Brain Drain: What's the Most Demanding Activity?

The Salthouse Cognitive Aging Lab at the University of Virginia has been asking adults for a bunch of years to rate the "cognitive demand" required to perform certain daily tasks. More than 3,000 participants have weighed in, and the title of most demanding falls to.... "handling finances. At the same time, other research suggests our decision-making skills peak at age 53. Seems to me this ratchets up the need to ramp up programs and policies to ensure retirees have plenty of help and nudges to make wise financial decisions.

What Challenges Our Brains Most The Salthouse research asks participants to rate a variety of tasks on a scale of 1 to 5 in terms of their cognitive demand. Sleeping (no cognitive demand) is an example of 1. Completing a tax form (high cognitive demand) rates a 5.

Personally I would have loved to have seen Assembling IKEA furniture on the list, given my utter inability to comprehend diagrams, but that's a whole 'nother topic.

The "demand" factor isn't about intelligence. What it captures is the engagement factor; the cognitive challenge behind certain tasks. So it's no surprise that growing tomatoes and watching Glee is a whole lot less demanding than handling the financial stuff. But when I see this sort of data it reinforces the need to rethink and retool vital financial tasks so that they aren't overly demanding. The UVA research doesn't ask if the high demand tasks are fun or not, but I am going to go out on a limb that for many people, the high cognitive demand of handling their finances also packs some high stress. Figuring out the right mix of stocks and bonds for your 401(k) isn't just cognitively demanding, it has huge repercussions. Expertly managing a big lump sum balance in your 401(k) once you retire so it will not run out before you do, takes some serious mental engagement.

That's why I am still in the camp that target retirement funds for 401(k)s are a net positive. And it's why I think the government's recent focus on how to help retirees manage their 401(k)s once they retire is a worthy and necessary exercise. All the fulminating that the federal government is trying to steal away 401(k) assets strikes me as another death-panel scare tactic. That's not what is being proposed, nor is it even going to be an unintended consequence. Every proposal and paper and speech I have read about adding annuities (or other lifetime-income vehicles) to 401(k)s has positioned the addition of these investments/products as an option. Not a requirement that participants must use. But simply an option that can be chosen. If you in fact find the cognitive demand required to work out a sustainable income stream from your 401(k) too demanding, having some well-structured options that can help you figure it all out seems like a good tweak to 401(k)s.

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