Senior citizens are targeted by financial scams of all types, from email-based phishing attempts to callers looking to swindle their life savings.

A new paper from Binghamton University Associate Professor of Psychology Ian M. McDonough sheds light on how age-related changes may affect the way we handle finances — and how we can stay sharp as we age. The paper, co-authored by Macarena Suárez-Pellicioni of the University of Alabama, was recently published in the Archives of Gerontology and Geriatrics.

The study focused on cognitively healthy adults ages 50 to 74, using MRI scans to measure brain structure and functional connectivity; study participants also engaged in simple financial tasks, such as balancing a checkbook or making change. Financial tasks rely on multiple cognitive domains including memory, executive functioning and numerical ability. Aging can prompt subtle decline in all of these areas.

“If I ask, ‘What’s 3 plus 3?’ you know it’s six; you don’t have to count 3 plus 3,” McDonough explained. “You have memorized this because of rote learning and years and years of it being embedded in you.”

If you don’t have a readily memorized answer and need to perform calculations, then your middle frontal gyrus kicks in. It uses more brainpower than memory and increases the possibility of error.

“When people are doing the calculation, they’re more likely to get it wrong. If you’ve memorized it, you’ve memorized the right answer,” McDonough said. “You’re faster, more efficient and more accurate when you have those verbal representations.”

The brain’s prefrontal cortex shrinks as a part of normal aging; with Alzheimer’s disease, the frontal cortex regions shrink even faster. As a result, individuals may start making more mistakes with financial tasks since their brains no longer rely on memorized answers and are instead recruiting different regions to compensate for deficiencies.

“They are potential markers that could show people’s increased vulnerability to scams,” he said. “If we understand how the brain changes, this can inform interventions used to target these brain regions.”

Preserving independence

Ultimately, successful financial management may rely more on language processing than sheer calculation. Individuals with better language skills were more likely to excel in financial tasks, the researchers found, likely because of increased connectivity between different parts of the brain.

Practicing the math skills you learned in school may be helpful in supporting good financial management throughout life.

Individuals and caregivers alike, however, also need to keep an eye out for cognitive declines that can make older adults more susceptible to financial scams and abuse. Financial tools, technologies and legal safeguards, such as power of attorney for automatic payment systems, can protect older adults while preserving their autonomy in decision-making.

“Managing finances is so important to maintaining independence later in life,” McDonough said. “We need to have interventions that can strengthen the brain and help keep people healthy when managing their finances.”

Binghamton University Associate Professor of Psychology Ian M. McDonough, courtesy of Binghamton University, State University of New York