According to recent research from the TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC), American’s personal finance outlook for 2022 is a mixed bag. The TIAA Institute-GFLEC Index measures financial literacy among American adults, providing insights into the state of personal finance in the country. Based on their findings, here is what we can expect in terms of personal finance in the coming year.
Financial Literacy Levels
The TIAA Institute-GFLEC Index measures financial literacy among Americans based on a series of questions related to personal finance topics like debt, interest rates, and investment products. According to their findings, only 34 percent of American adults are considered financially literate. While this number may seem low, it is actually an improvement over the previous year, where only 30 percent of American adults were considered financially literate.
Retirement Savings
One area where Americans fared poorly in the TIAA Institute-GFLEC Index is retirement savings. Only 42 percent of American adults are currently saving for retirement, and those who are saving may not be putting aside enough. According to the index, the average retirement savings for American adults is only $119,000, which is not nearly enough to support a comfortable retirement lifestyle.
Credit Card Debt
Credit card debt is another area of concern for American’s personal finance outlook in 2022. According to the TIAA Institute-GFLEC Index, 38 percent of American adults carry credit card debt from month to month, and 16 percent have missed a credit card payment in the last year. Additionally, 22 percent of adults pay only the minimum amount due on their credit card bills each month, which means they are not making much progress in paying down their balances.
Savings Habits
While Americans may not be saving enough for retirement, they are still engaging in some positive savings habits. The TIAA Institute-GFLEC Index found that 61 percent of American adults have an emergency fund in place, and 64 percent of adults are saving for short-term goals like a vacation or a down payment on a house. However, there is still room for improvement when it comes to long-term savings goals like retirement.
Conclusion
Overall, the TIAA Institute-GFLEC Index suggests that American’s personal finance outlook for 2022 is a mixed bag. While financial literacy levels are improving, there is still a long way to go. Additionally, retirement savings, credit card debt, and long-term savings goals all present challenges for American adults. However, positive savings habits like emergency funds and short-term savings goals are a step in the right direction.
As we head into 2022, it is important for individuals to take a proactive approach to their personal finances. This may include working on improving financial literacy levels, increasing retirement savings contributions, paying down credit card debt, and continuing to save for short-term and long-term goals. By taking these steps, Americans can improve their personal finance outlook for the coming year and beyond.
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