A new survey by Junior Achievement USA and AIG finds that nearly two-thirds (64 percent) of teens are concerned about their parents' preparedness for retirement while demonstrating a lack of education about their own. Sixty-nine percent of young adults ages 13-18 say they know little or nothing about financial planning.
When asked what they plan to do after they retire, teens cited traveling, hobbies such as golf or crafts, volunteering, and splurging on RVs or vacation homes as their top choices. More than a third (34%) of respondents think they will retire at age 60 or younger; however, one-third believe they will need less than $5,000 saved to retire and on average the teens plan to start saving for retirement at age 29.
In addition, 46 percent of teens are not confident they know how to plan for retirement. But teens' lack of understanding about financial and retirement planning does not translate into a lack of understanding about the imperativeness of planning. Ninety-three percent say it is important to have a financial plan for retirement, and 92 percent find value in taking a personal finance class in high school.
When asked to identify descriptions and benefits of financial products such as 401ks, annuities, and social security, nearly half (49%) were able to correctly match 401ks, one-third (33%) were right about annuities, and less than two-third (61%) about Social Security. Definitions, though, are just the start of any education process and help is needed in the application: While many could define an annuity, less than one-quarter (21%) of teens identified annuities as a protected source of lifetime income compared to bank deposits, stocks and mutual funds—none of which can provide protected income that cannot be outlived. And only about half (51%) were somewhat confident that Social Security will still exist when it's time for them to retire.
To gain the knowledge they need for information about investing for retirement, teens say they would first go to their parents, closely followed by a financial advisor or banker, other family member, teacher, or friend.