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Declining Cognitive Ability Presents Challenges to Boomer Finances

As Baby Boomers age, policy makers and economists may be served by looking at the condition of not just their nest eggs, but the health of their brains.

About 35% of wealth is controlled by those 65 or older, Prof. Laibson said, and that number will grow as boomers age. The total balance sheet of U.S. households is $53 trillion, he says.

All told, the point at which we make the best financial choices is 53 years old, according to his data.

Many seniors end up in a state called cognitive impairment without dementia that isn’t quite dementia, but still (as the name implies) a deterioration of memory. In spite of this, people still may make financial decisions on their own. Prof. Labison estimated that 16% of those 71-79 years old, 29.2% of 80-89 year olds, some 38.8% of those over 90 years old are in such a state.

Those people are at great risk for financial abuse. Some 17% of professional care staff report committing psychological abuse and 10% physical abuse, Prof. Laibson said.

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