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A rude awakening: Lack of financial literacy hurts the young. What about older people?

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We often hear how teens and young adults lack financial literacy. They may not understand investment concepts such as the power of compounding or the importance of diversification.

With age comes wisdom, right? Not necessarily. Many older people — from mid-career professionals to retirees — grasp the basics of spending, saving and investing. But just because you’re 50 or 70 doesn’t mean you’re financially literate.

“We need financial literacy throughout our lives,” said Genevieve Waterman, director of corporate partnerships and engagement at the National Council on Aging in Arlington, Va.

Pre-retirees face myriad challenges in managing their money. Retirement planning requires a deep dive into taxes (when and how much income to defer), Social Security (when to apply) and Medicare (what it covers — and doesn’t cover).

Medicare enrollees might assume it will cover almost all their healthcare for life, Waterman said. But Medicare doesn’t include long-term care, most dental care and other common needs.

Selecting an annuity also tests your financial savvy. Insurers keep rolling out new annuity products with a complex web of fees, policy provisions and surrender charges. It’s tough for even a diligent, intelligent shopper to sift through all the permutations.

To address knowledge gaps among today’s teens, there’s talk of expanding financial literacy courses in high schools and colleges. But it’s trickier to design and deliver educational programs for older people.

“Financial education targets young people as if once you get it, you’re set for life,” said Cindy Cox-Roman, president and chief executive of HelpAge USA, a Washington, D.C.-based nonprofit group. “In fact, people have a need for lifelong learning. Behaviors, circumstances and needs change over time.”

Older folks may benefit from courses that teach them how to spot scams, fund their retirement and pay down debt. In terms of managing debt, for example, they can learn how to leverage home equity to cover future healthcare and other expenses.

Speaking of debt, many parents (and grandparents) agree to co-sign for a family member’s student loan. Yet they may not realize the long-term consequences of backstopping a child’s tuition.

For the youngest baby boomers, born in the late 1950s and early 1960s, financial literacy is paramount. They’re the first generation for which a traditional pension wasn’t the norm. Instead, many self-fund their retirement through a 401(k) or other deferred-contribution plan.

“A rude awakening people have is they put money into a 401(k) and now they have to pay taxes on that money when they take it out in retirement,” Cox-Roman said.

As you approach retirement, here are two ways to burnish your financial knowledge:

1. Read and take notes: When you read articles or books about personal finance, take notes. Highlight key points so that you’re more likely to remember them. Whether you enter relevant tips into a designated file on your computer or keep a handwritten, numbered list in a folder on your desk, the trick is creating a well-organized system to help you retain important action items that you can access easily when the need arises.

2. Seek expertise: You can improve your financial literacy on your own. Even better, involve others in your quest for knowledge.

Many financial advisers offer a free consultation to potential clients. Whether you hire them or not, you can use this conversation to extract useful information.

Another option: Enroll in an in-person or online self-study module — and enlist friends to sign up. You’re more apt to retain what you learn in a financial education class if one or more peers participate as well, Cox-Roman said. That way, you can help each other reinforce important learning points over time.

Inviting cohorts to join you in your effort to strengthen your financial literacy builds confidence all around. Just knowing that you’re not alone — and that you’re not the only one who finds certain topics confusing — can bring comfort.

This becomes more critical for aging retirees. Those age 80 and over have the highest median loss — $1,500 — from online-shopping scams.

“People who feel lonely or depressed are far more likely to be victimized by fraud,” said Olivia S. Mitchell, a professor at the Wharton School of the University of Pennsylvania. “And many older people don’t understand their susceptibility to financial fraud.”

More: ‘I am paralyzed with fear.’ My wife and I are 60, with 2 homes, pensions and $950,000 saved for retirement. We want an adviser but fear the wrong choice. What’s our move?

Also read: I’m 65 and semi-retired, having amassed $1.8 million myself with ‘a lot of risky small caps,’ tech stocks and some ETFs. I also have 20% in cash. Am I doing it right? Do I need an adviser to help?

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