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Board of Governors of the Federal Reserve System
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Insights into the Financial Experiences of Older Adults: A Forum Briefing Paper

Executive Summary

The U.S. population is aging rapidly. By 2060, more than one in five individuals in the United States will be over the age of 65, up from one in seven today. The older adult population, here, defined as those 40 and older, represents multiple generations of individuals with varying financial circumstances and needs. Data show older adults as a group hold a greater share of household net worth than younger cohorts. However, substantial--and, for some, potentially irrecoverable--wealth losses resulting from the financial crisis are particularly acute for households without the capacity to work or without the time to recoup losses. Meanwhile, the financial marketplace has become increasingly complex due to the diversity of products and services, new payment methods, and emerging technologies. As older adults represent a growing share of the overall population, the convergence of these demographic, economic, and technological trends raises questions about the financial experiences of older adults in the years ahead.

Noting these trends, in 2012, the Federal Reserve Board's Division of Consumer and Community Affairs began exploring these issues to better understand the financial experiences of older adults. Staff reviewed existing data and research and engaged with a number of external research and policy experts for perspectives on the economic implications of the demographic trends and changing financial landscape for older populations.

This initial exploration identified a number of questions related to older adults' financial lives that were not fully answered from existing data. In response, the Board conducted an online survey (the "Older Adult Survey") in December 2012 to add to the collective base of knowledge and to better understand aspects of the financial lives of adults as they age. The survey was intended to be exploratory--ultimately confirming some insights and raising questions about other areas worthy of additional study. A particular aim was to help identify important issues for further research and analysis about the financial preparedness and stability of older adults to be explored by the field at large. The Older Adult Survey was fielded online using the RAND American Life Panel.1 The 1,821 survey participants ranged in age from 40 to 94 and were grouped into age cohorts.2 Details about the survey, its methodology, and limitations can be found in the body of the report and in a methodological appendix.

The Older Adult Survey set out to answer three main questions:

  • How do older adults use financial products as they age?
  • How do older adults make their financial decisions and where do they turn for advice?
  • What are older adults' main sources of financial stress?

Survey questions cover various types of financial choices--from the routine to major lifecycle decisions to handling financial matters in times of stress or emergencies. The survey also explores where people turn for help with these financial decisions.

Based on the survey responses, the following key findings emerged:

Use of Financial Products and Services by Older Adults

  • Many homeowner respondents have mortgage debt, including six in 10 of those in their 60s and nearly four in 10 of those 70 and older.
  • About one-third of respondents with mortgage debt refinanced their mortgages in the last three years. However, very few older adult respondents use or have considered using a reverse mortgage.
  • The vast majority of older adults are "banked," that is, they have a checking or savings account. Rates of being "unbanked" decline with age.
  • Older adults in all age groups report using a variety of methods--both with and without technology--to conduct their banking transactions.
  • Middle-aged adult respondents are more likely than the oldest adults to carry credit card balances.
  • Use of alternative financial services such as payday loans, deposit advances, or cash advances on credit cards appears to be modest, but more prevalent among lower-income and minority individuals.
  • For one in seven (14 percent) older adults, student loan debt for themselves or their children may persist well into middle age.

Financial Decisionmaking of Older Adults

  • Middle-aged respondents are more likely than the oldest adults to report needing help covering bills and expenses.
  • Many respondents make decisions about refinancing, investments, and retirement without seeking assistance from a financial professional; those who do seek assistance rely on friends or family as the primary source of help.
  • One-third of older adults in their 40s and one-fifth of those in their 50s expect "never" to retire.
  • The majority of the survey respondents, including many of the oldest, do not have plans in place in the event they are unable to make financial decisions.
  • Overall, most of the older adults in the survey are confident in their decisionmaking.

Financial Stress and Well-Being of Older Adults

  • More than one-third of respondents reported experiencing major financial stress in the preceding three years, with higher rates among the middle-aged.
  • Leading causes of financial stress were job loss or reduced hours and income and health-related issues.
  • One-half of respondents who are credit card users carry monthly balances.
  • One in eight (12 percent) respondents said they have had to carry a balance on their credit card in the prior three years because of a medical expense.
  • Less than one-half of respondents with financial stress sought advice in dealing with it.
  • Finally, respondents who reported lower levels of life satisfaction were more likely to report they had experienced recent major financial stress.

Some findings in the Older Adult Survey raise concerns about the ability of some older adults to maintain their financial footing, meet unanticipated expenses, and save for the future. Middle-aged adults are particularly susceptible to financial stress. They are also most likely to report experiencing a recent major financial stress and needing help covering the costs of bills and expenses in the past year. It also is notable that many older adults carry debt late in life--credit card, student loan, or mortgages--potentially undermining their financial security. Mortgage debt is of particular significance because homes comprise the largest component of net worth of many older adult households, and often are a major source of funds for retirement. Some financial decisions--such as refinancing a mortgage, managing investments, or retiring--are complex and have long-term consequences. Yet, barely half of older adults who refinance or have investments seek advice when making these decisions. The majority of older adults are confident in their decisionmaking abilities. This sentiment may be appropriate for some, but misplaced for others, particularly among those unaware they are beginning to experience cognitive decline.

These implications point to a need for a broad set of responses to help ensure the financial well-being of older adults. Many actors have a potential role to play in developing or implementing these responses. Financial institutions, for example, may recognize opportunities to offer new products or adapt existing ones tailored to a growing older adult population with varied cognitive abilities. For-profit and non-profit advisors may explore new methods and delivery channels for providing sound advice about financial risks and rewards. Policymakers, for their part, may encourage various stakeholders to work together to address current and future financial needs of an aging population.

This report serves two principal purposes. First, it summarizes insights from the Older Adult Survey and related research in the field. In addition to describing key findings from the survey data, it also draws on existing data for certain issues--such as cognitive issues and retirement savings--that are important for these age groups and have been well documented through preexisting research. Second, it frames certain research and policy considerations for a forum of experts in July 2013 to be hosted by the Federal Reserve Board. Questions for discussion, some of which are noted in this report, will aim at a variety of financial issues that are potentially promising areas for the field for additional study about the broader aging population.


1. The American Life Panel is maintained by the RAND Corporation and consists of a group of more than 5,000 individuals ages 18 and older who have agreed to participate in occasional online surveys. For more information, go to  Return to text

2. In this report, the term "older adults" is used to refer to the full sample of respondents ages 40 and above; older adults in their 40s and 50s also are referred to as "middle-aged"; 60- to 69-year-olds are referred to as "those in their 60s"; and those 70 years old and above are referred to as "oldest adults."   Return to text

Last update: July 30, 2013

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