CogniFit's Science blog: The Brain Keeps Your Financial Independence

The Brain Keeps Your Financial Independence

The effects of aging can reach far beyond the ones we normally see externally and the ones who leave the senior population more dependent to continue their lives. There are some hidden effects, which can be as much worrying and need to be addressed upfront.

The topic referred here is the financial independence of the senior population, not in terms of having in fact the financial means, but rather in their ability to take the right financial decisions over time to guarantee a good stability.

Over a lifetime, the expectation is that each person will earn and accumulate wealth, which means that when reaching the retirement age, it is expected that the level of wealth is higher than before. This is when the challenge starts.

Firstly, the retirement age may mean for many people a reduction of the income. This depends a lot on the savings and retirement plans from the previous decades, it is different for each individual, but generally speaking the fact of stopping to work and receiving a salary isn’t most of the times fully compensated by the retirement payments.

Secondly, the rising health care costs, which seem to never end, are specifically focused on the senior population, who is expected to need on average more health care and therefore will need to spend more to have access to those services.

However a less visible area that may affect the financial prospects of seniors, is their ability to make the right choices with their money, specifically the effect that the cognitive loss will have in that ability. Making financial decisions isn’t an easy thing. But it becomes even harder when the cognitive abilities are not there, or are reduced.

It is true that when someone has visible signs of dementia, the red sign lights up and indicates that that person is not ready to take that kind of decisions with their money. But this is an extreme case, most of the times the individual will already have suffered from cognitive decline without perceiving it, and therefore the ability to make the best decisions with their money is impaired, thus reducing their future financial prospects.

So what can be done to overcome this problem? First of all, be aware that the normal cognitive decline will affect your abilities – understanding what’s at sake is the first step to act upon it. Secondly, proactively act to reduce the cognitive decline and ensure you are fit to decide what to do with your money. This includes keeping your brain active everyday, challenging it, starting or continuing a good brain training program.

If this won’t be done in time, the solution appears to be to give another person the legal authority to make decisions about your finances. In itself, this is already a loss of independence, which may precede the actual total dependence. And this is, again, the anti-active aging. It it your choice!