Our brains, as we age, and money
How well can we function at work as we grow older? Or continue to manage our money?
Center for Retirement Research at Boston College has issued three briefs on the topic of Cognitive Aging. The first is called “Cognitive Aging: A Primer;” The second “Cognitive Aging and the Ability to Work;” and the third “Cognitive Aging and the Capacity to Manage Money.”
The ability to work summary from CRR states:
- Cognitive aging could hinder productivity by reducing the brain’s processing ability (“fluid” intelligence).
- But research shows that productivity generally does not decline with age.
- Key reasons are that declining fluid intelligence is often offset by accumulated knowledge, and reserve fluid capacity can act as a buffer against decline.
- Only a minority of workers are vulnerable: those in jobs that require very high levels of fluid intelligence and those who experience cognitive impairment.
So, in general, we stay productive with age except for a small group of people in stressful time sensitive jobs, or those who experience micro or macro strokes for example.
The ability to manage money summary from CRR states:
- Most people in their 70s and 80s can still manage their money, as financial capacity relies on accumulated knowledge, which largely stays intact with age.
- However, financial novices who lack such knowledge and are forced to take over money management after a spouse dies will likely need help.
- And individuals who develop a cognitive impairment may see a substantial reduction in their financial capacity and need someone to step in for them.
- Given that this impaired group will grow to more than a third of individuals who reach their 80s, better monitoring of financial capacity will be essential.
Importantly, if a person has been working with their personal finances on an ongoing basis, they’ve formed a knowledge which tends to stay intact. Those who have not been managing the family money routinely cannot, in general, learn this new skill when the other who has died. The population affected is over a third of those alive into their 80’s which calls for some form of monitoring.
Confused about what to be watching for? Here’s are some signs discussed at the end of this post about rambling and vague speech.
This is why the elderly are easy targets for financial fraud and exploitation. Useful resources to become more aware of this issue and how to spot it can be found at:
- StopFraud.gov Elder Fraud and Financial Exploitation which has compiled resources and additional website links to combat this issue and report suspicions.
- The FBI’s website Fraud Against Seniors describes the issue with resources as well.
- The Security and Exchange Commission also has a Senior specific website about investor fraud and elder abuse.
Families are best poised to what their elderly relatives. However, often it is a family member who is doing the exploitation, so other family members should be vigilant to this as well.
We all grow old and our financial capacity does slowly go away, or isn’t developed very well if we’ve relied on someone else for most financial affairs. This makes our elder family members potential victims of misuse of their money for things unrelated to their own affairs, outright theft, or other financial abuses.
By Jens Maus (http://jens-maus.de/) (Own work) [Public domain], via Wikimedia Commons