Financial literacy and financial decision-making at older ages

How well older households manage their wealth holdings is an important determinant of their financial security during retirement, yet little is known about their financial decision-making and how this relates to their financial literacy. Our paper fills this gap by measuring financial literacy among...

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Main Authors: FONG, Joelle H., KOH, Seng Kee Benedict, MITCHELL, Olivia S., ROHWEDDER, Susann
格式: text
語言:English
出版: Institutional Knowledge at Singapore Management University 2021
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在線閱讀:https://ink.library.smu.edu.sg/lkcsb_research/6998
https://ink.library.smu.edu.sg/context/lkcsb_research/article/7997/viewcontent/1_s2.0_S0927538X20306934_pvoa.pdf
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spelling sg-smu-ink.lkcsb_research-79972022-04-22T03:48:21Z Financial literacy and financial decision-making at older ages FONG, Joelle H. KOH, Seng Kee Benedict MITCHELL, Olivia S. ROHWEDDER, Susann How well older households manage their wealth holdings is an important determinant of their financial security during retirement, yet little is known about their financial decision-making and how this relates to their financial literacy. Our paper fills this gap by measuring financial literacy among older persons in the Singapore Life Panel and examining its association with timely credit card debt repayment, stock market participation, and age-based investment risk diversification. Most older respondents understand interest compounding and inflation, but fewer than half know about risk diversification. Almost all older credit card holders pay off their balances in a timely manner, but only 40% hold stocks; fewer than 18% with $1000+ in assets hold portfolios consistent with age-appropriate investment glide paths. We further show that a one-unit higher financial literacy score is associated with a greater propensity to timely pay off credit card balances (1.5 ppts), to hold stock (8.3 ppts), and to follow an age-appropriate investment glide path (1.7 ppts). 2021-02-01T08:00:00Z text application/pdf https://ink.library.smu.edu.sg/lkcsb_research/6998 info:doi/10.1016/j.pacfin.2020.101481 https://ink.library.smu.edu.sg/context/lkcsb_research/article/7997/viewcontent/1_s2.0_S0927538X20306934_pvoa.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection Lee Kong Chian School Of Business eng Institutional Knowledge at Singapore Management University Retirement Financial literacy Credit card debt Stock market participation Life-cycle investment Household portfolio Risk diversification Asian Studies Finance and Financial Management Gerontology
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Retirement
Financial literacy
Credit card debt
Stock market participation
Life-cycle investment
Household portfolio
Risk diversification
Asian Studies
Finance and Financial Management
Gerontology
spellingShingle Retirement
Financial literacy
Credit card debt
Stock market participation
Life-cycle investment
Household portfolio
Risk diversification
Asian Studies
Finance and Financial Management
Gerontology
FONG, Joelle H.
KOH, Seng Kee Benedict
MITCHELL, Olivia S.
ROHWEDDER, Susann
Financial literacy and financial decision-making at older ages
description How well older households manage their wealth holdings is an important determinant of their financial security during retirement, yet little is known about their financial decision-making and how this relates to their financial literacy. Our paper fills this gap by measuring financial literacy among older persons in the Singapore Life Panel and examining its association with timely credit card debt repayment, stock market participation, and age-based investment risk diversification. Most older respondents understand interest compounding and inflation, but fewer than half know about risk diversification. Almost all older credit card holders pay off their balances in a timely manner, but only 40% hold stocks; fewer than 18% with $1000+ in assets hold portfolios consistent with age-appropriate investment glide paths. We further show that a one-unit higher financial literacy score is associated with a greater propensity to timely pay off credit card balances (1.5 ppts), to hold stock (8.3 ppts), and to follow an age-appropriate investment glide path (1.7 ppts).
format text
author FONG, Joelle H.
KOH, Seng Kee Benedict
MITCHELL, Olivia S.
ROHWEDDER, Susann
author_facet FONG, Joelle H.
KOH, Seng Kee Benedict
MITCHELL, Olivia S.
ROHWEDDER, Susann
author_sort FONG, Joelle H.
title Financial literacy and financial decision-making at older ages
title_short Financial literacy and financial decision-making at older ages
title_full Financial literacy and financial decision-making at older ages
title_fullStr Financial literacy and financial decision-making at older ages
title_full_unstemmed Financial literacy and financial decision-making at older ages
title_sort financial literacy and financial decision-making at older ages
publisher Institutional Knowledge at Singapore Management University
publishDate 2021
url https://ink.library.smu.edu.sg/lkcsb_research/6998
https://ink.library.smu.edu.sg/context/lkcsb_research/article/7997/viewcontent/1_s2.0_S0927538X20306934_pvoa.pdf
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