Financial literacy needs to be a staple of the American education system, U.S. Secretary of Education Arne Duncan said at Pensions & Investments' Investment Innovation and the Global Future of Retirement conference.
“When you look at the baby boomer generation moving toward retirement, when you look at a lack of savings, when you look at how insecure people are as they move toward retirement, as a nation, I worry tremendously about the financial viability of families,” Mr. Duncan said in a June 23 keynote speech at the Waldorf Astoria in New York.
Mr. Duncan was interviewed by Mellody Hobson, president of Ariel Investments LLC, Chicago.
He said seeing so many families without savings or a basic understanding about how to prepare for retirement has him worried about the future.
“The lack of preparation for retirement, the lack of savings, particularly among the black and Latino populations, is devastating,” Mr. Duncan said. “I'm a huge proponent of education as a tool to help move families out of poverty.”
Although he was happy to see a number of states start financial literacy programs for high school students, Mr. Duncan likened financial literacy education to learning a foreign language in that it's something that should be taught as early as possible.
“If our young people aren't financially literate, we are part of the problem, not part of the solution. And as a nation, we have a huge problem.”
He also noted it's a topic that students find interesting.
“This is a great way to teach math. Kids care about money,” he said. “Rich, poor, black, white; it doesn't matter. This isn't an add-on or extra (to the curriculum); this is a really interesting way to engage students.”
This is part-and-parcel of what Mr. Duncan believes is the solution to raising graduation rates and lowering dropout statistics — making sure the curriculum is engaging and challenging, and not dumbing down the material.
“Many young people drop out of high school not because it's too hard, but because it's too easy. They're not challenged. So if we raise the bar, that'll help increase graduation rates,” said the education secretary.
Teachers need help
Teachers, too, need to be given as much help on this topic as possible. So, Mr. Duncan said that one challenge is that teachers need to be educated not just on financial literacy, but also on how to better manage their pensions.
“Teachers are extraordinarily altruistic. It's not fair for them to take a vow of poverty,” he noted.
Although some progress has been made in teaching young people about finance and planning for retirement, Mr. Duncan said the U.S. still had a “long, long way to go” in financial literacy education and is falling behind a number of other countries, such as Australia and the U.K.
“In a global competitive economy, we're not where we're supposed to be,” he said. “So I feel a sense of urgency.”
When asked why the U.S. is so behind many other countries in offering young people financial literacy education, Mr. Duncan said the U.S. lacks a sense of urgency about this issue.
“We have a sense of complacency,” he said. “Most parents don't understand how much the world has changed and how much is at stake. So many think, "what's good enough for me is good enough for my kid.'”
He also urged attendees and members of the investment industry to help educators with this goal.
“We need the corporate community to step in and be part of the solution. You guys have the knowledge. The facts that are so basic to many of you, folks in the education world don't know this stuff. It's a different world.” n
This article originally appeared in the July 7, 2014 print issue as, "Education secretary pushes need for financial literacy".