Early-Life Schooling and Cognition and Late-Life Financial Literacy in the Wisconsin Longitudinal Study

StagesThis paper by Pamela Herd, Karen Holden, and Yung-ting Su focuses on the relationship between cognitive functioning in early and late life and older adults’ ability to effectively manage their finances.

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 The results of this study demonstrate the problems that older adults face today, and that younger cohorts will face to an even greater extent in future years. As the complexity of individuals’ financial lives grows, the role of cognitive functioning in determining financial outcomes is likely to become increasingly important. The tasks in which older individuals must engage to manage their financial lives are complex in ways that pose real challenges for those with more limited cognitive functioning. To ameliorate this effect, policymakers must
develop strategies to help simplify the financial lives of older Americans.