A simple three-question quiz has stumped nine in 10 older Australians in a study researchers say has exposed the “dangerous levels” of financial illiteracy among Baby Boomers.
One third of respondents got all three questions wrong in the Bond University study, which involved more than 3,400 members of National Seniors Australia between the ages of 55 and 85.
“Financial illiteracy is reaching dangerous levels in Australia,” Bond University’s Associate Professor of Statistics Adrian Gepp said of the findings.
The study found that women were the most at risk of making bad financial decisions, while those who were unmarried, suffered poor health, and the most elderly (aged 70 and over) recorded the worst results.
“People tend to be overconfident of their financial knowledge and skills. Financially illiterate people are more likely to experience asset loss and outlive their savings after retirement.”
Dr Gepp urged Australians to talk to their parents and grandparents about their financial position and decisions.
“Don’t just assume they know what they are doing, make sure you check to see whether they are managing their finances properly.”
Bond University PhD candidate Rui Xue, lead author of the paper, said superannuation, insurance and other fund providers should design tailored, easy-to-understand products for elderly customers.
“Personalised products would be much easier to understand and make users more likely to optimise their income streams,” he said.
Mr Xue suggested developing free online and mobile apps specifically designed to engage elderly Australians that “gamify learning” how to invest and choose retirement income products properly, as an increasing number of elderly Australians are engaging with technology.
“Financial education is an efficient way for working Australians, particularly for pre-retirees, to improve their financial knowledge so that the next generation of elderly Australians have improved financial literacy,” he said.
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