OBJECTIVES: Perceived financial strain is associated with various health conditions, but it is unknown whether it is associated with an increased risk for dementia. The goal is to examine the associations between midlife perceptions of financial situation and dementia risk later in life. METHODS: Participants were derived from the Cardiovascular Risk Factors, Aging, and Dementia population-based cohort study (n = 2000) (between 1972 and 1987, baseline mean age 50 years) in Finland. Participants returned for two re-examinations in late life (in 1998 and 2005-2008, mean age 71 and 78 years). In this study, 1442 subjects that participated in at least one re-examination (mean total follow-up 25 years) were included in analyses. Financial strain was measured using two questions in midlife on perceptions of financial situation and perceptions of changes in financial situation. For each question, participants were categorized into three groups reporting improvement, worsening, or stability, with the latter set as the reference group. Analyses were adjusted for potential confounding factors. RESULTS: The group reporting better financial situation had a reduced risk for dementia (fully adjusted model: odds ratio (OR): 0.53, 95% confidence interval (CI): 0.33-0.86). In contrast, the group reporting worse financial situation did not have an increased risk for dementia (OR: 1.04, 95% CI: 0.53-2.02). Analyses on perceptions of current financial situation showed that the groups reporting satisfaction or dissatisfaction with financial situation did not differ in risk for dementia. CONCLUSION: This study is the first to show that midlife improvements in financial situation are associated with a reduced dementia risk later in life. Potential pathways related to stress reduction, improved lifestyle, and potential biological mechanisms are discussed.