plans. One of the biggest challenges for retirees is managing their retirement income. With the average life expectancy increasing, Americans need to ensure they have enough income to last through their retirement years. A solid understanding of financial literacy can help you make informed decisions about investment options, budgeting, and planning for unexpected expenses.
Reaching Retirement Goals: There are many wrong moves when it comes to planning for retirement. From not understanding the impact of healthcare costs to not saving an adequate emergency fund. By better understanding how to budget and save money, individuals can create plans that set expectations, hold them accountable to their finances, and set a course for achieving seemingly unachievable goals.
Investing Confidence: It would be somewhat foolish to think you could master the world of investing overnight and without research/knowledge. When it comes to investing for retirement, there’s no room for doubt. By making educated and informed decisions, you can help increase the ability to retire comfortably and take the necessary steps to make that happen.
Understanding all of these moving parts and how it affects your retirement income can help you make better overall decisions.
How to Improve Financial Literacy
We all have different levels of financial literacy. The average American rates their level of financial literacy as 6.2 out of 10, with the highest levels among the Baby Boomers and Gen X. So how do you help ensure you are fully armed with the right information?
1. Subscribe to financial newsletters. For free financial news in your inbox, try subscribing to financial newsletters from trusted sources like our weekly retirement planning blogs here.
2. Listen to financial podcasts. Financial Podcasts can be a great way to soak up financial news while you get on with your every day tasks.
3. Watch a Youtube Show. Are you more of a visual learner? Why not enter the world of financial information online and watch a show on your financial topic of choice?
4. Talk to a Fiduciary Advisor. A financial professional can be a good advocate to have in your corner when you’re expanding your financial know-how. They can answer your financial questions, whether it is about the basic day-to-day money situations or more complex long-term scenarios.
Whatever your level of financial literacy, it’s important to keep your knowledge base growing.
How Johnson Wealth and Income Management Can Help
At Johnson Wealth and Income Management, we’re committed to helping retirees achieve financial success.
When you have retirement in sight, sound decisions are vital in helping you pursue your goals and avoid costly mistakes that can affect your future.
As a financial professional, Fiduciary Matthew P. Johnson and his talented team are committed to helping people just like you create solutions for their retirement assets. Once we understand your risk tolerance, time horizon, and goals, we’ll work diligently to develop a program that carefully balances investment strategies with preserving principal. Today’s economic environment brings challenges, but along with challenges come opportunities and potential rewards. We work closely with my clients to evaluate those opportunities and get in position to reap those rewards. I enjoy helping people build a solid financial foundation for the future.
Additionally, we offer a variety of resources and tools to help you build your financial literacy. From educational workshops to personalized financial coaching, we’re here to help you gain the knowledge and skills you need to achieve success in retirement.
Final Thoughts
Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. When you are financially literate, you have the foundation of a relationship with money, and it is a lifelong journey of learning. The earlier you start, the better off you will be, because education is the key to success when it comes to money.
Contact us today to learn more and to schedule a complimentary consultation.
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