With Age Comes Wisdumb?

Interesting article in The Wall Street Journal yesterday. Under the title, “Why Middle Age May Be Healthy for Your Wallet,” it describes the findings of a study to determine the age at which people make the fewest financial mistakes. It defines mistakes as things like not getting the lowest available interest rate on a loan or getting stuck with readily avoidable credit card fees.

The optimum age, it turns out, is just over 53. People younger or older make more mistakes than do 53-year-olds, and the mistakes increase as you move away from 53 in either direction.

The researchers attribute this to the crossover between declining mental abilities (which begins at about age 20) and accumulating experience (which begins as soon as we start paying attention – sometimes well after 20). They also acknowledge, though, that some of this may be attributable simply to the different eras in which each generation grew up.

Both explanations sound reasonable. But, I think there is also another one. As we move through middle age, our focus on maximizing our wealth peaks. Prior to that, we’re distracted by thoughts of building relationships, a family, a home, a self-image, a career, and all the other aspects of life and legacy. After that, most of us start to mellow out, realizing that it’s often more important to deal with the best people than to get the best deal. And, we’re more willing to sacrifice the attainment of “optimum” for simplicity.

Some may view this as getting soft, or even soft in the head. And, our brains may, indeed, be shriveling in size and assuming the texture and conductivity of Swiss cheese. At the same time, the pace at which we are experiencing new things (thereby enhancing our judgment) may be slowing as we settle more and more into our preferred routines (aka ruts). But, we are also usually becoming less internally focused. And less demanding of ourselves and of those around us.

You might even say that, as we become less financially rigorous, we become better people. Or, maybe it’s the other way around.

Either way, for most of us it’s probably a good trade.