The tension between these two forces means that the sharpness of our financial decision making rises and then falls over the course of a lifetime, like an upside-down U. The authors of the paper even put a number on the peak of that upside down U: 53.
That's the age, on average, where people's increasing experience begins to be outweighed by the inexorable deterioration of all parts of the human body -- including, of course, the brain. As the baby boom generation heads toward retirement, there will never have been so many people with so much accumulated wealth heading into such an extended period of cognitive decline.
What does it mean for society? And what does it mean for individuals hoping to make sure that they and their families are taken care of?
In the paper "The Age of Reason: Financial Decisions over the Life-Cycle with Implications for Regulation," behavioral economics expert David Laibson and his co-authors find that the prevalence of dementia among Americans "explodes" after age 60, doubling every five years. By age 85, more than 30 percent have dementia. For Americans between the ages of 80 and 89, roughly half have dementia or a diagnosis of "cognitive impairment without dementia."
