Older people are more susceptible to emotions when making decisions over their retirement, scientists have warned (file picture) Older people are more susceptible to emotions when making decisions over their retirement, scientists have warned. Experts in America found that more than 50 per cent of pensioners with investments during the 2007 and 2008 global financial crisis panicked and sold them after the stock market fell by 30 per cent. Research carried out by scientists at Texas Tech University showed how those who did follow that path and sold at the lowest point eight years ago with a pension of £100,000 would only have £63,000 today. If they had resisted the temptation to sell, the same pot would be worth £141,000 today provided they had not spent any of the cash. It comes just days before retirees in Britain are given the power to decide how to spend their life savings for the first time ever in the biggest shake-up of pensions for almost a century. The Daily Telegraph quotes the authors of the study, Michael Finke and Chris Browning as saying: ‘Avoiding mistakes requires the ability to regulate emotions through our more rational cognitive process. ‘Consumers are increasingly responsible for managing their retirement savings... (but) we also find that cognitive scores decline with advance age.’ The newspaper says 1,204 retired people with investments between 2006 and 2008 were analysed as part of the study, which has been published in the Journal of Consumer Affairs. It reveals that retirees with better-than-average ability to solve ‘logic problems’ were more unlikely to make misjudgments in the investment market based on their emotions. The authors add: 'Lower levels of cognitive ability in old age can reduce an investor's ability to control emotional responses to a loss. Anyone in Britain turning 55 who isn’t in a final salary scheme will soon be allowed to dip in to their pension and take the income they need, under reforms announced by George Osborne (pictured) 'Greater sensitivity to loss may increase preferences for safety following a market decline, resulting in allocations away from stocks that are associated with long-term underperformance.' Under reforms announced by Chancellor George Osborne, anyone in Britain turning 55 who isn’t in a final salary scheme will simply be allowed to dip in to their pension and take the income they need from April 5. They could keep the money invested in the stock market to boost their profits. And if they die their spouse or loved ones will be able to inherit whatever is left over.
Half of pensioners in US with investments during 2007 financial crisis sold them at wrong time, research finds .
Experts analysed 1,204 retirees with investments between 2006 and 2008 .
Findings come days before UK retirees are given power to decide how to spend life savings .