Financial Sophistication in the Older Population
28 Pages Posted: 22 May 2012
Date Written: February 1, 2012
This paper examines data on financial sophistication among the U.S. older population, using a special-purpose module implemented in the Health and Retirement Study. We show that financial sophistication is deficient forolder respondents (aged 55+). Specifically, many in this group lack a basic grasp of asset pricing, risk diversification, portofolio choice, andinvestment fees. Subpopulations with particular deficits include women, the least education, persons over the age of 75, and non-Whites. In view of the fact that people are increasingly being asked to take on responsibility of their own retirement security, such lack of knowledge can have serious implications.
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