Originally Published by TIAA.
A study released today by the TIAA Institute found that older Americans with a higher cognitive ability are 52 percent more likely to avoid seeking out financial advice citing confidence in their ability to self-manage their finances. However, the same group is 50 percent less likely to know who to reach out to for financial assistance.
The study, titled “What the Health and Retirement Study Tells Us About Cognitive Ability, Financial Literacy, and the Demand for Financial Advice at Older Ages,” examined whether older investors would recognize a reduced ability to self-manage their finances, and if they would rationally delegate account management to others.
The results also showed those who scored higher on financial literacy assessments were 13 percent more likely to spend time managing his/her finances, 10 percent more likely to get help with money, 29 percent less likely to avoid asking for help due to self-confidence, and 21 percent less likely to not know whom to ask for help.”
As people reach retirement age, the financial decisions they make are critical,” said Stephanie Bell-Rose, Head of the TIAA Institute. “This study builds on existing research and improves our understanding of financial well-being by providing insight about how cognitive and financial literacy factors influence financial decision-making as people approach retirement.”
Of respondents who sought out financial advice, a large majority (71 percent) said they received it from a professional advisor. The majority reported they also acted on the advice of that professional advisor.
Additionally, researchers found that financial literacy appears to be related to a broader set of observed financial behaviors including cognitive ability, further underscoring the impact of financial literacy and its positive effect on older individuals’ financial management.
To view the full report, please click here.