HIROSHIMA, Japan — Feeling insecure about what life has in store for you in old age? Take a closer look at your financial literacy, as it holds a key to your prosperity after 60, a new study finds.

Researchers at Hiroshima University in Japan sent in-depth financial questionnaires to hundreds of American adults, which aimed to evaluate how well participants understood basic finance-related skills and concepts, such as arithmetic and bond prices.

Piggy bank savings
Nervous about reaching old age? Take a closer look at your financial literacy, as it holds a key to your prosperity after 60, a new study finds.

Participants were also asked to disclose how anxious they felt about turning 65 years of age, which the researchers had hypothesized was causally related to financial well-being.

While understanding finance did not necessarily lead to happily riding off into the sunset, other variables related to financial savviness, such as wealth, education, and having children, were found to directly determine how much a retiree enjoyed their twilight years.

Quite simply, financially-literate individuals were significantly more likely to purchase assets, such as stocks, bonds, and insurance, which could reduce anxiety later on by way of financial independence (e.g., not having to depend on Social Security).

Having offspring and doing regular exercise were also determinants of a long, healthy life — and incidentally, life choices that require financial resources.

“Anxiety is bad for one’s health, and it is bad for the economy,” says Yoshihiko Kadoya, the study’s lead author, as to why his team’s research carries weight. “If you have a high level of anxiety about the future, you tend to spend less and be more cautious about saving money, which negatively affects the national economy. We predicted that financial literacy would help to reduce this anxiety.”

Financial literacy, the researchers note, is usually highest among those who are male, college-educated, and of older age.

Previous studies have shown that over three-fourths of Americans feel stressed about advancing into their elder years, which can be attributed to a wide range of factors.

The takeaway: while being good with your financial affairs can help alleviate your fear of old age, it’s only one piece of the puzzle.

Kadoya and his research team published their findings in the journal Review of Economics of the Household.

About Daniel Steingold

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1 Comment

  1. Mad Dog says:

    Money will get you through times of no love better than love will get you through times of no money.