Financial decisions are not as reliable in the aging brain

Aging brings unique challenges, especially when it comes to finance management and scams – two words that seniors are becoming increasingly familiar with.

Senior citizens are targeted by financial scams of all types, from email-based phishing attempts to callers aiming to swindle away their life savings.

In a world where navigating financial decisions is complex for everyone, older adults often find themselves at a disadvantage.

Effects of aging on financial decisions

A recent study shed light on how age-related changes may affect the way we handle finances – and how we can stay sharp as we age.

Led by Professor Ian M. McDonough of Binghamton University, and co-authored by Macarena Suárez-Pellicioni from the University of Alabama, the study was published in the Archives of Gerontology and Geriatrics.

The research was focused on cognitively healthy adults aged 50 to 74, and used MRI scans to measure brain structure and functional connectivity.

Participants performed simple financial tasks, such as balancing a checkbook or making change. The results show how brain aging can disrupt the ability to make wise financial decisions.

The aging brain and financial decisions

Financial tasks rely on multiple cognitive abilities, including memory, executive functioning, and numerical skill.

However, aging can trigger subtle declines across these domains, which increases the potential for errors and vulnerabilities.

Earlier research focused on cognitive decline associated with Alzheimer’s disease and the parietal cortex – the brain region involved in attention and future planning.

“Little attention has been paid to the brain regions connected specifically with math processing, outside of the development of these regions in children,” noted McDonough.

Mathematical processes in the brain

Mathematical processes engage two critical brain regions. The inferior frontal gyrus retrieves mathematical information stored in memory.

“If I ask, ‘What’s 3 plus 3?’ you know it’s six; you don’t have to count 3 plus 3. You have memorized this because of rote learning and years and years of it being embedded in you,” explained McDonough.

When calculations require more effort, the middle frontal gyrus takes over, using greater cognitive resources.

“When people are doing the calculation, they’re more likely to get it wrong,” McDonough said. “If you’ve memorized it, you’ve memorized the right answer. You’re faster, more efficient, and more accurate when you have those verbal representations.”

Unfortunately, normal aging shrinks the brain’s prefrontal cortex and, with Alzheimer’s, this shrinkage accelerates.

As a result, individuals may struggle to complete financial tasks accurately as their brains start to employ different regions to compensate for deficiencies.

“They are potential markers that could show people’s increased vulnerability to scams,” McDonough noted. “If we understand how the brain changes, this can inform interventions used to target these brain regions.”

The role of language in financial literacy

Interestingly, the researchers found that successful financial management may rely more on language processing skills than sheer numerical ability.

Participants with stronger language skills were better at financial tasks, likely due to enhanced brain connectivity.

The research also highlights that higher household income and financial literacy – both socioeconomic markers – help protect against age-related declines.

“Relying on memory requires that memories be developed in the first place, which is more likely in an environment where financial literacy is promoted,” said McDonough.

Financial independence in an aging population

Financial education and practicing basic math skills may help older adults retain their decision-making abilities and independence.

At the same time, caregivers and families should be vigilant for signs of cognitive decline that increase susceptibility to financial scams and abuse.

“Managing finances is so important to maintaining independence later in life,” said McDonough. “We need to have interventions that can strengthen the brain and help keep people healthy when managing their finances.”

Tools like financial technologies, legal safeguards, and systems such as power of attorney can protect older adults while preserving their autonomy in decision-making.

Building financial resilience

The study highlights the importance of lifelong learning in preserving financial independence.

Keeping the brain engaged through mental exercises, such as puzzles, reading, or learning new skills, can help maintain cognitive function as we age.

Financial education programs tailored for older adults can further empower them with tools to handle their finances confidently and recognize potential scams.

Additionally, community-based initiatives and workshops can create a support system where seniors learn about emerging financial technologies, secure banking practices, and common scam tactics.

Combining these efforts with consistent practice of basic math skills – like balancing budgets and calculating change – could strengthen the brain’s reliance on stored information, thus reducing errors and cognitive strain.

These proactive strategies not only boost financial resilience but also cultivate a sense of empowerment and independence.

As McDonough’s research highlights, preserving brain health is integral to protecting seniors from financial vulnerabilities in a rapidly evolving financial landscape.

The full study was published in the journal Archives of Gerontology and Geriatrics.

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