Early Warning Signs of Impaired Financial Skills in Older Adults

This study, funded by a NEFE grant to University of Alabama at Birmingham, identifies very early declines in financial skills among cognitively normal aging adults through the analysis of a unique federally funded longitudinal dataset. These findings are translated into understandable early warning signs accessible to older adults, their families and a range of professionals.

It’s inevitable that an average person will see change in their ability to make financial decision as they age. While there are varying degrees of cognitive decline for each individual, the key is to be prepared for when – not if – this decline occurs. Knowing how to identify early warning signs can help friends, family and caretakers be proactive instead of reactive in the planning process.

The early warning signs of financial decline, all representing a change from the older person’s prior financial functioning, are as follows:

  1. Taking Longer to Complete Financial Tasks
    Examples include preparing bills for mailing; completing checks and check register; and filing income taxes.

  2. Missing Key Details in Financial Documents
    Examples include identifying a bill that is overdue and needs prompt attention; scanning/finding details in complex documents like a bank statement; and completing sections of a check register.

  3. Experiencing Difficulty with Everyday Math
    Examples include determining a return on an investment; calculating a medical deductible; doing two related calculations at the same time, especially making change; and figuring a tip in a restaurant.

  4. Showing Decreased Understanding of Financial Concepts
    Examples include health care concepts like a medical deductible and terms in a bank statement like interest rate and minimum balance.

  5. Identifying Risks in Investment Opportunities
    Examples include identifying a key risk in an investment purchase and emphasizing benefits/return and minimizing risks.

Final Report

Executive Summary

Checklist of Early Warning Signs

Early Warning Signs of Financial Decline (video)




Helping Families Negotiate Aging Parents' Finances (video)


Contacts