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Board of Governors of the Federal Reserve System
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Insights into the Financial Experiences of Older Adults: A Forum Briefing Paper

Considerations for a Forum and for Further Research

The Older Adult Survey confirms some insights into the financial lives of older adults, while raising questions about others. The findings described in this report will help frame discussions among experts on aging at a forum in July 2013 to be hosted by the Federal Reserve Board.

A particular aim of the forum is to help identify the next set of questions about financial preparedness and stability of older adults to be explored by the field at large. Discussions will be organized around specific issues, including: the financial circumstances of different subgroups of older adults, current and future housing needs and affordability, employment and retirement transitions, and the role of cognition in financial decisionmaking. Practitioners will share examples of policies, products, or services that hold promise as ways to meet the financial needs and choices of older adults as they age. Policy issues that affect the financial stress, stability, and security of older adults also will be discussed. The gaps in knowledge identified, hopefully, will prompt further research to increase understanding of these issues.

Topics for discussion at the forum and for future research may include:

Economic Conditions, Aging, and Financial Stress

  • How are financial circumstances different among different groups of older adults? What are their financial vulnerabilities? What are some alternative ways to measure "financial stress" and how do these measures relate to perceived levels of stress on the part of older adults?
  • How can older adults best prepare for and cope with financial shocks and economic downturns in their later working years? Are new concepts of working and retirement needed to ensure financial security and mitigate financial stress? What can be done to incentivize workers and retirees to work longer? How do attitudes and policies need to change among employers?
  • How do employment and housing needs change as people age? How prepared are individuals, communities, and employers to cope with changing demands for different types of housing and transportation options, employment arrangements, and other services?

The Financial Marketplace for Aging Consumers

  • What are the main drivers of older adults having mortgages, credit card balances, student loans, or other debt late in life? How much of household debt burdens are due to financial responsibilities for other members of their families or delayed life choices such as later marriage or childbearing? Are households leveraging home equity to age in place or to pay off other debts or for other purposes?
  • What more might be learned about the use of financial products and services by older adults from a geographic or demographic analysis by race, income, or gender? Would the implications of the financial issues highlighted in the survey be different for these groups of older adults?
  • What kind of adaptations for existing financial products and services and what type of new financial products and services are likely to be developed by private industry to meet the needs of an aging population? Does social media create new delivery channels of financial products and services for older adults? What safeguards can be put in place for older consumers with diminished capacity?

Financial Decisionmaking, Advice, and Cognition

  • What factors broadly influence how older adults make major financial decisions? What additional assistance might older adults need when considering the use of certain financial products (e.g., mortgage refinancing, reverse mortgages, credit card advances, alternative financial services, etc.)? What guidance can be put in place to help working adults of all ages understand the long-term consequences of major financial decisions, such as the full costs of withdrawing retirement savings early?
  • How does current technology (e.g., mobile devices, mobile applications, Internet) usage and social networking (e.g., Facebook, Twitter, etc.) among older adults inform their consumer financial behavior and decisionmaking? Can social media provide a conduit into better understanding of financial decisionmaking among older adults?
  • Research suggests that older adults tend to be overconfident in their abilities to make financial decisions. What are the obstacles to adults seeking professional advice: availability, cost, or other factors? What are the most effective ways to deliver financial assistance in various life stages? How well are older adults able to educate themselves--including using online research--when making major financial decisions? How can older adults best cope with making major financial decisions as they experience cognitive decline?

The Older Adult Survey was intended to provide a general overview of older adults' use of financial products and services, their financial decisionmaking, and sources of stress as they age. While the survey adds to the body of knowledge provided by previous surveys and research on this topic, much remains to be explored. The Federal Reserve Board intends for this survey report, the forum, and the resulting discussions to help shape future inquiry in these areas among researchers and policymakers. The goal, too, is to encourage practices in the field that enable older adults to better navigate the financial marketplace as they age. Insights from this work not only will help meet today's challenge of 76 million aging Baby Boomers, but also begin to prepare the way for future generations of aging Americans--including the equally large wave of 77 million Millennials just now reaching their early 30s.71


References

71. Pew Research Center (2010). "Millennial" refers the generation born after 1980--the first generation to come of age in the new millennium.  Return to text

Last update: July 30, 2013

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