Financial Literacy Goes South at 60

[G8tr]

Is it possible that retirees are more focused on enjoying their retirement rather than spreadsheets? As long as there is money in the bank to pay bills, travel and have some hobbies, they may not care as much as if they were working.


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[gerntz]

Possible cognitive decline makes me especially glad to have the pension payment + social security components which should guarantee there will at least be enough for beans and rice and electricity if the nest egg should get scrambled for any reason.

Choosing an annuity would accomplish the pension part. Question is, is that best for anyone.

 

[gerntz]

I've found that over the past two years I have less interest in following short-term moves. And I don't have to much concern myself about that with someone else running much of the show. Of course many think they're fine running the show to the end. TETO.

 

[papadad111]

I seem to see more and more articles on how we loose financial "smarts" as we age.
This article suggests it is even more pronounced and widespread than I had wanted to believe--1.5% degradation every year after 60--regardless of gender or background.

So at age 90 we will still be around 69% smarter about financial matters than the average non-ER.org reader ... Despite our gray matter decline.

Stay calm and keep invested !!

It's a ploy to get older folks to sign up with high fee FA's ... Here's "a study proving that older folks shouldn't DIY"

I like the idea of keep it simple.

 

[harley]

That's why I double check with my calculator from either my iPhone or iPad. Even for tips, my kids check that we add them right.

I can still manage tips. I even look forward to mediocre service so I can do 15%, since 20% is easy.

 

[W2R]

I can still manage tips. I even look forward to mediocre service so I can do 15%, since 20% is easy.

I love figuring out tips and how much each of us needs to chip in for the bill at lunchtime including taxes. To me this is loads of fun and I am probably better at doing this in my head, than I was when I was in my 30's. Doing math in my head is something I have always liked and been unusually good at, though, for some reason.

I do "lose" a word or name now and then and have to describe around it until F suggests the word or name I am trying to recall. This type of forgetting aggravates me but I suppose it is part of aging and I should just accept it. F says the mind is like a file cabinet, and when it gets full it is hard to remember new things or find anything in it very fast. Nice analogy.

 

[Fedup]

I can still manage tips. I even look forward to mediocre service so I can do 15%, since 20% is easy.

It's not the percentage, it's the addition that I notice husband and I might make mistake.

 

[Lsbcal]

I am seeing the same thing, but then again I never need to do arithmetic in my head any more. That system engineering degree that I acquired at the young age of 55 forced me to learn to use spreadsheets ;^>

A degree at 55, wow congratulations. What made you want to do that?

 

[frayne]

I seem to see more and more articles on how we loose financial "smarts" as we age.
This article suggests it is even more pronounced and widespread than I had wanted to believe--1.5% degradation every year after 60--regardless of gender or background.
The scary switch that happens to investors over age 60
Check out the survey questionnaire they used link in the article--seems pretty straightforward to me and I am 68.
Unfortunately, the full study while linked in the article is behind a pay-wall.
Anyone else noticed degradation?
Nwsteve

I really think it would be hard to self notice degradation, due to the fact that you are degrading and the natural response would be denial. All the more reason to keep your portfolio simple with index funds and minimal complex trading schemes.

 

[Lsbcal]

From the OP's linked article:

Finke, along with Texas Tech professor Sandra Huston and University of Missouri finance professor John Howe, looked at literacy scores of more than 3,870 adults aged 60 and older. Topics in the assessment included investing, borrowing, insurance and basic financial knowledge.

Investing -- I don't care about the tests. I benchmark against some pretty good portfolios and come up doing well. When I stop comparing favorably, I'll turn it over to the folks at Wellington/Wellesley.

Borrowing and insurance -- who needs this?

Basic financial knowledge -- I agree, most Americans are pretty clueless.

 

[Lsbcal]

I really think it would be hard to self notice degradation, due to the fact that you are degrading and the natural response would be denial. All the more reason to keep your portfolio simple with index funds and minimal complex trading schemes.

I agree that designing a portfolio (or choosing one) with low complexity is good at any age.

I'm always trying to simplify things and commit my methods to spreadsheets that are not overly complex. This results in a data driven strategy as opposed to ad hoc.

 

[UpAnchor]

That's why I double check with my calculator from either my iPhone or iPad. Even for tips, my kids check that we add them right.

I can still manage tips. I even look forward to mediocre service so I can do 15%, since 20% is easy.

I love figuring out tips and how much each of us needs to chip in for the bill at lunchtime including taxes. To me this is loads of fun and I am probably better at doing this in my head, than I was when I was in my 30's. Doing math in my head is something I have always liked and been unusually good at, though, for some reason.

Many years ago I read or heard that an easy way to estimate restaurant tips was to simply take the tax and double it. And depending upon local tax rates that can usually get one in the ballpark for ~15%. Of course the 20% is drop dead simple by moving the decimal point and then doubling it. The only downside to such shortcuts is one less opportunity to exercise the aging noggin. But if the alternative means finishing off a nice dining experience by doing more complicated head math, I'd rather just go home and help my grandkids with their homework...

 

[Walt34]

Many years ago I read or heard that an easy way to estimate restaurant tips was to simply take the tax and double it.

The restaurants around here have taken to calculating the tips for 10%, 15%, and 20% for you, printed on the bill, thus taking away even that simple exercise.

 

[redduck]

I really think it would be hard to self notice degradation, due to the fact that you are degrading and the natural response would be denial. All the more reason to keep your portfolio simple with index funds and minimal complex trading schemes.

I just assume there is degradation. I just don't know to what degree. I used to have someone check that I did the tip correctly and then check my addition. Now, I just let someone at the table put in the tip and do the addition (and usually sign my name as I have on occasion signed my name in the wrong place--which isn't easy to do).

As for investments. Most of my stuff is in index funds or Wellesley or Wellington and I don't mess with it. I mess a bit with my dividend fund, but I have someone looking over my should when I buy (or sell) something. I also use a desk calculator to tally up shares and price before I buy (or sell). And, I, of course, pay attention to what the brokerage company says the entire transaction will cost before I complete the transaction.

 

[Options]

No, not at all. The reverse is true,,,,,, so far....

+1
My cognitive skills--financial and otherwise--have increased exponentially since the age of 45. I've noticed my decision-making skills have increased markedly with each passing year. Then again, I view aging as a (socially acceptable as well as socially contagious) "mental" disease more than anything else.

 

[Fred123]

Arguments against taking this too seriously:

1) It's CNBC
2) Not peer reviewed
3) It's not peer reviewed
4) It's published in an obscure journal
5) No indication of what the variance is in the decline of cognitive abilities
6) It's one study

Sigh.



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[2017ish]

Arguments against taking this too seriously:

1) It's CNBC
2) Not peer reviewed
3) It's not peer reviewed
4) It's published in an obscure journal
5) No indication of what the variance is in the decline of cognitive abilities
6) It's one study

Sigh.



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arguments for taking it seriously: 1) it is one in a long series of studies reaching the same conclusion, including from the Center for Retirement Research at Boston College. See http://crr.bc.edu/wp-content/uploads/2015/01/IB_15-1-508.pdf ; 2) is consistent with laws such of that of California that specificaly protect "elders" against financial and other abuse; 3) falls firmly within common knowledge.

People refusing to believe that that the 100 year old me might not be as sharp as the 50 year old me (or that 100% of the drop occurs at age 99). sigh.

 

[Fred123]

arguments for taking it seriously: 1) it is one in a long series of studies reaching the same conclusion, including from the Center for Retirement Research at Boston College. See http://crr.bc.edu/wp-content/uploads/2015/01/IB_15-1-508.pdf ; 2) is consistent with laws such of that of California that specificaly protect "elders" against financial and other abuse; 3) falls firmly within common knowledge.

People refusing to believe that that the 100 year old me might not be as sharp as the 50 year old me (or that 100% of the drop occurs at age 99). sigh.

Always helpful if you actually read the study! The average age of participants in the study you quoted was 83, and, in fact, in the conclusions the paper states: "...The findings confirm that declining cognition, a common occurrence among individuals in their 80s, is associated with a significant decline in financial literacy." If you recall, the original article said that the decline begins at 60. And, even so, there's no sign that this study was peer reviewed either, and it doesn't even have any statistics such as p-values or confidence intervals associated with their linear regression.

 

[Shanky]

It started earlier with me. Until I was 50 or so I never had to write anything down. Appointments, passwords, charge card numbers, goals, targets or commitments. I had been like that my entire life so I never developed any good record keeping habits. Not yet 60, I have slipped considerably. Recall time takes longer, and I have misplaced keys and forgotten details of something I used to remember without effort. No physical issues and others appear not to notice, but it is clear to me I am a couple steps behind my former self. I now am taking steps to protect me from my future self, (diminished intellect and memory.). Fortunately my wife is still around to provide kind reminders. (Trash, flossing, ....)

This my be an attention span issue since I can still recall items I pay attention to. The problem is that it is not easy for me to pay attention anymore. It now has to be "active", when I was younger it was "passive".


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[Dash man]

What were we talking about?


Enjoying life!

 

[AbdRahim]

Warren Buffett & George Soros seem to be doing just fine. They would have to do a double blind study, comparing those that are active physically and mentally, at various levels.


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[mickeyd]

"Get off my lawn" Clint Eastwood Gran Torino

 

[imoldernu]

Financial literacy....
Can't lose what I never had, so age doesn't enter in.

Besides... too busy studying Brexit, negative bond rates, the IMF, and international debt to think about personal finances. Que sera, sera...

 

[MichaelB]

Financial literacy....
Besides... too busy studying Brexit, negative bond rates, the IMF, and international debt to think about personal finances. Que sera, sera...

Hey - don't forget China hard landing, Venezuela collapse, Brazil gov't turmoil, climate change, and that whole thing going on over there..

 

[RenoJay]

My dad has done really well, but I've noticed this decline a bit in him after 60. He used to be simple buy and hold index guy. In his 60's he started reading newsletters and making his portfolio so complicated that none of the family could understand it. Fortunately during the Great Recession when many cap gains were temporarily wiped out, I was able to convince him to simplify the portfolio and move back to a more simple plan.


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