“I’m not surprised that most Americans have low levels of retirement income literacy. And in many ways, can we blame them?” asks personal finance guru and author Lynnette Khalfani-Cox. “Those older people who do have good savings habits or positive money-management skills typically learned the value of thrift from their parents. But they’re the exception, rather than the rule.

“Most Americans — of all ages — didn’t have the best financial role models in their parents,” she says. “Nor do we get any formal training or teaching in the area of investments, Social Security, long-term care and related topics. With so many complexities and so many options, it’s very difficult for the average 60-year-old to stay on top of the stock market, to fully understand the variety of annuities offered in the marketplace, and to also navigate issues like life insurance, taxes and medical insurance planning.”

In survey after survey, Americans have not scored well on retirement literacy tests. But a new survey of Americans ages 60 to 75 says 80% failed a retirement income literacy test.

The results of the poll, released today by the American College of Financial Services in Bryn Mawr, Pa., are pretty dismal. The poll was conducted through online interviews of 1,019 people 60 to 75 years old with at least $100,000 in household assets.

They were asked 38 retirement literacy questions on basics, such as Social Security, life expectancy, IRAs, life insurance and investments, and how bonds work. Only 2 in 10 had passing grades, the college said.

“We’re not surprised by the fact that people don’t know a lot about retirement income planning,” says David Littell, program director at the American College. “I was surprised at how badly they did.”

It’s not the first survey to raise concerns about Americans’ retirement readiness. The 2011 report “Financial Literacy and Retirement Planning in the United States,” done for the National Bureau for Economic Research, found similar shortcomings, though not to the same degree. That report said, “Americans fail to understand critical financial concepts, including interest compounding, inflation, and risk diversification, and these shortcomings are most acute for women, the less educated, and older individuals.” That report also said many people have failed to plan for retirement, even when it’s only five to 10 years off.

Retirement literacy and planning is critical today more than ever because Americans are on their own when it comes to retirement. Company pension plans have largely been replaced by company-sponsored 401(k) plans and Individual Retirement Accounts.

Among the highlights of the new report:

•Only 1 in 4 have a written financial plan, even though a written plan leads to better financial planning and financial decisions.

•A significant minority have never tried to figure out how much they need to accumulate to retire securely.

•Only 31% know that $4,000 is the most they can afford to withdraw per year from a $100,000 retirement account to make it last for 30 years.

•More than half underestimate the life expectancy of a 65-year-old man, which suggests they may not realize how long their assets must last.

•Only 54% realize that Social Security benefits increase each year one delays up to age 70, and a similar percentage know that it is best to wait until age 70 to claim Social Security if you expect to live to 90.

“I see many people who lack critical knowledge about financial products and investing in general,” says New York attorney Ann-Margaret Carrozza, who specializes in elder law and estate planning. “This collective financial ignorance threatens to undermine the security of countless retirees.

“Without a solid financial education, the average investor is at the mercy of his or her financial adviser,” she says. “This leaves them more susceptible to being placed into inappropriate investments (with high commissions to the adviser) as well as outright fraud. I encourage my clients to attend continuing education classes at their local colleges or high schools to shore up their financial knowledge. This can help increase confidence and reduce some of the stress surrounding retirement planning.”

Financial planner Michael Dalton, a retired professor of accounting and taxation at Loyola University in New Orleans who has written or co-written more than 100 books on financial planning, says he thought the questions in the survey went well beyond the survey’s subject, and some were were overly general. Questions on insurance and reverse mortgages should not be included in a retirement-income survey he says. And, he says, the questions went well beyond what people might know. But still, it addresses the problem of retirement literacy.

“There were too many questions about insurance and investments and not enough questions about retirement income,” he says. Still, he was positive about the survey. “I would say this is a good start,” Dalton says.

Khalfani-Cox was still taken aback. “I was surprised by the fact that about 1 in 3 older Americans haven’t even tried to figure out how much money they would need in retirement,” she says. “Even if someone doesn’t have a financial adviser, there are scores of calculators and online tools to help you at least ballpark your retirement needs.

“Given this reality, I wonder if many of these pre-retirees and retirees have simply given up doing any real analysis and planning and opted instead to either cross their fingers or stick their heads in the sand and hope for the best,” she says. “Obviously, neither strategy will get them to a secure retirement.”

She said there is more than enough blame to go around: “I certainly don’t completely blame the 50+ crowd for their lack of financial knowledge,” she says. “The survey’s findings also speak to the poor job that many financial advisers must be doing with their clients. How can you claim to help someone plan for retirement if the client literally does not have a written plan? That’s inexcusable!”

Originally published 12/3/2014 in USA Today