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New study finds financial declines as an early warning sign of Alzheimer’s

BY: KERRY PECK & PAYTON MOORE


An Alzheimer’s diagnosis is undoubtedly strenuous for both the person living with Alzheimer’s and their loved ones. Financial problems can only exacerbate this challenging and uncertain time

in their lives. However, according to new research, warning signs for a memory disorder may now be discoverable through a person’s financial decision-making.


The Federal Reserve Bank of New York (FRBNY) and Georgetown University employed economists and medical experts to conduct and publish a study regarding the financial consequences of undiagnosed memory disorders. To analyze how individuals borrowed money before and after a diagnosis of Alzheimer’s or another memory disorder, researchers combined Equifax data from FRBNY’s Consumer Credit Panel and Medicare records from the Medicare Beneficiary Summary File. Data retrieval for both types of records spanned from 2000 to 2017.


Researchers compiled data of almost 2.5 million Americans, ages 65 and over, with roughly half

a million of whom were diagnosed with Alzheimer’s or another memory disorder. Due to the

volume of data available, researchers were able to finely examine specific subgroups of

individuals based on demographics such as race, sex, and household structure.


Prior to a diagnosis of a memory disorder such as Alzheimer’s, a person’s cognitive decision-

making ability is affected and begins to deteriorate. This includes financial decision-making and

risk tolerance. According to the study, these people may miss payment deadlines, make

impulsive purchases, or take part in risky investments, all of which they would not have done

prior to the onset of a memory disorder.


For instance, one year before diagnosis of a memory disorder, these people were 17.2% more

likely to be delinquent on mortgage payments and 34.3% more likely to be delinquent on credit

card bills. Even more surprising, average credit scores of people suffering from Alzheimer’s or

another memory disorder begin to deteriorate up to five years prior to a diagnosis and continue to decrease in the time leading up to a diagnosis.


Further, this study estimates that up to 600,000 payment delinquencies will happen within the

next decade because of undiagnosed memory disorders. Realistically, this number is likely to be

much higher. These estimated delinquencies were determined from the information documented in credit reports, including late or missed payments; however, many people can be financially impacted in other ways that do not necessarily show up in financial reports.


Along with this, people with an undiagnosed memory disorder are more susceptible to falling

victim to scams or fraud. Dr. Lauren Hersch Nicholas, a Professor at the University of Colorado

School of Medicine, published a paper with several co-authors which detailed the instances of

abuse and fraud of people with undiagnosed memory disorders. Dr. Nicholas observed that a

person’s overall household wealth declined in the ten years prior to their diagnosis of

Alzheimer’s or another memory disorder.


People with limited resources are disadvantaged when it comes to looking out for these financial

warning signs. Without someone to keep an eye on their spending or to check in with them on a

regular basis, financial problems may go unnoticed for an extended period of time. This can lead

to substantial financial consequences and leave the person without sufficient money at a time

when they may need it most.


Overall, researchers are optimistic that these findings could enable the development of an

algorithm to identify individuals who might be suffering from impaired financial decision-

making due to Alzheimer’s or another memory disorder. Until then, this study can serve as a

“warning” to older Americans and their families to explore a financial power of attorney to serve

as a safeguard in addition to watching out for these early warning signs.


The Law firm of Peck Ritchey, LLC, affiliated for many years with the Illinois Chapter of the Alzheimer’s Association, has recently been named the Legal Education Partner of the Association. Kerry Peck, Managing Partner of Peck Ritchey, LLC serves as Chair of the Illinois Supreme Court Commission on Elder Law and previously as President of the Chicago Bar Association. Mr. Peck is Co-Author of Alzheimer’s and the Law and Don’t Let Dementia Steal Everything, books which he wrote at the request of the American Bar Association. Kerry Peck served on the Association’s Board for many years and the Law Firm was honored last year by the Alzheimer’s Association. Peck Ritchey LLC is a one-stop shop for families navigating the devastating effects of a loved one with Alzheimer’s Disease.

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