ARTICLE IN PRESS

Am J of Geriatric Psychiatry &&:&& (2021) &&−&&

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journal homepage: www.ajgponline.org

Regular Research Article

Adverse Impacts of Declining

Financial and Health Literacy
in Old Age
Lei Yu, Ph.D., Gary Mottola, Ph.D., David A. Bennett, M.D.,
Patricia A. Boyle, Ph.D.

ARTICLE INFO ABSTRACT

Article history:
Received November, 23 2020
Revised February, 6 2021
Accepted February, 7 2021
Key Words:
Domain-specific literacy
decision making
scam susceptibility
psychological wellbeing
Objectives: Inadequate financial and health literacy presents a formidable
public health and economic challenge in old age. This study investigated
declining financial and health literacy in relation to decision making perfor-
mance, scam susceptibility and psychological wellbeing. Design: Longitudinal
study. Setting: A community-based cohort in Northeastern Illinois, USA.
Participants: One thousand fourty-six older adults who were free of dementia
at baseline and underwent annual clinical and literacy assessments.
Measurements: Financial and health literacy, decision making, scam sus-
ceptibility, and psychological wellbeing were assessed using validated
instruments. Linear mixed effects models estimated person-specific rates of
change in financial and health literacy, and multivariable regression analy-
ses examined the associations of declining literacy with subsequent levels of
decision making, scam susceptibility, and psychological wellbeing.
Results: The mean age was 81 years and 76% were female. Over up to
10 years of annual follow-ups, the average financial and health literacy score
dropped 1 percentage point a year. Substantial variability in decline was
observed between participants. Faster decline in financial and health literacy
was associated with poorer decision making, higher scam susceptibility, and
lower psychological wellbeing. Notably, these associations were above and
beyond the baseline literacy level and persisted even after controlling for cog-
nition. Conclusions: Most community-dwelling older adults experience
decline in financial and health literacy over time, but decline is not inevitable.
Declining literacy is related to poorer decision making, greater scam suscepti-

From the Rush Alzheimer’s Disease Center, Rush University Medical Center (LY, DAB, PAB), Chicago, IL, USA; Department of Neuro-
logical Sciences, Rush University Medical Center (LY, DAB), Chicago, IL, USA; FINRA Investor Education Foundation (GM), Wash-
ington DC, USA; and the Department of Behavioral Sciences, Rush University Medical Center (PAB), Chicago, IL, USA. Send
correspondence and reprint requests to Lei Yu, Ph.D., Rush Alzheimer’s Disease Center, 1750 W Harrison Street, Suite 1000, Chicago, IL
60612. e-mail: Lei_Yu@rush.edu
This study is supported by the National Institute on Aging and the FINRA Investor Education Foundation.
© 2021 American Association for Geriatric Psychiatry. Published by Elsevier Inc. All rights reserved.
https://doi.org/10.1016/j.jagp.2021.02.042

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 ARTICLE IN PRESS
Adverse Impacts of Declining Financial and Health Literacy

bility and lower wellbeing. These findings suggest that efforts to mitigate
declining financial and health literacy may promote independence and well-
being in old age. (Am J Geriatr Psychiatry 2021; &&:&&−&&)

Highlights
 What is the primary question addressed by this study?
What is the relationship of declining literacy with subsequent adverse outcomes?
 What is the main finding of this study?
Declining literacy impacts on decision making, scam susceptibility, and wellbeing.
 What is the meaning of the finding?
Efforts to mitigate declining literacy promote independence and wellbeing in old age.

Low financial and health literacy have major impli-

OBJECTIVE
F inancial and health literacy, the acquisition, proc-
essing, and utilization of financial and health
information to facilitate effective decisions,1 is of par-
ticular importance to successful aging in modern soci-
ety. Every day, thousands of older Americans are
confronted with a series of financial and healthcare
challenges ranging from planning for retirement,
making investment decisions, to choosing Medicare
coverage and signing up for healthcare services.
Alarming data have shown that older adults are
highly vulnerable to poor financial and health liter-
acy.2 In a nationally representative survey of older
Americans, a significant proportion of respondents
failed to understand basic concepts of compound
interest, inflation or mutual funds.3 Older adults
also lack financial sophistication in areas such as
risk diversification, asset valuation, portfolio choice
and investment fees.4 Similarly, many older adults
lack the fundamental health literacy necessary to
maneuver the current healthcare environment. The
high prevalence of inadequate health literacy is not
only confined to older patients in public hospital
settings,5 but is also widely observed among older
community residents.6 In a previous American
Medical Association report,7 approximately a third
of English-speaking and separately over a half of
Spanish-speaking Medicare enrollees in managed
care facilities had inadequate or only marginal
health literacy.
cations for the overall wellbeing of older adults. In
particular, older persons with poor financial and
health literacy tend to make suboptimal financial and
healthcare decisions8−11 and are more susceptible to
financial scams.12,13 Further, low financial and health
literacy is also associated with poor mental health.
Prior studies reported that individuals with inade-
quate health literacy have worse mental health func-
tioning, and that older adults with lower financial
and health literacy tend to have more depressive
symptoms and are more emotionally isolated.14,15
Notably, research on the impacts of financial and
health literacy to date has relied almost exclusively
on cross-sectional data. Emerging evidence suggests
that financial and health literacy is not static and may
change across the lifespan. One study reported that
financial literacy deteriorates after age 6016 and a
study on the life-cycle pattern of financial mistakes
suggests that financial literacy and decision making
likely follow an inverse U-shape pattern that peaks in
middle-age.17 Decline in health literacy among aging
populations has been reported as well.18 With finan-
cial and health literacy declining in old age, it raises
an important question on whether the consequences
of inadequate financial and health literacy in old age
are driven primarily by starting levels of literacy, age-
related decline in literacy, or both.
To address this knowledge gap, we present a con-
ceptual model of declining financial and health liter-
acy and its impacts in old age (Supplementary
Materials). Briefly, we hypothesize that starting levels
(i.e., financial and health literacy accumulated

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 ARTICLE IN PRESS
through earlier life experiences) and rates of decline (i.
e., age-related deterioration in literacy) vary across
individuals, and both are important determinants of
adverse outcomes. Older adults with lower level of
literacy and/or faster declining literacy tend to make
poorer financial and health decisions, are more vul-
nerable to financial fraud and scams, and have lower
wellbeing. Importantly, this model was built upon
overwhelming cross-sectional findings that link poor
financial and health literacy to adverse outcomes as
well as prior evidence of declining literacy in old age.
The relationships presented in the model are in gen-
eral consistent with and complementary to prior theo-
retical frameworks on various causal pathways that
link literacy to financial and health outcomes.19−22 In
the current work, we test our conceptual model by
leveraging data from over 1,000 community-dwelling
older adults with an average 80 years of age. Specifi-
cally, we investigate the extent to which declining
financial and health literacy are associated with sub-
sequent decision making performance, scam suscepti-
bility, and psychological wellbeing, above and
beyond the effects of starting level of literacy.
METHODS
Study participants
The present study included 1,046 older persons
from the Rush Memory and Aging Project (MAP).
MAP, started in 1997, is an ongoing cohort study of
common chronic conditions of aging that include (but
are not limited to) Alzheimer’s and other dementias,
motor impairment and Parkinsonism, as well as phys-
ical frailty and disability.23 The study recruits older
residents throughout northeastern Illinois of the
United States, and participants primarily come from
continuous care retirement communities and subsi-
dized housing facilities. A decision making substudy
was introduced in 2010. As of May 31, 2020, 1,698
MAP participants were alive and active since the start
of the decision making substudy. Two hundred four-
teen were ineligible for the substudy due to reasons
such as moving out of the geographical area, lan-
guage barriers, or severe sensory impairment. Of the
remaining 1,484, 1,277 (86.1%) had completed the
baseline literacy assessment. In order to estimate per-
son-specific change in financial and health literacy
Am J Geriatr Psychiatry &&:&&, && 2021
Yu et al.
over time, the analyses were restricted to participants
with at least 2 literacy assessments (N = 1,088). We
further excluded participants who were demented by
the baseline literacy assessment (N = 42), resulting in
an analytic sample size of 1,046. Participants were fol-
lowed annually for up to 10 years (Mean: 4.8 years,
SD: 2.9). In examining the associations of declining lit-
eracy with adverse outcomes, approximately 5% of
the total sample were excluded from the regression
analyses due to incomplete data for income or out-
come measure.
Both the MAP parent study and the decision mak-
ing substudy were approved by an institutional
review board of the Rush University Medical Center.
Participants signed informed consents and agreed to
annual home visits that include detailed clinical eval-
uation as well as a full decision making battery.
Financial and health literacy
Details on financial and health literacy assessment
were described previously.24 Financial literacy was
assessed via 23 items adapted from the Health and
Retirement Study. In brief, 12 items assessed financial
and institutional knowledge, nine items assessed
numeracy, and the remaining three items assessed
the skill that combines both financial knowledge and
numeracy in the context of investment returns. The
financial literacy score was the percentage of the 23
items that were answered correctly.
Health literacy was assessed via nine items that
measure knowledge of health information and con-
cepts. The questions were tailored to aging popula-
tion and focused specifically on Medicare, following
prescription instruction, flu vaccination, leading
causes of heart disease and stroke, and determining
drug risk. Similar to financial literacy, the health liter-
acy score was the percentage of the nine items that
were answered correctly. The present study used a
composite score to examine the change in financial
and health literacy over time, which is the average of
financial and health literacy scores (Supplementary
Methods). Higher scores indicate higher financial and
health literacy.
Financial and health decision making
A 12-item version of the Decision Making Assess-
ment Tool25 assessed financial and health decision
3
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Adverse Impacts of Declining Financial and Health Literacy
making in older adults, as previously described.26 The
instrument is designed to simulate real world situa-
tions in choosing mutual funds (financial decision
making) and HMO plans (health decision making).
Specifically, for financial decision making, tables with
information about different mutual funds were pre-
sented to the participants, followed by six questions
that range from simple understanding of the informa-
tion presented to more challenging problems that
require integrating multiple information. The assess-
ment of health decision making follows a similar
structure. Tables with information about various
HMO plans were presented, and participants were
asked six questions of varying difficulty level. Each
correct answer is scored 1 point, and the number of
correct answers was tallied to obtain a total financial
and health decision making score. The total score can
range between 0 and 12, and higher scores indicate
higher financial and health decision making ability.
Scam susceptibility
Scam susceptibility was assessed by averaging par-
ticipants’ responses to five statements that indicate
vulnerability to scams according to findings from the
AARP and the Financial Industry Regulatory Author-
ity Risk Meter.27 Specifically, participants rated, on a
7-point Likert scale, their likelihood of 1) answering
and 2) ending a phone call from a stranger/telemar-
keter; 3) listening to sales pitches from a telemarketer;
and whether they agree on the statement that 4) if
something sounds too good to be true, it usually is,
and 5) older persons are often targeted by scammers.
Higher average ratings across the five items indicate
greater scam susceptibility.
Psychological wellbeing
An 18-item instrument was adapted from Ryff’s
Scales of Psychological Well Being,28 as previously
described.29 Participants rated, on a 7-point Likert
scale, their agreement to each item. Six different
aspects of psychological wellbeing were assessed,
which include self-acceptance, autonomy, environ-
mental mastery, purpose in life, positive relations
with others, and personal growth. Item-specific rat-
ings were averaged to obtain an overall wellbeing
measure, and higher scores indicate higher psycho-
logical wellbeing.
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Cognition
Cognition was assessed using 19 tests which cover
five primary domains of episodic memory, sematic
memory, working memory, perceptual speed and
visuospatial ability.30,31 To reduce random variability
and potential floor and ceiling artifacts in individual
tests, raw scores of each test were first standardized
using baseline mean and SD of the MAP cohort, and
then averaged across the 19 tests to obtain a global
cognitive score. Higher scores indicate higher cogni-
tion. Additional information on the cognitive tests,
as well as clinical diagnoses of dementia and mild
cognitive impairment are provided (Supplementary
Materials).
Statistical analysis
To investigate longitudinal change in financial and
health literacy, we fit a linear mixed effects model
with annual financial and health literacy scores as the
longitudinal outcome. Time in years since baseline
was the predictor, and the corresponding coefficient
estimates the mean annual rate of change in financial
and health literacy (i.e., the mean slope). The random
slopes from the model estimated the deviation of indi-
vidual slopes of change from the mean slope. As a
result, these random slopes represent adjusted per-
son-specific rates of change in financial and health
literacy.
To examine the influence of change in financial and
health literacy on the measures of decision making,
scam susceptibility and psychological wellbeing, we
fit a series of linear regression models. In these mod-
els, the slopes of change in financial and health liter-
acy, estimated using the data from baseline up until
the last decision making assessment, was the primary
predictor. The measures of financial and health deci-
sion making, scam susceptibility and psychological
wellbeing at the last assessment were the continuous
outcomes. Each outcome was modeled separately. All
the regression models were controlled for age, sex,
education, income, as well as the baseline level of
financial and health literacy. For ease of comparison,
the magnitude of the association was contextualized
as the difference in SD of an outcome measure with
every 1SD increase or decrease of a predictor.
Statistical analyses were conducted using SAS soft-
ware 9.4 on the Linux platform. As the analyses
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Yu et al.

involve three primary outcomes, statistical significance decline (Random slopes variance: 1.70, SE: 0.20, Z:
for the primary analyses was determined at a level of 8.55, p <0.001). It is evident from the data that, while
0.015 after correction for multiple testing. most participants (N = 873, 83.5%) experienced
decline in financial and health literacy, others
(N = 173, 16.5%) managed to maintain their literacy
level during the follow-up (Fig. 1).
RESULTS Older participants (Spearman r: 0.37, N = 1,046, p
<0.001) with lower income (Spearman r: 0.23,
Financial and health literacy declines in old age
N = 1,009, p <0.001) or fewer years of education
Characteristics of the study participants are (Spearman r: 0.24, N = 1,046, p <0.001) showed faster
described (Table 1). At baseline, approximately 70% decline in financial and health literacy. Female partici-
of the financial and health questions were answered pants declined faster than male participants (t456.6:
correctly on average. We examined the longitudinal 4.89, p <0.001), as did participants with mild cogni-
trajectory of financial and health literacy using annual tive impairment at baseline (t535.2: 11.02, p <0.001).
literacy scores from baseline up until the last assess-
ment. Consistent with previous reports,32,33 we Declining financial and health literacy and
observed a decline in financial and health literacy decision making performance
over time. On average, the financial and health liter-
acy score dropped about 1 percentage point each year To examine the association of declining literacy
(Mean slope estimate: 0.82, Standard error [SE]: with financial and health decision making, we
0.07, t1045: 12.03, p <0.001). Notably, the model regressed the total decision making scores on the
revealed substantial person-to-person variation in slopes of preceding change in the financial and health
literacy score. In the model adjusted for demo-
graphics (i.e., age, sex, education, and income), lower
TABLE 1. Baseline Characteristics of Study Participants
baseline level of financial and health literacy was
Age (Years)a 81.1 (7.4, 59.0−100.2) associated with poorer decision making years later
Education (Years)b 15.6 (3.0)
Femalec 798 (76.3%) (Table 2). In the same model, faster decline in finan-
Non-Hispanic Whitec 959 (91.7%) cial and health literacy was also associated with
Incomed 8 (6−9) poorer decision making. Specifically, with 1SD of
Financial and health literacy score 69.2 (14.2)
(% correct)a additional decline in the financial and health literacy
Financial and health decision making score 8.1 (2.6) score, the decision making score was 0.33SD lower
(# correct)a
(Fig. 2A). By comparison, 1SD lower in the baseline
Susceptibility to scamsa 2.7 (0.8)
Psychological wellbeinga 5.6 (0.6) level of financial and health literacy score (i.e.,
Cognitiona 0.22 (0.52) approximate 14 percentage points) corresponds to
Mild cognitive impairmentc 317 (30.3%)
0.21SD lower in the decision making score; and 1SD
Income: 1: $0−$4,999, 2: $5,000−$9,999, 3: $10,000−$14,999, 4: of additional years of age (i.e., approximate 7 years)
$15,000−$19,999, 5: $20,000−$24,999, 6: $25,000−$29,999, 7: corresponds to 0.24SD lower in the decision making
$30,000−$34,999, 8: $35,000−$49,999, 9: $50,000−$74,999, 10:
$75,000 and over. score. Together, these results suggest that the strength
Cognitive score is the average of individual scores for 19 cognitive of association of declining literacy with the subse-
tests after standardization. A score of 0 represents the mean baseline quent level of decision making is stronger than base-
cognition of the cohort, and each unit approximates 1 standard devia-
tion of the baseline cognition of the cohort. line literacy or even age. The domain-specific results
Mild cognitive impairment: each participant underwent annual were similar (Supplementary Results).
clinical evaluations including detailed cognitive assessments and neu-
Cognitive health is strongly associated with both
rologic examinations. A diagnosis of mild cognitive impairment is ren-
dered if a person has cognitive impairment as determined by financial and health literacy as well as decision mak-
neuropsychological testing but does not meet the criteria for demen- ing.34−37 Thus, to assess whether the association of
tia diagnosis by the clinician.
a
Mean (SD, Min-Max).
declining literacy and decision making is robust
b
Mean (SD). against traditionally measured cognition, we aug-
c
N (%). mented the regression model by further controlling
d
Median (Interquartile range).
for the global cognitive score derived from 19

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Adverse Impacts of Declining Financial and Health Literacy

FIGURE 1. Illustrates the longitudinal profiles of change in financial and health literacy for 100 (approximate 10%) older adults
randomly selected from our study sample. The left panel is a spaghetti plot that shows the actual data, where each wiggly line traces
annual total literacy scores (y-axis) observed over the years since baseline (x-axis) for a particular participant. For this same group
of participants, the right panel shows individual slopes of change in total literacy scores (gray) as well as the mean slope (black),
estimated from a linear mixed effects model. Figure 1 reveals 2 key features of change in financial and health literacy. A negative
mean slope suggests that on average literacy declines over time in old age. The difference in person-specific slopes suggests that
rates of change vary and decline is not inevitable. Some older adults show faster decline, some slower decline, while a small pro-
portion managed to maintain their literacy level over the years.

cognitive tests. As expected, higher global cognitive
score was associated with higher decision making
score. Importantly, however, the association of declin-
ing literacy with decision making persisted even after
controlling for cognition, suggesting that the impact
of declining literacy is relatively independent of cog-
nition (Table 2).
Declining financial and health literacy and scam
susceptibility
Next, we examined declining financial and health
literacy in association with scam susceptibility. Multi-
variable regression analysis suggested that partici-
pants with lower baseline level of financial and health

TABLE 2. Association of Declining Literacy with Financial and Health Decision Making

Model 1 Model 2
Variable B SE p B SE p
Age 0.097 0.010 <0.001 0.075 0.011 <0.001
Male sex 0.061 0.177 0.729 0.364 0.178 0.041
Education 0.081 0.028 0.004 0.065 0.028 0.019
Income 0.115 0.034 <0.001 0.102 0.033 0.002
Cognition - - - 1.078 0.149 <0.001
Baseline literacy 0.045 0.006 <0.001 0.032 0.007 <0.001
Decline in literacy 1.147 0.099 <0.001 0.609 0.123 <0.001

B: unstandardized regression coefficient; SE: standard error.

Statistical inference for model 1 was based on t-statistic with 979 degree of freedom, and statistical inference for model 2 was based on t-statistic
with 961 degree of freedom.

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Yu et al.

FIGURE 2. Illustrates the associations of declining financial and health literacy with financial and health decision making, scam
susceptibility and psychological wellbeing, after controlling for demographics and the baseline literacy level. Each panel is a par-
tial residual plot with corresponding regression line and 95% confidence band. Blue circles are adjusted person-specific slopes of
change in the total literacy score plotted against total decision making score (A), scam susceptibility rating (B) and overall psycho-
logical wellbeing score (C). The covariates of age, sex, education, income and the baseline total literacy score are regressed out.

literacy and separately faster decline in literacy were
more susceptible to scams (Table 3). With 1SD of
additional decline in the financial and health literacy
score, the scam susceptibility score was 0.34SD higher
(Fig. 2B). By contrast, the strength of association for
baseline literacy level was approximately half of that
for declining literacy, such that 1SD lower in the base-
line literacy score corresponds to 0.17SD higher in the
scam susceptibility score, again suggesting that the
association was stronger for declining literacy than
level.
Similar to the result for financial and health deci-
sion making, the association of declining literacy with
scam susceptibility persisted after the model was con-
trolled for cognition. Further, during the annual fol-
low-ups into the decision making substudy,
approximately 13% of the participants had developed
dementia. To account for potential recall bias in the
scam susceptibility measure among the demented
people, we reanalyzed the data by restricting to par-
ticipants who were free of dementia throughout the
study period. In this subsample (N = 906), declining

TABLE 3. Association of Declining Literacy with Susceptibility to Scams

Model 1 Model 2
Variable B SE p B SE p
Age 0.028 0.003 <0.001 0.021 0.003 <0.001
Male sex 0.265 0.056 <0.001 0.196 0.057 <0.001
Education 0.007 0.009 0.433 0.008 0.009 0.343
Income 0.031 0.011 0.004 0.027 0.011 0.011
Cognition - - - 0.315 0.048 <0.001
Baseline literacy 0.011 0.002 <0.001 0.007 0.002 0.001
Decline in literacy 0.365 0.032 <0.001 0.219 0.039 <0.001

B: unstandardized regression coefficient; SE: standard error.

Statistical inference for model 1 was based on t-statistic with 981 degree of freedom, and statistical inference for model 2 was based on t-statistic
with 965 degree of freedom.

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Adverse Impacts of Declining Financial and Health Literacy
TABLE 4. Association of Declining Literacy With Psychological Wellbeing
Model 1
Variable B SE
Age 0.019 0.003
Male sex 0.114 0.043
Education 0.032 0.007
Income 0.019 0.008
Cognition - -
Baseline literacy 0.003 0.002
Decline in literacy 0.137 0.024
B: unstandardized regression coefficient; SE: standard error.
Statistical inference for model 1 was based on t-statistic with 985 degree of freedom, and statistical inference for model 2 was based on t-statistic
with 968 degree of freedom.
literacy remained associated with greater scam sus-
ceptibility (B: 0.341, SE: 0.039, t862: 8.86, p <0.001).
Declining financial and health literacy and
psychological wellbeing
Finally, we examined the association of declining
financial and health literacy with psychological well-
being. After controlling for demographics, we did not
observe an association of baseline literacy level with
psychological wellbeing; however, participants with
faster decline in financial and health literacy exhibited
lower psychological wellbeing (Table 4). With 1SD of
additional decline in the literacy score, the overall
psychological wellbeing score was 0.19SD lower
(Fig. 2C). In a model that was further controlled for
the global cognitive score, the regression coefficient
for declining literacy was attenuated by approxi-
mately a half but remained nominally significant. A
similar association was observed in the subset of par-
ticipants who had not developed dementia since the
decision making baseline (B: 0.088, SE: 0.029, t863:
3.02, p = 0.003). Separate analysis on each of the
6 domains of psychological wellbeing suggested that
declining literacy was strongly associated with all
domains except purpose in life (Supplementary
Results).
CONCLUSIONS
Financial and health literacy is an important deter-
minant of independence and wellbeing across the life-
span but is particularly critical in old age. Cross-
sectional studies have reported associations of
8 Am J Geriatr Psychiatry &&:&&, && 2021
Model 2
p B SE p
<0.001 0.016 0.003 <0.001
0.008 0.082 0.044 0.060
<0.001 0.031 0.007 <0.001
0.020 0.017 0.008 0.037
- 0.140 0.037 <0.001
0.070 0.001 0.002 0.545
<0.001 0.065 0.030 0.030
financial and health literacy with cognition, disability,
mental health,15 as well as decision making
ability.24,38 Financial and health literacy is also an
important correlate of scam susceptibility.12 Of note,
these studies have not examined the degree to which
declining literacy may have longer term impacts on
these outcomes. In the present study, we first demon-
strated that financial and health literacy declines over
time among community-dwelling older adults. Sec-
ond, we presented for the first time evidence that
declining financial and health literacy is associated
with subsequent decision making performance, scam
susceptibility and psychological wellbeing. These
new findings extend prior research on the impact of
financial and health literacy in several important
ways.
First, our finding greatly extends a very limited lit-
erature on change in financial and health literacy in
old age. It is hypothesized that domain-specific liter-
acy may improve with educational programs or
decline with progression of age-related pathologic
processes.39 Yet prior evidence of change in literacy
relies heavily on either cross-sectional data on persons
of different age groups or differences in performance
between only two time points.2,18 Repeated measures
of financial and health literacy assessment on the
same individuals are required to robustly estimate
longitudinal change in financial and health literacy
and document whether there is truly an age-related
decline in literacy. The present study leveraged data
from over 1,000 older residents with up to 11 (and a
mean of 5) annual literacy assessments. Two patterns
of change emerged. An average older person declined
1 percentage point a year in the total literacy score,
and this result depicts a general trend of decline in
 ARTICLE IN PRESS
financial and health literacy among community-living
older adults. Separately, the rate of change varied
substantially from person to person. Not everyone
experienced declining financial and health literacy
and a small proportion were able to maintain their lit-
eracy level over the course of follow-ups. Older age,
female, lower income, fewer years of education, and
impaired cognition at baseline were correlated with
faster decline in financial and health literacy. These
results are consistent with a previous report from a
smaller sample with less follow-ups.32 Future studies
are needed to identify modifiable determinants of
declining financial and health literacy.
Second, the present study expands prior work on
the impact of domain-specific literacy to include a
critically important mental health outcome, psycho-
logical wellbeing. Wellbeing is a multidimensional
construct that refers to the sense that one is striving,
emotionally connected and balanced, and generally
functioning well mentally. Wellbeing is related to
multiple psychological and health outcomes in old
age yet has not been a focus of literacy studies.40
Here, we showed that declining literacy is not only
related to lower wellbeing in general, but specifically
the tendency to have lower self-acceptance, lack of
self-determination, feeling easily overwhelmed, hav-
ing difficulty maintaining positive relationships, and
limited focus on personal growth. This greatly
expands our understanding of the health consequen-
ces of declining literacy and suggests that it affects
domains of functioning not previously considered.
Older adults already face many challenges to their
psychological health (e.g., disease-related, loss of
friends and family), and we show that declining liter-
acy presents an additional source of distress. Fortu-
nately, unlike many other challenges, literacy is
modifiable. Thus, efforts to prevent or reduce declin-
ing literacy in old age may confer meaningful psycho-
logical benefit.
Third, this study disentangles the influence of lon-
gitudinal decline in financial and health literacy from
that of starting level of literacy. While cross-sectional
data are crucial in evaluating the impact of financial
and health literacy on important outcomes, an impor-
tant limitation is that the level and change are con-
founded. Financial and health literacy is strongly
influenced by life experience factors such as educa-
tion, occupation and contextual factors like systemic
racism and sexism, and these factors greatly influence
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Yu et al.
the level of performance at a single point in time.
Thus, the wide individual differences observed in
financial and health literacy could simply be reflective
of a longstanding and preexisting discrepancy
between different demographics, rather than an age-
related deterioration. However, with aging, human
beings are increasingly exposed to various diseases
(e.g., Alzheimer’s disease and stroke) that degrade
many functional abilities including financial and
health literacy. Of note, the capacity for tolerating
these disease insults differs between persons. Varying
abilities of tolerating disease pathology may result in
person-specific rates of decline in literacy and further
contribute to individual differences in financial and
health literacy in late life. Indeed, our results show
that the association of declining financial and health lit-
eracy with subsequent outcomes was above and
beyond the starting level of literacy. More importantly,
judging by the regression coefficients, the strength of
associations with all three outcomes (i.e., financial and
health decision making, scam susceptibility and psy-
chological wellbeing) are stronger for decline than
level, suggesting that it is actually the aging-related
decline in literacy that has the most potent impact on
key outcomes. These results highlight the importance
of capturing and possibly reversing age-related decline
in financial and health literacy.
Inadequate financial and health literacy in old age
presents a formidable economic and public health
challenge. Boomers are the most vulnerable age
group that can suffer from unrecoverable financial
loss and severe health consequences due to poor liter-
acy and decision making. While possessing the vast
majority of financial resources, older adults unfortu-
nately lack the flexibility to bounce back from finan-
cial setbacks and are least protected by financial
regulations.17 Various diseases common in old age
impair cognitive and physical functions and further
worsen the situation health-wise. By showing that
declining financial and health literacy impacts a vari-
ety of adverse outcomes, yet that decline is not ubiq-
uitous and potentially preventable or reversible, the
present study has several important real-world impli-
cations. First, it demonstrates that the impact of finan-
cial and health literacy is not confined to the starting
level accumulated throughout the life-span; rather,
change in literacy over time is a more important
determinant of decision making and other wellbeing
outcomes in old age. Second, the associations of
9
 ARTICLE IN PRESS
Adverse Impacts of Declining Financial and Health Literacy
declining literacy persisted even after controlling for
cognition, which supports the concept that domain-
specific literacy is a higher order brain function dis-
tinct from memory or other traditionally measured
cognitive abilities. In this context, declining financial
and health literacy may represent a novel harbinger
of adverse outcomes, and regular monitoring of
financial and health literacy could serve as a useful
tool to identify individuals at risk of impending
impairment in decision making and other abilities.
The result further suggests that interventions aimed
to maintain or improve literacy may be beneficial for
behavioral economic and psychological outcomes
regardless of individuals’ level of cognitive perfor-
mance. Third, the present study highlights the poten-
tial of health and financial literacy as a primary target
of prevention against poor decision making or loss of
overall wellbeing, both of which have critical adverse
effects.
The present study underscores the critical need for
efforts to maintain or even improve financial and
health literacy among older persons. Evidence
suggests that educational programs (e.g., eHealth lit-
eracy intervention) that are designed to boost under-
standing of financial and healthcare concepts are well
received by recipients and have positive effects on
real-life financial and healthcare actions taken by
older adults.41 Importantly, our findings suggest that
the benefits of such interventions also may extend to
the psychological domain. Thus, targeted efforts to
increase both the availability and usability of literacy
interventions for older adults hold the potential to
offer considerable public health benefit and should be
prioritized.
Strengths and limitations are discussed. By embed-
ding annual decision making assessments into an
ongoing epidemiologic cohort study of well-charac-
terized community-dwelling older persons that has a
high rate of follow-up, it allows us to robustly esti-
mate the longitudinal change in financial and health
literacy. The analytic approach specifically targets the
rate of change in financial and health literacy that pre-
cedes the outcomes of interest. This temporal relation-
ship between the predictor and the outcomes
facilitates the investigation on the consequences of
declining literacy. The instruments used for testing
financial and health literacy, decision making, scam
susceptibility and psychological wellbeing have been
validated in various publications. Limitations include
10
that MAP is a voluntary cohort which limits the gen-
eralizability of our findings. Over 90% of the partici-
pants in the present study are non-Latino whites.
Annual decision making assessments have been
expanded to a separate cohort of older African Ameri-
cans in 2017. As data mature, we will be able to exam-
ine whether the same associations can be replicated in
the minority population.
AUTHOR CONTRIBUTIONS
LY, GM and PAB contributed to the conception
and design of the work; DAB and PAB contributed to
the acquisition of data for the work; LY contributed to
the analysis of data for the work; all authors contrib-
uted to the interpretation of data for the work. LY
drafted the work and all authors contributed to revis-
ing it critically for important intellectual content.
DISCLOSURE
Nothing to disclose.
ACKNOWLEDGMENTS
Funding for this study comes from the National Insti-
tute on Aging (R01AG17917, R01AG33678, and
R01AG34374) and the FINRA Investor Education Foun-
dation. All results, interpretations, and conclusions
expressed are those of the research team alone, and do not
necessarily represent the views of the National Institute of
Aging or of the FINRA Investor Education Foundation or
any of its affiliated companies. This study would not have
been possible without the contributions of the participants
from the Rush Memory and Aging Project, as well as
investigators and staff at Rush Alzheimer’s Disease Center
(RADC). Data used in this study can be requested for
research purpose through the RADC Research Resource
Sharing Hub at https://www.radc.rush.edu.
SUPPLEMENTARY MATERIALS
Supplementary material associated with this article
can be found, in the online version, at https://doi.
org/10.1016/j.jagp.2021.02.042.
Am J Geriatr Psychiatry &&:&&, && 2021
 ARTICLE IN PRESS
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