Helping a Loved One With Dementia Manage Their Money
Indeed, according to experts from the Center for Retirement Research at Boston College, “When once-simple financial tasks become difficult or confusing, it can be the canary in the coal mine signaling that an elderly person is developing dementia.”
This is confirmed by another study, this one from Georgetown University. “Alzheimer’s disease isn’t usually diagnosed until symptoms are severe, and its progression typically involves a multi-year process of cognitive decline,” said the study’s lead author, health economist Carole Roan Gresenz, Ph.D. “People in the very early stages of Alzheimer’s lose financial capacity; that is, their ability to manage their checkbook, to pay bills on time, to spend in ways that are consistent with the values they had in the past.”
Researchers from Duke University are investigating the correlation between money management problems and identifiable dementia-related changes in a person’s brain. “There has been a misperception that financial difficulty may occur only in the late stages of dementia, but this can happen early and the changes can be subtle,” said geriatrics and psychiatry professor P. Murali Doraiswamy. He says that this could have real repercussions for the nation’s economy, noting, “Older adults hold a disproportionate share of wealth in most countries and an estimated $18 trillion in the U.S. alone. Given the rise in dementia cases over the coming decades and their vulnerability to financial scams, this is an area of high priority for research.”
And on the individual family level, a senior’s lessened ability to manage money can have severe consequences, as well. A senior may simply forget to pay bills. They may stop balancing their checkbook. They may forget to pay their taxes. Credit card statements might demonstrate that a formerly frugal elder has become a spendthrift!
And seniors with memory loss are a prime target for fraud, whether it’s bad investments, big loans to a brand new “friend,” or falling for phone callers pretending to be the IRS or Social Security. Did you know that con artists sell lists of the phone numbers of seniors they think might have dementia?
Once a senior has been defrauded or has made poor financial choices, the money they’ve saved for their care might be lost. Their nest egg can be siphoned off by these crooks. Family caregivers then have to dip into their own savings to make up for the money that has disappeared.
It’s best to discuss these matters with older loved ones before there is a problem. Talk about ways you can, or may one day be able to, help your loved one manage their bills, taxes, insurance, investments and all the other business matters of life. From a legal perspective, there are two ways to designate that person: through a durable power of attorney or by a court-created guardianship. Families may create an “advance directive for money management,” with instructions about what should happen if a senior can no longer manage their money.
These conversations can be challenging. Call in a geriatric care manager (aging life care professional), an elder law attorney or trusted financial planner to help. You may want to transition in increments. For example, many families protect their loved one’s sense of independence by furnishing them with small amounts of cash or a debit card with a small balance. The National Institute on Aging offers more advice.