Survey says…you are not as 401(k) smart as you think

A client of mine owns several banks across several Midwestern states. He recently sent me a copy of a banking industry report that shocked me.

The publisher of this report is a company called Raddon, which is owned by Fiserv. Raddon works exclusively with financial institutions by providing them with research and analysis.

The report named, “Financial Literacy; Prosperity Begins with Knowledge,” was published last April. The research data was compiled from 1,200 online surveys completed during fall 2017. The survey participants were a nationally representative online survey panel of U.S. adults ages 18 and older.

A whopping 84 percent of Americans have never participated in any sort of financial education program. But the survey results found that these same adults claim to possess a great deal of knowledge when it comes to finances.

Raddon found 44 percent of adults said they were extremely or very financially literate. But when given a quiz on the topic, only half passed and just 6 percent earned an “A” (scoring 90 percent or better).

I certainly hope that you don’t suffer from the same investment management overconfidence.

It makes no difference that your company 401(k) retirement plan account statements have recently showed “all-time” high balances. The preservation of those investment gains and the last several years of individual company 401(k) retirement plan contributions and company-matching contributions are what is most important.

Successful long-term investing requires the necessary steps to preserve investment gains in the early stages of stock market declines and a rise in interest rates.

The last several years of stock and bond market investment gains will eventually come at a price for individual company 401(k) retirement plan participants. Some very expensive stock and bond market lessons are long overdue.

Ric Lager
Lager & Company, Inc.