In line with the mission to “redesign long life,” we think it is time to redefine traditional notions about financial capability. Our cultural norms and our standards for financial education need to change as individuals are living longer and need to be increasingly responsible for their own financial well-being.

Financial capability refers to possessing a level of understanding of financial matters to take effective action toward achieving individual and family financial goals. Whereas financial literacy only focuses on building knowledge, financial capability expands the definition and puts additional emphasis on attitudes and behaviors needed to successfully achieve financial goals.

Topics within this realm include understanding financial concepts (from numeracy to wealth transfer), using that knowledge to create and execute financial plans (understanding the roles of individuals and financial professionals), and the underlying financial education and standards that support building such knowledge and behavior. Typical conceptions of retirement, for example, must change in order to reflect the current reality of increased responsibility and longevity. Changes in pension and retirement plans, confidence in the stability of government entitlement programs, the lingering effects of the recent recession on investments and housing, continued low interest rates and returns, rising healthcare expenses, and longer life spans have made retirement planning an incredibly complex equation.

Current studies show that individuals’ confidence in the ability to retire comfortably, or to retire at all, are at new lows. According to the Employee Benefit Research Institute’s 2012 Retirement Confidence Survey, 47% of all workers were either “not too confident” or “not confident at all” about their ability to retire. Not only do individuals lack confidence about their ability to retire, they also have very little confidence in their ability to develop and execute a plan through retirement. This is because retirees and pre-retirees often fall prey to several “pitfalls” surrounding retirement planning.

Important first steps in changing retirement planning behavior include identifying which resources individuals are likely to use, and what education or financial advice will stimulate appropriate action.