Impact of Aging on Financial Mgt.

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BachemFan
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Impact of Aging on Financial Mgt.

Post by BachemFan »

Robert Powell has an interesting article on "Marketwatch" about an academic study on the impact of aging on one's ability to manage his or her financial affairs. I especially noted that that as one ages, one's CONFIDENCE in financial decision increases, while the actual cognitive ABILITY to make these decisions declines.

http://www.marketwatch.com/story/our-fi ... iteID=mktw

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Opponent Process
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Re: Impact of Aging on Financial Mgt.

Post by Opponent Process »

this is why I'll probably take the advice in my disaster plan for my spouse and put everything into TR Income funds at retirement. you never know.
30/30/20/20 | US/International/Bonds/TIPS | Average Age=37
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SimpleGift
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Re: Impact of Aging on Financial Mgt.

Post by SimpleGift »

Interesting study. Personally, this helps explain why the financial discussions here on Bogleheads Forum are so valuable for those of us past the age of 60. Not only do these discussions keep us on our toes, so to speak, but the "adversarial collaboration" in these forums fills in much of the financial knowledge that we seniors are purported to be losing daily! Thanks for posting the article.
Last edited by SimpleGift on Thu Oct 27, 2011 1:06 pm, edited 1 time in total.
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kenyan
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Re: Impact of Aging on Financial Mgt.

Post by kenyan »

How does the 90+ group average 13%? Random choice would get you 33%. They must not have finished filling it out.
Retirement investing is a marathon.
Bungo
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Re: Impact of Aging on Financial Mgt.

Post by Bungo »

A quiz of this type should be a mandatory requirement to graduate from high school. Hopefully all Bogleheads scored 100%!
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bob90245
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Re: Impact of Aging on Financial Mgt.

Post by bob90245 »

Study is in line with other shocking findings where half of all 85+ have some sort of cognitive impairment.

http://moneywatch.bnet.com/retirement-p ... ntent;col1
Ignore the market noise. Keep to your rebalancing schedule whether that is semi-annual, annual or trigger bands.
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archbish99
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Re: Impact of Aging on Financial Mgt.

Post by archbish99 »

Yeah.... This is exactly the bane of my family.
If I look over the last 15 years of my investing I see that there have been a lot of down turns That I’m trying to avoid now so I stay agile and trade a lot, besides I enjoy trying to beat the market. I think that over the long run the IBD approach is best. (only buy when stocks are going up and get out if they start down) but It takes a lot of time which now I have.
My 77-year-old father is an inveterate market timer. He gets really irate when mom asks him how long it's been since he reported a capital gain on their tax return, 2010 excepted. :roll:

I keep trying to get them into index funds, but this is Dad's hobby. People in other generations went to the casinos or the race track; Dad goes stock picking. I can accept it as a hobby, but it makes me worry about Mom's financial security at the end of the game.
I'm not a financial advisor, I just play one on the Internet.
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Taylor Larimore
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End of the game ?

Post by Taylor Larimore »

it makes me worry about Mom's financial security at the end of the game.
Sorry to say, it's not the "end of the game." I hope you have a spare bedroom. :wink:
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nisiprius
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Re: Impact of Aging on Financial Mgt.

Post by nisiprius »

The scary thing is that there seems to be a whole industry devoted to profiting from the mental impairment of seniors. I don't know how many of the firms that do these things know consciously that that's what they're doing, or whether they just know empirically that when they follow some sleazy practice, their sales increase.

I was talking to the daughter of a woman in her nineties. She says her mother

a) Responds to magazine subscription renewals that are sent years before the subscription has expired. She'll renew one that expires in 2017 for a couple of years more, then a six months later she'll get a great offer to add a couple of years more to her subscription, etc. And she responds to new-subscription offers for magazines she already subscribes to, vaguely thinking they're renewal notices or something, and ends up with multiple subscriptions to the same magazine.

b) Sends money to anything that sort of looks like an invoice, even if it says "this is not an invoice."

c) Joins negative-option book clubs, fails to return the "Don't-send-it" postcard, and receives unwanted books which she doesn't attempt to return. Joins more than one book club, fails to return the postcards, and receives multiple copies of the same book. Joins book clubs because they say their books help retirees stretch their money, and they turn out to be schlocky investment books, or tips on how to flip real estate.

d) Makes several "annual donations" a year to a charity.

I mean, you and I, we get these mailings and we just cuss and throw them in the wastebasket. We wonder "who could be so stupid as to fall for it." I'm afraid the answer is: you and I are the people stupid enough to fall for it... someday.

And I'm not even talking about the truly evil people, who trade mailing lists of mentally impaired elders, and cold-call them and say (on the first call) "This investment opportunity isn't going to last, and I'm concerned because I haven't received the check for $50,000 you said you were going to mail me..."
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Fallible
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Re: Impact of Aging on Financial Mgt.

Post by Fallible »

I wonder if the studies (Finke's and also Laibson's) referred to in the MarketWatch article indicate how financially literate these older folks were BEFORE 60. We all know people of all ages who are financially illiterate to one degree or another and some of them probably will remain so.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
john94549
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Re: Impact of Aging on Financial Mgt.

Post by john94549 »

I'm 64 1/2 and got 10/10. It was a pretty easy quiz.
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joe8d
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Re: Impact of Aging on Financial Mgt.

Post by joe8d »

69 and got 100% on the quiz.I do agree with the article though.
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norookie
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Re: Impact of Aging on Financial Mgt.

Post by norookie »

:twisted: These predators prey on elderly because of increased decrease % of their cognitive impairment, accumulation of assets, their want to talk (ie loneliness), and many other factors. Its sickening. To me, anyway. :annoyed I plan on 1-3 funds over 65. Thats easily managed.
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gkaplan
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Re: Impact of Aging on Financial Mgt.

Post by gkaplan »

I scored ninety percent. The only one I missed was the mortgage one, which is not surprising, since I am a lifelong renter.
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motodoc42
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Re: Impact of Aging on Financial Mgt.

Post by motodoc42 »

I missed the mortgage question as well . 90%, age 69. Haven't had a mortgage in over 20 years. I'm unsure when variable rate ones became available.
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likegarden
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Re: Impact of Aging on Financial Mgt.

Post by likegarden »

I still got it. Here is another older Boglehead with 100%, 10/10! I got twice as many correct as the stated average for my age of 72, which is 5 in that referenced graph. I agree simplicity in the portfolio is a great plan as we get older.
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nisiprius
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Re: Impact of Aging on Financial Mgt.

Post by nisiprius »

For the record, I got all ten--whew!--but I was worried about the mortgage question. That was the only one I was uncertain about. But it makes sense, because it sort of answers a question that had long bothered me: why would anyone get an adjustable-rate mortgage if they had a choice? Obviously, the answer is: in order to get a bigger house than you can afford.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
leonard
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Re: Impact of Aging on Financial Mgt.

Post by leonard »

I am baffled as to why answers to these questions would vary because of age. You either know the answer to them or you don't. The only reason I would see this varying across age groups is if somehow older peopler are worse guessers when they don't know the answer. But, since it's guessing, I don't see any reason for that to vary with age either.

Strange quiz with strange results.
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.
HearDoc
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Re: Impact of Aging on Financial Mgt.

Post by HearDoc »

Fallible wrote:I wonder if the studies (Finke's and also Laibson's) referred to in the MarketWatch article indicate how financially literate these older folks were BEFORE 60. We all know people of all ages who are financially illiterate to one degree or another and some of them probably will remain so.
My thoughts exactly. Although my 85 year old father who was never a real wiz with finance recently told me that as he ages he gets cheaper and therefore
less susceptible to come-ons and beg letters. Wisdom may fade but cheap is to the bone.
HearDoc
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Re: Impact of Aging on Financial Mgt.

Post by HearDoc »

leonard wrote:I am baffled as to why answers to these questions would vary because of age. You either know the answer to them or you don't. T.
I don't understand your bafflement. Have you never heard of memory loss or cognitive decline with age?
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Re: Impact of Aging on Financial Mgt.

Post by Alan S. »

I would wager that people who entered this age group with an interest in these issues and did not get hit with dementia probably lost almost nothing. Those with dementia obviously will lose their cognitive ability quickly and those without an interest in the first place are unlikely to develop one.

Add me to the 90% list that blew the mortgage question. At a time of record low interest rates, why would a bank loan more for an adjustable which will only increase from here and exceed the current fixed rate fairly soon after rates begin to rise?
Last edited by Alan S. on Fri Oct 28, 2011 6:53 pm, edited 1 time in total.
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FrugalInvestor
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Re: Impact of Aging on Financial Mgt.

Post by FrugalInvestor »

All the more reason to simplify your investment plan.
Have a plan, stay the course and simplify. Then ignore the noise!
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Munir
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Re: Impact of Aging on Financial Mgt.

Post by Munir »

I'm 74 and got 100%. Does this mean I should drop my financial advisor? :)
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bob90245
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Re: Impact of Aging on Financial Mgt.

Post by bob90245 »

Alan S. wrote:At a time of record low interest rates, why would a bank loan more for an adjustable which will only increase from here and exceed the current fixed rate fairly soon after rates begin to rise?
Straight-forward logic and the answer is contained in the words you wrote. It would be to the bank's benefit, and conversely to the borrowers detriment, for the adjustable rate to rise. Gives the bank more interest income. And if the more on loan, the more interest income earned which boasts the bank's bottom line.

We assume, of course, that the bank has determined that the borrower is good for the increased interest payment. Otherwise, the loan wouldn't have been granted in the first place (all things being honest and equal -- but after the sub-prime meltdown, maybe we shouldn't assume).
Ignore the market noise. Keep to your rebalancing schedule whether that is semi-annual, annual or trigger bands.
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bob90245
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Re: Impact of Aging on Financial Mgt.

Post by bob90245 »

Alan S. wrote:At a time of record low interest rates, why would a bank loan more for an adjustable which will only increase from here and exceed the current fixed rate fairly soon after rates begin to rise?
Straight-forward logic and the answer is contained in the words you wrote. It would be to the bank's benefit, and conversely to the borrower's detriment, for the adjustable rate to rise. Gives the bank more interest income. And if the more on loan, the more interest income earned which boasts the bank's bottom line.

We assume, of course, that the bank has determined that the borrower is good for the increased interest payment that may come about. Otherwise, the loan wouldn't have been granted in the first place (all things being honest and equal -- but after the sub-prime meltdown, maybe we shouldn't assume).
Ignore the market noise. Keep to your rebalancing schedule whether that is semi-annual, annual or trigger bands.
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