Our financial smarts erode quickly after age 60

[fritz]

100% - but what do I (think I) know - according to the article - I'm 60

You have to wonder about the qualifiers. People now in their 70's and 80's probably didn't have to deal with a lot of the more complex financial scenarios available today. Imagine Jay Leno could have a field day with this (jaywalking) - most people can finish jingles, but some can't name the first President of the United States

With the comments (Finke is also a CFP) about how older people should turn control of their money over to financial professionals, and/or buy annuities - think annuity salespeople and financial planners will be handing older customers copies of this article?

 

[foxfirev5]

Not much of a test. I scored 100% (guessed #4 correctly) but I certainly wouldn't want to give advice to anyone. I read somewhere that we become overconfident in our thinking abilities as we age. However I have no idea where I read it.

 

[Col. Klink]

Well, I chose the dental insurance insurance instead of the disability insurance for #10 (a young person with no family). A set of pearly whites will will help ensure this person looks good for job interviews!

 

[harley]

These have nothing to do with financial acumen, but rather how well you have learned your financial catechism. Most of them are definitely TBD in each historical situation.

Ha

Even so, if there is a decreasing ability to answer the questions "correctly" based on age, that's an indication of a problem. Heck, I can't tell you how many classes I passed and certifications I got putting down answers that I knew were wrong, but were what the authorities wanted the answer to be.

Unless, of course, the reason the oldsters were getting lower scores is that they don't believe the standard answers and didn't care enough to try to "pass". Cranky old folks could easily do that. Honey badger don't give a $#!%.

 

[TromboneAl]

100%, but this study doesn't seem right to me.

Let's take the first question:

Q.1 Savings accounts and money-market accounts are most appropriate for: Emergency funds and short-term goals
​

I got that right. If I don't get it right in 10 years, does it mean that financial smarts have eroded? It will probably only mean that my memory is shot.

Now, if there is some new financial vehicle that I haven't heard of because I'm 68, then I am ignorant, but not less smart.

The fact that older people did less well, doesn't mean that as people get older they'll do less well. It only means that right now, older people did less well on the test.

 

[marylandcrab]

I got a 100% and am not a senior. However, how many of the older seniors are getting a first mortgage, buying a car or worried about credit card interest rates? In other words, don't rely on your 90 yo grandma to give you advice on various mortgage options.

 

[GregLee]

It will probably only mean that my memory is shot.

Only? If you open up your computer and remove its memory chips, ...

 

[Backpacker]

I got #4 wrong, but I am a money lender and we run debt ratios based on todays rate plus 3% but i guess we are a conservative lender. Evidenced by the fact that we didnt get laid away during the past couple years. Fixed rate is running about 4.25 and ARM was 3.875% today so not a whole lot of difference. Makes me wonder why on earth anyone would sign up for an ARM.

 

[RootyToot]

63/100%

 

[toofrugalformycat]

100%. Not sixty yet, but I grew up in the sixties...

+1
I would not have done as well in my 20's or maybe even my 30s as I did today. I wasn't thinking as much about retirement, and as I recall, IRAs did not even exist, so no way I would have answered that question correctly.

 

[Free To Canoe]

I can't believe all of those "other people" scored so low. I think he made it all up.

 

[MBAustin]

100% at 54. Sent it to my kids (early 20s) to see if they've learned anything from me trying to teach them about financial matters.

 

[braumeister]

65/100%
This reinforces my thought that most people are simply not interested enough to learn to manage their finances themselves.

 

[flotsamandjetsam]

Something's fishy... Each problem has 3 chioices. Answering randomly would give you an average score of 3.3/10. The chart accompanying the article shows people age 80 and over averaging less than this. Is this willful ignorance? Are old people that ornery?

 

[Bikerdude]

Forget the test. I just scored 100K of 10 yr Zimbabwe bonds paying 80%. Don't tell me old people don't know what's going on.

 

[unclemick]

#4 also. I 'knew' the answer but just didn't like it.



heh heh heh - At 68 on full auto(aka balanced index) I can be as stupid, cranky as my little ole curmudgeony heart desires.
So there.

 

[East Texas]

Got 100% right. #4 was a easy for me because I've had the first two types of mortgages early in life.

 

[grasshopper]

90%/60. #3 got me, I read most important instead of least important. Oh those darn little talking people in my head. Knew the answer just didn't read the question, I think I should give myself a E for reading comprehension.

 

[Dreamer]

I was secretly afraid that I would not do well. Debated whether or not I would put down my score, if i did poorly. Age 58, 100%. I thought it was going to be a hard test.

I am sure that some of my older relatives would not know about 401Ks and Roth IRAs. Those were not really available to them during their working years.

 

[Nova]

Something's fishy... Each problem has 3 chioices. Answering randomly would give you an average score of 3.3/10. The chart accompanying the article shows people age 80 and over averaging less than this. Is this willful ignorance? Are old people that ornery?

+1

 

[freebird5825]

90% - question 4 got me.
Age 53

 

[Coolius]

100%.

I would expect that most of the members in this forum would score very high on the test, since they are all fairly basic questions.

 

[arebelspy]

Something's fishy... Each problem has 3 chioices. Answering randomly would give you an average score of 3.3/10. The chart accompanying the article shows people age 80 and over averaging less than this. Is this willful ignorance? Are old people that ornery?

I'm a teacher. I have students that regularly get less than 25% on a multiple choice with 4 choices (A-D), over a large number of tests, so as to be statistically significant. They specifically (though not purposefully) choose the wrong ones, based on ignorance or misinformation. It well could be that older people get less than a monkey with a dart due to just being plain wrong.

FWIW, I'm young and got 100% as well.

 

[REWahoo]

I would expect that most of the members in this forum would score very high on the test, since they are all fairly basic questions.

Looks like we aren't the only group to do well:

Judging from our quiz results so far, MarketWatch readers are far smarter than the average American when it comes to questions about money. Our readers are averaging 97%, while the people in the study averaged a measly 50% on those questions.

MarketWatch readers score top marks on money quiz

 

[Bestwifeever]

100 percent. Hard to believe "the respondents in Finke’s study answered on average just five of those 10 correctly."

People who are 80 probably score worse than people who are 60 because they probably don't do the things the quiz is about--they are probably not putting money into IRAs and 401ks; they surely are more likely to have their retirements funded by pensions; and for the most part, are they really deciding whether to get an adjustable rate or a fixed rate mortgage? Also, the financial instruments available to an 80-year-old over his or her lifetime are different than what's out there now; the stock market was only for rich people back then, and most people kept their money in the bank. Even those new-fangled CDs are a fairly recent alternative, so I can understand that generation not knowing or caring that there might be other places to put their money.