Seniors are more likely to be victims of financial fraud than any other age group. And they are far more likely to be pitched an investment vehicle that sounds great but is really inappropriate. Are seniors in the crosshairs because they are not as sharp as they used to be when it comes to making financial decisions?
Research does show that our brains slow as we get older. If this makes you concerned about your financial decision-making ability, relax. Your storehouse of knowledge often can make up for those "senior moments" when you might not be at the top of your game.
Scientists believe our brains have two types of intelligence: fluid and crystallized. "Fluid intelligence handles things like calculation, learning new things, problem solving and abstract reasoning," says Ye Li, a professor at the University of California, Riverside's School of Business Administration. Li, who has done extensive research on judgment and financial decision-making, says that as we age, our brains become less adept at fluid intelligence. Fortunately, there's crystallized intelligence, which increases through your 60s. "It's essentially what you know -- your experience, your knowledge, your expertise," he explains. "You end up having this alternative route to good decision-making because you've made similar decisions in the past."
So, you can avoid being taken advantage of because of your age by taking advantage of your life experience. First, be sure to take your time before deciding on any important financial matter. If you feel rushed by an investment adviser to make an immediate decision, that's a red flag to take a step back. "If you're dealing with someone who's trying to sell you an annuity, which might not be in your best interest, taking more time and letting your expertise soak in can definitely help," Li says.
Get as much written material as you can and take it home to read. Li says older adults do a lot better when they have time to process information at their own pace.
Still, there are some areas where you may need help. All the new "smart" devices could make you feel dumb because you probably have little life experience setting up these high-tech products. Li says it might help to have a grandchild or someone else who is tech-savvy to guide you through some of the newer things, like setting up a TV.
But, he says, "For other types of things where you have experience, you should hold onto those decision-making rights."