Personal financial skills start to decline around age 60, which is an especial cause for concern because of the increased reliance on savings for the retirement years, according to the Center for Retirement Research.
Studies have found declines in investment skills and behaviors that affect personal credit, as well as a decrease in financial literacy and confidence in making financial decisions, it said.
It cited one study of older persons that focused on skills potentially impacted by aging including ability to perform calculations, understanding of how interest works, the relationship between bond prices and interest rates and historical differences between stocks and bonds. It also asked how confident respondents were in their answers.
It said that while financial literacy is seen to decline over time, the individual’s confidence in their financial knowledge and in their ability to manage their own finances remains about the same.
“Over half of all elderly individuals with significant declines in cognition get no help outside of a spouse. Given the increasing dependence of retirees on 401(k)/IRA savings, cognitive decline will likely have an increasingly significant adverse effect on the well-being of the elderly,” it said.