An Age-Old Challenge

Published 9:38 am Wednesday, April 7, 2021

Getting your Trinity Audio player ready...

Have you ever gone grocery shopping and left with everything except the one item that made you go in the first place? Did you ever frantically search for your reading glasses, only to find them atop your head?

We might lightheartedly call these “senior moments,” but in a more serious light, age-related lapses could affect your financial decision-making.

Changes in how your brain manages memory, thinking and other mental processes has a scientific-sounding name: cognitive aging. Many folks continue to handle their finances well into their later years, but even those with perfectly healthy brains experience cognitive aging. It doesn’t happen overnight, but rather over time. And like other age-related changes, it tends to happen differently for each person.

Email newsletter signup


Fifty three years old – that’s the age a person’s financial decision-making ability peaks, according to a Harvard University study. This is the age that people have substantial amounts of experience – called crystallized intelligence – but only modest declines in their problem-solving ability, called fluid intelligence.

David Laibson, an economics professor at Harvard and co-author of the research, said he believed that crystallized intelligence tends to plateau when people reach their 70s. That plateau, along with declining fluid intelligence, might explain why older folks made more financial mistakes than middle-age ones in his study.

To be clear, cognitive aging isn’t a disease (unlike Alzheimer’s, for instance). Your brain’s neurons are basically fine, they’re just not working as well or as quickly as they used to. As a result, our ability to use logic and solve problems – fluid intelligence – declines. This can interfere with financial decisions that require an understanding of the underlying concepts and the ability to weigh risks and rewards.

Early warning signs:

Difficulty with math
Overlooking details
Slowness in finishing tasks
Decreased comprehension of concepts
Trouble identifying risks

You can begin to understand the challenges when you consider these cognitive changes. There is a decrease in how quickly you process information. You may have more difficulty weighing complicated decisions. You become easily distracted, requiring more effort to focus. You may also tend to have trouble with situations that generate negative emotions – making it more difficult to engage in planning for unpleasant eventualities.

Intelligence times two

These two distinct parts of general intelligence play a role in making important decisions.

Fluid intelligence
The ability to use logic and solve problems in new or novel situations without reference to preexisting knowledge.
• Ability to reason
• Ability to learn new things
• Ability to think abstractly
• Ability to solve problems
• Declines with age
• Relevant quote: “You can’t teach an old dog new tricks”

Crystallized intelligence
The ability to use knowledge that was previously acquired through education and experience.
• Prior learning and past experiences
• Based on facts
• Increases with age
• Peaks later in life, around age 60 to 70
• Relevant quote: “There’s no substitute for experience”


The sheer knowledge you have accumulated over years of living makes you better at assessing new situations. Most people of a certain age are more adept at getting to the heart of issues than they were when they were younger.

You’re also less likely to rush to judgment and more likely to reach the right conclusion based on the information at hand. This can be an enormous help in everyday problem-solving, from planning the most efficient way to do your errands to managing your staff at work.

Case in point: In a study of pilots and air-traffic controllers, those over 50 took longer than those under 50 to master new equipment, but once they had, they made fewer mistakes when using it.

How is it possible for older people to function better even as their brains slow? “The brain begins to compensate by using more of itself,” explains Dr. Bruce Yankner, professor of genetics and co-director of the Paul F. Glenn Laboratories for the Biological Mechanisms of Aging at Harvard Medical School (phew, test your memory by repeating back that title).

He notes that MRIs of a teenager working through a problem show a lot of activity on one side of the prefrontal cortex, used for conscious reasoning. In middle age, the other side of the brain begins to pitch in. In seniors, both sides share the task.

Now that you’ve had a moment to digest all of this, what can you do going forward? What precautions can you assimilate into your life to preserve your financial integrity?


As you move beyond your 60s, it’s a good time to start organizing and simplifying your financial life. Consolidating your accounts in one reputable institution is a great idea. So is using specialized software to securely store and share digital copies of important financial documents. Above all, continue to count on your financial advisor to help you make decisions in your best interest.

Another thing you’ll want to do is to share your financial details with trusted family members. Engaging them early on can help protect your financial health.

The important thing to take away is now that you know aging can change your financial decision-making, you can counter with how you deal with it. After all, you still have a good head on your shoulders.


• Have a conversation with your financial advisor.
• Consolidate your financial accounts.
• Organize your financial documents.
• Engage trusted family members.

Material created by Raymond James for use by its advisors. The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Raymond James is not affiliated with any other entity listed herein. © 2021 Raymond James Financial Services, Inc., member FINRA/SIPC. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. 20-FA-WW-0294 LE 1/21
Stephen P. Poitevint, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc.
Stephen P. Poitevint, Financial Advisor, is located at 908 Tallahassee Highway, Bainbridge, Georgia, and can be contacted at (229) 246-7208 or