According to new findings from the Arc Centre of Excellence in Population Ageing Research (CEPAR) and Neuroscience Research Australia (NeuRA), the direct cost of dementia is set to hit $12 billion by 2025. That's compared with $9 billion in 2016, the Cognitive ageing and decline: Insights from recent research report found.
UNSW Business School's Professor John Piggott, the CEPAR director, said "Our retirement income system is very complex and requires a lot of active decisions. We are only beginning to think about how population ageing will affect the decision-making ability of older cohorts and what insights psychology and behavioural finance can bring," said
He has called for greater investment into ageing research to help identify dementia risk factors, build strategies to assist financial decision-making in old age and create more workplace support for older workers.
UNSW Professor Kaarin Anstey, the report's co-author and CEPAR chief investigator, added that about 8 per cent of Australians in their 60s experience mild cognitive impairment, although a large portion of this cohort never develop dementia.
Nevertheless, even a mild cognitive impairment can have significant consequences for decision-making.
Dementia is the leading cause of disability among Australians over 65 and the second leading cause of death in Australia. In 2016, the direct costs alone of dementia were close to $9 billion in Australia, with a predicted increase to $12 billion by 2025.
Professor Anstey said the critical report highlights the prevalence of dementia in Australia, which doubles every five years between ages 70 and 84, and how our ageing population trends will result in greater numbers of people with dementia.
"Australia's ageing population is leading to an increasing number of Australians with the disease which will further impact individuals, society and the economy over the next decade," said Prof Anstey.
The report also found that the knowledge-base around the cause of dementia in the senior community varied greatly, raising the need for in-depth dementia awareness workshops and community involvement.
"While some detrimental attributing factors to dementia such as smoking and alcohol consumption were known, other factors connected to cognitive health were unknown to over 95% of the sample population," Prof Anstey added.
Professor Hazel Bateman, the CEPAR chief investigator at UNSW Business School, says it doesn't help that financial decisions are difficult for Australians of all ages.
"Australians nearing retirement score higher in tests of financial literacy than younger people or those in other countries, but about half of them answer basic questions about inflation, interest rates and diversification incorrectly," she said. "As the population ages and more people face cognitive limitations, we need to consider whether the choice architecture of superannuation can cope."
Scientia Professor, Director, ARC Centre of Excellence in Population Ageing Research (CEPAR), Director, Australian Institute for Population Ageing Research (AIPAR)
School of Economics