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March 6, 2020, 11:23 a.m. EST

How can women do a better job preparing for retirement?

Women typically fall behind men when it comes to financial literacy and saving for retirement — and they’re right to be worried about it

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By Kerry Hannon


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In 1758, Ben Franklin wrote in his book “The Way To Wealth” that “an investment in knowledge always pays the best interest.”

When it comes to managing your personal finances, that adage is as germane today as it was then. So let’s start with a simple quiz.

Question 1: Suppose you had $100 in a savings account and the interest rate was 2% a year. After five years, how much do you think you would have in the account if you left the money to grow?

a) More than $102

b) Exactly $102

c) Less than $102

Question 2: Imagine that the interest rate on your savings account was 1% a year and inflation was 2% a year. After one year, how much would you be able to buy with the money in this account?

a) More than today

b) Exactly the same as today

c) Less than today

Question 3: Do you think that the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund.”

a) True

b) False

The answers are at the bottom of this column, but no cheating, please.

These three basic questions were developed by Annamaria Lusardi, an economist and professor of economics and accountancy at The George Washington University School of Business and Olivia S. Mitchell, an economist and professor at The Wharton School of the University of Pennsylvania.

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