Cognitive Decline: Where Health and Financial Wellness Intersect

Warren Cormier, with the DCIIA Retirement Research Center, discusses what plan sponsors can do to help employees address the potential for cognitive decline and its effect on financial wellness.

What responsibility, if any, does a plan sponsor have to boost awareness among retirement plan participants of the potential effects of aging—such as cognitive decline—on retirement planning? While the topic is certainly open to discussion, the reality is that as the industry migrates toward a more holistic financial wellness model, factors related to overall wellness are likely to get more attention going forward.

Cognitive decline is located at the intersection of both financial and health wellness concerns. A plan sponsor that, at a minimum, shines a light on the issue of cognitive decline is helping employees navigate two important aspects of their wellness both now and in the future.

Thus far, cognitive decline has not received a lot of attention. In surveys conducted by the Defined Contribution Institutional Investment Association (DCIIA) Retirement Research Center (RRC), 69% of larger plan sponsors said they have no idea how prevalent cognitive decline is among their active, separated or retired participants. In addition, established practices and policies related to cognitive decline are quite rare. Only 8% of survey respondents said this issue is a “very high priority” and are working toward or have specific policies and practices to deal with cognitive decline. The majority (56%) see the issue as a “very low priority” and have had no discussions about it. However, all respondents agreed that cognitive decline can have serious consequences. Most of their awareness of the issue comes from personal experience with the cognitive decline of a relative or acquaintance.

The Department of Labor (DOL)’s ERISA [Employee Retirement Income Security Act] Advisory Council recently published a report on key considerations in this area, noting that, “As our population ages, employers, plan sponsors and their service providers, as well as plan participants, can benefit from insights into how various industries, professionals and service providers identify and address the unique challenges associated with individuals who may demonstrate diminished mental capacity.”

However, as the recordkeeper is typically the primary point of contact for separated and retired participants, the most effective strategies that plan sponsors could use should center on awareness and education while participants are still actively employed. In fact, in the RRC research, some respondents suggested the best approach would be prevention through education. As the trend continues toward keeping participants in the plan post-retirement and/or as participants are working longer, respondents expected cognitive decline to become a greater focus.

What might plan sponsors consider doing to address potential cognitive decline as part of helping employees optimize their health and financial wellness as they prepare for retirement?

Boost awareness of cognitive health best practices during active employment: If your organization is able to support employees’ engagement with volunteering or other activities that could be continued in retirement, it is likely to boost their chances of warding off some elements of cognitive decline, as well as mental health issues such as depression. Gerontology researcher Ross Andel has noted that people might be particularly susceptible to cognitive decline when there is no replacement for the structure, sense of purpose and routine of active employment, also noting that people who volunteer appear to experience less cognitive decline than those who don’t. Boosting awareness of health-related best practices that can help prevent cognitive decline—such as exercise, dietary modifications and good sleep—could also yield both shorter- and longer-term benefits.

Consider that there are unique challenges at different ages: Harvard behavioral economist David Laibson has identified two kinds of intelligence: fluid intelligence (i.e., the ability to learn and adapt) and crystallized intelligence (i.e., the wisdom gained from experience). His work has shown that cognitive performance, which draws on both fluid and crystallized intelligence, peaks when people are in their 50s, so nudging employees in this age range to actively begin planning for retirement and boosting their awareness of potential longer-term cognitive issues could be valuable. Younger employees with an abundance of fluid intelligence may be flexible regarding automatic features and other savings tools and eager for educational opportunities related to their overall health and well-being.

Do targeted outreach based on gender: Given the disparities in women’s and men’s retirement outcomes, engaging with plan participants using specific messages relevant to issues noted in their gender cohort could be informative and also have a positive impact on retirement readiness (and happiness in retirement), especially for women. In “Risk of Cognitive Declines With Retirement: Who Declines and Why?” (2020) the authors note:

“There are well-established gender differences on central measures of cognitive functioning: Women score better on episodic memory, whereas men score better on executive functioning. … Research suggests men and women also report differential retirement transition experiences and activities that may affect post-retirement declines in cognition. … Women, who typically enter retirement with fewer socioeconomic resources than men, report more negative attitudes toward retirement, prepare for it less and experience more depressive symptoms during this transition. Gender differences in retirement leisure activities have also been observed, with women less likely to actively pursue concrete goals and men less likely to engage in social activities. Recent evidence suggests such leisure activities exhibit gender-dependent associations with cognitive declines in old age, prompting recommendations to examine differences between men and women in cognitive aging research.”

Other research on this topic includes “Effect of Retirement on Cognitive Function” (2017) and “The Impact of Retirement on Age-Related Cognitive Decline – a Systematic Review” (2017). Both point to the need for more investigation into the association between retirement and age-related cognitive decline. However, there are steps plan sponsors can take now to raise awareness among employees approaching retirement about cognitive decline issues and financial wellness, as well as mental and physical health tips that could help boost their chances of a happy and secure retirement.


Warren Cormier is executive director of the Defined Contribution Institutional Investment Association (DCIIA) Retirement Research Center (RRC). He has previously served as CEO and co-founder of Boston Research Technologies and as president and founder of Boston Research Group.

This feature is to provide general information only, does not constitute legal or tax advice, and cannot be used or substituted for legal or tax advice. Any opinions of the author do not necessarily reflect the stance of Institutional Shareholder Services or its affiliates.