Examining Health and Wealth Correlates of Perceived Financial Vulnerability: A Normative Study

Age-associated financial vulnerability was introduced because it was increasingly recognized that cognitively intact older adults experienced changes that rendered them financially vulnerable. In this study, we attempt to apply the construct of Age-Associated Financial Vulnerability to a measure of Perceived Financial Vulnerability and whether this perceived vulnerability is predicted by risk factors from the 4 categorical domains used to define Age-Associated Financial Vulnerability's impact.

This study was part of the Health and Retirement Study (HRS) survey in 2018. The survey contained 7 experimental module items of Perceived Financial Vulnerability. One thousand three hundred fourteen participants completed the Perceived Financial Vulnerability measure. The sample was drawn from Waves 13 and 14 of the HRS (2016 and 2018, respectively). The measurement of Perceived Financial Vulnerability was developed on the basis of 7 questions assessing financial awareness and psychological vulnerability items regarding personal finance that were included in the 2018 HRS data collection. Predictors included measures of cognition, function/health, depression, and wealth. Predictor measures from 2016 were regressed on 2018 Perceived Financial Vulnerability scores.

Six items of Perceived Financial Vulnerability had psychometric properties acceptable for a new measure. Responses revealed variability in Perceived Financial Vulnerability. Overall, 18% of variance was accounted for and measures from cognition, depression, assets, and functional abilities were all unique and significant predictors.

This study represents both a conceptual and empirical contribution to our understanding of older adult's perceptions of financial vulnerability. The high levels of Perceived Financial Vulnerability found in this normative sample underscore the importance of context in understanding people's economic behaviors. For instance, more than one half of the sample indicated that they wished they had someone to talk to about their finances. This desire to talk with others is normative and yet often underappreciated.