Financial Acumen Declines After 60

[xchrom]

http://online.wsj.com/article/SB10001424052970203554104577001573761681852.html

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 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 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 Mr. Finke, who is also head of Texas Tech University's Ph.D. in financial-planning program.



*** it's WSJ -- so a large grain of Salt is in order.

[FarCenter]

1. Note that most of the leadership of Congress is over 65 due to the effects of seniority rules

"The average age of Members of the House at the beginning of the 112th Congress was 56.7 years;
and of Senators, 62.2 years."

http://www.senate.gov/reference/resources/pdf/R41647.pdf

---

No wonder Congress is so incompetent with respect to business and financial matters.

Harry Reid, 71
Mitch McConnel, 69

John Boehner, 61
Nancy Pelosi, 71

[jwirr]

9. Excellent point.

[dkf]

2. That is ridiculous. Look at Warren Buffet for goodness sakes.

Some of the old timers are the most savvy because they know the basics and they stick with them. And like anything else, financial literacy is a matter of educating yourself and keeping those skills sharp.

In general though, financial literacy is dismal. So many stories of woe, that makes me wonder "What were you thinking?"

[gristy]

3. Buffet might be an exception

But with regard to changes in mental performance, probably not. The ravages of age spare no one. Further, the article is talking about typical or average performance of a large sample. Buffet or any individual could lie anywhere on that distribution.

[dkf]

8. My uncle was an incredible investor until he started showing signs of dementia.

Now that is easier to understand as a cause of decline.

If the article is picking up on what is more of a medical issue then yes.

[RagAss]

4. What a crock of shit. Who funded this bullshit study ? The reverse mortgage fuckers ?

[Codeine]

5. Holy crap. I'm gonna have LESS financial acumen than I do now?!

I'm screwn.

[shraby]

6. It's probably more of a case of "tired of dealing with finances"

sort of thing. I have always done the money/taxes, etc part for this family and frankly I don't want to see another tax form, income form or anything else..just want to take enough money to the store to be able to purchase what I went for. Even the medicare part D I don't want to deal with finding the "right" provider for the "right" money.
We have a medigap policy that covers EVERY cent of the 20% that medicare doesn't. My old brain is just plain tired of comparing costs.

[jwirr]

10. Yes, when you are finally retired you would like to have life be easier

than when you worked. I for one find myself refusing to do things that I am tired of doing and then losing the ability that I used to have. In the case of finance I have never been totally competent. Fortunately I am poor enough I just need to balance a checkbook.

[pipi_k]

7. Really huge crock of shit...

if they're generalizing.

Mr Pipi is well beyond 60 and he's as financially sharp as ever.


OTOH, my daughter and her husband (late 30s, mid 40s), are so financially inept it's pathetic.

[Blue_In_AK]

11. Well, i'm 65, and I know WAY more about finances now

than I did 10 years ago. I think this is a crock.

[RebelOne]

22. Dsme here. I am 72 and a lot more knowledgeable about

my financies than I was 20 years ago. Despite my Social Security, I know any money that I have in the bank is going to have to last for a few years.

[JackDragna]

12. Anecdotal evidence doesn't contradict the study, people

Your great aunt so-and-so might have been a shrewd investor, but that doesn't disprove the point of the study. If you've personally looked at their data and can find fault with their conclusion or methodology, that's one thing. If you're just saying it's "bullshit" because of your personal experience, you're missing the point.

[pipi_k]

14. If the person claiming this

is generalizing, then it's certainly bullshit.

If they want to say that financial acumen declines in SOME people after the age of 60, fine.


Just like those bullshit "studies" that come out every so often claiming that coffee is bad...no, this week it's not bad, it's neutral....oh wait, this week it's GOOD...no, wait, it's bad again.

Based on results gleaned from a limited percentage of the population.

The results keep changing.


So if the study included most of the people with anecdotal evidence posting here, it would have come out a completely different way.

[JackDragna]

15. No, it's not.

If the person tests a sufficiently large sample, that's sufficient. I don't think the author claims EVERY person over the age of 65 is going to decline significantly in their abilities. Their study didn't even show that, just like not everyone after age 65 will get cancer or have heart problems. The chances of such things occurring at these ages, however, increases, according to the body of knowledge available to medical professionals. Your comparison of this study to other studies is logically fallacious and your criticism of this study is based on a strawman the author doesn't build.

Edited for grammar.

[pipi_k]

18. Sorry, but...

the very first sentence says it all:

"Regardless of gender or education level, Americans become considerably less literate about all things money after age 60, according to a new study."

It does NOT say SOME Americans.

Further on in the article, it says,"Mr. Finke and his team noticed that financial literacy peaks in the late 40s, and that there was a statistically strong and consistent decline in financial literacy among older respondents."

And the article also says that older people tend to overestimate their own financial acumen.

Not SOME older people. Just..."older people".

It sure does look to me like someone is generalizing.


The article doesn't say how the test subjects were chosen. Maybe the test subjects responded because they were becoming unsure of their own ability to manage their finances.

Nor does the article say what questions were asked of the test subjects.

Nor does it give a clue as to whether or not the test subject ever HAD financial acumen to begin with. That's a big one right there. If the testing was done on the same people in their 30s, then again in their 70s, and there was a significant decline, then that seems valid enough. Otherwise, it's bullshit.

[JackDragna]

19. You have no understanding of scientific studies, then.

The people who publish scientific papers do not feel the need to say "SOME people do this" or "SOME organisms are affected" when making statements about data. It's understood there is variance around a mean: this particular study, which I've now perused, says as much. Will SOME seniors retain their financial acumen? Yes, but the general point of the study is that the tendency is for decline. The authors also cites several papers to back up their claims. It's just like every other study regarding risk factors: not every person who smokes gets lung cancer, not every person who eats a double cheeseburger daily has a heart attack and not every person who ages loses their mental faculties in certain areas, but that's the way to bet. You are setting up a strawman to tilt at.

If you read the actual paper (available by clicking on a link or two), it answers all the questions you have, including a list of the questions asked of the respondents.

[pipi_k]

21. Well now...

I concede to your obviously superior intelligence.


I believe studies like this certainly SHOULD qualify their findings with the disclaimer "some".

Because if they don't, and people see that just about all of a group is included, then some of them are going to think the entire thing is a pile of shit. Which I'm assuming the "researchers" don't want to happen.

Because they don't qualify their statements, that doesn't make their failure RIGHT. It just means...IMO, anyway...that they're a bunch of arrogant assholes.

In any event...back to twiddling my thumbs in the corner while I pick lint from my navel.


PS...you might also want to tell the other naysayers as well how lacking they are. Unless this is targeted specifically at me.

[JackDragna]

23. I wasn't trying to deman your intelligence..

..but the criticisms you were making were unfair. I once did scientific research, so I'm somewhat sensitive when people attack someone's work unfairly. It's entirely possible what the author said isn't accurate, and more studies need to be done to confirm their statement. I had no intention of making you feel inferior. I like to be friendly when I can. :)

I won't go through and nit at everyone in this thread saying B.S. : this thread is obvious enough for the other posters to see. I also wasn't specifically targeting you - you were simply the only person who actually responded.

[pipi_k]

25. I think my criticisms were fair enough

and I also added that I think it's the absolute height of arrogance for a group of researchers not to qualify their findings with the word "some".

Painting an entire group of people with the same brush has caused quite a few here to close their eyes and ears to whatever point those researchers wanted to make.

Which is unfortunate.

And it's also a main reason why I tend to look upon ANY similar testing (and the results) with a cynical eye.

For whatever reason researchers don't make that disclaimer, I don't know. If they think people will understand that NOT everyone is included, then they need to rethink the way they present these things.

[JackDragna]

28. All I can say is that this is understood in the scientific community.

..when it comes to this type of data. Researchers don't make universal statements about anything. You'll notice, for example, nowhere in the paper do the authors make the following claim: "all people, regardless of age, will experience a decline in their financial acumen." Instead, the authors state (in their results section) the average score decreases over time, which their data bears out. I understand your criticism, but it's a criticism that could be levied against virtually everyone who publishes any type of paper on any topic.

Frankly, after reading the paper, the methodology of the paper seems sound, their sample size is fairly large and they quote several other papers demonstrating how age affects decision-making abilities.

[elocs]

30. If DUers disagree with a study, then it's bullshit no matter how good its data or methodology may be

and they do love anecdotal evidence.

I have a freeper friend who insists that Canadians don't like their healthcare plan because he has a cousin who lives there who doesn't like it.

I understood this study as well as others, that they don't mean every single individual without exception. Exceptions do not disprove the findings of any valid study.

[JackDragna]

31. Good point.

Many of the claims here sound a lot like the people I know who smoke and talk about their relative who lived to a ripe old age despite lighting up like a chimney. I just don't like the anti-intellectalism of it all.

[elocs]

33. I can accept the findings of a good study even if I don't like its findings. Many cannot.

I don't know why so many cannot bring themselves to do the same.

Oh yeah, my grandfather lived to be 86 and he drank and smoked nearly right up until the time he died. However, he did have an abstaining and nonsmoking brother who lived to be 102.

[lunatica]

13. That is total bullshit

Just another attempt to discredit Boomers. Paints us like we're blubbering idiots.

You can pour the entire salt canister on it.

[pinboy3niner]

17. Yes, I sit here blubbering as I give all my money away to Nigerians

:rofl:

[pipi_k]

20. Oh no...you too???

I gave all mine to the Nigerians, the family of Scots who got stuck in Lithuania when their luggage was stolen, seven people stranded on a desert isle when their boat was caught in a storm, and some guy at the gas station who wanted me to buy his winning lottery ticket from him.

[pinboy3niner]

24. Their stories were so heartbreaking, what else could I do (besides blubbering)?

Damn my declining financial acumen! :rofl:

[pipi_k]

26. Well, at least...

you still had the sense enough to blubber while giving away your fortunes.

I've heard stories where people were so devoid of sensibility they just sat and stared at their pureed lunches after giving all their financial information to the nice man who called asking for their bank account numbers...

[pinboy3niner]

32. But I'm going to get millions--I had it in writing on the internetz!!!

Being a doddering, drooling oldster, I knew it was true if it was in black and white on the internetz.

Some stoopid people might have sat and stared, but we smart people blubbered while we handed over our banking information.

Never fear, and don't believe what you hear about our "declining financial acumen." We're going to be RICH!

They say my check is in the mail. Thank God I'm not young anymore, or I might have missed this fantastic opportunity!

[spanone]

16. drivel...80 and older? you just don't give a shit.

when you reach 60 you also realize it's about 90% bullshit.

[MoonRiver]

27. And the war against seniors continues.

:mad: I call b.s. on that article! :mad:

[Morning Dew]

29. Crock of crap

When you're 80, you won't have much interest in keeping current on much of the financial things in their quiz.

It's not so much that they plain don't know - they don't need to know about adjustable rate mortgages or how to invest to someday avoid a tax hit on their retirement savings. That ship has sailed.

My 76 year old father isn't much concerned with saving money on a car loan - if he wants a new car (and he doesn't), he'll buy it outright.