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Cognitive Decline of Older Americans Impacting Housing Decisions, Behavior Patterns

Cognitive Decline of Older Americans Impacting Housing Decisions, Behavior Patterns


Based on a new report by the Mortgage Bankers Association's (MBA) Research Institute for Housing America (RIHA) titled Cognition and the Housing Behavior of Older Americans, there is a strong correlation between housing behavior and the cognitive decline of older Americans. Importantly, normal cognitive aging also correlates to a potential borrower's ability to make decisions relating to their own housing and financial situation.

"As the Baby Boom begins to enter retirement years, new challenges are arising with significant implications for both borrowers and lenders," said the paper's author, Gary V. Engelhardt, Ph.D., Melvin A. Eggers Faculty Scholar and Professor of Economics in the Maxwell School of Citizenship and Public Affairs at Syracuse University, and a Faculty Associate in the Syracuse University Aging Studies Institute. "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.  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," said Lynn Fisher, Ph.D., Executive Director of RIHA and MBA's Vice President for Research and Economics.

Key findings include:

  • 28% of homeowners and 36% of renters aged 65 and older in 2012 rated themselves as having a fair or poor memory. 
  • 7% of homeowners and 16% of renters aged 65 and older in 2012 self-reported a medical diagnosis of memory disease.
  • For older homeowners, memory and cognition hold relatively stable until the late 70s, then decline fairly rapidly. 
  • Likewise, the incidence of memory disease rises steadily with age.  By age 90, about 20 percent of older homeowners suffer from memory disease.
  • Typical declines in memory and cognition are associated with substantial increases in difficulty with managing money; a new diagnosis of memory disease, in particular, is associated with very large increases in such difficulty.
  • A new diagnosis of memory disease is associated with large changes homeownership and shared living arrangements; typical declines in memory and cognition are associated with small to modest changes in these domains.
  • Declines in memory and cognition are associated with an increase in mortgage delinquency, especially for older women.

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