Investments, as in other aspects of life, require hope and optimism. Adults near retirement are significantly less optimistic concerning future economic growth compared to younger groups. This pessimism extends to longer term personal finances, as well as stock market returns. This could propel them to exit stocks quickly. Older individuals may also excessively slash their spending. This leads to an unsatisfied quality of life.
Pessimism on the rise
According to Matt Fellowes of United Income, the benefits of living longer lives, and the relief that comes with retirement could be lessened if older households become overly cautious concerning spending and investing with the onset of age. The report states that adults who had crossed the 64 year age mark were 40 percent more skeptical concerning their future financial health. About 30 percent expressed skepticism concerning the future of economic growth, compared to individuals below 35 years of age. It was found that the rise of pessimism with increasing age was completely unfounded. The indication is there: people leave substantial estates when they expire. Retired adults who died in their 60s left an average net wealth of $296,000. The amount increased to $313,000 in their 70s and $315,00 in their 80s.
Even individuals who lived beyond 90 years of age left behind a median amount of $238,000. This shows that aging adults worry excessively about money. The study says this is the reason spending decreases with age.
Perception bars reality
A study conducted by United Income showed people aged 65 years or more with open stock markets have a lesser chance of going up during the coming 12 months. This question was asked every year from 2001 to 2014. The reality is that stocks rose during all those years except two. If the older adults did not invest their money during this period, they have lost the chance to double their money in all those years. On the flipside though, they missed the brutal stock market burn in 2008.
Crankiness due to advanced age is not the only culprit. Other reasons include a rising sense of uncertainty that comes with much longer life spans. Retirement is now much more complex due to the longer lifespans. Standard pensions are either disbanded or underfunded. Gloom dominates due to uncertainty and the retiree knowing that there is no safety net.