How undiagnosed cognitive decline eats into seniors’ retirement savings

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Subscribe to enjoy similar stories. Undiagnosed cognitive decline can cost seniors tens of thousands of dollars in retirement savings through bad investments or financial scams, according to new research.

Since current retirees are living longer than previous generations, they are more likely to suffer memory loss, according to the economics professors who were co-authors of the study. What’s more, current retirees are making more decisions about their finances since relatively few have guaranteed income from pensions or annuities, the researchers said.

As a result, says Franco Peracchi of Tor Vergata University of Rome, today’s seniors face an elevated risk of financial losses that can erode their standard of living, especially if they are active in the stock market and are unaware of their cognitive decline. “The current literature has been emphasizing the need to educate younger generations about financial literacy," he says, “but too little attention has been paid to people who hold a pretty substantial amount of money and are at the end of their life cycle." The researchers studied data collected from 1998 to 2014 by the University of Michigan Health and Retirement Study, which tracks a sample of about 20,000 people ages 50 and up that is demographically representative of the U.S.

population. Every two years during the study period, the Michigan study asked respondents to rate their ability to remember things, ranging from poor to excellent, and to assess whether their memory had changed over the prior two years.

Participants were subsequently asked to recall two lists of 10 words apiece, giving them a memory score between 0 and 20. For this new study, those whose memory scores decreased 20% or more over a two-year