Retirement savers have a dangerous lack of bond knowledge, concludes State Street Global Advisors in reviewing the results of its January 2014 biannual defined-contribution investor survey.

“A lack of bond literacy could cause bigger problems now that participants say they have become more conservative. Participants may not understand the impact that greater conservatism can have on their portfolios’ vulnerability to inflation and ability to generate the growth they need for retirement,” said the investment firm.

State Street warned since relatively few participants surveyed named lower risk, better diversification and reduced volatility as features of bonds, it suggests that many people don’t fully grasp the appropriate role of fixed income in their retirement savings.

As an example, the group pointed out that a third of participants said bonds help minimize the vulnerability of their retirement portfolios to inflation, showing they don’t realize when inflation goes up the value of their debt securities goes down.

This may be an advantageous time to spread the word about the downside of bonds to clients, said State Street, because participants are more willing to accept warnings about risk.

In encouraging news from the survey, State Street said poor wage growth and worries about their jobs hasn’t led the vast majority of plan participants to weaken their contributions. About eight in 10 said they are putting in as much or more than they did five years ago.

In addition, with the stock market rising 160 percent since near the height of the recession in March 2009, about half of defined contribution plan participants said their plans are in much better shape than they were then, with the remainder of the respondents nearly equally divided between “same shape” and “somewhat/much worse shape.”

Three in four participants are optimistic on investments, telling State Street they expect the markets to be in the same or better shape five years from now.

The results are from a poll of 1,021 verified 401(k), 403(b), 457 and profit-sharing plan participants and retirees, age 25 and older, who were actively engaged with their plans.