Financial mistakes and missteps can begin as early as five years before an official dementia diagnosis. Knowing that problems with finances can be a sign of dementia, how can you identify the cause and avoid potentially catastrophic money issues? Seniors Guide writer Eric Wallace looks into the realities.
It started about five years ago with my father-in-law swearing that someone had hacked and changed all his passwords. My mother-in-law opened the family computer to discover it was locked and had to have it professionally reset. Logging into streaming services like Netflix required constant resets and recoveries. Turncoat phone pins demanded trips to the Apple store. Charges for redundant services – like repeat HBO Max subscriptions on three different platforms – and things like pop-up antiviral software appeared on credit card statements.
Then came the deluge of notices for overdue bills. Her husband had a system and swore he’d mailed the checks same as always. But late fees and bank account records told a different story. What was happening?
Experts know that finances can be a sign of dementia
“Years before people are diagnosed with dementia or other cognitive impairment, they often have difficulty managing money and start suffering financially,” writes AARP health correspondent Penelope Wang. Those mistakes can serve as early warning signs for loved ones.
A recent study found that individuals in the early stages of dementia were much more likely to miss credit card and mortgage payments within five years before diagnosis. The problems got worse as time went on: Average credit card balances in delinquency within a year of diagnosis were 50% higher compared to six years before. Credit scores also saw significant declines during that period. Delinquent mortgage balances, meanwhile, grew by about 11%.
The cumulative monetary impacts of cognitive decline can be extreme if left unchecked. A team of University of Michigan researchers found that net worth plummets by an average of more than 60% within the first eight years of a dementia diagnosis. The losses are particularly harsh, as they come at a time of increasing vulnerability and financial need.
Here, we bring you four expert-vetted actions to help you protect your loved ones and secure their finances from unnecessary diminution.
Watch for signs
Be on the lookout for red flags like trouble counting change, balancing the checkbook, calculating tips, or struggling to comprehend credit card statements. Another indicator may be worry, fear, or evasiveness around discussing money matters. Other telltales could include:
- Numerous new or strange purchases on credit card statements.
- Unopened bills or mail.
- Uncharacteristic spending, like a risky stock investment or large donation to an unknown church group or charity.
- New merchandise that seems odd or out of place in the home.
- Unexplained withdrawals from bank accounts.
- Disheveled files that used to be neatly maintained.
Protect against scams
Scammers often target seniors, and those with dementia or cognitive decline are even more vulnerable to being duped. But you can take steps to fight back. These simple actions will help you protect your loved one:
- Add your loved one’s information to the national Do Not Call registry to cut down on telemarketers.
- Prevent fraudulent accounts by freezing their credit report at all three major credit bureaus.
- Turn on fraud alerts for all bank accounts and credit cards, or use a credit monitoring service.
- Check with their cellular provider or phone company about options to block calls and texts from unknown numbers.
Start a conversation
The best thing you can do to help your loved one is to start a conversation.
First and foremost, encourage your loved one to see a doctor to determine the cause. Let them know that finances can be a sign of dementia, but that the cognitive challenges could come from other medical conditions or medication side effects. If a doctor confirms a dementia diagnosis, early diagnosis offers more opportunity to get treatments and make plans.
Next, address their finances. Some people may resist the idea of opening up, but explaining your reasons and that you have their best interests in mind can help open the door. The key is to provide support while also respecting the person’s independence. Building trust will likely take months, rather than days or weeks. You can start with some easy lifts and build from there.
- Set up automated payments for the mortgage, phone bill, utilities, credit card minimum payments, and other monthly expenses. The approach will ensure bills get paid correctly and on time.
- Help your loved one develop a monthly budget plan on paper or with an online or app-based tool. The discipline will enable them to stay more self-aware and you to better monitor their spending. It also creates a platform for regular fiscal discussions.
- Try to simplify and manage spending. Convincing your loved one to do things like consolidate bank accounts, cancel unnecessary credit cards (unless that would harm their credit score), and reduce spending limits can help rig the game in their favor.
- Offer to accompany them on shopping trips or arrange for deliveries. Tagging along for grocery store visits, for instance, can slash potential for overspending or impulse spending and make sure your loved one has what they need at home.
Make an action plan
The probability of financial mistakes goes up as the disease progresses. Making worst-case arrangements in advance can help you protect your loved one against avoidable losses. The earlier you have the conversation, the better. That way, your loved one can comprehend the situation, contribute to discussions, and approve of arrangements.
Gain consent to manage finances.
Talk with your loved one about naming you or another trusted person as their durable power of attorney. The designation lets you access information and make financial decisions over everything from utility payments to bank accounts and investment portfolios.
Look into long-term healthcare.
Declines can tailspin suddenly and abruptly, so don’t be caught unprepared. Discuss the pros, cons, and financial costs of options like aging in place with at-home care versus, say, a move to an assisted living community. The goal is to help your loved one create a care plan that’s best for them and their situation.
Prioritize estate planning.
Work with your loved one to understand their final wishes and ensure that they get honored. If they don’t already have a will, help them find an elder law attorney and make one. It also helps to gather and compile important records and documents like passwords, bank accounts, will, and birth certificate in an “In Case of Death folder.” Its contents create a roadmap for what to do when your loved one passes and makes sure family members aren’t left scrambling to tie up loose ends while mourning their loss.
