Final answer:
The hippocampus and the prefrontal cortex are the parts of the brain that shrink the most in later life, affecting long-term memory formation and cognitive functions, including planning and decision-making.
Step-by-step explanation:
The parts of the brain that are known to shrink the most in later life are the hippocampus and the prefrontal cortex. The hippocampus is a structure in the temporal lobe that is crucial for the long-term storage of episodic memories. The prefrontal cortex, on the other hand, is involved with functions such as planning, reasoning, memory, and impulse control. Age-related decrease in the volume of these brain areas can affect memory and cognitive functions.
The hippocampus shrinks, making it difficult for long-term memories to form, while changes in the prefrontal cortex can influence decision-making processes, working memory, and the regulation of social behavior. The corpus callosum, thalamus, and hypothalamus are also important brain structures, but they are not primarily associated with the most significant shrinkage in the context of aging.