Could impaired financial decision-making be an early sign of an undiagnosed memory disorder? According to new research¹ from the Federal Reserve Bank of New York and Georgetown University, people who develop Alzheimer’s, dementia, or a similar disorder often begin falling behind on their bills years earlier. As covered by The New York Times², this study found: 

• Credit scores among people who later develop dementia begin falling sharply long before their disease is formally identified; 
• A year before diagnosis, these people were 17.2% more likely to be delinquent on their mortgage payments than before the onset of the disease, and 34.3% more likely to be delinquent on their credit card bills;
• And some financial missteps may occur years before – there’s evidence of people falling behind on their debts five years before diagnosis.

The connection between financial consequences and memory loss isn’t new, but this study is notable for its reach – researchers had access to data on nearly 2.5 million older Americans with chronic health conditions, roughly half a million of whom were diagnosed with Alzheimer’s or related disorders. Another recent study³ from Johns Hopkins also found that people likely to develop dementia saw their household wealth decline in the decade before diagnosis – and this is only partially related to cost of care. The authors of the New York Fed study noted that the financial effects they saw predated most of the costs associated with the disease, such as the need for long-term care.

So, what decisions or behaviors are behind this financial decline?

As The Times explains, “people who are starting to experience cognitive decline may miss payments, make impulsive purchases, or put money into risky investments they would not have considered before the disease.” Lauren Hersch Nicholas, a professor at the University of Colorado School of Medicine who has studied dementia’s impact on people’s finances⁴ explains, it’s not just about being forgetful – our risk tolerance also changes. “It might suddenly seem like a good move to move a diversified financial portfolio into some stock that someone recommended,” or to buy a brand new car you don’t need and can’t afford. 

Older adults are also more likely to be targeted by fraud and scams, and those with memory loss are particularly vulnerable to predatory schemes. In 2024, it is difficult for any of us to avoid the constant stream of telemarketing, text, and email scams, but when your judgment is impaired it becomes all the more challenging to determine what is a genuine request for money and what is a trick. And once your loved one has fallen victim to a scammer, they’re more likely to be contacted – and defrauded – again. 

What family members can do to help protect their loved ones

While researchers hope that financial data could eventually be used to identify people who may be experiencing early symptoms of Alzheimer’s, this won’t be available in the near time (and, as the researchers also point out, there are outstanding questions about private data access and usage). Until then, researchers want their findings to “be a warning to older Americans and their families that they should prepare for the possibility of an Alzheimer’s diagnosis.” And they encourage people to take steps such as “granting a trusted person financial power of attorney, or paying attention to signs that someone might be behaving uncharacteristically.” 

But these aren’t your only options if you’re concerned about a loved one developing a memory disorder. Helping a loved one navigate early Alzheimer’s or dementia can be a delicate balancing act – you want to help them maintain a level of independence and freedom, but you also want to protect them from devastating financial consequences. True Link’s own CEO Kai Stinchcombe knows this experience firsthand, and he founded True Link specifically to help families dealing with similar challenges.

The True Link Visa^® Prepaid Card for older adults can be beneficial for families who want to keep an eye on their loved one’s financial habits without taking over their day-to-day purchases. With the True Link Spending Monitor you can choose where the Visa card works and where it doesn’t, block access to cash or over-the-phone purchase, and set transaction limits. Plus, you can monitor spending and identify concerning patterns before they become bigger problems. Thousands of families, like Leslie and her mom, rely on True Link to help protect their loved one’s finances while still allowing them to “live their best life.” And if their cognitive situation declines further, the settings can be adjusted to meet their new needs.   

Early intervention and awareness are important to managing both the financial and emotional tolls of cognitive decline. As researchers uncover more about the link between financial-decision making and early signs of memory disorders, we hope families can use this information to protect their loved ones and pursue earlier diagnoses and treatments. 

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¹Federal Reserve Bank of New York Report

² New York Times Article Source

³John Hopkins University Study

⁴ Colorado School of Medicine Study