Aging Does Not Impair Financial Decision-making

Of concern is whether individuals’ ability to make good financial decisions will deteriorate as they age.

Research conducted with men and women in their 50s, 60s and 70s by the MetLife Mature Market Institute and the Center for BrainHealth at the University of Texas at Dallas found that those who demonstrated smart decision-making also excelled at strategic learning—the ability to sift more important information from the less important.   

Researchers gauged participants’ financial conscientiousness (i.e., being careful and organized) using a series of questions regarding monthly budgeting practices and financial retirement plans. There were no significant differences in risk-taking in that all three age groups showed a similar pattern of conservative choices.  

Although study participants in all three life stages had about the same strategic learning abilities, the oldest participant group slightly surpassed the rest, implying strategic learning capacity may actually increase with age in normally functioning adults. Additional findings show that older study participants (those in their 70s) were more conscientious, remained vigilant (i.e., considered their options before making a decision) and avoided being hyper-vigilant (i.e., focused on immediate solutions without considering other outcomes) when compared to the younger group (those in their 50s).    

The study demonstrates that age alone is not a key factor in predicting the ability to make decisions. “Combining these findings with emerging evidence of retained cognitive brain health in aging suggests that policies aimed at protecting those most vulnerable to poor decision-making should focus on impairment caused by an underlying medical condition, rather than age itself, as a risk factor,” said Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute.  

“Healthy Brain, Healthy Decisions: The MetLife Study of Decision-Making Potential” can be downloaded from here.