Poor financial literacy means that many older people are not making the most of their money in retirement.
The findings from a recent survey conducted by the American College New York Life Center for Retirement Income of over 1,300 Americans (reported here in Motley Fool) show that almost 3 out of 4 people aged 60 to 75 failed to pass a quiz measuring financial literacy, and only 5% managed a grade of 80% or better. Yikes!
According to the Social Security Administration, almost 1 in 4 couples and nearly half of all single retirees count on Social Security for 90% or more of their income. I suspect the same applies to the reliance on pensions in other countries. Given the average retired American worker collects just $1,360 in Social Security benefits per month, and half of all baby boomers have $50,000 or less in retirement savings, it’s little wonder seniors are struggling to make ends meet.
According to the AARP Americans over age 50 own 67 percent of bank deposits and control 70 percent of the nation’s assets. And with the population of those age 65 and over set to double within the next 30 years, the deposits owned by older adults are also poised to balloon.
Banks have been failing miserably to meet the needs of these (and the less wealthy) older customers. There are a few exceptions, like Wells Fargo in the USA that launched extra fraud alerts and established internal units to crack down on fraud aimed at older customers.
A while back, Barclays Bank of the UK assembled a team of employees dubbed Digital Eagles. These tech tutors helped (older) consumers with online and mobile banking and other banking tasks. Judging by the ‘Login-required’ landing page here, I’m not sure how successful this has been (or how active it remains).
But surely a better job can be done? Think seminars, financial training sessions.
Banks might think that ‘an ignorant customer is an easier customer’ and that there are questionable returns for the cost of staging financial training activities for older customers. The Bank of Montreal might beg to differ. Their Retirement & Financial Planning Group Client Seminars have not only helped and informed their older customers but they have been hugely successful in generating additional investments from the same.
Please contact us if you’d like to explore similar initiatives events for your mature customers.