Older adults have 'toxic combination' of lower financial literacy, higher self-confidence

http://www.eurekalert.org/pub_releases/2016-05/uom-oah050916.php

Public Release: 9-May-2016
Older adults have 'toxic combination' of lower financial literacy, higher self-confidence
Experts say that older adults should have a 'financial' checkup the same time they have annual doctor visit
University of Missouri-Columbia

Previous studies have shown that as humans age, cognitive declines are inevitable. Now, a recent study by researchers at the University of Missouri and Texas Tech University has confirmed that this cognitive decline extends into financial literacy. The researchers also found that older individuals retain a strong sense of self-confidence, which could add to the problem, leading to significant mistakes when making financial decisions.

"Mixing a decline of financial literacy with an increase in self-confidence is a toxic combination," said John Howe, professor and chair of the Department of Finance in the Trulaske College of Business. "This opens the door for more honest mistakes as well as fraud. It's widely known that older adults are very common victims of financial fraud. It's important that as we age, we find someone who has our best interests in mind when managing our finances."

In the study, Howe and his colleagues, Michael Finke and Sandra Huston from Texas Tech University, surveyed more than 3,850 individuals 60 and older and found that they experienced increasing declines in financial literacy, which is the ability to understand and make good decisions about personal finances. The researchers also found that the participants' self-confidence increased slightly. This meant that even though they didn't understand financial terms or policies well, they still believed they could make good decisions about their personal finances.

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