American adults have hit a new bottom in basic financial knowledge.
On topics like spending, borrowing, investing, and retirement, US adults correctly answered only 47% of questions on the TIAA Institute’s 2026 test, the lowest score in the index’s 10-year history.
Even more alarming, the share of Americans with very low financial literacy has grown from 20% to 25% since 2017.
“That’s not statistical noise,” Surya Kolluri, head of the TIAA Institute, told Yahoo Finance. “It’s a measurable, growing segment of the population that lacks the foundational knowledge to handle routine financial decisions with confidence.”
And they’re getting the wrong answers across the board. “This isn’t a single weak spot,” he added. “It’s a widening gap across the full landscape of everyday financial decision-\ making.”
Financial stress, more choices take a toll
There are several factors contributing to this year’s slump.
Kolluri attributes some of it to immediate financial stress supplanting bandwidth for learning.
“When a third of American adults struggle to make ends meet in a typical month, survival mode takes over,” he said.
And when they do try to get a grip on these money matters, many adults turn to social media. That “financial content is engaging but rarely educational,” he said.
Meanwhile, the financial decisions many people are staring down, say, when to claim Social Security, what investments to pick for a 401(k) account, or the best way to pay down a loan, “are getting harder and compounded with more product choices, more individual responsibility for retirement, and higher stakes at younger ages,” Kolluri said.
Low financial literacy comes with a price
Adults with very low financial literacy are four times more likely to struggle making ends meet and four times more likely to lack a month of emergency savings, according to the researchers.
On retirement specifically, Americans are flunking, averaging about two correct answers out of six basic questions. Only 7% were able to correctly answer five or six of the retirement-related questions. More than a third answered just one or none correctly.
“Getting those wrong doesn’t just cost money,” Kolluri said. “It shapes decades of life.”
Younger adults land the lowest scores
More than one-third of Gen Zers are stuck in the very lowest knowledge category, and women consistently score below men across nearly all areas of personal finance.
Men averaged 50% of correct answers compared with 44% among women. Gen Z averaged just 38% correct — far below Gen X (49%) and baby boomers (54%). More than 1 in 3 Gen Z adults fall into the very lowest knowledge category.
Not a good omen. “They’re doing so at the exact moment life starts demanding answers: student loans, first paychecks, whether to enroll in a 401(k),” Kolluri said. “Low financial literacy at that life stage sets a trajectory that’s difficult to reverse.”
The rewards of financial savvy
Here’s why financial education matters: Among those who scored high on retirement questions, for example, more than 8 in 10 save for retirement on a regular basis and 70% feel confident they will have enough money to live comfortably throughout retirement, according to the data.
“The demands on Americans’ financial knowledge have never been higher,” said Kolluri. “Our research finds their knowledge has never been lower. That collision is what makes this moment so urgent.”
Want to test your own knowledge? See how you score on these questions from the test.
1. Akiko has $1,000 in savings that earns a 2% rate of return over the course of the year. The inflation rate during the year is 3%. Which statement is true?
A. She can afford to buy fewer things at the end of the year
B. She can afford to buy more things at the end of the year
C. It’s not clear whether she can afford to buy more things or fewer things at the end of the year
2. Which statement about investing is correct?
A. Investing in the stock of a single company is typically safer than investing in a mutual fund that holds shares of many companies in multiple industries
B. Investing in a mutual fund that holds shares of many companies in multiple industries is typically safer than investing in the stock of a single company
C. Investing in the stock of a single company and investing in a mutual fund that holds shares of many companies in multiple industries are typically equally safe
3. Which statement about Social Security is false?
A. The amount someone receives in Social Security benefits depends upon his/her earnings during the last two years of full-time employment.
B. A worker receives Social Security benefit payments if he/she becomes disabled before retiring.
C. Social Security benefit payments will continue as long as an individual is alive, no matter how long he/she lives.
4. On average, Medicare and other government programs cover how much of an individual’s healthcare expenses in retirement?
A. Over 90%.
B. About 2/3.
C. About 1/2.
Answers: 1. A 2. B 3. A 4. B
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including “Retirement Bites: A Gen X Guide to Securing Your Financial Future,” “In Control at 50+: How to Succeed in the New World of Work,” and “Never Too Old to Get Rich.” Follow her on Bluesky and X.
Sign up for the Mind Your Money newsletter
Click here for the latest personal finance news to help you with investing, paying off debt, buying a home, retirement, and more
Read the latest financial and business news from Yahoo Finance
