Cognitive Ability, Financial Literacy, and the Demand for Financial Advice at Older Ages: Findings from the Health and Retirement Study
Date of this Version
This paper evaluates how cognitive ability and financial literacy shape the demand for financial advice at older ages. We analyze a new module of the Health and Retirement Study which queried older respondents about their usage of financial advice and other financial management activities. Results show that cognitive ability and financial literacy are often positively correlated with advice-seeking for financial matters. Generally speaking, the more cognitively able tend to seek financial advice from professionals outside of family members; nevertheless, they are also more likely to be overconfident regarding their investments. The more financially literate also tend to ask for help with money management, but they are less likely to be overconfident. Overall, our findings are suggestive that cognitive ability as well as financial literacy can help shape older persons’ money management behaviors.
financial advice, cognitive ability, older population, money management, Health and Retirement Study
D14, G11, G41, J26
Working Paper Number
Opinions and conclusions expressed herein are solely those of the authors and do not represent the opinions or policy of the funders or any other institutions with which the authors are affiliated.
The authors thank Yong Yu for excellent programming and research assistance.
Date Posted: 06 February 2019
This project was sponsored by the TIAA Institute and the Pension Research Council/Boettner Center at the Wharton School of the University of Pennsylvania.