How Does Aging Affect Financial Decision Making?

The brief’s key findings are:

• With the shift from traditional pensions to 401(k) plans, the welfare of retirees depends increasingly on their ability to make sound financial decisions.

• Using a dataset that follows a group of older individuals in the Chicago area, the analysis examines how aging affects financial decision making.

• Participants who suffer cognitive decline experience a reduction in their financial literacy but no change in their confidence in managing their money.

• Perhaps not surprisingly then, while they are more likely to get help with financial decisions, more than half retain primary responsibility for managing their money.