From the April 2006 issue of Investment Advisor • Subscribe!

April 1, 2006

Retiring Minds

"Old people are no longer educable," opined Sigmund Freud in 1907. Since then, advances in brain research prove that people over 50 still have a lot to learn

As a baby boomer, I grew up believing that most people would work until age 65, then retire to a life of rest, play, and living out their favorite fantasies. Today I have friends who retired at 40 and 55. Others are still working in their 80s. Colleagues who shut down their careers at 60 or 65 have gone back to work out of boredom or financial need. I saw my aging mother end up ina wheelchair after a series of mini-strokes, unable to speak or make meaningful emotional contact for the rest of her life. I watched my father, a retired judge, continue trying to make a difference in the world until he died at the age of 87.

As I get older, my thoughts and emotions careen from one view of aging to its opposite. In the anxiety mode, I notice how much more often I struggle to find the right word for something, or that I reverse letters and numbers when typing quickly. Then the specter of my mom's strokes, and the possibility of Alzheimer's, grip me with fear that sometimes expands into panic.

At other times, I feel good about being older. I love feeling that my years of experience have given me a sense of wisdom and calm that I didn't have before. The idea of sharing this with others in my work and in my life makes me happy.

Some of the strengths and shortcomings of aging may be new territory for you personally, as well as many of your clients. You're probably familiar with the main financial issues: income generation, "decumulation" strategies, Social Security benefit maximization, and so on. But what about the mental and emotional aspects of growing older, and how these changes may affect your own life as well as the way you work with people of retirement age?

You can expect to see more and more boomer clients struggling with issues of loss, life transition, financial insecurity, and fear of declining capacities. Aging always involves letting go, which has aspects of mourning and sadness in it. Don't try to jolly clients out of feeling this loss. But after giving them a little space to vent, you may be able to help them return to sources of hope and healing, thanks to new research that shines light on how they can keep learning, revitalizing themselves, and deepening their sense of wisdom and mastery.

How the Brain Changes

Brains are unbelievably complex. Within about three pounds of tissue, there are a 100 billion or more nerve cells, each one able to make thousands of connections with others. As we age, the brain's physical makeup becomes a little less robust, and like other parts of the body--and muscle strength--brain capacity operates on a "use it or lose it" principle.

As we age, observed neurobiologist James L. McGaugh of the University of California-Irvine in 2004 in an article for the AARP division NRTA and The Dana Alliance for Brain Initiatives, "We can make the brain work better simply by accumulating more knowledge, which builds more networks of connections in the brain. The wisdom that we acquire can compensate for the decline that may be gradually occurring."

"The brain wants to learn; it wants to be engaged as a learning machine," wrote neurobiologist Michael Merzenich of the University of California-San Francisco in the same NRTA-Dana Alliance series. But that doesn't mean rehashing the same old stuff learned in high school. The brain wants new ideas, new experiences.

"Recent discoveries in neuroscience show us that the aging brain is more flexible and adaptable than we previously thought," agrees Dr. Gene Cohen, director of the Center on Aging, Health & Humanities at George Washington University Medical Center and author of The Mature Mind: The Positive Power of the Aging Brain (Basic Books, 2006). According to Dr. Cohen, these studies suggest that our brain's "logical" left and "creative" right hemispheres become better integrated as we age, leading to greater creativity.

This integration also makes it easier for older people to reconcile thoughts with feelings. Personally and professionally, I've known people in their 20s who agonize over each decision, large or small, and whose emotional perfectionism creates tremendous psychic stress. Older clients and friends seem to trust their own instincts more. They appear to be more comfortable with their decisions, and are able to make them more quickly and with less effort.

Learning and Communicating

Like it or not, some faculties do decline with age. But it's not as though we fall off a mental cliff at age 65; these declines actually start as far back as age 20. According to research from NRTA-Dana, these are some of the changes you may notice in clients or in yourself:

1. Taking longer to learn. Processing speed slows down with age, so you may need to factor in more time to perform tasks and learn new things. Be prepared to educate your clients about this normal fact of life, and help them take the time to work on what they want to master.

2. Difficulty in multitasking. Executive functions such as planning and reasoning become more difficult with age, as do tasks that require keeping many things in mind simultaneously. You've experienced this parallel processing glitch if you've ever gone into the next room for something, only to forget why you went there. (Here's a tip: Name the item out loud before you go.)

If clients seem confused or uncertain when asked to consider a number of options at the same time, slow things down. Try to break down the decisions into simpler yes-no, either-or choices, in such a way that you still cover all the important considerations.

3. Inability to remember random facts and sources. Now where did I see that really interesting article? And what did it say that I wanted to tell my friends?

Being able to store and retrieve new information easily, a function called "strategic memory," is one of those faculties that starts to decline after the teenage years. (My 24-year-old son obviously wasn't making it up when he recently complained to me about "getting stupider.") To combat this decline in your own strategic memory, learn to tell yourself, "I need to remember this." Underline it mentally by repeating the information out loud or making verbal or visual associations with it. If clients complain of this problem, these solutions may help them cope.

4. Plain old forgetfulness. My contemporaries and I now find we're much more understanding when one of us forgets an appointment, fails to return a phone call, doesn't deliver a message, or neglects an errand that used to be routine. This is another normal consequence of brain aging.

Suggest to forgetful clients that the best remedy is to write things down. They can make agendas for meetings and lists for multi-errand trips, and put notes on the dashboard or computer monitor. If they lapse, remind them to be gentle with themselves. After all, they're only human!

Retirement (Over)Spending

Many older clients lead creative, active lives, pursuing career or charitable missions, and generally enjoying their older years to the hilt. In fact, some may be enjoying life so much that overspending their limited resources becomes a concern to their families--and to you.

Spending is already a concern with the Silent Generation (ages 59-71). Many people in this age group give little thought to longevity risk, according to a June 2005 MetLife Retirement Income Decisions Study. Most of the study participants felt confident of having enough money to live comfortably to at least age 85. However, their retirement planning tended to focus on asset accumulation instead of the possibility of outliving their savings or having to care for an incapacitated spouse or parent.

It's difficult enough to urge restraint on overspending clients when they're young. With retirees, you may face a number of deep-seated motives and behaviors:

o Wanting to live large despite their now-lower income.

o Spending to fill up the time that their job used to fill.

o Feeding an ego starved by lack of daily reinforcement. Instead of enjoying the time with loved ones or living out their dreams, these people derive their main pleasure from various kinds of overindulgence: gambling, dining out, expensive travel, and so on.

o Bailing out their children, or giving lavishly to the kids despite their own struggle to make ends meet, sometimes out of guilt about past neglect or a need to feel needed.

How You Can Help

In these cases, you can gently and empathetically help clients look at their life choices. Give them the support they need to take better care of themselves and their future.

One of the most useful things you can do is assist them in mentally transitioning from "having it all" to "making the most of what you've got." For example, NRTA-Dana Alliance research found that 39% of retirees aged 65 to 75 are still making mortgage payments, compared with only 28% in 1989. Carrying a mortgage is normal during one's working years, but this sizable long-term liability can become a financial straitjacket for people with limited retirement resources.

In fact, many people who thought they'd pocketed their last paycheck will be forced back to work by financial pressures. If you have clients in this situation, review their spending patterns to see whether lifestyle changes could allow them to stay retired (for example, moving to a less expensive home or a location with a lower cost of living). If a return to work is inevitable, you can help them identify jobs that turn them on, challenge their skills, or give them more social contact while improving their life financially.

Aided by your skill and perspective, your older clients will be able to see that they are not locked into an undesirable course of action. In fact, this financial crisis could lead them to exciting new opportunities. They still have many choices that can help stave off boredom, assuage feelings of meaninglessness, and relieve financial stress.

Maximizing the Mind

The discovery that the brain is more plastic than previously thought is tremendously exciting. When people learn new skills or take on new challenges, the brain creates new neural connections, expanding and improving its thinking power and reservoir of wisdom.

What does this have to do with your money management role? A great deal, if you hope to stay vigorously in control of your own life and help clients do the same. Experts say activities like these can maximize vibrancy and creativity as people age:

Achieving mastery. It's been documented that feeling a sense of control and mastery helps people stay physically and mentally healthier. Learning a new language or musical instrument, taking up a new sport, or learning a new artistic or creative skill can not only make people feel good about themselves but may well strengthen the immune system.

Making friends. Many studies link social connection to lower blood pressure, a reduced risk of stroke and ensuing mental effects, a lessening of anxiety and depression, and lower death rates. Losing a life partner to death or divorce often ruptures this connection, leaving older people isolated as well as bereaved. You may be able to help these clients strengthen their relationships with family members and old friends, while encouraging them to make new acquaintances who share their interests.

Exercising the brain. Trying to outguess the contestants on Jeopardy or Wheel of Fortune, doing crossword puzzles or sudoku, reading, playing bridge, poker, or board games--frequent mental exercises like these help keep neural pathways active. For instance, NRTA-Dana Alliance researchers discovered that people who did crosswords four days a week had a risk of dementia 47% lower than others who did puzzles only once a week. My own bliss is competitive Scrabble (that counts as a crossword puzzle, right?). Ask your clients if they do something most days to stay mentally limber.

Being creative. Playing a musical instrument is another one of the top ways to reduce the risk of dementia and cognitive decline. I don't know if such comparable activities as painting, sculpting, or writing memoirs, poetry, or fiction have been studied, but I'd have to believe they are equally valuable as mental rust-busters.

Exercising the muscles. The best physical exercise to increase brainpower, according to research, is an aerobic workout involving large muscle groups. I'm happy to see dancing at the top of the list, since ballroom and tap dancing are passions of mine. Brisk walking is a good alternative. If older clients confess to a lack of zest for life, one of the questions you might ask is whether they exercise regularly. If not, there may be an activity they would enjoy incorporating into their lives, such as swimming, walking with a friend, or taking fencing lessons. Whatever works!

A Terrible Thing to Waste

When you use these findings from brain research to help older clients envision a more invigorating future, it can nurture their sense of self and strengthen their self-esteem. This in turn may lessen the stranglehold of overspending and overgiving behaviors.

The benefits can go way beyond their own happiness to affect others with whom they interact. If they are parents, they will be modeling for their children ways to grow old gracefully without becoming an emotional or financial burden.

As older clients increasingly call on your help, you can benefit from becoming more of an expert in aging wisely and well. Build up a resource list of local places to exercise or learn new skills, community organizations that need volunteers, therapeutic counselors for depressed or anxious clients, centers for meditation, yoga, or biofeedback, ElderHostel-type organizations for travel and learning, educational institutions that cater to the older student, and ways and places to make friends or begin dating again. These resources will heighten your value to your clients, so that you become an even more trusted advisor as they take on the challenges and opportunities of their later years.

Olivia Mellan, a speaker, coach, and business consultant, is the author with Sherry Christie of The Advisor's Guide to Money Psychology, available through the Investment Advisor Bookstore at www.investmentadvisor.com. You can e-mail Olivia at moneyharmony@cs.com.

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