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Financial Literacy And Suboptimal Financial Decisions At Older Ages
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Book Synopsis Financial Literacy and Suboptimal Financial Decisions at Older Ages by : Joelle H. Fong
Download or read book Financial Literacy and Suboptimal Financial Decisions at Older Ages written by Joelle H. Fong and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Over the life-cycle, wealth holdings tend to be highest in the early part of retirement. The quality of financial decisions among older adults is therefore an important determinant of their financial security during the asset drawdown phase. This paper assesses how financial literacy shapes financial decision-making at older ages. We devised a special module in the Singapore Life Panel survey to measure financial literacy to study its relationship with three aspects of household financial and investment behaviors: credit card debt repayment, stock market participation, and adherence to age-based investment glide paths. We found that the majority of respondents age 50+ has some grasp of concepts such as interest compounding and inflation, but fewer know about risk diversification. We provide evidence of a statistically significant positive association between financial literacy and each of the three aspects of suboptimal financial decision-making, controlling for many other factors, including education. A one-unit increase in the financial literacy score was associated with an 8.3 percentage point greater propensity to hold stocks, and a 1.7 percentage point higher likelihood of following an age-appropriate investment glide path. The financial literacy score is only weakly positively linked with timely credit card balance repayment, both in terms of statistical significance and estimate size.
Book Synopsis Financial Decision Making and Retirement Security in an Aging World by : Olivia S. Mitchell
Download or read book Financial Decision Making and Retirement Security in an Aging World written by Olivia S. Mitchell and published by Oxford University Press. This book was released on 2017 with total page 249 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume will explore how financial decision-making changes at older ages, how and when financial advice can be useful for the older population, and what solutions and opportunities are needed to resolve the likely problems that will arise.
Book Synopsis How Financial Literacy and Impatience Shape Retirement Wealth and Investment Behaviors by : Justine S. Hastings
Download or read book How Financial Literacy and Impatience Shape Retirement Wealth and Investment Behaviors written by Justine S. Hastings and published by . This book was released on 2020 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Two competing explanations for why consumers have trouble with financial decisions are gaining momentum. One is that people are financially illiterate since they lack understanding of simple economic concepts and cannot carry out computations such as computing compound interest, which could cause them to make suboptimal financial decisions. A second is that impatience or present-bias might explain suboptimal financial decisions. That is, some people persistently choose immediate gratification instead of taking advantage of larger long-term payoffs. We use experimental evidence from Chile to explore how these factors appear related to poor financial decisions. Our results show that our measure of impatience is a strong predictor of wealth and investment in health. Financial literacy is also correlated with wealth though it appears to be a weaker predictor of sensitivity to framing in investment decisions. Policymakers interested in enhancing retirement well-being would do well to consider the importance of these factors.
Book Synopsis Old Age and the Decline in Financial Literacy by : Michael S. Finke
Download or read book Old Age and the Decline in Financial Literacy written by Michael S. Finke and published by . This book was released on 2015 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Households over age 60 own half of the discretionary investment assets in the United States and are increasingly responsible for generating income from these investments to fund retirement. Studies in cognitive aging show that older respondents experience a decline in cognitive processes closely related to financial decision making. We investigate whether knowledge of basic concepts essential to effective financial choice declines after age 60. Financial literacy scores decline by about 2% each year after age 60, and the rate of decline does not increase with advanced age. Results from regressions censored by respondent groups and financial literacy topic areas suggest that the decline is not related to cohort effects or differences in gender or educational attainment. Confidence in financial decision making abilities does not decline with age. Increasing confidence and reduced abilities can explain poor credit and investment choices by older respondents.
Book Synopsis Financial Literacy by : Olivia S. Mitchell
Download or read book Financial Literacy written by Olivia S. Mitchell and published by Oxford University Press. This book was released on 2011-10-27 with total page 328 pages. Available in PDF, EPUB and Kindle. Book excerpt: As defined contribution pensions become prevalent, retirees are increasingly responsible for managing their own pension assets and thus their own financial literacy becomes crucial. Based on empirical evidence and new research, the book examines how financial literacy enhances retirement decision-making in ever more complex financial markets.
Book Synopsis Financial Literacy and Ageing in Developing Economies by : Kshipra Jain
Download or read book Financial Literacy and Ageing in Developing Economies written by Kshipra Jain and published by Taylor & Francis. This book was released on 2023-05-09 with total page 179 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book weaves together current understanding around financial literacy and ageing, arguing for the relevance of financial literacy for old age security. Building upon on the experiences of ten developing Asian economies with a focus on India, the book enters new territory by developing frameworks that identify predictors of financial literacy and a mechanism for its internalization, as well as recognising the need for specialized training programs for the older population in order to establish a link between financial literacy and old age security. It thus makes a case about the centrality of financial literacy in creating an environment conducive to a dignified ageing experience in this world of shouldering one’s own responsibility. Going forward, the book comprehends financial literacy for India as a skill which enables an individual to decide the suitable avenues to invest savings, utilize monetary resources and shape financial decisions aligned with their financial goals, in accordance with the dynamic financial & economic environment. This original volume is a first-time attempt to provide an in-depth account of financial literacy and its association with savings behavior, old age planning, wealth accumulation, healthcare and wellbeing in older age. It also provides a detailed account of various measurement tools used and policy initiatives undertaken across the globe for financial literacy. It is an indispensable reference guide for scholars and researchers, cutting across multiple disciplines particularly financial and development economics, gerontology, demography, social work, psychology and public policy.
Book Synopsis How Cognitive Ability and Financial Literacy Shape the Demand for Financial Advice at Older Ages by : Hugh Hoikwang Kim
Download or read book How Cognitive Ability and Financial Literacy Shape the Demand for Financial Advice at Older Ages written by Hugh Hoikwang Kim and published by . This book was released on 2019 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate how cognitive ability and financial literacy shape older Americans’ demand for financial advice using an experimental module in the 2016 Health and Retirement Study. We show that cognitive ability and financial literacy strongly improve the quality, but not the quantity, of financial advice sought. Most importantly, the financially literate and more cognitively able tend to seek financial help from professionals rather than family members, and they are less likely to accept so-called 'free' financial advice that may entail conflicts of interest. Nevertheless, those with higher cognitive function also tend to distrust financial advisors, leading them to eschew their services.
Book Synopsis "Do you save for your retirement?" An empirical snapshot of the level of financial literacy and retirement planning by : Angelina Scholtysik (geb. Haniecka)
Download or read book "Do you save for your retirement?" An empirical snapshot of the level of financial literacy and retirement planning written by Angelina Scholtysik (geb. Haniecka) and published by GRIN Verlag. This book was released on 2018-09-25 with total page 11 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2014 in the subject Sociology - Miscellaneous, grade: 1,0, University of Applied Sciences Dortmund (Fachbereich Wirtschaft), language: English, abstract: The severe consequences of the current financial crisis have reaffirmed the great lag in financial knowledge. Apart from the change of economic conditions, there is also the demographic barrier, which poses a risk to every individual. Therefore, individuals need to understand financial information in order to be able to react adequately. However, research suggests that financial literacy is low on a global scale, showing concerning gaps between certain groups that may be attributable to financial insecurity and old-age poverty. In light of these findings, an empirical snapshot of the level of financial literacy and retirement planning is given, observing 165 students and non-students, of German and non-German nationality, aged between 20 and 30. The findings suggest that the research findings still apply to the current status. With regard to the financial literacy test, we find that overall only less than half of all respondents were able to answer all three questions correctly. With regard to the groups, women score lower than men; students do better than non-students. In addition, we found that age and nationality are not of importance, while the professional background – at least in our sample - can lead to a better test score. As a consequence, a female non-student working in/studying a nonbusiness/ economics-related field/discipline is most endangered. With regard to the savings behavior, we see differences among gender and academic backgrounds implying that male students save on average more often, putting female non-students at risk. We did not find a statistically significant link between the financial literacy test score and savings behavior in our sample.
Book Synopsis Financial Capability and Asset Holding in Later Life by : Margaret S. Sherraden
Download or read book Financial Capability and Asset Holding in Later Life written by Margaret S. Sherraden and published by Oxford University Press, USA. This book was released on 2015 with total page 281 pages. Available in PDF, EPUB and Kindle. Book excerpt: In Financial Capability and Asset Holding in Later Life: A Life Course Perspective the concept of Financial Capability is used to underscore the importance of acquiring knowledge and skills while addressing policies and services than can build financial security.
Book Synopsis Feature: Cognitive Function, Financial Literacy and Financial Outcomes at Older Ages by :
Download or read book Feature: Cognitive Function, Financial Literacy and Financial Outcomes at Older Ages written by and published by . This book was released on 2010 with total page 154 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Cognitive Function, Financial Literacy and Financial Outcomes at Older Ages by : Antonio Ciccione
Download or read book Cognitive Function, Financial Literacy and Financial Outcomes at Older Ages written by Antonio Ciccione and published by . This book was released on 2010 with total page 154 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Promoting Better Lifetime Planning Through Financial Education by : Naoyuki Yoshino
Download or read book Promoting Better Lifetime Planning Through Financial Education written by Naoyuki Yoshino and published by World Scientific. This book was released on 2016-02-29 with total page 230 pages. Available in PDF, EPUB and Kindle. Book excerpt: Surveys show that financial literacy levels are typically low around the world, despite the widening access to financial services and the increasing financial risks borne by households in many countries. This suggests that there will be mounting challenges for households and SMEs to invest wisely and effectively as societies age and governments shift away from defined benefit to defined contribution pension schemes. Individuals will increasingly have to make complex financial decisions to plan for their retirement and for a range of foreseen and unforeseen expenditures. All of these developments suggest that financial education should be part of a lifetime process that starts at an early age and is pursued throughout adulthood.The contributions in this book came from a symposium titled, Promoting Better Lifetime Planning through Financial Education, organized by the Asian Development Bank Institute, the Bank of Japan, the Japan Financial Services Agency, and the Organisation for Economic Co-operation and Development, held on 22-23 January 2015 in Tokyo.Amongst the topics discussed were: effective pension management, financial education curricula in schools, training for teachers of financial education, internationally comparable data on financial literacy and the evaluation of the effectiveness of financial education programs. There are also case studies on financial inclusion, regulation, and education in Indonesia, Pakistan, Philippines, Viet Nam, Thailand, and Japan.
Book Synopsis Consumer Knowledge and Financial Decisions by : Douglas J. Lamdin
Download or read book Consumer Knowledge and Financial Decisions written by Douglas J. Lamdin and published by Springer Science & Business Media. This book was released on 2011-11-23 with total page 341 pages. Available in PDF, EPUB and Kindle. Book excerpt: There has been an increasing recognition that financial knowledge (i.e., literacy) is lacking across the population. Moreover, there is recognition that this lack of knowledge poses real problems as credit, mortgages, health insurance, retirement benefits, and savings and investment decisions become increasingly complex. Financial Decisions Across the Lifespan brings together the work of scholars from various disciplines (family and consumer sciences, economics, law, finance, sociology, and public policy) to provide a broad range of perspectives on financial knowledge, financial decisions, and policies. For consistency across the volume each chapter follows a similar format: (1) what individuals know or need to know (2) how what they know or need to know affects financial decisions and outcomes (3) ways in which policies or programs or financial innovations can enhance their knowledge, or decisions, or outcomes. Contributors will provide both new and existing research to create a valuable picture of the state of financial literacy and how it can be improved.
Book Synopsis Financial Literacy and Adult Education by : Karin Sprow Forté
Download or read book Financial Literacy and Adult Education written by Karin Sprow Forté and published by John Wiley & Sons. This book was released on 2014-03-19 with total page 115 pages. Available in PDF, EPUB and Kindle. Book excerpt: Many adults attend financial education classes to help them make more informed financial decisions, based on their knowledge of their financial situation available cash or funds planned expenditures. This volume brings together scholars from the fields of adult education and financial literacy and covers topics that reveal the interrelatedness of the two fields. They show how concepts and knowledge about adult education can be utilized in and illuminate financial education, and they offer insights about how financial education, as an eminently practical subject, shows adults learning and putting their new knowledge into action. This is the 141st volume of this Jossey-Bass series. Noted for its depth of coverage, it explores issues of common interest to instructors, administrators, counselors, and policymakers in a broad range of adult and continuing education settings, such as colleges and universities, extension programs, businesses, libraries, and museums.
Book Synopsis Financial Knowledge, Overconfidence, and Financial Behaviors of Individuals by : Sunwoo T. Lee
Download or read book Financial Knowledge, Overconfidence, and Financial Behaviors of Individuals written by Sunwoo T. Lee and published by . This book was released on 2021 with total page 217 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial knowledge has emerged as one of the important factors affecting one’s financial behaviors and decision makings. This dissertation consists of three essays, each with a focus on the effects of the discrepancy between objective financial knowledge and subjective self-assessment of financial knowledge, or financial knowledge overconfidence. Respondents were categorized as having overconfidence in financial knowledge when they had high subjective financial assessment but low objective scores. The first study focuses on early withdrawals from retirement accounts. Early distributions could pose risk on one’s financial stability during retirement by permanently reducing retirement wealth. The first study used 2018 National Financial Capability Study dataset and examined how (1) objective financial knowledge, (2) subjective financial knowledge, and (3) overconfidence in financial knowledge were related to one’s behavior of taking hardship withdrawals and plan loans by conducting logistic regression and Two-Stage Least Squares (2SLS) Instrumental variable (IV) analysis. The analyses found objective financial knowledge being negatively related to hardship withdrawals and plan loans, but subjective financial knowledge being positively related to hardship withdrawals. Respondents with financial knowledge overconfidence were more likely to take early withdrawals than those with other combinations of objective and subjective knowledge. The second study is about respondent perceptions of emergency fund needs. Using the 2016 Survey of Consumer Finances dataset, OLS regression analysis was conducted on the ratio of perceived emergency fund needs to estimated monthly spending. Quantile regressions and 2SLS IV regressions were conducted for robustness checks as well. Based on the OLS regression results, the perceived emergency fund ratio of respondents with financial knowledge overconfidence is 21.4% lower than respondents with appropriately high confidence (above median objective and subjective financial knowledge). Lastly, the third study examined retirement adequacy. Many U.S. households may not be adequately prepared for retirement, and one of the challenges they face is perceiving their retirement preparedness realistically. I examined factors related to appropriately evaluating retirement adequacy, by focusing on the relationship between two discrepancy indices: (1) between objective and subjective financial knowledge, and (2) between objective and subjective assessments of retirement adequacy. Using the 2016 Survey of Consumer Finances dataset, logistic, multinomial, and 2SLS IV regressions were conducted. About 72% categorized themselves as expecting to have enough retirement income, while I projected that 50% would have adequate retirement income. Projected and perceived adequacy aligned for 60% of respondents. Those who are overconfident in financial knowledge were less likely to have enough retirement income and more likely to be categorized as Unrealistic Optimists, who perceive themselves as having enough retirement income, while lack projected adequacy. The main implication of these three studies is that the respondents who are overconfident in financial knowledge might be making suboptimal financial decisions. The importance of financial education needs to be emphasized, and financial education should focus on not only increasing objective financial knowledge but also making people aware of the limitations of their financial literacy. The study also provides implications for policymakers and financial professionals regarding diverse financial behaviors to improve the financial well-being of individuals and households.
Book Synopsis Sources of Lower Financial Decision-Making Ability at Older Ages by : Shachar Kariv
Download or read book Sources of Lower Financial Decision-Making Ability at Older Ages written by Shachar Kariv and published by . This book was released on 2016 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: After middle age, further aging is associated with lower levels of many cognitive abilities, some of which could influence import economic decisions. Our prior research (Choi et al., 2014) shows a substantial negative relationship between age and the consistency of choices with economic rationality (decisionmaking quality). This paper investigates the sources of that negative correlation using panel data on more than 4,000 members of a panel study in the Netherlands. The analysis finds no evidence that the correlation between age and rationality is, in fact, a just a cohort, not an age effect. Similarly, there is little evidence that the correlation is due to other forms of cognitive or health declines. Rather, the findings indicate that age has an independent and negative effect on economic rationality.
Book Synopsis The Role of Financial Literacy in Financial Decisions and Retirement Preparedness Among Seniors and Near-Seniors by :
Download or read book The Role of Financial Literacy in Financial Decisions and Retirement Preparedness Among Seniors and Near-Seniors written by and published by . This book was released on 2016 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Social Research and Demonstration Corporation 1 The role of financial literacy in financial decisions and retirement preparedness among seniors and near-seniors The second research objective is to explore the practical implications of financial confidence with respect to the effective design and targeting of policy interventions, which aim to enhance the financial preparedness of seniors and near- [...] The second set of research questions explores the way financial knowledge and financial confidence interact and connect with behavioural tendencies: 3. When financial knowledge and financial confidence are examined simultaneously, what are the factors that characterize the seniors and near-seniors with a substantial misalignment between the two attributes, or a large financial knowledge-confidence [...] Social Research and Demonstration Corporation 3 The role of financial literacy in financial decisions and retirement preparedness among seniors and near-seniors Previous literature Seniors score the lowest on the objective assessment of financial knowledge in the CFCS compared to younger cohorts (Financial Consumer Agency of Canada, 2014b). [...] Social Research and Demonstration Corporation 8 The role of financial literacy in financial decisions and retirement preparedness among seniors and near-seniors Data and methods To understand the financial characteristics of seniors (aged 65 and over) and near-seniors (aged 55 to 64), the way their financial knowledge and confidence influence their money management decisions, as well as the way th [...] For the first three research questions on the interplay between financial knowledge, financial confidence and behaviours, the bivariate analysis reveals that financial decision-making changes Social Research and Demonstration Corporation 9 The role of financial literacy in financial decisions and retirement preparedness among seniors and near-seniors with knowledge, as well as with confidence.
