The Aegon survey found that many workers may be in denial about how long they can actually work to support themselves. Sebastien Bozon / AFP

Try out the test yourself

Q1 Suppose you had $100 in a savings account and the interest rate was 2 per cent per year. After five years, how much do you think you would have in the account if you left the money to grow?
a) More than $102
b) Exactly $102
c) Less than $102
d) Do not know
e) Refuse to answer

Q2 Imagine that the interest rate on your savings account was 1 per cent per year and inflation was 2 per cent per year. After one year, how much would you be able to buy with the money in this account?
a) More than today
b) Exactly the same as today
c) Less than today
d) Do not know
e) Refuse to answer

Q4 Do you think that the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund.”
a) True
b) False
d) Do not know
e) Refuse to answer

The “Big Three” financial literacy questions were created by Professors Annamaria Lusardi of the George Washington School of Business and Olivia Mitchell, of the Wharton School of the University of Pennsylvania. 

Answers: 
Q1 More than $102 (compound interest). 
Q2 Less than today (inflation). 
Q3 False (diversification).

Most online quizzes are relatively mindless, promising to reveal what vegetable, sandwich or rock band best represents your personality. That was not the case for a short online test given to more than 14,000 people in 15 countries this year. It revealed just how unprepared a good chunk of the world is for retirement.

The three-question test, given as part of The Aegon Retirement Readiness Survey 2018, measured how well people understand basic financial concepts. Many of the participants failed the quiz, with big potential consequences for their future security.

Beyond the sobering lack of financial literacy, there was some rather curious data in Aegon’s annual survey, published this week. For example, some 20 per cent of workers surveyed in China envisioned spending retirement with a robot companion. But before we get to that, take a look at this question, which only 45 per cent of people around the world got right:
"Do you think the following statement is true or false? Buying a single company stock usually provides a safer return than a stock mutual fund.”

The possible answers? True, false, do not know and refuse to answer.

Sixteen per cent of people got it wrong. “Do not know” was chosen by 38 per cent. In the US, 46 per cent of workers got it right. (The answer, in case you were wondering, is false.)

It was an inflation question that had the highest percentage of wrong answers, however. More than 20 per cent of workers failed to grasp how higher inflation hurts their buying power. Given that declining health was the most-cited retirement worry, at 49 per cent, and healthcare is an area with high cost-inflation, well, that makes the subject something the older generation should have sorted.

The survey asked workers - about 1,000 per country, but none in the Middle East, what global trends would affect their retirement plans. “Reduction in government retirement benefits” was the most popular answer worldwide, chosen by 38 per cent globally. The countries most worried about cuts to government benefits were Brazil and Hungary, at about 53 per cent.

Across the board, though, workers did not seem to recognise the huge impact that basic changes in the labour force, technology and the climate will probably have on their retirement plans, says Catherine Collinson, president of the nonprofit Transamerica Center for Retirement Studies and executive director of The Aegon Center for Longevity and Retirement.

“It makes me wonder about the extent to which people are naive about the magnitude of the disruption in our world, and the level of change that has not only occurred, but is imminent,” says Ms Collinson. “Is it that people don’t see it coming, or is it so overwhelming that people are in denial?”

Many workers may well be in denial about how long they can actually work. The survey found workers generally plan to retire around age 65. “The sobering reality is that 39 per cent of retirees globally retired sooner than planned,” according to the report. “Of those, 30 per cent stopped working earlier than they had planned for reasons of ill health, and 26 per cent due to unemployment / job loss.”

And those robots? The survey asked about “ageing friendly modifications or devices” people envisioned having in their homes.

Thirty-five per cent of workers in India, 34 per cent of workers in Turkey and 18 per cent in the US figured ageing could include video monitoring devices. Then there are the robots, which 20 per cent of Chinese workers see coming in retirement, compared with 6 per cent of American workers.

The report is intended as a call to action, says Ms Collinson. Recommendations include working financial literacy into educational curriculums, promoting a more positive view of ageing and allowing universal access to retirement savings arrangements.

With the traditional “social contract” between government, employers and individuals crumbling, “the sooner we roll up our sleeves and get to work, the sooner we will be able to identify and implement solutions,” she says. Whether that’s in public-private partnerships or implementing more findings from the field of behavioral finance, “inaction is really the enemy.”

For the rest of the quiz, look at the questions in the box and then see how you do.