Too old to manage your money?

A set of controversial scientific findings by university professors in America have made their way to Britain recently.  The Harvard University research suggests people’s ability to make good financial decisions peaks at age 53 and then starts to decline.

The results come from measuring two types of intelligence that help people manage their money. The first is “crystallised intelligence”, which is based on skills acquired through experience, and therefore improves with age. The second is “fluid intelligence” which is based on the ability to solve new problems, and declines with age.  According to the Harvard academics, overall cognitive performance declines after mid-50s. This is because the ageing process causes the brain to approach a tipping point at which their “crystallised intelligence” stops offsetting the decline in their “fluid intelligence”.

They warn that by the time people get into their 80s, approximately half the population suffer from a significant cognitive impairment, which may make them incapable of making important financial choices. Nest, the government-run occupational pension scheme for British workers, is so concerned by the findings that it has called upon the industry to develop financial products which let people plan their pensions in their 50s, saying that financial decision-making above this age could become “increasingly problematic”.

But Ros Altmann, the Government’s older workers champion, who also studied at Harvard, has branded the research “ageist”. She said: “Everybody is different so there is no point in making stereotypes. There are plenty of people in their 80s who are still very mentally capable.” Whatever your cognitive capacity Enable's IFA’s in Bishop’s Stortford are here to help.

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