Close

Dementia and Financial Decision Making

The impact of a memory disease diagnosis on a couple’s finances depends on how actively the couple controls their retirement accounts. Couples who manage their own retirement accounts are 2.4 times more likely to change the spouse in charge of handling their finances when a medical diagnosis of cognitive impairment is given. This is the finding of Federal Reserve economist Joanne Hsu and University of Michigan professor Robert Willis.

A reason for this is that couples who control their investment choices are potentially more exposed to poor financial decisions. As such, they face greater benefits and are more likely to make a change in reaction to an increased awareness of cognitive impairment.

However, the study’s authors found that the probability of switching the financial respondent is less dependent on the financial decision-maker being “cognitively impaired but not demented” (CIND) then it is on the probability of reporting problems with managing money. The decision to turn over finances to one’s spouse often occurs after people develop difficulties managing money. Hsu and Willis based these conclusions on data included in the ongoing Health and Retirement Study (HRS) and on supplementary data included in the Aging, Demographics, and Memory Study (ADAMS).

...To continue reading this article you must be registered with AAII.

Gain exclusive access to this article and all of the member benefits and investment education AAII offers.
JOIN TODAY for just $29.
Log in
Already registered with AAII? Login to read the rest of this article.

Register for FREE
to read this article and receive access to future AAII.com articles.
  


Discussion

No comments have been added yet. Add your thoughts to the discussion!

You need to log in as a registered AAII user before commenting.
Create an account

Log In