Californians Believe They Can Better Invest Portion of Social Security Funds Than Government; But Huge Majority Knows Little or Nothing About Investing.

REDWOOD CITY, Calif. -- A slim majority of Californians believe that they can do a better job of investing a portion of their Social Security payments than the government can. Yet 80 percent admit they have little or no investing experience. The findings are part of a recent financial literacy survey of 800 Californians sponsored by the California Society of CPAs (CalCPA).

When asked, "How does the prospect of managing a portion of your own Social Security investments strike you?" 51 percent said they could make better investments than the government. Forty-one percent, however, were concerned about their ability to make such decisions.

But when asked, "How would you describe yourself as an investor?" 52 percent admitted they have little investment knowledge or experience, and 28 percent said they have no investment experience. Only 19 percent said they were very knowledgeable and experienced in investing.

"Many Californians need to improve their financial literacy so they can better manage their money and create a more financially secure future for themselves and their families," said Paul Regan, CPA, and CalCPA chair.

"Californians may think they are better investors than a government agency, but they also admit they are uninformed about financial matters, which could create a generation of retirees who are living on the brink of financial disaster."

"Information and materials abound that can help educate Californians and put them on path toward a financially literate future -- it's time to use them."

More Opinions About Social Security

When questioned about what they would consider the best solution to the Social Security "crisis," 35 percent of those surveyed said they favored allowing contributions to personal accounts, while 22 percent would continue the system as is. Seventeen percent, however, would increase the Social Security tax, while 8 percent favored raising the minimum retirement age. Fourteen percent of respondents said they don't know what the correct solution is, and 1 percent declined to answer.

A full quarter of respondents (25 percent) said that their 401(k) from work would be their primary source of retirement income. Twenty percent said it would be Social Security, and another 20 percent responded savings and investments they fund themselves. Eighteen percent will rely on a pension from their work as their chief retirement income source, while 10 percent look to their IRAs.

Social Security, however, topped the list of secondary sources of income for retirement, with 23 percent of respondents selecting that option. Twenty-two percent said savings and investments that they fund themselves, 16 percent said a 401(k) plan, 13 percent an IRA and 10 percent a pension would be their secondary source of retirement income.

When allowed to combine these sources of retirement income, 52 percent said they would rely on Social Security, IRAs, 401(k)s and other investments for their retirement. Thirty-six percent said that when they reach retirement age, they expect to work while also tapping these other sources of income. Only 7 percent said they were likely to rely primarily on Social Security and no other sources of income.

The Industrial Mutual Association of Burton, Mich., conducted the survey of 800 California residents on behalf of CalCPA from March 23 to April 1. The survey has a potential margin of error of about 3.5 percent (+/-) at a 95 percent confidence level.

About CalCPA

The California Society of Certified Public Accountants (CalCPA) (www.calcpa.org) is one of the nation's largest accounting organizations and the largest CPA association in California. It serves 27,000 members in public practice, private industry, education and government. In 2003, CalCPA launched a major financial literacy initiative, including creating CalCPA Institute, a 501(c)(3), the primary goal of which is to improve the financial literacy of all Californians.