Dealing With Money Gets Harder As We Age

September 15, 2017

When it comes to the activities of daily life, financial matters are some of the most complex we deal with. A low level of financial literacy is a challenge Canada faces as a nation, and we are not alone in this. In the absence of sound financial capacity these complex decisions get made using emotions.

As we age we lose some mental capacity. Research indicates that a person’s financial abilities peak at age 53 and steadily decline thereafter. For those with dementia it’s even worse. Even mild dementia will result in significant impairment in financial capacity – particularly the most complex activities.

The nine domains of financial capacity[i] are something you’ll be hearing more about in the coming years. That’s because they help us understand the kinds of financial matters we all deal with and how they may be impacted by our diminished mental capacity as we age.

Despite seeming to be common, the incidence of dementia is actually quite low. For example; between the age of 65 and 69 we see dementia in 1.5% of people. It doubles to 3.3% between the ages of 70 and 74 and again to 6.7% from age 75 to 79. Only about 13.5% of people between the ages of 80 and 84 experience some degree of dementia. That jumps to 30.8% between the ages of 85 and 89. Put more positively, almost 70% of 85 – 89 year olds do not have dementia[ii].

From least complex to most, what follows is a list of the nine domains of financial capacity. As you read them think about someone you know who you think may have diminished capacity.

  1. Basic monetary skills
  2. Financial conceptual knowledge
  3. Cash transactions
  4. Cheque book management
  5. Bank statement management
  6. Bill payments
  7. Financial judgement
  8. Estate planning
  9. Investment decision making

What strikes me immediately as a problem is the fact that the issues being dealt with by people later in life are some of the most complex. For example, estate planning is often left until late in life. This may help explain why so many people die without a Will. They simply can’t deal with the complexity.

As you might imagine this creates a substantial challenges for people (often family members) who help people deal with financial matters. Here are a few triggers that indicate someone is having trouble: They are missing payments, they are confused about simple financial concepts, they are repeatedly asking questions and requiring instructions, they are disoriented about time and place, they can’t recall things they should remember, or they are uncharacteristically irritable.

Sadly there are those who take advantage of the diminished capacity of another. We all need to be on the lookout for this. People in this state of mind are vulnerable to financial exploitation and financial abuse. Unfortunately financial abuse is often hidden and significantly under-reported.

The Financial and Consumer Services Commission have some terrific free resources to help seniors and those who assist them. I encourage anyone interested to look up all that is available by visiting or by calling them toll free at 1-866-933-2222.

If you found this article interesting or would like a complimentary financial evaluation, click here for our contact information.

Keir Clark ( is a Portfolio Manager for ScotiaMcLeod®, a division of Scotia Capital Inc. in Fredericton

This article is for information purposes only. All performance data represents past performance and is not indicative of future performance. It is recommended that individuals consult with their Wealth Advisor before acting on any information contained in this article. The author is an employee of ScotiaMcLeod, a division of Scotia Capital Inc. (“SCI”) Member, CIPF, but the data selection, analysis and views expressed herein are solely those of the author and not those of SCI.  The author has taken all usual and reasonable precautions to determine that the information contained in this publication has been obtained from sources believed to be reliable.

[i] Declining Financial Capacity, Daniel C. Marson, 2008 (via Canadian ElderPlanning Counsel)

[ii] U.S. National Library of Medicine, National Institute of Health.