Roger Ferguson, President and CEO, TIAA-CREF
National Financial Literacy Month marks a time for each of us to focus on the importance of financial education and its impact on our own future financial health – and that of our nation.
Today, many Americans are facing financial challenges of all kinds. In light of this and other factors, retirement has become a source of increasing anxiety across the land. For many, retirement planning is more of a do-it-yourself proposition than ever before. The shift away from traditional pensions to 401(k) plans in the private sector has placed saving and investment decisions squarely on the shoulders of the individual. And far too many people focus solely on accumulating savings rather than ensuring they have a guaranteed stream of lifetime income during retirement.* Navigating such issues successfully takes a level of financial understanding that many simply do not possess – even those nearing retirement.
At the other end of the demographic spectrum, today’s college students face more financial challenges than previous generations. Family income has dropped, and public funding for student support has declined, while the costs of undergraduate and graduate education continue to rise. The result is that today’s students carry unprecedented debt burdens that can significantly impact their financial futures.
So what can be done to address these and other financial challenges? Improving financial literacy is an essential part of the response.
Schools, families, government, and businesses all have a role to play. Ideally, financial education should begin at a young age, with basic concepts introduced early in childhood and reinforced throughout a person’s lifetime.
Yet today, more than half the states have no financial education requirements in their K-12 curricula, and only four states mandate that students take a personal finance class in high school. Both local school districts and state legislatures should work to make financial education part of the school curriculum nationwide – well before students enter college and begin grappling with options to finance their educations. Teachers need to be given appropriate training to ensure financial education courses are effective. And parents and families have a responsibility to explain and model sound financial decision-making in their daily lives.
Businesses, and the financial services industry in particular, are another source of financial education skills. They could start by focusing on the financial literacy of their own workforces, recognizing that it’s never too late to help people get on track with their finances, even for workers who may be approaching their retirement. But beyond that, the industry possesses a wealth of knowledge that should be shared far and wide to help Americans manage their money, make wise purchasing decisions, use credit responsibly, and invest prudently to achieve lifelong financial security.
Finally, each of us as individuals has an important role to play in ensuring our own financial well-being. I urge you to see National Financial Literacy Month as an opportunity to review your own financial goals and explore the many resources available to help you improve your knowledge and understanding of financial matters. Encourage your relatives, friends, and co-workers to do the same.
This website can help. It includes educational articles, organized by various life stages for easy reference, as well as other tools and resources to help you get started. We hope these insights and ideas will be useful as you undertake your own personal journey to better financial literacy.
*Guaranteed income is subject to the claims paying ability of the issuing insurance company.