experience may be the best teacher in other walks of life but not when it comes to retirement investing in fact according to a justreleased study experience counts for surprisingly little when it comes to a working knowledge of finance those with decades more experience are only slightly more literate than those in their 20s those with the most experience still are able to answer barely half of a couple dozen basic financial literacy questions that’s the finding of the new study from tiaa institute and george washington university’s global financial literacy excellence center gflec the authors of the study are paul yakoboski a senior economist with the tiaa institute annamaria lusardi a professor economics and accountancy at gwu and the founder and director of gflec and andrea hasler a professor in financial literacy at gflec take marketwatch’s financial literacy quiz will you get a 1010 the survey they conducted this year represents the sixth year in a row in which the researchers have measured us adults’ financial literacy they did so by sending respondents a detailed survey with 28 questions testing their working knowledge of common financial situations—on issues ranging from saving investing and borrowing to insurance and comprehending risk the researchers distilled the answers into a single index—which they refer to as the pfin index—which reflects the average percentage of questions that are answered correctly read this man is on a mission to bring personal finance classes to all high schools here’s the no 1 lesson he says everyone should know the latest pfin index is 50 which means that on average us adults were able to correctly answer only 50 of the index questions the pfin index has remained remarkably steady since 2017 when it was 49 it got as high as 52 in 2020 in an interview professor hasler said that these variations in the yearly values of the pfin index are not statistically significant which means that the average level of financial literacy today is indistinguishable from where it stood in 2017 can it really be true our financial literacy hasn’t improved over the last six years while this depressing result hints at the poor job that experience does in teaching financial literacy another of the researchers’ results makes this conclusion even stronger upon calculating each generation’s average pfin index values they found that the oldest adults did only marginally better than the youngest ones these results are summarized in the accompanying chart on average those in generation z had pfin index values of 42 this number grows with each older generation but for the oldest generation is still only 54 those with the most experience still were unable to answer nearly half of the financial literacy questions in other words a lifetime of learning from financial missteps increases the number of correct answers on the test by just three on average—from 12 to 15 and note that even if the oldest generation were able to answer all of the 28 financial literacy questions it’s still not clear that it would make much of a difference to their retirement financial security that’s because they needed that literacy the most early in their careers if experience is such a poor and inadequate teacher what is the solution professor hasler says there is “no way around financial education” indeed she and her coresearchers consider their results to be a loud and clear “call to action” the need for financial education is particularly acute when it comes to correctly assessing risk and uncertainty she added such an understanding is crucial to making wise decisions that will impact your lifetime financial security—and especially your retirement but the researchers found that not only was this the subject area in which the average us adult had the least financial literacy their literacy has gone down in recent years in the 2017 pfin index survey us adults on average correctly answered just 39 of the questions relating to comprehending risk in this latest survey it had fallen to 36–a statistically significant decline professor hasler said though the researchers did not collect data on what might have caused this decline in the alreadylow financial literacy about risk and uncertainty my suspicion is that a big culprit was the financial markets’ strength in the wake of the covid19 pandemic it would have hardly been surprising for that pandemic and associated economic lockdowns to cause the stock market to enter an extended and punishing bear market yet far from causing that the stock market enjoyed one of its strongest bull market runs in history no wonder investors are more confused than ever about risk the bottom line educate yourself consult with a qualified financial planner if you have to assume you don’t know all the answers since you probably don’t example of a riskanduncertainty question the pfin index survey asked which of the following indicates the highest probability of getting a particular disease   there is a oneintwenty chance of getting the disease   2 of the population will get the disease   25 out of every 1000 people will get the disease the answer of course is the first option yet according to the researchers only 28 of respondents got it right that’s sobering if we can’t get this simple question right it’s hard to imagine how we can make sound and wise financial decisions impacting our lifetime financial security mark hulbert is a regular contributor to marketwatch his hulbert ratings tracks investment newsletters that pay a flat fee to be audited he can be reached at markhulbertratingscom