Holiday cheer? “Bah, humbug!” Here’s some coal for your stocking…

In a paper entitled “The Age of Reason: Financial Decisions over the Life-Cycle with Implications for Regulation” authors Sumit Agarwal, John C. Driscoll, Xavier Gabaix, and David Laibson argue that when it comes to money our accumulated experience and wisdom are lost to our declining health.

When do we peak? It’s at age 53 according to the authors who argue that’s when the physical body (including the brain) typically begins to deteriorate.

Think about it like an upside-down “U”. Prior to age 53 we accumulate wisdom. We peak at age 53 and then begin our decline.

The implications are frightening. If we make decisions independently will they be rational? If we seek assistance how do we understand and trust the advice? What does it mean for us as we hope to provide for ourselves and loved ones? How can we accomplish our goals when we’re rapidly losing the capacity to manage our finances?

For some all-around depressing holiday reading and proof that “senior moments” exist read the full report here.