TIAA: U.S. financial literacy hits 10-year low on risk

The TIAA Institute’s 2026 Personal Finance Index, released this year, found U.S. financial literacy at its lowest level in the survey’s 10-year history. The study of 3,206 adults showed risk comprehension as the weakest category, with respondents answering 36% of risk questions correctly overall and 33% of Generation Z questions correctly.

Researchers used 28 questions across eight personal finance areas. Scores fell in five of the eight areas in 2026. A shortened version of the survey, the P-Fin 8, included one question from each area and produced similar results: respondents answered 46% of P-Fin 8 questions correctly versus 47% on the full test.

By generation, baby boomers scored 39% on risk items, while millennials and Generation X scored 36% each and Gen Z scored 33%. The report notes that repeated cross-sectional data over a decade cannot fully separate age effects from cohort effects.

One risk question asked respondents to compare expected winnings between two lotteries. Lottery A paid $200 with a 5% chance of winning; Lottery B paid $90,000 with a 0.01% chance. Only 46% selected the correct answer, 22% chose the wrong option, 30% said they did not know and 2% skipped the question. Overall, nearly two-thirds of answers to risk-related items were incorrect.

Evan Potash, executive wealth management advisor at TIAA Wealth Management, wrote in an email that many clients have gaps in financial knowledge and recommended diagnosing those gaps early and incorporating foundational education into planning conversations. Gloria Garcia Cisneros of Great Waters Financial in Minneapolis wrote in an email that many people can describe volatility but do not translate that understanding into behavior when portfolios decline.

The report recommends targeted efforts to improve risk literacy and suggests advisers probe whether clients truly understand the risks they accept rather than relying only on stated willingness to take risk. The Personal Finance Index provides ongoing cross-sectional snapshots of financial knowledge in the U.S.