Does aging impact an individual’s ability to make sound financial decisions? The Center for Retirement Research at Boston College recently issued a report that provided an answer to this question based on a research study that followed a group of individuals over time, assessing their financial literacy throughout the study.
Participants in the study were tested on financial literacy using a variety of questions and then asked to rate how confident they were about each answer they gave. Participants were also asked about who has responsibility for their financial decisions. The findings of the study concluded, “Declining cognition, a common occurrence among individuals in their 80’s, is associated with a significant decline in financial literacy.” Despite these findings, it was also apparent that the decline in cognition was associated with little effect on the confidence of the individual in making financial decisions. Furthermore, about half of individuals experiencing significant cognitive declines receive assistance with their finances from someone other than a spouse.
The increased concern about the relationship between cognitive decline and financial literacy stems from the shift from pensions to 401(k) plans, which places increased responsibility on the individual to make investment decisions. This decline in cognitive abilities and financial literacy coupled with a lack of decline in confidence may lead an individual to make poor financial decisions thereby jeopardizing their retirement income and security. For individuals in this position, it may be advisable to seek financial assistance from a reputable financial professional.
Tully Law, P.C. does not endorse any particular advisor or firm and recommends all clients meet with more than one financial advisor before selecting a company the individual feels will accomplish his or her financial objectives. While not endorsing any particular company, our firm has in the past worked with the following financial advisors:
Siena Wealth Advisory Group
324 South Service Road, Suite 107
Melville, NY 11747
Contact Person: Joseph De Sena or Katie Coleman
The Evolution Group
300 South Oyster Bay Road
Syosset, NY 11791
Contact Person: Anthony Soldano
JJ Burns & Company
538 Broadhollow Road, Suite 204
Melville, NY 11747
Contact person: JJ Burns or Anthony LaGiglia