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If you think you’re financially literate, try answering this question.
How much health care do Medicare and other government programs cover when they retire?
Over 90%? About two-thirds? Or about half?
If you choose “about two-thirds” you are right, and you are in the minority.
Only one in four Americans answered the question about a financial literacy quiz that 3,371 consumers completed online in January.
Overall, Americans got the correct answers with less than half of the quiz questions. The findings are from the 2025 Personal Financial Index published by the TIAA Institute and the Global Financial Literacy Excellence Center in late May.
Each of the 28 questions covers the basic concepts of financial literacy. Savings and investments, managing borrowing and debt, spending money, understanding financial risk.
Most Americans don’t pass this financial literacy quiz
In a financially literate society, most of us will know most of the answers, says Quizmaster. However, only 16% of Quiz Takers got 22 or more out of 28 questions correctly. The average test taker knew about half of the answers.
“In a capitalist economy, some level of financial knowledge is envisaged when a person is responsible for managing his own finances, including his own lifestyle during his retirement,” says Michael Finke, professor of asset management at American Financial Services. “And those who don’t have financial knowledge are vulnerable.”
Personal Finance Index and Attendant Quiz have been offered annually since 2017. The results suggest that Americans have not made much progress in financial literacy. The best year, 2020, Quiz Taker answered 52% of the questions correctly.
Caleb Silver, editor-in-chief of financial journalism site Investopedia, said:
Financial literacy is low because financial literacy is not learning much in schools about savings, investments or debt management, according to Silver and others.
The next generation may be better. According to the Council on Economic Education, more than two-thirds of states need personal financial classes to graduate from high school, compared to less than half of states in 2022.
Financial literacy: We know a lot about debt. . .
The Personal Finance Index Quiz measures the literacy of eight subjects. The correct share in 2025 ranged from the highest value of 59%, which is eligible for borrowing, to the lowest value of 36% in the area of understanding risk. Test takers showed greater knowledge of the basics of savings and showed less literacy in insurance and investment.
If you don’t understand the fundamentals of managing your debt, you may not know that a credit card balance with a 20% interest rate costs borrowers over time than a 10% interest rate balance.
If you are financially illiterate about investments, you may not appreciate the power of compound interest in building retirement savings over decades.
“How much of your salary to save on your salary for retirement: This is a very important decision that can have a major impact on the standard of living you have retired,” Finke said.
. . . And there’s not much about risk
A series of questions covering uncertain financial outcomes has nothing more burned the Quiz Taker than risk.
Here is the sample question about risk.
Malik’s car has a 50/50 chance of requiring engine repairs within the next six months, which costs $600. At the same time, there is a 10% chance that he will need to replace the air conditioning unit in his home, which costs $4,000.
Which poses greater financial risk for Malik? Replacing the air conditioner? Car repair? Or is there any way to tell?
To get the correct answer, multiply the cost of each scenario by its probability. After all, replacing an A/C poses a greater risk. A third of the Quiz Takers understood that.
“It’s a very simple scenario, but a lot is happening there,” said Surya Kolluri, head of the nonprofit Institute.
Test your knowledge about these financial literacy questions
Below are other questions from the Personal Finance Index Quiz: Test your financial literacy!
Latisha plans to start savings for retirement by securing $2,000 this year. Her employer offers a 401(k) plan, perfectly matching the contributions of workers up to $5,000 each year. Under which scenario does Latisha have the largest amount of retirement savings at the end of the year?
a) She will donate $2,000 to her 401(k) plan and invest her money in mutual funds that will earn a 5% return that year.
b) She will donate $2,000 to an IRA or individual retirement account and invest the money in mutual funds that will earn a 5% return.
c) That’s not the problem: she has the same amount of year-end savings in both ways.
Answer: A.
Anna saves $500 each year for 10 years, then stops saving extra money. At the same time, Charlie saves nothing for ten years, but receives a $5,000 gift. If both Anna and Charlie get a 5% return each year, who will save more in 20 years?
a) Anna
b) Charlie
c) Anna and Charlie have the same amount
Answer: A.
Which Social Security statement is false?
a) The amount received in Social Security benefits depends on your income during full-time employment over the past two years.
b) Workers will receive Social Security benefits if they become invalid before resignation.
c) Social Security benefits payments continue, no matter how long they live, as long as the individual lives.
Answer: A.