Cognitive decline is a growing threat to financial security

WINDSOR, Conn., April 22, 2026 — While market volatility and inflation often dominate retirement planning discussions, new research from the LIMRA Retirement Income Institute finds that age‑related cognitive decline may pose an equally serious threat to retirement security.

The new paper, “Decision Risk and the Desirability of Protected Income,” explores how declining cognitive capacity can impair financial decision-making later in life, introducing what it describes as decision-making risk — a form of risk that operates independently of markets, inflation, and interest rates.

The research highlights several findings, such as:

• Decision‑making risk is emerging as a major threat to retirement security, operating alongside — and sometimes independent of — market risk.
• Nearly 30% of adults over age 65 experience diminished cognitive capacity, with financial management often among the first skills to decline.
• Financial distress can begin years before a dementia diagnosis, leaving households vulnerable during a prolonged, unrecognized period of impairment.
• Cognitive decline can result in average household wealth losses of roughly $124,000, driven by missed payments, fraud, and poor financial decisions.
• These losses are often irreversible and can rival the impact of major market downturns.
• Protected income strategies, such as annuities, can help reduce decision risk by simplifying finances and placing income on “safe autopilot” later in life.

“Retirement planning has traditionally focused on the risks associated with financial markets and products,” said Chris Heye, Ph.D., a fellow at the LIMRA Retirement Income Institute and author of the paper. “But as people live longer, success in retirement depends just as much on sound decision‑making over time. Cognitive decline introduces a form of ‘decision risk’ that can undermine even the most well‑constructed financial plan.”

To read the full paper and other LIMRA Retirement Income Institute research, please visit: https://www.limraconsumer.com/retirement-income-institute/research-and-insights-retirement-income-institute/.