Context

Age and certain personal or life-stage factors may leave seniors more vulnerable than other demographic groups on financial matters (for example, due to physical or cognitive impairment). Therefore, improving financial literacy among seniors is an important element of the Canadian Government’s Economic Action Plan to help people make more informed decisions about their financial interests and futures.

The study

The Financial Consumer Agency of Canada (FCAC) commissioned The Strategic Counsel to undertake this study. The two principal objectives of the project were to:

• Prepare a synopsis of information and observations to provide some insight into seniors’ financial literacy needs and challenges, identifying gaps in current understanding.
• Conduct in-depth interviews with seniors’ organisations and other stakeholders knowledgeable about seniors and their financial literacy needs.

This report synthesises findings from an ‘environmental scan’, which involved a literature review alongside analysis of other tools, resources and organisations that are relevant to older people’s financial literacy and the financial issues they face. The ‘environmental scan’ helped to identify participants for the expert interviews and informed the topics for discussion.

The Strategic Counsel conducted in-depth interviews with 16 experts from March to May 2014. Almost all were senior officials of the organisations they represented.

Key findings

• The ratio of elderly people relative to the working age population is growing and is expected to double with substantial implications for Canada’s support system and for the senior individuals themselves.
• Whilst there is a great deal of work (research and support activities) in Canada that focusses on financial capability in general, very little targets older people’s needs specifically.
• Canadian seniors are carrying increasing debt loads into their later years.
• Financial capability declines with age: older people’s abilities to keep track, plan ahead and stay informed decline significantly with advancing age. When cognitive decline is combined with other health issues, seniors’ financial vulnerability can be exacerbated.
• Looking ahead, changes to the retirement landscape may create further challenges for people reaching retirement age. Canadians are now required to take greater personal responsibility for managing their retirement income, which is increasingly complex due to economic volatility.
• Studies have shown that receiving financial education typically correlates with higher levels of saving and wealth, suggesting that providing financial education to pre-seniors will have a positive effect on how well they plan for retirement.

• There is broad consensus that there is a need for financial literacy programmes, resources and tools targeted specifically at seniors.
• Certain groups are especially vulnerable, including low income seniors; women (particularly divorced/separated); immigrants/newcomers; Aboriginals; and those who suffer from mental health issues.
• Stakeholders considered the following topics particularly relevant to older people: financial planning and working towards financial/personal goals; understanding markets trends and risks; accessing financial support; fraud/scams; and digital literacy.
• Stakeholders felt that person or peer–to-peer approaches are most likely to be successful rather than leaving seniors to seek out information themselves.
• Stakeholders expressed some reservations about the effectiveness of on-line approaches.
• There was a clear call among some respondents for enhanced protections to safeguard more vulnerable groups who are at risk of financial abuse.

Points to consider

• While the research process is rigorous and meticulous, it is based on interviews with experts who can talk about issues at high level rather than reflecting real consumer issues as they affect individuals.
• The research only involved a small number of individuals.
• Although the individuals represent substantial institutions in the market, their views are not representative of other organisations in the market.

• Trends relating to this age group (e.g. increasing personal responsibility of managing retirement income) suggest that the issues and findings of this study will have increasing relevance.

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• The research and analysis are specific to the senior market in Canada but general issues relating to older people and their financial capability will also apply to other developed countries with an ageing population.

Full report

Public opinion research to strengthen financial literacy for seniors - full report