Faculty, Staff and Student Publications

Language

English

Publication Date

5-8-2025

Journal

The Journals of Gerontology: Series B

DOI

10.1093/geronb/gbaf032

PMID

39968659

PMCID

PMC12067059

PubMedCentral® Posted Date

2-19-2025

PubMedCentral® Full Text Version

Post-print

Abstract

Objectives: Excessive financial risk-taking in older age can have harmful consequences as opportunities to recover lost wealth are limited. Understanding financial risk-taking in older age is important for identifying vulnerabilities and developing interventions to empower aging investors to make wise financial choices. In this paper, we explore how overconfidence in financial knowledge affects financial risk-taking among older adults.

Methods: We examine this research question in older adults aged 58-101 (N = 1,242) using data from the Rush Memory and Aging Project (MAP).

Results: After controlling for demographics, overconfidence was associated with self-reported financial risk tolerance such that those who were more overconfident reported tolerating more financial risks. Moreover, this relationship emerged for both healthy older adults and those diagnosed with mild cognitive impairment. However, overconfidence did not predict performance on a behavioral measure of risk aversion.

Discussion: The present results suggest that overconfidence may partially contribute to financial risk-taking in older adults, regardless of cognitive status. Thus, interventions aimed at calibrating confidence to actual levels of financial knowledge could be an impactful target for intervention.

Keywords

Humans, Aged, Male, Female, Aged, 80 and over, Risk-Taking, Middle Aged, Cognitive Dysfunction, Aging

Published Open-Access

yes

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