The 2025 P-Fin Index — the most comprehensive annual survey of financial literacy in America — shows the average American can only answer half of the basic personal finance questions correctly.

That score hasn’t budged in nine years. Young adults do worse: Gen Z averages just 38%. Women consistently score 10 points below men. And across every age group, knowledge of retirement basics — Social Security, Medicare, long-term care — is the weakest area of all. Below, I walk through what the numbers actually mean for anyone building toward financial independence.

What Is the P-Fin Index?

The Personal Finance Index (P-Fin Index) is one of the most rigorous annual surveys of financial knowledge in the United States. Run jointly by the TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) at George Washington University, it has been tracking the same set of benchmarks every year since 2017.

The 2025 edition surveyed 3,371 US adults in January, with results weighted to represent the adult population nationally.

The survey covers eight areas of personal finance knowledge — the things most people will have to deal with at some point in their financial lives:

• Earning — understanding what affects your take-home pay, such as taxes and benefit deductions
• Consuming — budgeting and managing day-to-day spending
• Saving — how savings accounts, interest rates, and time work together to build wealth
• Investing — the basics of stocks, bonds, diversification, and risk vs. return
• Borrowing and managing debt — how loans work, what interest really costs you, and how to manage repayments
• Insuring — different types of insurance coverage and how they protect your finances
• Comprehending risk — understanding that most financial decisions involve uncertainty, and being able to reason through it
• Go-to information sources — knowing where to find reliable financial advice and how to spot bad advice

These are not trick questions or obscure financial theory. They are the working knowledge you need to make decent decisions about a mortgage, a pension, a credit card, or an investment account. Think of it as a driving test — except instead of road signs, it covers the financial landscape you navigate every day.

Key concept: “Financially literate” in this context means having enough practical knowledge to make sound decisions about your own money — not being a professional investor or accountant.

Nine Years of Data — and Virtually No Progress

Here is the headline finding, and it is a striking one.

– In 2017, the first year of the survey, US adults answered an average of 49% of the P-Fin Index questions correctly.

– In 2025, after nine consecutive years of measurement, the figure is still 49%.

– In between, it briefly reached 52% in 2020, but it has never sustained any meaningful improvement.

To put that in context: fewer than half of American adults can correctly answer basic questions about their own financial lives. Not a majority. Less than half.

Figure 1: US Adult Financial Literacy, 2017–2025. The score has barely moved in nine years, peaking at 52% in 2020 before sliding back. (Source: TIAA Institute–GFLEC P-Fin Index)

It gets more specific. The share of adults who answered seven or fewer of the 28 questions correctly — the “very low” category — has actually grown, from 20% in 2017 to 23% in 2025. The share at the top, those answering 22 or more questions correctly, has not budged from 16%.

What is particularly striking is what happened during this period. Between 2017 and 2025, Americans lived through a global pandemic, the highest inflation in 40 years, a dramatic rise in interest rates that transformed the housing and mortgage market, the rise of retail investing and cryptocurrency, and a genuine explosion of personal finance content on social media and podcasts. None of it moved the average score.

Why does this matter? Because financial literacy is not just a score on a survey. It is the difference between making informed decisions about your money and making expensive guesses.

What People Know — and What They Don’t

The P-Fin Index does not just give an overall score. It breaks performance down across all eight functional areas, which reveals where knowledge is strong and where it falls apart.

Debt

The best-performing area, perhaps unsurprisingly, is borrowing and debt management. Adults answered 59% of these questions correctly in 2025.

This is likely because debt is something many people encounter early and repeatedly — student loans, car finance, credit cards — and lived experience teaches a basic familiarity with how repayments and interest work, even without formal education.

Risk

The weakest area, by a significant margin, is comprehending risk — and this is worth dwelling on.

Figure 2: Functional Knowledge by Area, 2017 vs 2025. Borrowing leads; risk comprehension lags well behind. Notably, three of the four areas that changed significantly since 2017 got worse. (Source: TIAA Institute–GFLEC P-Fin Index)

Only 36% of risk-related questions were answered correctly in 2025 — down from 39% in 2017. What does “comprehending risk” actually mean in a financial context? It means understanding that most financial decisions do not come with guaranteed outcomes. It means grasping that when you choose an investment, you are choosing a range of possible outcomes, each with a probability attached. It means understanding why putting all your money in one place is riskier than spreading it across many.

This matters enormously for real life. Whether to fix or float a mortgage rate involves reasoning about future interest rate uncertainty. Choosing between a defined benefit pension and a lump sum involves thinking about longevity risk. Deciding how much of your portfolio to put in equities versus bonds involves understanding volatility. All of these require exactly the kind of probabilistic thinking that, according to this data, most adults are not equipped to do.

Risk comprehension scored just 36% — the weakest of all eight areas, and declining. Yet nearly every important financial decision involves reasoning about uncertain outcomes.

Investing and Insuring

The other areas below average — investing and insuring — are also worth noting. Insurance is one of those topics that feels boring until something goes wrong, and by then, it is too late to fix a knowledge gap. Investing literacy gaps matter most for long-term wealth building, which is precisely the foundation that financial independence rests on.

The Generation Gap: Why Gen Z’s Score Is Alarming

One of the sharpest findings in the 2025 report is the gap between generations.

Financial literacy tends to improve with age — older adults have had more time to accumulate financial experience, make mistakes, learn, and encounter more of the situations the survey covers. That pattern holds here.

– Baby Boomers and the Silent Generation score around 55%.

– Gen X scores 52%.

– Gen Y (Millennials) scores 47%, and

– Gen Z — adults born between 1996 and 2003, currently aged roughly 22 to 29 — scores just 38%.

Figure 3: Financial Literacy by Generation, 2025. Gen Z scores 11 points below the already-low national average. (Source: TIAA Institute–GFLEC P-Fin Index)

Now, some of that gap is expected. Younger adults have had less time to encounter financial decisions in real life. A 23-year-old may never have taken out a mortgage, bought life insurance, or made active investment choices.

But here is the concern: Gen Z is entering exactly the period in life when these decisions start to matter most. First jobs come with pension enrolment choices. First apartments involve credit checks and rent-to-income ratios. Student debt repayment begins. The early years of saving and investing are disproportionately important because of compound growth — money invested at 25 has decades more to grow than money invested at 45.

Making these early decisions with a financial literacy score of 38% is a bit like navigating a new city with an outdated map. You can get somewhere, but you are likely to take costly wrong turns.

The power of compound growth means that financial decisions made in your twenties have outsized long-term consequences. Low financial literacy at this stage is not just a gap — it is a compounding disadvantage.

There is also a broader structural question here. Parallel data from PISA 2022 — the OECD’s international assessment of 15-year-olds — showed a historic collapse in mathematical proficiency among young people globally. As I explored in a recent article on maths literacy, the ability to reason with numbers is the foundation of financial literacy. If that foundation is eroding in schools, financial literacy scores among younger generations may reflect something deeper than inexperience.

The Gender Gap: Persistent, Significant, and Not Fully Explained

One of the most consistent findings across all nine years of the P-Fin Index is a substantial gender gap in financial literacy.

In 2025, men answered an average of 53% of questions correctly. Women answered 45%. That is an 8-to-10 percentage point gap, and it has been broadly stable since the survey began.

When researchers control for other demographic factors — age, income, education level, employment status — the gap does not disappear. Women answer significantly fewer questions correctly even when you hold other variables constant. This is not simply a function of women earning less or having less formal education on average. Something else is at work.

Figure 4: Financial Literacy by Gender and Area, 2025. The gap is consistent across most areas — with the notable exception of consuming, where scores are equal. (Source: TIAA Institute–GFLEC P-Fin Index)

Breaking it down by functional area reveals something interesting. The one area where there is no meaningful gender gap is consuming — budgeting and managing spending. Women and men score equally there. In every other area — investing, risk, insuring, saving, borrowing — men score higher, sometimes by 10 to 15 percentage points.

At the top of the distribution, 22% of men demonstrate very high financial literacy. Only 11% of women do. That two-to-one ratio at the top has remained stable for nearly a decade, despite considerable public attention to women and investing, financial independence communities with significant female audiences, and workplace financial wellness programmes.

The report is careful to note that this does not reflect inherent differences in capability. The same is said of the racial and ethnic gaps in the data (see the next section). What these gaps reflect is the cumulative effect of who has historically had access to financial education, financial products, and financial decision-making. Gaps in outcomes are usually downstream of gaps in opportunity.

The gender gap in financial literacy is real, persistent, and not explained by demographics alone. It points to a structural failure in how financial education has been designed and delivered — and who it has reached.

Race, Ethnicity, and Access to Financial Knowledge

The P-Fin Index also examines financial literacy across racial and ethnic groups, and the findings reflect well-documented inequalities in access to financial education and services.

Asian Americans score highest among the groups measured, followed by White Americans. Black and Hispanic Americans score at broadly similar levels to each other, but meaningfully lower than the national average. These gaps appear across all eight functional areas.

The authors are explicit: these differences do not reflect inherent capability gaps. They reflect the downstream effects of structural inequality.

For generations, access to quality financial education — in schools, workplaces, and communities — has not been distributed equally. Nor has access to the kinds of financial products and institutions — savings accounts, investment platforms, workplace pensions — that give people hands-on experience with financial decision-making.

This has a compounding effect over time.

If you grow up in a household without investments, you are less likely to understand investing. If your school did not teach financial literacy — or taught it poorly — you arrive in adulthood with a knowledge deficit that is hard to close.

The data reflects these accumulated gaps, not any difference in intelligence or potential.

The Retirement Knowledge Gap: A Problem That Will Get Expensive

Alongside the core financial literacy assessment, the 2025 P-Fin Index measured something called “retirement fluency” — basically, do people understand enough about retirement to make the decisions that will shape their financial security in old age?

Six questions were asked, covering: how Social Security benefits work, what Medicare does and does not cover, how workplace retirement savings schemes (like a 401(k)) function, how to generate a reliable income in retirement, the likelihood of needing long-term care, and realistic life expectancy in retirement.

These are not obscure topics. They are the building blocks of retirement planning — the information you need to make decisions that will affect the last 20 to 30 years of your life.

The results are, frankly, poor. On average, adults correctly answered just two of the six questions.

Figure 5: Retirement Fluency by Topic, 2025. Only one topic clears 50%. Long-term care — arguably the single biggest financial risk in retirement — is the least understood. (Source: TIAA Institute–GFLEC P-Fin Index)

The highest-scoring topic was ensuring lifetime income: 53% of adults answered that question correctly. Every other topic fell below 50%. Social Security knowledge sat at 42%. Medicare coverage scored 38%. Life expectancy in retirement: 31%.

But the most striking figure — and the one with the largest real-world consequences — is long-term care: just 23% of adults correctly answered the question about the likelihood of needing it.

What does “long-term care” mean? It refers to help with everyday tasks — bathing, dressing, eating, moving around — that many people need as they age. It can mean home care, assisted living, or nursing home care. It is not routinely covered by Medicare (the US government health programme for people over 65). It is often not covered by standard health insurance. And it is expensive: the average annual cost of a private room in a nursing home in the US now exceeds $100,000.

Long-term care is one of the largest financial risks in retirement — common, expensive, and largely uninsured. Yet only 23% of adults correctly understand the likelihood they will need it. This is not an abstract knowledge gap; it is a financial time bomb.

A population that underestimates this risk is a population that will not save for it, will not insure against it, and will be financially devastated when it arrives. The knowledge gap here is not merely an academic concern. It is a retirement security crisis in formation.

The Real Cost of Not Knowing: Financial Literacy and Your Financial Life

At this point you might reasonably ask: does any of this actually matter in practice? Perhaps people muddle through without necessarily being able to ace a financial literacy test.

The P-Fin Index data suggests otherwise. The 2025 report quantifies the relationship between financial literacy scores and actual financial outcomes, and the differences are substantial.

Compared to adults with very high financial literacy, those with very low financial literacy are:

• Twice as likely to be “debt-constrained” — meaning their debt situation is actively limiting their ability to manage their finances or make other financial decisions
• Three times more likely to be “financially fragile” — meaning they could not cover an unexpected expense of even a few hundred dollars without borrowing or selling something
• Five times more likely to have no emergency savings at all — not even one month’s worth of living expenses set aside
• More than twice as likely to spend ten or more hours per week managing personal finance issues — a significant and often invisible burden of stress and cognitive effort

That last point is easy to overlook, but it matters. Financial literacy does not just improve outcomes — it reduces the mental load of managing money. People who understand how their finances work spend less time worrying, less time firefighting, and more time making forward-looking decisions. The opposite is also true: when you do not understand what is happening with your money, it demands more of your attention, not less.

For anyone on a path toward financial independence — building enough of an asset base to make work optional — these gaps are not background noise.

Knowing how compound interest works is not a nice-to-have; it is the mechanism that makes long-term investing actually work.

Understanding risk is not academic; it is how you avoid panic-selling in a downturn or taking on more leverage than you can absorb. Knowing what your pension does and does not cover is not a retirement problem; it is a planning problem you need to solve decades in advance.

Financial literacy does not just help you make better decisions. It reduces the time and energy you spend managing money — freeing both up for everything else.

So What Does This Tell Us? And What Can Actually Change It?

There is a seductive but flawed response to data like this:

– just add more financial education.

– Mandate a class in school.

– Send a few more workplace emails about pension contributions.

– Create more content.

The problem is that nine years of the P-Fin Index — spanning a period of enormous public interest in personal finance — shows no meaningful improvement in average scores. More content alone does not seem to be the answer.

This does not mean financial education is pointless. It means that the kind of financial literacy that actually changes behaviour — the ability to reason about compound interest, evaluate uncertain outcomes, read a financial product’s small print, and think critically about risk — requires deeper foundations than most financial education programmes build on.

As explored in a companion article on maths literacy and PISA 2022, mathematical proficiency is the hidden prerequisite for financial literacy. You cannot understand compound interest without grasping exponential growth. You cannot evaluate risk without basic probability reasoning.

When mathematical foundations erode — and the PISA data suggest they are eroding, particularly among younger students — financial literacy will follow, with roughly a 10-to-20-year lag.

The most effective model, supported by both PISA financial literacy data and independent academic research, is integration:

teaching financial concepts through mathematics, not instead of it.

When compound interest is used as the vehicle for learning about exponential functions, students absorb both the maths and the financial reasoning simultaneously. When ratio problems are framed around mortgage comparisons, numeracy and financial judgement reinforce each other.

At an individual level, the implication is more direct. Financial literacy is a skill, and like most skills, it responds to deliberate effort. Reading the right books, engaging with the right communities, and — crucially — starting to apply the concepts to your own financial life are all things that compound over time.

The people who have built genuinely resilient financial lives are rarely those who got lucky. They are overwhelmingly those who took the time to understand how the system works.

The P-Fin Index has now collected nine years of evidence that, on average, most Americans have not done this yet. That is not a verdict on their intelligence or their intentions. It is a gap — and gaps can be closed.

Data source: TIAA Institute–GFLEC Personal Finance Index (P-Fin Index) 2025 — “Financial Literacy and Retirement Fluency in America,” Yakoboski, Lusardi & Sticha (May 2025).

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