Nearly 40% of Americans don’t know what a 401(k) is, according to a GOBankingRates survey of Americans about basic finance terms and concepts.
Asked “Which of the following describes a 401(k)?” nearly two-thirds (63%) selected the correct answer: “Retirement savings vehicle.” Twenty percent of respondents answered “Tax credit for retirement.”
Eight percent said a 401(k) was a type of tax form, 6% said it was a tax-free health savings account, and 3% said it was an insurance claim.
The survey also found people ages 55 to 64 had the most correct answers, with 76% choosing “Retirement savings vehicle.” More than 60% of respondents ages 25 and older (five age groups total) answered correctly. The age group with the fewest correct answers was the 18- to 24-year-old group (43%).
GOBankingRates says it might be understandable that young Millennials would know the least about a retirement vehicle like a 401(k), but still, for every age group—excluding 55- to 64-year-olds—at least one-fifth incorrectly selected “Tax credit for retirement” as the answer.
More information from the survey is here.