Thursday, November 3, 2011

What Happens to Financial Literacy as We Age?

There is a fascinating article in the Wall Street Journal this week about how financial literacy acumen changes as we age. The conclusion? Financial knowledge peaks in the late 40s.

There are obviously consequences for this. Just as Americans are reaching their retirements and making major financial decisions, their ability to make smart choices is declining. Further compounding the issue is the fact that age and experience leads a lot of older Americans to feel a false sense of confidence about their financial know-how.

The article includes a lot of pratical advice and insight. Here is a snapshot:

First, acknowledge that your ability to make financial decisions will decline after age 60. Don't think this won't happen to you; it will.

Of course, you won't know that it's happening when it does. In fact, you're likely to develop a false sense of security about your ability to make financial decisions given that your confidence—if you're like most older Americans—will rise over time.