Objective and subjective memory: Impact on the financial behavior of older adults in the United States

This study adds to the literature on adverse effects of cognitive decline among older adults focusing on financial decisions. This study investigates the impact of objective and subjective memory on the financial decisions of older adults, such as asset holdings, allocation, and financial health. In general, older adults with higher objective memory have better financial outcomes. A higher objective memory leads to greater financial assets including stocks, cash-equivalent, individual retirement accounts, bonds, and thus total financial assets. It also leads to a smaller share in cash-equivalent. Older adults with better objective memory are more likely to have sufficient liquid assets to cover short-term expenses and they save enough to meet retirement adequacy. On the other hand, a higher subjective memory leads to fewer financial assets, retirement inadequacy, and insolvency. These findings have important implications for older adults who experience memory loss, and their families.