Dollars and Sense (Editorial)

The decline of the defined benefit pension plan means that most non-governmental workers in America are responsible for funding their own retirements. That funding usually takes the form of a combination of Social Security and a 401(k) or IRA. The pessimistic — or perhaps just cautious — among us view Social Security as a lagniappe, wonderful to have but not something on which to base our whole retirement, even if we’ve paid into it for 50 or 60 years.

Getting financial education, especially reliable information designed for people who don’t make investment their life’s work, is also tricky, another thing on which an employee cannot rely.

It’s clear: In many respects American workers are on their own in planning for retirement. Neither the Scarlett O’Hara gambit — “I’ll think about that tomorrow” — nor an investment in Arkansas Lottery tickets is a viable strategy. All these circumstances combine to make financial literacy more important than ever.

This school year is the first in which Arkansas high school seniors will have been required by the state to pass a semester course in economics to graduate, as the Little Rock Branch of the Federal Reserve Bank of St. Louis recently reminded us. It was promoting its “Tools for Teaching the Arkansas Economics & Personal Finance Course,” the free course that it and the nonprofit Economics Arkansas are offering the state’s teachers to help guide them in their lessons.

The economics course requirement is a first step to relieving Arkansans’ of their ignorance, but it’s only a first step. We’re heartened by other legislative efforts to enhance Arkansas students’ economics and personal finance education and hope they’ll continue. And we call on both employers (who themselves must plan for retirement) and employees to recognize this new reality. Financial ignorance is the costliest for those least able to afford it.