Understanding the cognitive factors which contribute to individual differences in financial capacity in aging

Aging is accompanied by changes in multiple cognitive domains, which can impact older adults' ability to maintain independence. The ability to manage one's personal finances is an activity of daily living most often studied in the context of Mild Cognitive Impairment and dementia. However, it is critical that we also understand the nature and sources of variation in financial capacity in cognitively unimpaired populations. This study aimed to establish meaningful individual differences in financial capacity in this population and to define those primary behavioral predictors of individual differences. Applying a partial least squares correlation approach, we found significant associations between financial capacity, as assessed by the Financial Capacity-Short Form, and a battery of neuropsychological and self-report measures in normal aging (r = .56, p < .001). Key predictors of financial capacity included fluid reasoning, crystallized intelligence, working memory updating, visual memory, and self-reported sleep duration (|rs| = 0.29-0.56, ps = 0.02- 0.001). These findings indicate that financial capacity is supported by multiple cognitive domains in aging. Further, associations with fluid reasoning and crystallized intelligence suggest some individuals may be more protected against clinically-relevant impairment in financial capacity through cognitive reserve mechanisms.