Research Shows Financial Decline Precedes Dementia Diagnosis

As we age, our cognitive abilities can start to decline, impacting not only our memory but also our decision-making skills. A recent study conducted by economists and medical experts at the Federal Reserve Bank of New York and Georgetown University has shed light on how financial behaviors can change long before a diagnosis of Alzheimer’s or a similar disorder.

The research, which combined Medicare records with data from Equifax, the credit bureau, found that individuals who later develop dementia often begin falling behind on mortgage payments, credit card bills, and other financial obligations years before their disease is formally identified. This decline in financial management is a clear indicator of the cognitive decline that is to come.

The study revealed that a year before diagnosis, individuals were significantly more likely to be delinquent on their mortgage payments and credit card bills. This trend of worsening credit scores and delinquencies continued as the diagnosis approached, highlighting the impact of cognitive decline on financial decision-making.

Decision-making, including on financial matters, can deteriorate long before a diagnosis of dementia is made or even suspected. People may miss payments, make impulsive purchases, or put money into risky investments they would not have considered before the disease. This can lead to financial hardship and vulnerability to scams and fraud.

The implications of these findings are significant, especially as the American population ages and more people develop dementia. The study estimates that hundreds of thousands of delinquencies will occur over the next decade as a result of undiagnosed memory disorders. This underscores the importance of early detection and preparation for the financial impacts of cognitive decline.

The researchers hope that their findings will serve as a warning to older Americans and their families to be vigilant about the possibility of an Alzheimer’s diagnosis. Taking steps such as granting a trusted person financial power of attorney or paying attention to signs of impaired financial decision-making can help mitigate the financial consequences of the disease.

In conclusion, the study highlights the importance of recognizing the early signs of cognitive decline and taking proactive steps to protect one’s financial well-being. By being aware of the potential impact of dementia on financial decision-making, individuals and their families can better prepare for the challenges that may lie ahead.