Being financially savvy makes ageing less worrying

Shin Min Daily News, 会理财不怕老

By Professor Yow Wei Quin, Head of Humanities, Arts and Social Sciences (HASS) at SUTD

(Translation)

Mr Li, now in his 70s, was a primary school teacher before retiring. He has always taken pride in managing his finances in an orderly way—paying utility bills on time every month, carefully recording expenses, and regularly checking his bank savings. But not long ago, his daughter suggested he consider switching to a new insurance plan. The terms were numerous and complex, and after hearing about them, Mr Li frowned and said, “I have no problem with daily expenses, but these complicated financial terms are getting harder and harder to understand.”

With an ageing population, situations like Mr Li’s are becoming increasingly common. Many older adults are perfectly capable of handling everyday expenditure, but when it comes to making complex financial choices or investment decisions, they may struggle. According to a study published in 2017 by researchers Bangma and others, basic financial skills—like paying utility bills or managing day-to-day expenses—generally do not decline with age. The research found no significant differences between older and younger adults when it comes to routine money management.

However, when faced with complex financial decisions—such as comparing investment plans, evaluating insurance policies, or making judgments based on specific rules—older adults are more likely to encounter difficulties. This is because such decisions require the use of short-term memory, flexible thinking, and reasoning abilities, all of which tend to decline with age.

That said, a 2007 study by Peters and others found that older adults have better control over impulsive spending and instant gratification. In other words, as people age, they become more emotionally regulated and less easily swayed by temporary shopping temptations. Additionally, years of accumulated life experience, saving habits, and risk awareness are powerful tools in financial planning. This wisdom gained from life can help older adults make more prudent decisions when facing complex financial options.

Of course, if an older adult develops cognitive decline—such as mild cognitive impairment or Alzheimer’s disease—their ability to manage finances can be significantly affected. A 2009 study by Marson and others recommended that family members stay attentive in such cases, to prevent older adults from falling victim to scams or making irrational financial choices.

In Singapore, we advocate for active ageing—not only physical health but also financial independence. As people age, cognitive abilities may change, but the wealth of financial experience and life wisdom accumulated over the years remains an older adult’s most valuable asset.

We can provide appropriate support and companionship to the elderly—for example, by helping them set up automatic bill payments, watching out for signs of forgetfulness or confusion over bills, or accompanying them as they learn to use online banking or e-payment services. This helps them maintain their ability to learn and think.

When facing complex financial products or investments, we can offer patient guidance and clear explanations, helping older adults make informed and confident decisions. In the end, Mr Li, with his daughter by his side, slowly went through the insurance plan terms. Combining his years of financial experience with his daughter’s explanations, he was able to make a choice he felt comfortable with.