Seniors: help for financial decisions

Noting that most retirees have acquired significant assets as well as debts, and that cognitive decline afflicts older adults, the Center for Retirement Research at Boston College in a recent brief discusses four policy responses to help seniors make effective financial decisions. The paper lists them from least to most paternalistic:

• Disclosure. "Legislation to strengthen disclosure requirements has recently been introduced in many different domains....However, we are skeptical that improved disclosure will be effective in improving financial choices."
• Financial "Driving Licenses." "...require that individuals pass a 'license' test before being allowed to make nontrivial financial decisions, such as opting out of 'safe harbor' investment products. Such proposals would need to overcome several logistical problems."
• Mandatory Advance Directives. "...require older adults to put in place a financial advance directive before reaching a certain age so that the management of their assets could be transferred to a third party in the event of their incapacity."
• Regulatory Approval. "Instead of primarily targeting individual investors, regulations could instead target the financial products themselves."

What Is the Age of Reason? July 2010
      Brief (pdf, 8pp/249kB)
      Introduction