‘Financial education can help with planning for old age’
ROSE Miller, grants manager at the JN Foundation and head of the JN Bewi$e Financial Empowerment Programme, says there is a growing need for more senior citizens to be exposed to financial education programmes, so that they can better plan for their old age.
She said that this is important as growing older doesn’t mean getting wiser when it comes to making sound financial decisions.
Miller noted that two studies in the United States found that older people gradually, but steadily lose their ability to make sound financial decisions as they age.
The studies were conducted by the Texas Tech University and the Centre for Retirement Research at Boston College in 2015.
It was found that at a time when persons 60 years and older are responsible for managing their retirement assets and distributions, and making complicated decisions about their investments, insurance and pensions, many also face a decline in their mental performance.
According to the research, the ability to understand financial concepts and apply them properly peaks in the mid-50s and declines by one per cent per year after age 60.
Ironically, one study also found that
confidence in financial decision making and investing ability remained constant or increased with age.
Miller noted that this was a cause for concern as declining aptitude and overconfidence is a bad combination and could spell trouble if seniors and their family members do not take precautionary measures, such as financial planning, and in some cases, hands-on assistance to avoid vulnerabilities and even abuse.
“A certain amount of cognitive decline is a normal process of aging, and while this decline will differ from person to person, acknowledging that your ability to make financial decisions, and generally manage your financial affairs, will decrease is an important part of the retirement and financial planning process,” she advised.
The JN Foundation manager further said there is no need for senior citizens and their children to worry about their financial future in retirement if they have a sound and regularly reviewed financial plan.
“It is also critical that the person or persons responsible for the care and management of senior citizens be completely trustworthy to ensure they receive the full benefit of the provisions they have put in place for this season of their lives.”