Old age and the decline in financial literacy

Michael S. Finke, John S. Howe, Sandra J. Huston

Research output: Contribution to journalArticlepeer-review

85 Scopus citations


Households age 60 and older bear increasing responsibility for managing retirement portfolios, and they hold the majority of financial assets in the United States. Cognitive aging studies find evidence of a decline in fluid and crystallized intelligence in old age that may impact the ability to manage money effectively. Using a large sample of older respondents, we test whether knowledge of basic concepts essential to effective financial choice declines after age 60. We find a consistent linear decline in financial literacy score after age 60. A nearly identical rate of decline among men, stockowners, older, and collegeeducated respondents indicates that cohort effects are not driving the results. Confidence in financial decision-making abilities does not decline with age. A separate analysis using data that include measures of cognitive ability suggests that a natural decline in both fluid and crystallized intelligence in old age contributes to falling financial literacy scores.

Original languageEnglish
Pages (from-to)213-230
Number of pages18
JournalManagement Science
Issue number1
StatePublished - Jan 2017


  • Aging
  • Cognitive ability
  • Financial literacy
  • Household finance
  • RRetirement


Dive into the research topics of 'Old age and the decline in financial literacy'. Together they form a unique fingerprint.

Cite this