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Americans Don't Know As Much About Money As They Think

Americans are confident in their understanding of finances - too confident, it turns out. A recent study has made plain that, as the country's economy has continued to recover since 2009's recession, the average citizen's financial literacy has decreased.

Simply put, we think we know more than we do. This is not good. The study, undertaken by the Finra Investor Education Foundation (FIEF), reveals that over-confidence makes people vulnerable to financial mistakes - poor investments, substandard saving plans, a complete dearth of estate planning considerations. According to a recent article in The New York Times, industry professionals prey on such individuals, putting their savings and retirement accounts at risk.

Most people fear they'll run out of money during retirement

FIEF's findings are based on a survey in which respondents answered five basic - indeed, very basic - questions about fundamental financial issues. Only 37 percent of people answered at least four questions correctly. Nevertheless, 76 percent of respondents judged themselves to have a "very high" level of financial acumen. This does not bode well for our collective ability to make wise investment decisions.

Perhaps most troubling is nationwide failure to plan adequately for the future. More than half of the survey's respondents worried about running out of money during retirement, to say nothing of their ability to provide for their beneficiaries' financial security.

The dangers of self-confidence

Proper planning, the study says, is key to a stable future. With this in mind, it is clear that many might benefit from learning the basics of establishing wills, trusts, related financial instruments that can protect - and grow - one's estate.

"In the world we live in, misplaced self-confidence is dangerous," notes The New York Times. Consulting with a trusted attorney, with a reputation for serving his or her clients' best interests, can provide a much-needed measure of safety.

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