Contrast the interests of young people and seniors. How do they differ in risk aversion, planning needs, and approach to financial planning?

Student 1:

Financial planning interests are greatly different between young people and seniors. In terms of risk aversion and planning needs, the former group, which is classified as individuals from 18 to 42, usually has higher risk tolerance because they often focus on current living standards and future career (Alfest, 2017) instead of personal wealth. As they are still at the early stage of their career, it is common to use debts, e.g., student loans and mortgage, for education and property and pay those off later then start saving money when they have disposable income. In contrast, seniors, whose age is 68 and beyond are much more risk-averse, according to Alfest (2017), as they approach retirement. They usually use their accumulated wealth to take care of themselves and others and if desired, to make conservative investments. Debt and risky financial decisions are no longer in favor due to slower monetary growth. With regard to approach to financial planning, young people tend to start only when they have established long-term relationships while seniors usually plan as soon as they can and prioritize estate planning to take care of others. All in all, these differences illustrate that age plays an important role in determining preferences and interests in personal financial planning.