Managing Money with Cognitive Decline

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Despite the normal cognitive challenges that people in their 70s and 80s inevitably face, most are sharp enough to be in charge of their financial affairs or oversee them.

But the significant minority of seniors who do have trouble is explored in a new summary of the research by Anek Belbase and Geoffrey Sanzenbacher at the Center for Retirement Research, which supports this blog.

One such group is people learning for the first time how to carry out financial tasks. Widows, not surprisingly, are often required to negotiate this financial learning curve, which gets steeper as a senior’s ability to process new information erodes. With guidance from a family member or professional, however, the novices can usually figure things out.

Seniors with mild cognitive impairment might also develop problems. Mild impairment becomes fairly common by the time people reach their 70s, affecting their financial judgment and potentially their ability to manage their affairs in ways that promote their best interests.  Among those with mild impairment, 82 percent can independently handle the various financial tasks they face, such as paying bills, managing bank accounts, and maintaining good credit.  This compares with 95 percent of unimpaired seniors.

Another danger facing seniors with mild cognitive impairment is their vulnerability to fraud.  They are usually aware they’re slipping, yet they may remain confident about their ability to handle their financial affairs.

“The combination of high self-confidence, intact knowledge of financial procedures, and impaired financial judgment” makes them “more likely to be victims of fraud,” the researchers conclude.  This puts adult children and caregivers in the position of assessing whether a senior needs assistance with their finances and how to provide it.

Things become more problematic once dementia sets in.  By age 85, dementia afflicts more than one in four seniors. As the condition progresses, judgment, and eventually the ability to carry out basic tasks, declines sharply. A reliance on caregivers creates another fraud issue: a greater risk of being victimized by an abusive caregiver.

As the baby boom generation reaches advanced old age, greater numbers of elderly Americans will struggle with their financial responsibilities.  The challenge will be to find trustworthy caregivers and experts either to advise them or to take over completely.

The research reported herein was performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement Research Consortium. The opinions and conclusions expressed are solely those of the author(s) and do not represent the opinions or policy of SSA or any agency of the federal government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report. Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.  


Thank you for addressing this important topic. Many seniors and their families are embarrassed to discuss this vulnerability, so it’s great that your research sheds light on the matter. I’d be interested in reading a follow-up where you discuss possible solutions, either on the policy level or the ground level (for individual families can implement).

Paul Brustowicz

Society for Financial Service Professionals presented a video webinar training program on this subject several years ago in cooperation with The Alzheimers Organization. It was directed at financial professionals to recognize the signs of dementia and cognitive decline in general and presented by a gerontologist.

I find the statistic about dementia affecting 1 out of four at age 85 very interesting. Is that backed by research? More on this topic would be appreciated.


This is a huge concern for me. I’m single, childless and nearing retirement.

When I do retire, I hope to simplify my finances a lot, into a few funds in one taxable, one tax-deferred and one Roth account, and a checking account.

But even that isn’t all that simple!

When we cared for a mother with Alzheimer’s, I saw how her ability to make good financial decisions deteriorated much more quickly than other life skills. Like she could still go grocery shopping and remember what aisle breakfast cereal was in, but a glib stranger in line at the bank could probably have talked her out of her life savings. We kids took control of her financial affairs pretty early in the process, but I don’t have anyone to do that for me.

Donald Mayfield

I know a women widowed in ’96. She went back to work in about 2004-2007 and did not know of IRAs or retirement arrangements based on a question she asked. Women and men need to keep up with financial issues and instruments all during their life. IRAs cames into being in the 1980s and I became aware of them then and started saving in them and other means of saving through my employer. Life is complicated.

Erin Connelly

Finding the right support from trusted caregivers and financial experts is certainly a valid concern. One could consider the help of a Daily Money Manager (DMM) who can play an important role of maintaining the bills, budgets and records for those who are no longer able to manage the responsibility. Bringing in a third party reduces the workload and stress for the caregiver and prevents the possibility of elder financial fraud when a qualified DMM professional handles the tasks. DMMs usually maintain the day-to-day banking, budgeting, insurance paperwork, and organizing records and receipts in preparation for income tax filing. With ongoing communication, the caregiver knows the financial affairs are being taken care of properly and professionally. It may also allow some seniors with health challenges to avoid guardianship and a complete loss of independence.


This is a very important topic. I have seen with my own father that retailers can take advantage of elderly people by suggesting higher priced goods up to totally inappropriate goods. Mail order companies and phone selling organisations seem to be the worst offenders. I have also witnessed, through my time as a financial adviser, cases were caregivers have used funds under their care for their own purposes. Adding a few items of groceries when doing the shopping or paying bills from their loved ones bank account. All very subtle but certainly can be classified as abuse. Unfortunately, hiring professional trustee companies is quite costly so is not the answer for the average person. This issue certainly needs addressing as part of our ageing population, that’s for sure.

Mary V

I don’t know whether this falls under the heading of managing money with dementia, but when my father had Alzheimers, he was constantly sending in sweepstakes entries, accepting CD and movie offers, and nearly anything anyone was selling over the phone. It was tragic the way he ran up charges on credit cards for stuff he didn’t even remember ordering. Subsequently, there were badgering calls and letters from bill collectors. It was a real mess.

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