Robert Powell of MarketWatch writes about a critical, but very sensitive topic in his article “Our Financial Smarts Erode Quickly After Age 60.”
Regardless of gender or education level, Americans become considerably less literate about all things money after age 60, according to a new study.
The scores on a test measuring knowledge of investments, insurance, credit and money basics fell about 2% each year starting after age 60, falling from about 59% correct — hardly a passing grade — for those in their 60s to a dismal 30% for those 80 and older, according to Michael Finke, an associate professor at Texas Tech University and a co-author of the study.
Here’s what’s even worse: Our confidence in our financial decision-making abilities rises with age. We are not older and wiser. Rather, we are older, less smart and overconfident.
This notion of confidence rising while financial literacy is falling spells trouble for that group of Americans that now represents more than 12% of the population and controls half of all the financial wealth in America, according to Finke, who is also head of Texas Tech University’s Ph.D. in financial-planning program.
Obviously, there are noteworthy exceptions to this tendency. In fact, it is likely that each of us could immediately think of a number of people who seem to defy this trend. However, it would be unwise to disregard these results. The very population with the bulk of the financial wealth in this country is also the population that can benefit most from good financial advice and money management.
