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If you think you are financially literate, then try to answer this question:
How much of your healthcare expenses do Medicare and other government programs cover in retirement?
Over 90%? About two-thirds? Or about half?
If you chose “about two-thirds,” you’re correct, and you’re in the minority.
Only about one in four Americans answered that question right on a financial literacy quiz, completed online in January by 3,371 consumers.
Overall, Americans got correct answers on just under half of the quiz questions. The findings come from the 2025 Personal Finance Index, published in late May by the TIAA Institute and the Global Financial Literacy Excellence Center.
Each of the 28 questions covers a basic concept of financial literacy: Saving and investing, borrowing and managing debt, spending money and comprehending financial risk.
Most Americans don’t pass this financial literacy quiz
In a financially literate society, the quizmasters say, most of us would know most of the answers. Yet, only 16% of quiz-takers got 22 or more of the 28 questions right. The average test-taker knew about half of the answers.
“In a capitalist economy, when human beings are responsible for managing their own finances, including their own lifestyle in retirement, a certain amount of financial knowledge is assumed,” said Michael Finke, professor of wealth management at the American College of Financial Services. “And people who don’t have financial knowledge are vulnerable.”
The Personal Finance Index and attendant quiz have been offered annually since 2017. The results suggest that Americans aren’t making much progress in financial literacy. In the best year, 2020, quiz-takers answered 52% of the questions correctly.
The results matter “because the lack of financial awareness is what holds people back from either building wealth or getting out of a cycle of debt,” said Caleb Silver, editor in chief of Investopedia, the financial journalism site.
Financial literacy runs low, according to Silver and others, because most Americans don’t learn much in school about saving, investing or managing debt.
The next generation may do better. More than two-thirds of states now require personal finance classes for high school graduation, compared with fewer than half of states in 2022, according to the Council for Economic Education.
Financial literacy: We know a lot about debt . . .
The Personal Finance Index quiz measures literacy in eight subjects. The share of correct answers in 2025 ranged from a high of 59%, on the subject of borrowing, to a low of 36%, in the area of comprehending risk. Test-takers showed greater knowledge on the basics of saving, and less literacy on insurance and investing.
If you don’t understand the basics of managing debt, then you might not know that a credit card balance with a 20% interest rate costs the borrower more over time than a balance with a 10% rate.
If you aren’t financially literate on investing, then you might not appreciate the power of compound interest in building retirement savings over multiple decades.
“How much of your paycheck to save for retirement: This is an incredibly important decision that can have a huge impact on the standard of living that you have in retirement,” Finke said.
. . . And not a lot about risk
Nothing flummoxed the quiz-takers more than risk, a set of questions that covered uncertain financial outcomes.
Here is a sample question about risk:
There’s a 50/50 chance that Malik’s car will need engine repairs within the next six months, which would cost $600. At the same time, there is a 10% chance that he will need to replace the air conditioning unit in his house, which would cost $4,000.
Which poses the greater financial risk for Malik? The air conditioning replacement? The car repair? Or is there no way to tell?
To get the correct answer, you multiply the cost of each scenario by its probability. As it turns out, the A/C replacement poses the greater risk. One-third of quiz-takers figured that out.
“It’s a very simple scenario, but there’s a lot going on there,” said Surya Kolluri, head of the nonprofit TIAA Institute.
Test your knowledge on these financial literacy questions
Here are some other questions from the Personal Finance Index quiz. Test your financial literacy!
Latisha plans to start saving for retirement by setting aside $2,000 this year. Her employer offers a 401(k) plan and fully matches a worker’s contributions up to $5,000 each year. Under which scenario does Latisha have the largest amount in retirement savings at year-end?
A) She contributes $2,000 to the 401(k) plan and invests the money in a mutual fund that earns a 5% return during the year.
B) She contributes $2,000 to an IRA, or Individual Retirement Account, and invests the money in a mutual fund that earns a 5% return.
C) It doesn’t matter: She will have the same amount of year-end savings either way.
Answer: A.
Anna saves $500 each year for 10 years and then stops saving additional money. At the same time, Charlie saves nothing for 10 years but then receives a $5,000 gift, which he decides to save. If both Anna and Charlie earn a 5% return each year, who will have more savings after 20 years?
A) Anna
B) Charlie
C) Anna and Charlie will have the same amount
Answer: A.
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.
Answer: A.
