Consumers at High Risk for Dementia Put More Wealth in CDs: Researchers

The high-risk survey participants held 11% less wealth in stocks, 15% less wealth in individual retirement accounts, and 7% less wealth in other “hands-on” financial assets.

The economists tested three possible reasons for the high-risk people’s preference for hands-off assets:

• People might know from their family histories that they are at high risk, and invest accordingly.
• High-risk people might simplify their investments because they are already having serious trouble with thinking clearly.
• High-risk people may simplify their investments because they grow to understand their risk of developing dementia with more precision as they age.

The economists conclude that high-risk people’s growing understanding of their dementia risk fits the data the best.

“As people age, those with higher Alzheimer’s disease PGS alter their savings type and amounts,” the economists write. “Such changes in behavior may simply reflect a person’s recognition of accumulating forgetfulness or it may reflect a more complicated process that involves adult children more actively intervening.”

In the new paper, the economists also discuss the potential for using genetic testing to help high-risk people manage their finances.

Knowing about high dementia risk scores “might induce patients to alter their behavior in welfare-enhancing ways,” the economists write.

An individual who learns of a high risk score “may start saving earlier to finance the costs of the care he/she will want later in life,” the economists write. “The private savings improves social welfare because it reduces the amount governments need to tax. ”

There’s also some evidence that people who know they are at high risk tend to cut down on smoking and drinking, and exercise more, the economists write.

“ To the extent these behaviors yield higher lifetime utility, private welfare improves,” the economists write.

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