Studies have found that we tend to get more risk averse about financial matters as we get older, especially after we hit age 50. However, aging, in and of itself, accounts for 60% of the increased dislike of risk. The balance is due to life events.
We all don’t look at financial risk the same way. Not surprisingly, the rich are more tolerant of risk than the poor, as are those with college degrees, and some people simply enjoy the rush of taking a risk. Even so the studies show what- ever group you fall into, you are more likely to become a bit more reticent about exposing yourself to loss as you get older. This was originally thought to be purely a chronological thing, but it turns out life choices and life shocks affect how we perceive risk.
Even though each has the same income net worth and health picture, the change in the household changes their risk tolerance.
The study also found that the effect of these life shocks is greater on women than men.
Agents need to go beyond the financial questions to truly understand what is in the best interests of the consumer.
Banks, J., E. Bassali & I. Mammi. 2019. Changing Risk Preferences at Older Ages. University of Venice No. 01/WP/2019
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