Financial Literacy and Financial Behavior at Older Ages

Financial Literacy and Financial Behavior at Older Ages

Olivia S. Mitchell and Annamaria Lusardi

Working paper

Global Financial Literacy Excellence Center Working Paper Series

2021

Recent research has documented that people are increasingly entering old age holding more debt than ever before, and having done little or no retirement planning. This paper examines some of the reasons why older peoples’ financial behaviors depart from the predictions of the life cycle model, where the latter predicts that older persons would be at the peak of their wealth accumulation process, and manage their money so as not to run out of savings in retirement. Drawing on the rapidly growing literature on financial literacy and financial behavior at older ages, we highlight findings on financial literacy patterns. We also document that “better” financial behaviors are strongly associated with greater financial literacy in later life. We close with some thoughts regarding limitations, policy implications, and next steps.