72% of Americans 55 and Older Got FINRA’s Inflation Question Right. Younger Adults Gained 10 Points Since 2021. Older Ones Didn’t Move
A single quiz question about inflation separates retirees who protect their purchasing power from those quietly losing it every year, and the gap between age groups who get it right reveals something surprising about who actually learned from living through…
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A quiz question in the FINRA Foundation’s National Financial Capability Study asks something that sounds easy. If a savings account earns less interest than the inflation rate, will that money buy more, less, or the same a year from now? The right answer is less, and that idea sits behind every retirement budget. For people on a fixed income, a check that doesn’t grow loses buying power every year that prices rise.
Older Americans Still Lead, but Younger Adults Are Catching Up
In the study’s 2024 wave, 72% of participants aged 55 and older answered the inflation question correctly. That’s the same share as in 2021. Younger adults moved a lot more. Participants aged 18 to 34 improved by 10 percentage points, going from 34% to 44%. The middle group, ages 35 to 54, improved by 6 percentage points, rising from 49% to 55%.
For all age groups, the share answering correctly rose to 58%. The oldest group still has the highest score by a wide margin, though its share didn’t change between the two surveys.
FINRA’s report suggests that living through periods of higher inflation helps people better understand how inflation affects purchasing power. Younger adults experienced high inflation more recently, when Social Security’s cost-of-living adjustment hit 8.7% in 2022. Many people over 55 learned that lesson decades ago, when the adjustment reached 14.3% in 1980. That could explain why their score was already high and had less room to rise.
What a Fixed Check Buys After 10 Years
Inflation works slowly, so it’s easy to miss. Take a pension that pays $2,000 a month with no adjustment. After 10 years of 3% annual inflation, that check buys about what $1,488 buys today. The check amount stays the same, but the groceries, utilities, and copays it covers keep getting more expensive.
Healthcare costs are one example of this pattern. Medicare’s standard Part B premium went from $185 a month to $202.90 in 2026, and that comes straight out of many retirees’ monthly benefits.
Income Sources That Keep Up With Prices, and Ones That Don’t
Social Security is the highest inflation-adjusted income most retirees have. Its annual inflation adjustment was 2.8% for 2026, and benefits will rise 3.6% for 2027. The adjustment follows a price index built around wage earners. A separate BLS research index, based on spending by households led by someone 62 or older, places more weight on housing and medical care, so the official adjustment may not match what older households actually pay.
Treasury Inflation-Protected Securities, or TIPS, raise their principal along with inflation. Their yields are stated as real yields, which means the return above inflation. On October 30, 2026, the 5-year real yield was 2.25%, and the 10-year was 2.6%.
I bonds pair a fixed rate with an inflation rate that resets every six months. Bonds issued from May through October 2026 earn a combined 4.26%, which includes a 0.9% fixed rate. The Treasury has also announced a new rate for the next six months.
Pensions are a different story. State and federal pensions typically adjust for inflation, but most private pensions do not. Many annuities work the same way. They pay a level amount unless you purchased an inflation feature up front. Stocks have historically grown faster than inflation over long periods. They can also fall sharply in any single year, so a retiree who has to sell during a downturn may lock in losses.
A Quick Self-Check Anyone Can Try
The question involves money in a savings account that earns less interest than inflation. After one year, does that money buy more than it does today, exactly the same, or less? It buys less, since the balance grew a little but prices grew faster, so each dollar covers less than it did before. Anyone who answers “the same” is looking only at the dollar balance and leaving out what those dollars can buy.
One Income Source Worth a Closer Look
For many retirees, a private pension or an annuity is the income source most likely to have no inflation protection. Plan documents and annuity contracts state whether payments rise with prices, and if so, by how much and whether there’s a cap. Some other dates are coming up soon. Social Security’s 3.6% adjustment takes effect for 2027, and the current I bond rate period ends October 31, 2026, after which the newly announced rate applies to new purchases.
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David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.
