Researchers at the New York Federal Reserve who analyzed both US credit reporting and Medicare data found that in the five years before a dementia diagnosis, a person’s average credit scores may start to weaken and their payment delinquencies rise.
“The harmful financial effects of undiagnosed memory disorders exacerbate the already substantial financial pressure households face upon diagnosis,” the researchers wrote. “Beyond susceptibility to payment delinquency, early stage [Alzheimer’s disease and related disorders] may affect new account openings and debt accumulation, credit utilization, and/or credit mix.”
Their findings echo the results of a 2020 study from the Johns Hopkins Bloomberg School of Public Health.
Marcey Tidwell, who lives in Bloomington, Indiana, said those findings are “not remotely shocking.” Tidwell’s mother was diagnosed with a form of dementia in 2020 and has been living with her daughter ever since.
Tidwell said that for most of her life, her mother was an “outrageously methodical human being” who kept the bills paid and the family records organized across many moves as her husband pursued a career in the military.
After going through her mother’s papers this year, Tidwell surmises that her mother’s memory started faltering around 2015, because from that point forward her record-keeping became “less than pristine.”
For example, Tidwell said, her mom used to keep an immaculate record of checks written and deposits and withdrawals made in her checkbook register. But that register became a mess. “There was a bunch of stuff scratched out and she was obsessively adding and re-adding — she knew things weren’t all they could be. Later on, I saw that she took out large amounts of her savings, more than she needed for groceries.”
Karen Lemay, who lives in Ottawa, Canada, knew something was really wrong with her father in 2022 when she saw on his desk piles of late-payment notices and final-notification warnings from service providers and insurers.
Her father was a former finance executive who “was very conservative with his money, very smart about it and never reckless with it,” she said. And he had strongly impressed upon his daughter the importance of paying off her credit card in full every month to avoid interest.
Yet Lemay discovered he owed $50,000 in charges, interest and late payment fees on a Visa card. He also financed the purchase of a new car he didn’t need, just months before police took away his driver’s license. Normally, he would only buy high-end used cars with cash, she said.
What’s more, his daughter noted, he failed to pay his 2021 taxes. So he ended up owing the government roughly $20,000, the bulk of which was for late payment and underpayment penalties.
“I spoke to him about some of his balances and he refused to believe he hadn’t paid them,” Lemay said.
Early planning lessens some stress
While there are few dementia-specific financial tools to reduce the odds that someone squanders their own hard-earned money, there are steps you can take to make it easier to assume control over another person’s finances when they become incapacitated.
Since dementia can worsen over time and because someone in the initial stages may not recognize they are more vulnerable to financial errors and scams, the US National Institute on Aging recommends that a family take steps early on to alleviate those concerns, such as setting up automated bill payments for the person with dementia.
Of course, no amount of advanced financial planning can alleviate the heartbreak of watching a loved one with dementia decline. “I prepared as best as I could, but it’s still hard,” Tidwell said. That’s why she advises anyone potentially facing a similar situation to, in her words, “make the easy part easy.”
