If you have grandparents or your parents are getting close to their 80s, it may be time to get them some help with their finances, no matter how much financial literacy they think they have.
A recent study by the Center for Retirement Research at Boston College found that elderly people in their 80s have declining cognition on financial decision making, though the declines in financial literacy “have little effect on an elderly individual’s confidence in their financial knowledge, and essentially no effect on their confidence in managing their finances.”
In other words, their financial decision-making abilities are declining in old age, but they’re still confident they can handle them.
That overconfidence, as anyone with a stubborn grandparent may know, can cause them to mismanage their finances and be easily lured into financial schemes by crooks. They may think their financial literacy is high, but old age takes some of it away.
Many not getting financial help
The good news is that the study found that people with declining cognition were more likely to get help with their finances. However, it found that more than half of elderly individuals with significant declines in cognition get no help outside of a spouse.
With more retirees depending on 401(k)s and IRAs, instead of defined benefit pensions, cognitive decline could hurt the elderly more, according to the study.
It can be a scary thing to slowly lose the ability to understand financial literacy in old age. But remaining over confident to manage your finances while losing the ability to do so can be a scarier thought.
