Financial Literacy and Your Retirement

A new study authored by the Department of Personal Financial Planning in Texas has found that Americans in their retirement years gradually lose the ability to manage their money. According to the study, the ability to answer basic financial literacy questions wanes as age increases.

Now, before you start arguing that most facilities decrease as you age, consider that in the same study, the ability to confidently make financial decisions does not falter as you grow older.

This is quite important, given that Americans aged 50 years and up command an annual income which accounts for 42% of all after-tax income in the U.S. 

A lack of financial literacy opens the door to abuse from those looking to target the elderly as older consumers whose financial literacy skills have declined and may be particularly vulnerable to the sale of unsuitable investments.

Fraud is becoming a bigger threat to your retirement security — even if you think you're too sharp to fall for a scam. Reports estimate that older Americans lose $36.5 billion each year to financial scams and abuse. The problem is growing, and researchers say older adults experiencing cognitive decline are just a segment of the victims. 

This is one of the bigger reasons why it is so important to invest time in financial literacy to protect oneself from anyone looking to con you.  If you are educated in a subject, it may be more difficult for crooks to try to take advantage of you. It is an investment of time and energy that may help protect you as time goes on.

And with fewer employers providing pensions, retirement strategies are more important than ever nowadays. “A day late and a dollar short” is not the situation you want to find yourself in when it comes time to pack up and venture off into retirement.

But the picture is not hopeless. There are many private and public organizations at local, state, and national levels that offer tools and programs to help people build financial literacy skills to help them make good decisions and to pursue ongoing financial capability.

It's important to be proactive with financial education. Financial coaches and advisors can help individuals inventory their finances and help determine priorities to cope with difficult situations, such as potential default on a mortgage or the financial effects of a divorce. There is help available.

 

IMPORTANT DISCLOSURES

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

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David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC.