Think tank argues for urgent action to better understand “what works” in terms of improving financial outcomes for older people. ILC-UK question whether we have adequate evidence that financial education makes a difference in old age.
New analysis of the English Longitudinal Study of Ageing (ELSA) by the International Longevity Centre UK (ILC-UK) reveal:
Only 1 in 4 English people aged 50+ can perform a simple compound interest calculation (1 in 3 men and 1 in 6 women)
Greater numeracy is associated with higher saving levels and better planning for care
Surprisingly and perplexingly, older people who have good numeracy, tend to have sex more often than those who don’t.
ILC-UK Research Fellow, Dr Cesira Urzi Brancati argues that whilst there is strong evidence of a link between good numeracy and good financial outcomes, the evidence of what works in terms of improving financial literacy is limited.
With greater responsibility for financial wellbeing in retirement being placed on individuals, Dr Urzi Brancati says that urgent action is needed to better understand how financial capability links to good outcomes. Dr Urzi Brancati adds that the financial wellbeing of older people is being potentially undermined by poor numeracy.
Questions highlight the challenge of poor numeracy in old age
If the chance of getting a disease is 10 percent, how many people out of 1,000 (one thousand) would be expected to get the disease? 1 in 10 older men and 1 in 5 women got this wrong
A second hand car dealer is selling a car for £6,000. This is two-thirds of what it cost new. How much did the car cost new? 68% of older men and about half the women got this right
If 5 people all have the winning numbers in the lottery and the prize is £2 million, how much will each of them get? 69% of older men and only 45% of women got this right
ILC-UK analysis reveals that average household savings increase with numeracy, as does the extent to which an individual had planned for long term care. Other literature finds that greater numeracy is correlated with better outcomes on many financial domains including financial management; shopping around; planning for retirement; investment; and debt.