Financial Literacy Is Fading with Age

Here’s What the Research Shows—and Why It Matters to Everyone

We all expect to slow down a little as we age. But what if part of what slows down is our ability to understand money?

That’s exactly what a groundbreaking study from researchers at Wharton and Rush University Medical Center just confirmed: financial literacy tends to decline with age, and that decline can quietly erode a person’s independence, wealth, and decision-making confidence in retirement.

If you think this only affects people over 80, think again. This isn’t just a retirement issue—it’s a life planning issue. And the earlier we understand what’s at stake, the better equipped we’ll be to face it.

The Big Question: Does Financial Literacy Decline With Age?

Yes. And the data is clear.

The study followed 1,075 adults aged 60 and up (average age 81) over an average of six years, with some participants being followed for up to 13 years, researchers found that:

• Financial and health literacy scores dropped about 1% per year.
• Men started off with higher financial literacy scores than women—by about 9 percentage points—but both genders declined at similar rates.
• Health literacy dropped slightly faster than financial literacy.
• Only 13% of participants avoided any decline at all—the vast majority saw their understanding fade gradually over time.

This decline happened across income levels, education levels, and even among people without dementia. In other words, this isn’t about memory loss or disease—it’s a natural result of aging.

Why This Matters More Than Ever

Let’s zoom in for a second on why this should matter to everyone—especially those in their 40s, 50s, and 60s.

As we age, our financial decisions get more important—not less.

Think about the choices older adults face:

• When to claim Social Security
• Whether to take a lump sum or annuity
• How to manage required minimum distributions (RMDs)
• How to avoid scams and fraud
• Which Medicare or long-term care plan is best

These aren’t just “money” decisions. They’re life decisions. And they often come at a time when we may no longer be at our best financially.

Women Face an Even Greater Risk

While both men and women decline at similar rates, the study revealed that women started at a disadvantage.

They had lower financial literacy scores to begin with, even though they lived longer. And that combination—less knowledge, longer life—can be dangerous.

Many women outlive their spouses and then become responsible for managing retirement income, investments, and estate issues on their own—often for the first time. Without a strong foundation of financial literacy, this can feel overwhelming or lead to costly mistakes.

Health Literacy Matters Too

This study didn’t just measure financial knowledge—it also looked at health literacy. And the results are just as important.

Health literacy is your ability to understand things like:

• Prescription instructions
• Medicare benefits
• Insurance coverage
• Risk information from doctors
• End-of-life care decisions

Just like with finances, health literacy declines over time. And just like with finances, those declines make you more vulnerable—to confusion, bad decisions, or unnecessary hardship.

What’s Causing the Decline?

Researchers don’t pinpoint a single cause, but they do suggest some likely culprits:

• Cognitive aging – Natural changes in brain function can affect how we process numbers, terms, and risk.
• Less financial engagement – Retirement often leads to a “set it and forget it” mindset, reducing the need to actively manage money.
• Stress, illness, and loss – Life’s challenges can make decision-making harder, especially with complex topics.

Importantly, this decline can happen even to people who were once financially savvy. It’s not about intelligence. It’s about how age slowly changes the way we take in and act on information.

So What Can We Do About It?

That’s the good news: there are things we can do—starting today.

Here are six practical steps that can help you protect your future self (or help someone you love do the same):

1. Build Your Financial Literacy Now

The earlier you learn how money works, the longer you’ll benefit. Whether you’re 35 or 65, get educated and stay sharp. Use books, videos, quizzes, or one-on-one conversations with a financial professional.

2. Simplify Your Finances

As you age, simplicity is power. Consolidate accounts. Create clear plans. Make your financial picture easier to manage—not harder.

3. Set Up Trusted Contacts

Most investment firms now allow you to name a “trusted contact”—someone they can call if something seems off. It’s a smart layer of protection.

4. Create a Decision-Making Framework

Use checklists or written guides to walk through important decisions. These tools can help reduce errors later when your energy—or clarity—is lower.

5. Engage Your Spouse or Family

Don’t go it alone. If one partner handles all the finances, make sure both are up to speed. If you have adult children, include them in high-level plans.

6. Work with a Financial Professional

An experienced, trusted financial educator or professional can help you navigate decisions, explain your options, and keep your plan on track—even when life gets complicated.

Final Thoughts: Plan Now, Benefit Later

The study confirms what many people experience firsthand: the older we get, the more we need help understanding the financial world around us.

But this doesn’t have to be a crisis.

It can be a chance.

A chance to:

• Build up your financial literacy before you need it most
• Create systems that protect your future self
• Make decisions today that will serve you for decades
• Help the people you love—parents, grandparents, friends—do the same

Financial literacy may fade with age. But with the right tools, guidance, and planning, your confidence doesn’t have to.

Let’s stay sharp. Let’s stay prepared. Let’s teach the next generation how money works—before the moment they really need it.

Ready to start? Take the Financial Literacy Quiz, talk with a financial professional, or explore TheMoneyBooks Series to begin your journey today.

Because the truth is, financial literacy is a lifelong journey. And while it may get harder with age, that just means we need to be more intentional—more prepared.