Perceived Financial Vulnerability, Wealth, and Wealth Change: The Health and Retirement Study

Abstract

ABSTRACT Objectives The 6-item Perceived Financial Vulnerability (PFV) scale assesses awareness and psychological vulnerability regarding finances. Prior findings using the Health and Retirement Study (HRS) identified significant associations of PFV with wealth, demographics, and health status. This study examines the relationship between wealth, changes in wealth, and PFV. Methods Data from HRS respondents were analyzed (N = 1,056). Total assets at baseline (2016) and changes in total assets over two waves (2016 to 2018) were stratified into deciles and used as primary predictors of PFV in 2018. Multiple linear regression models examined the influence of demographics, wealth change (linearly and curvilinearly), and baseline wealth on PFV. Results Wealth change and baseline wealth were associated with PFV. When controlled for baseline wealth, wealth loss linearly predicted increased PFV. Conclusions These findings support the utility of the PFV. Findings underscore the importance of integrating multifaceted financial and demographic information when conceptualizing subjective financial welfare. Clinical Implications Financial wellbeing is crucial in older clients and should be assessed over time. The 6-item PFV effectively evaluates contextual aspects of financial decision-making across socioeconomic statuses, making it valuable for clinical assessments.