Financial gerontology is a multidisciplinary field of study encompassing both academic and professional education, that integrates research on aging and human development with the concerns of finance and business. Following from its roots in social gerontology, Financial gerontology is not simply the study of old people but emphasizes the multiple processes of aging. In particular, research and teaching in financial gerontology draws upon four kinds of aging or "'four lenses" through which aging and finance can be viewed: population aging, individual aging, family aging, and generational aging.Cutler, N. E., Advising Mature Clients: The New Science of Wealth Span Planning. Wiley 2002, chapter 1.
Demographic concepts, issues, and data play a substantial role in understanding the dynamics of financial gerontology. For example, through the lens of population aging, demography identifies the number of persons of different ages in cities and countries—and at multiple points in time. Through the lens of individual aging, demography also notes changes in the length of time—number of years lived in older age, typically measured by increases in life expectancy. From in its founding years in the beginning of the 21st century, one primary interest of Financial Gerontology has been on baby boomers and their relationships with their parents.
The impact of these two kinds of aging on finance are reasonably apparent. The large and increasing number of older persons in a society, no matter how "old age" is defined, and the longer each of these persons lives, the greater the impact on a society's pattern of retirement, public and private pension systems, health, health care, and the personal and societal financing of health care. The focus on boomers illustrates also the other two lenses or "kinds" of aging. How boomers deal with the social, emotional, and financial aspects of their parents' aging is a central aspect of family aging. And how boomers may differ from their parents, born and raised twenty to forty years earlier, and from their Generation X and Millennial children and grandchildren, are substantial aspects of generational aging.
Origins of financial gerontology Establishment of the field of study The origins of financial gerontology came from the work of two business professionals, Joseph Boettner, an insurance salesman and entrepreneur, and Davis Gregg, a business educator and administrator. Boettner was born in 1903 and left West Philadelphia High School to work in the city's insurance industry. He purchased the Philadelphia Life Insurance Company for $1 per share and reestablished operations. Boettner's post-high school education was with the American College of Life Underwriters, then an insurance education program within the University of Pennsylvania's Wharton School of Business & Finance; he earned his Chartered Life Underwriter (CLU) designation in 1934. Born in 1918, Gregg graduated from the University of Texas and earned his PhD from the University of Pennsylvania in 1947, where he studied under professor Solomon Huebner, the founder of the American College of Life Underwriters and considered by many to be the "father of insurance education".Stone, M.F., The Teacher Who Changed an Industry, Richard D. Irwin Inc, 1960. Gregg was on the faculty of Stanford University when Huebner asked him to come to the insurance college in Philadelphia for a short time. The "short time" became four decades including thirty years (1954 to 1983) as the college's president.
Boettner made several investments in higher education, including endowing academic chairs primarily in the realm of life insurance programs. Although he was financially secure, he became increasingly concerned about how the average person can deal with aging and how educational programs could be created to respond to the needs and concerns of aging persons. Over the years Gregg's intellectual experience as dean and president encouraged him to expand the college's distance education curriculum beyond the CLU designation which focused substantially on life insurance. Under his leadership the college developed a second professional designation, the Chartered Financial Consultant (ChFC) whose approach included financial planning courses beyond life insurance.
By the 1980s Boettner's concerns about personal aging and financial education began to merge with Gregg's views on the need for more comprehensive professional education in the expanding field of financial services. A result of these joint concerns was the plan for a new research institute that would focus on the interconnections among social gerontology and personal finance. With funding from Boettner, Gregg convened a study committee of gerontologists that agreed on four organizing principles: (1) that there was a need for specialized research that integrates gerontology and financial planning; (2) that a social gerontology research center could succeed at a small specialized business school; (3) that the permanent director of the institute should be an experienced gerontologist because the financial side of the relationship would be provided by the business school's faculty; and (4) that the new institute would be communicating gerontological concerns to financial professionals and financial concerns to gerontologists.
The Boettner Institute of Financial Gerontology On July 4, 1986 American College established the Boettner Research Institute under Gregg's supervision. Its first permanent director was Neal E. Cutler, a professor of political science and gerontology, recruited in 1989 from the University of Southern California's Andrus Gerontology Center. As models, there are several gerontological interdisciplinary sub-fields, including biological gerontology, social gerontology, occupational gerontology, and recreational gerontology; and the phrase "financial gerontology" was starting to be seen in professional publications.Gregg, D.W., "Introducing Financial Gerontology," Journal of the American Society of CLU & ChFC, November 1990 Consequently, in 1990 "Boettner Institute of Financial Gerontology" was chosen as the official name in order to create new sub-fields in both gerontology and in finance, and to describe and communicate the institute's scope of academic and professional education and research.
In 1992 the Boettner Institute of Financial Gerontology became chartered as a nonprofit charitable educational corporation with an independently appointed board of trustees of business and gerontology academics and practitioners. The same year, the trustees voted to move the institute from The American College and accept an invitation to become affiliated with the University of Pennsylvania School of Arts & Sciences.Vitt, L.A and Siegenthaler, J.A (eds.), Encyclopedia of Financial Gerontology, Greenwood Press 1996, "Boettner Center of Financial Gerontology," pp.51-55 The Boettner Institute organized a series of published lectures given by experts in the "two sides" of Financial Gerontology. The inaugural lecture was given in 1997 by George L. Maddox, Director of the Duke University Center for the Study of Aging and Human Development: "Age and Well-Being." Other lectures included: William C. Greenough, CEO of TIAA-CREF and developer of the variable-annuity stock fund: "Critical Policy Issues for Pensions" (1989). Matilda White Riley, Director of the Office of Social and Behavioral Science, National Institute of Aging: "Aging in the Twenty-first Century" (1990). Davis W. Gregg, Founding Director of the Boettner Institute: "The Human Wealth Span: A Life Span View of Financial Well-Being" (1992). James E. Birren, psychologist and founding director of the USC Andrus Gerontology Center: "Information and Consumer Decisions-Making: Maintaining Resources and Independence"(1994). Dallas L. Salisbury, CEO of the Employee Benefit Research Institute: "Recent Trends in Pensions, Benefits, and Retirement: In-House Research" (1995).
In keeping with its established academic naming practices, the University of Pennsylvania renamed the Institute as the Boettner Center of Financial Gerontology. In 2003 the Center was moved into the university's Wharton School as the Boettner Center for Pensions and Retirement Research affiliated with the business school's Pension Research Council, under the direction of Olivia S. Mitchell. The Wharton School holds one of two Boettner-funded endowed chairs in Financial Gerontology.
Financial gerontology as academic teaching and research
The human wealth span Early Financial Gerontology research focused on the interaction of (and longitudinal trends in) middle-aging and older-aging, and their combined impact on savings, retirement, health care, and long-term care. Research on aging and money often juxtaposes old age with the adequacy of financial resources (pensions, Social Security, and a variety of savings and investment approaches, often referred to as the "three legged stool")Social Security Administration, "Origins of the Three-Legged Stool Metaphor for Social Security," https://www.ssa.gov/history/stool.html, May 1996 to support the quality of personal and family later life. The integration of middle age as an essential dimension of Financial Gerontology reflected Gregg's and Cutler's conceptualization of the "Human Wealth Span" introduced in 1991-1992.Cutler, N.E. and Gregg, D.W., "The Human Wealth Span and Financial Well-Being in Older Age," Generations, Winter 1992Gregg, D.W., "The Human Wealth Span: A Life-Span View of Financial Well-Being," Boettner Lecture, Boettner Institute of Financial Gerontology, University of Pennsylvania, 1992. As Gregg noted in his 1992 Boettner Lecture, the Human Wealth Span "mirrors" the better known Human Life Span concept which speaks not only to patterns of maturation and aging, but also to identifiable stages in human development.
An additional link in the etiology of the Wealth Span is the emphasis on the Health Span in Rowe and Kahn's concept of successful aging, especially the connection between health span stages, health behavior and, thereby, "successful aging." In terms of stages, it is apparent that health behavior choices made earlier affect health status and outcomes later in life. Rowe and Kahn emphasize that while it is better to start early and always have good health behaviors, starting later life can affect and improve health. For example, both cessation of smoking or "pumping iron" in one's 60s or 70s can have beneficial effects. Drawing on these insights, the wealth span representation of the life span in financial terms emphasizes two stages: the accumulation stage and the expenditure stage, which are somewhat correlated with developmental-maturational stages. Traditionally, people accumulate wealth in their younger and middle-aged years, and spend that wealth in their later retirement years. As Modigliani's life-cycle saving-spending hypothesis illustrates, this is a simplification of a complex life span dynamic; many people continue to accumulate in their older years just as younger and middle-aged persons spend during the accumulation years of their wealth span.
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