Older adults with early‐stage dementia (ED) can experience confusion or lack clarity when performing routine activities of daily living (ADLs). These circumstances predispose the older adult to safety‐critical and often risky situations. A safety‐critical risky situation is one that constitutes a hazard. To support independent living, a sensor‐laden smart environment can be employed to mitigate such hazards. In this paper, we propose a situation‐centered goal reinforcement framework that supports older adults with ED in their decision making, and guides them through their ADL in order to fulfill their goal or intention and avoid hazards. First, we employ an LSTM (Long Short‐Term Memory) model to infer the current goal of the resident, using their previously observed normal ADL patterns. Secondly, we identify potentially risky situations in their currently observed goal path. We then incorporate a situ‐learning agent (SLA) that helps an inhabitant to make the right decision, thus preventing adverse events while guiding her through the task sequence that leads to her goal state. In addition, we use a naïve agent to simulate episodes of confusion similar to those that might be experienced by older adults with ED. We validated our method against an open‐source dementia dataset (Quesada et al., 2015) by considering four types of ADLs as case studies. We achieved an accuracy of 90.1% for our goal inference model, higher than the accuracies reported by related studies. We also reported other metrics including precision, recall and f1‐score for goal inference model. Finally, SLA's action recommendations relevance was evaluated accordingly.