Cognitive decline in older homeowners becoming a challenge – study

by Ryan Smith24 Mar 2016
A new study has found a strong correlation between cognitive decline in older Americans and housing behavior.

The study, released Wednesday by the Mortgage Bankers Association’s Research Institute for Housing America, found that the effects of normal aging on memory and cognition can affect potential borrowers’ ability to make decisions about their housing and financial situation. That’s particularly important as the Baby Boomers move into retirement age.

“As the Baby Boom begins to enter retirement years, new challenges are arising with significant implications for both borrowers and lenders,” said the study’s author, Gary V. Engelhardt, Ph.D. “In particular, given the impact of aging on memory and other cognitive skills, there is a need to consider the implication for financial decisions made by older individuals.  By the time individuals are arriving into traditional retirement ages, when many important financial decisions are made, cognitive skills are already in decline as part of normal cognitive aging.”

“The Baby Boomers are entering their traditional retirement years with an expectation of living longer than prior generations but also with more debt, meaning that they will have to make increasingly complex housing and financial decisions,” said Lynn Fisher, Ph.D., executive director of RIHA and MBA vice president for research and economics. “In addition, the number of Americans over the age of 60 will grow to nearly 62 million by 2024. This study highlights the fact that memory loss in particular raises particular challenges for the financial well-being of older Americans and suggests that we may need to reassess how the mortgage industry designs, originates and services financial products for seniors.”

Among the study’s key findings were:
  • 28% of homeowners and 36% of renters 65 and older in 2012 rated their memory as fair or poor.
  • 7% of homeowners and 16% of renters 65 and older in 2012 reported a medical diagnosis of memory disease.
  • Older homeowners’ memory and cognition are relatively stable until the late 70s, then tend to decline fairly rapidly.
  • Incidence of diagnosable memory disease also rises with age. By the age of 90, around 20% of homeowners suffer from a memory disease.
  • Memory and cognition lapses are associated with significant increases in difficulty managing money.
  • Declining memory and cognition is also associated with increased mortgage delinquency, especially in older women.


Should CFPB have more supervision over credit agencies?