U.S. financial literacy falls, Gen Z and women lag most

The cost of missing the basics

Weak financial literacy is now showing up where it hurts most: higher debt stress, thinner emergency savings, and worse retirement decisions in an economy where borrowing costs and everyday prices remain unforgiving. The latest TIAA Institute-GFLEC Personal Finance Index found that U.S. adults answered only 47% of its 28 questions correctly on average, the lowest result in the survey’s 10-year history.

That decline matters because the index is built around the financial choices people face every day: earning, consuming, saving, investing, borrowing and managing debt, insuring, comprehending risk, and choosing go-to information sources. TIAA and Stanford researchers say the broad drop is especially troubling because the survey measures knowledge tied directly to everyday decisions, not obscure theory.

Where knowledge is slipping

The slide is not confined to one topic. In 2026, financial knowledge declined in five of the eight functional areas: consuming, borrowing, earning, insuring, and comprehending risk. The weakest area was comprehending risk, where adults answered just 36% of questions correctly.

That weakness has real-world consequences. People who score very low on financial literacy are more likely to struggle to make ends meet, be financially fragile, be debt-constrained, and lack emergency savings. In a high-rate environment, those gaps can amplify the damage from even a small mistake, whether it is carrying expensive credit-card balances, choosing the wrong loan, or underestimating how much money an emergency will require.

The trend is also worsening over time. The share of adults with very low financial literacy rose from 20% in 2017 to 25% in 2026, showing that the problem is not just persistent but deepening.

Gen Z and women are slipping furthest behind

The largest age gap remains among Gen Z, which correctly answered only 38% of the index questions on average. That leaves younger adults entering adulthood without enough command of basics that shape borrowing, saving, and insurance choices at the very moment they are making them for the first time.

Women also scored 6 percentage points lower than men overall, underscoring a gender gap that continues to show up across the survey. The results suggest that the financial literacy challenge is not evenly spread across the population: it is falling hardest on groups that are already more likely to face uneven pay, less accumulated wealth, or fewer financial buffers.

Surya Kolluri of the TIAA Institute said the decline shows financial literacy has never been lower, and he warned that Gen Z is entering adulthood without the foundational knowledge needed to thrive. Annamaria Lusardi, Stanford economist and academic director of GFLEC, said financial literacy is an essential life skill and that the urgency cannot be ignored. Their warnings fit the data: when basic knowledge drops, the people with the least cushion are the ones most exposed.

Retirement remains a major blind spot

One of the clearest gaps in the report is retirement fluency. Adults answered only about two out of six retirement-related questions correctly on average, a sign that many people are underprepared for the costs that come later in life. Two specific misses stand out: only 27% correctly identified how much Medicare covers in retirement, and just 28% knew the likelihood that a 65-year-old will eventually need long-term care.

Those are not minor details. Medicare misconceptions can lead households to underestimate out-of-pocket health costs, while underestimating long-term care needs can leave families without a plan for one of retirement’s biggest financial shocks. In practical terms, that can mean too little saving, the wrong insurance choices, or a false sense of security about what public programs will cover.

The upside is that retirement fluency appears to change behavior. Adults with higher retirement fluency are nearly twice as likely to save for retirement regularly and more than twice as likely to have calculated how much they need to save. In other words, understanding retirement is not just about passing a quiz. It is linked to actions that can materially improve long-term outcomes.

AI is emerging, but it is not yet a financial habit

The report also points to a newer development: artificial intelligence is starting to play a role in personal finance, but adoption remains limited. Nineteen percent of U.S. adults have used an AI tool such as ChatGPT or Gemini for a personal finance topic, yet only 4% use AI regularly to help manage their finances.

That gap suggests curiosity is outpacing reliance. For now, AI appears to be an occasional source of information rather than a routine financial assistant for most households. The implication for consumers is straightforward: AI may help with quick explanations or comparisons, but it is not closing the broader literacy gap on its own.

Why this decline matters now

The message from the 2026 index is not simply that Americans are missing a few facts. It is that the financial foundation needed for borrowing, insurance, saving, and retirement planning is weakening at the same time households face higher financing costs and less room for error. A score of 47% on the index is a warning sign; the rise in very low literacy from 20% to 25% is a second one.

The broader pattern is clear. Americans who know more about money are more likely to save regularly, manage debt effectively, and feel confident about retirement. Americans who know less are more likely to fall behind on the basics that keep a household stable. In a tougher financial climate, that difference is no longer academic. It is the line between resilience and avoidable hardship.