Falling behind on mortgage payments. Late to pay credit card bills. A declining credit score.
Years before people are diagnosed with dementia, they often begin facing these financial problems, new research from the Federal Reserve Bank of New York has found.
Analyzing both U.S. credit score reports and Medicare data, the researchers found that in the five years before someone is diagnosed with dementia, they begin acting irresponsibly with their money. The magnitude of these payment delinquencies, combined with the long pre-diagnosis period during which they occur, is “remarkable,” the researchers wrote.
“Although not everyone in early stage [Alzheimer’s disease and related disorders] will experience a payment delinquency, for those who do, the scale of the change in delinquency is substantial,” the researchers said.
One year prior to diagnosis, average credit card debts increased by more than 50%, while mortgage debt increased by 11%, on average.
These findings magnify an earlier breakthrough study Johns Hopkins University researchers conducted in 2020, which found dementia patients can begin missing payments seven years prior to a diagnosis.
Economist Joanne Hsu, a long-time researcher in this topic and one of the authors of that study, told Fortune it was “really exciting” to have further research confirm what she said doctors have long known.
Money management is “the first skill to decline” with dementia
“We think of Alzheimer's as something that affects your ability to recognize family members, or, do you remember where your keys are? Do you remember what room in the house you're in?” Hsu said. “Actually, the first skill that declines with Alzheimer's disease is your ability to manage money, and so to be able to document that in the financial data is really important.”
Mariel Deutsch, a neurologist specializing in neurodegenerative disorders, told Fortune she often sees the first sign of decline occur in financial decision-making.
“Many times, I've heard people describe that the bills weren't paid, and it was only after some late fee or some phone call from the bank that the other unaffected spouse realized something was up,” Deutsch said.
That’s because financial planning and decision-making involve several cognitive skills that decline with dementia, Deutsch added. For seniors who haven't automated their finances, there are frequent opportunities to notice issues due to the regular nature of bill-paying and account management.
In one recent case, a patient’s spouse noticed issues when the patient didn’t resume paying bills after returning from a summer trip, breaking their usual patterns. Sometimes the alarm comes when a patient forgets how to write checks, puts amounts in the wrong spots, or does not fill them out completely.
These warning signs are easy to miss, Deutsch added. Often, they are written off as a “senior moment,” or they’ll blame it on depressive episodes, or an increase in stress.
“Sometimes, all of us might forget to do something every now and then,” Deutsch said.
However, left unnoticed, these mistakes can balloon into “catastrophic” financial consequences, like eviction or bankruptcy, Hsu said. Last year, a JPMorgan client with dementia sued the bank after he lost $50 million making risky bets, and was forced to move in with relatives.
“If it goes undetected and unaddressed, there could be pretty severe consequences, not just for yourself, but for your spouse or your family,” Hsu said.
How to spot the pattern
Hsu and other researchers hope these findings will encourage patients to view a string of financial fumbles not just as missteps, but as potential red flags for cognitive decline.
“In American culture, it can be very difficult to talk about money,” Hsu said. “So our hope is by getting our resources out there, that we can help de-stigmatize these conversations.”
There is no reason to panic if you make a mistake here and there, Deutsch said. However, consistent errors or changes over time could be a reason to contact a doctor for “peace of mind.”
Particularly, she said to watch out for:
- Repeated missed payments
- Inability to use previously mastered financial technology
- Disorganization in handling bills and mail
- Errors in check writing or balancing accounts
- Forgetting about recent financial transactions
It’s better to get checked out sooner rather than later, Deutsch said. A lot of the time, people assume the worst: that they will be diagnosed with a neurodegenerative condition with no cure.
But sometimes, treatable issues like vitamin deficiency, thyroid dysfunction, and other metabolic disturbances can contribute to cognitive changes, she said.
“Getting a comprehensive valuation is key,” Deutsch said. “And you know, the best that could happen is you see the doctor, and it turns out they say that you're fine, that these are just minor slip-ups, and it wasn't indicative of anything bigger. And you know, that one inconvenient medical encounter was worth it.”
