A new study reveals that financial literacy improves with age, yet significant knowledge gaps remain. According to the SPARK Institute (which represents a broad cross-section of retirement plan service providers and investment managers), nearly one in four recent hires are unable to correctly identify a 401(k) as an employer-sponsored retirement plan. Retirement anxiety is also rising, with 63% of recent hires expressing concern about running out of money in retirement.
The 15-page report, titled “Financial and Retirement Literacy Among Students and Recent Hires” and published in partnership with financial literacy research company Corporate Insight, is based on a survey of 962 working individuals hired in the past five years, 1,057 current or recently graduated college students, and 934 current or recently graduated high school students. Now in its third year, the study focuses on how young Americans understand money, savings, and retirement readiness. It reveals both encouraging signs and persistent challenges, according to SPARK officials — including widening literacy gaps along socioeconomic lines.
“One of the clearest insights from this year’s research is the outsized impact of the household a child grows up in,” Mike Ellison, president of Corporate Insight and co-chair of SPARK’s Financial Literacy Committee, said. “Students from wealthier or college-educated families benefit from steady, at-home financial guidance, while kids from lower-income households often don’t receive the same foundation. As a result, they enter adulthood already behind. This gap isn’t about ability, it’s about access.”
Indeed, the study highlights the powerful role of parental education and household income. Young people whose parents attended college demonstrated higher financial literacy, healthier savings behaviors, and greater confidence. In contrast, respondents from lower-income or non-college-educated households consistently reported higher financial stress, lower savings rates, and less access to formal financial education.
The study also notes gender disparities in saving behaviors, limited access to high-quality financial education courses, and an overwhelming desire among young people to learn more about saving and investing. Nearly half of recent hires said they wish they knew more about savings, while college and high school students expressed strong interest in investing knowledge.
Survey implications
The findings point to growing responsibilities and opportunities for retirement plan providers, according to Tim Rouse, executive director of the SPARK Institute.
“Recordkeepers and plan sponsors are uniquely positioned to help level the playing field, especially for first-generation professionals and young workers who didn’t grow up with the benefit of financial education at home,” he said. “AI-powered personalized guidance, targeted outreach, and simple ‘Start Now’ messaging can make a real difference in closing these gaps, helping young participants build confidence and begin saving earlier, regardless of their background.”
The study urges recordkeepers to expand financial wellness programs, deploy AI-driven smart nudges, and integrate retirement education earlier — especially during onboarding, when savings behaviors are first formed. With 78% of recent hires reporting that money shortages limit what they can do, the need for accessible, personalized support is more urgent than ever, Rouse added.
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