Americans have inflated notions of their financial savvy, and that includes their efforts to save for retirement.

According to a study from Fifth Third Bank, although 48 percent of Americans consider themselves financially savvy, the reality of their financial situations is far different.

More than half of respondents, for example—55.2 percent—don’t contribute to a 401(k), IRA, or other retirement plan. However, 46 percent agree that retirement savings should begin in a person’s 20s.

But it’s worse than that. In fact, 70 percent are in debt and 30 percent of them have no plan to pay it off—which makes it tough to save for retirement.

And that flies in the teeth of the goal for 82 percent of Americans to be financially independent—defined as living debt free (with the exception of a mortgage) and no longer living paycheck to paycheck. Only 25 percent of Americans are debt free.

Other financial disconnects include the fact that more than half(55 percent) of Americans know an emergency financial fund should hold six months of living expenses—but 69 percent of respondents do not have six months of living expenses saved in an emergency fund and 30 percent of Americans have no emergency fund at all. This is despite the fact that 45 percent know they should set aside 20 percent of their income for savings.

“Americans seem to know and understand the concepts that lead to financial well-being,” Jada Grandy, senior vice president and Community Reinvestment Act strategies director for the bank, said in a statement.

Grandy continued, “But the results of this survey suggest we aren’t putting those theories to practice.” Forty-seven percent of Americans, she added, report frequently living paycheck to paycheck.

Not exactly a sterling example of financial literacy in action.

Instant Insights /

Financial knowledge doesn&rsquo;t equate to retirement preparedness

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Financial knowledge doesn’t equate to retirement preparedness