Promoting Financial Literacy

By Hannah Wallace July 31, 2008

Nearly 60 percent of workers older than 55 have saved less than $100,000 for retirement, according to the 2008 Retirement Confidence Survey conducted by the Employee Benefit Research Institute, and 49 percent of workers overall have savings of $25,000 or less. Meanwhile, the U.S. personal savings rate wavers between 0 percent and 1 percent, due in part to skyrocketing health and fuel costs and stagnant wages.

These financial pressures are not expected to ease up. Add to the mix the looming baby boomer retirement strain on Social Security and Medicare systems, and you have a recipe for financial insecurity and hardship—not the comfortable, albeit frugal, retirement for which Floridians are known.

Florida officials are concerned that the working population, especially, is in dire need of financial education and guidance to weather economic turbulence and to mitigate diminished retirement resources from employers. Led by Florida’s chief financial officer Alex Sink, the Legislature created the Florida Financial Literacy Council ( in 2006 to study problems that arise from a lack of financial knowledge and to recommend solutions.

Paul Auslander, CEO of American Financial Advisors, is one of Sink’s appointees to the council. “The Pension Protection Act gave small businesses the ability to educate employees” about retirement investments, says Auslander. The 2006 act also removed obstacles for employers who want to institute automatic enrollment in their companies’ 401(k) plans.

Up to 50 percent of employees who have access to 401(k) accounts do not enroll. Of those who do, most are contributing only minimum amounts into safe investments that don’t keep pace with inflation. Sarasota-based FCCI Insurance Group instituted automatic employee sign-up in its 401(k) plan with immediate employer matching, and saw participation increase to close to 90 percent.

AARP and other advocacy groups are now lobbying Congress for automatic savings plans that range from required auto-enrollment in 401(k)s to tax credits for small businesses that provide payroll deductions for IRAs.

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