Older Spouses & Financial Decision-Making
Worldwide, a ‘divide and conquer’ approach to household finances has emerged, whereby husbands typically assume responsibility for major financial decisions (e.g., investments), whereas wives are generally in charge of managing smaller day-to-day financial tasks (e.g., paying bills). Although this task specialization can be efficient, there are potentially serious consequences when one’s own – or one’s partners’ capacity to complete their responsibilities is compromised due to cognitive decline.
We sat down with one of our Principal Investigator’s Dr. Sarah Coundouris to discuss her recent publication in Gerontology.
“My colleagues and I explored whether older adults’ financial decision-making capacity is impacted not only by their own, but also by their romantic partners’ level of cognitive functioning. This is important as how sensitive older couples are to any signs of cognitive decline, as well as their ability to successfully compensate for this when it comes to their own financial decision-making behaviour, is likely to play a critical role in the couple’s continued financial wellbeing.”
“This study adds to the encouraging evidence of successful compensation in older women, as the possibility of widowhood becomes more imminent.”
“Our hope is that these findings will encourage additional work that examines the potential mechanisms underlying women’s improved competency, so that these can be practically utilized to help ensure older adults’ financial security.”
KEY MESSAGES
1.Age-related cognitive decline reduces older adults’ ability to make sound financial decisions
2.Perceiving greater cognitive decline in their husband positively predicted wives’ ability to adequately carry out specific financial tasks. Interestingly, this finding was only true for females
3.Wives’ sensitivity to their husbands’ decline, as well as successfully compensating for this, may be particularly important given that males have traditionally been the key financial decision-makers. Consequently, wives’ capacity and willingness to take over the financial responsibility may be critical to both partners’ continued financial well-being
4.Given that females’ involvement in household decision making, and likelihood of being the primary financial decision maker in a household have both increased markedly in recent generations, the gender-specific effect we found here may be unique to today’s older adults
To learn more about Cognition and Financial Decision-Making in Older Adult Spouses, click here.