How does age affect memory?

It shouldn't. In a otherwise healthy individual, age should not greatly affect memory. Benign forgetfulness of aging does affect some and is typified by "where did i leave my car keys", "why did i walk into this room" and "i really should remember their name" type problems, but does not typically result in any debility. More serious dementia problems are often noted more by family members than the patient.
The Brain Series. At www.Charlierose.Com says we have 2 memory systems. One is declarative memory for people, places and objects. The other is motor-perceptual memory for physical skills. The motor-perceptual system does not decrease significantly with age. The declarative memory system deteriorates gradually with age & becomes more variable from person to person. Wisdom & perspective improve with age.