Old age and the decline in investment performance

Michael S. Finke and Sandra J. Huston

Chapter 14 in Financial Education and Risk Literacy, 2021, pp 236-249 from Edward Elgar Publishing

Abstract: Retirees in industrialized societies are increasingly encouraged to fund their own spending in retirement through publicly-subsidized savings programs.  Individuals are then responsible for investing these assets through retirement to support a lifestyle.  Unfortunately, there is evidence that age-related cognitive decline has a negative impact on a retiree’s ability to manage an investment portfolio in later life.  Individuals over age 60 exhibit a gradual decline in financial literacy that reduces observed decision-making quality.  Older investors are not able to fully capture an equity risk premium that may be attributed to time varying risk preferences that erode investment performance. A lack of awareness of decline in financial capability also increases vulnerability to financial exploitation.  Improved investor protections and the use of financial instruments that automate the management of retirement portfolios to produce lifetime income can improve the financial security of retirees.

Keywords: Economics and Finance (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.elgaronline.com/view/edcoll/9781789908848/9781789908848.00022.xml (application/pdf)
Our link check indicates that this URL is bad, the error code is: 503 Service Temporarily Unavailable

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:elg:eechap:19356_14

Ordering information: This item can be ordered from
http://www.e-elgar.com

Access Statistics for this chapter

More chapters in Chapters from Edward Elgar Publishing
Bibliographic data for series maintained by Darrel McCalla ().