Age is the price of wisdom, or so the old saying goes, and we daresay a lot of people in their 60s and 70s would be appalled at the accusation they are too old to manage their own finances. However, a controversial new study looking into the effects of ageing on our financial intelligence has concluded that our ability to make sound financial judgements peaks at just 53 years of age.
The study, conducted by researchers at the prestigious Harvard University in the US, measured the two types of intelligence people use in order to effectively manage their finances. "Crystallised intelligence", derived from the skills and experience we gain as we go through life, and therefore grows the older we become, was the first they studied. Secondly, they focused on something known as "liquid intelligence", which measures our ability to tackle new tasks and problems, something that gets harder as we get older.
According to the professors helming the study, our overall cognitive ability begins to worsen upon entering our mid-50s. There comes a point, they claim, when "crystallised intelligence" can no longer balance the decline in "fluid intelligence", ultimately impairing judgement in those entering their twilight years.
They warned that upon reaching their 80s, approximately half of people will be labouring under the strain of some sort of significant impairment to their cognitive abilities, leaving them incapable of making important financial judgements, barring them from securing instalment loans and other monetary aid.
One person who challenged the results, labelling them "ageist", was fellow Harvard-alum Ros Altmann, a champion for the Government's senior workforce. She said it was pointless making generalisations about people and making them into stereotypes, before going on to claim "there are plenty of people in their 80s who are still very mentally capable.”
It is believed findings like the ones from Harvard are behind the increasing number of UK-based studies looking into how older people manage their money, as well as their ability to make important financial decisions.
One option, according to Nest chief investment officer Mark Fawcett, is for people to decide how they will finance their retirement and begin saving money during their 50s, before their so-called "financial intelligence" begins to slide.
Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk