A recent study has revealed the financial challenges that individuals dealing with Alzheimer’s disease encounter well before being formally diagnosed. The research, conducted by a team of economists and medical experts at the Federal Reserve Bank of New York and Georgetown University, analysed Medicare records and data from Equifax, the credit bureau, to observe changes in borrowing behaviour before and after an Alzheimer’s diagnosis.
The results of the study were significant. They showed that individuals who later developed dementia experienced a decline in their credit scores and an increase in delinquent payments on bills several years before their diagnosis. One year before being formally diagnosed with Alzheimer’s, these individuals were 17.2 percent more likely to fall behind on mortgage payments and 34.3 percent more likely to be delinquent on their credit card bills. Evidence even showed financial difficulties up to five years prior to their diagnosis.
Carole Roan Gresenz, an economist at Georgetown University and one of the study’s authors, emphasized the striking clarity and consistency of the results. She highlighted that credit scores and delinquencies consistently worsened over time as the diagnosis approached, closely mirroring the changes in cognitive decline observed in the individuals.
This study contributes to the growing body of work that outlines the significant impact of Alzheimer’s on an individual’s decision-making abilities, including their financial decisions, well before a formal diagnosis is made. As cognitive decline begins, individuals may miss payments, make impulsive purchases, or engage in risky financial behaviour that was not typical before the onset of the disease.
Lauren Hersch Nicholas, a professor at the University of Colorado School of Medicine, explained that the changes go beyond forgetfulness, affecting individuals’ risk tolerance. This may lead them to make financial decisions they would not have considered in the past, such as moving a diversified financial portfolio into a risky investment based on someone else’s recommendation.
The findings of this study emphasize the need for increased awareness and support for individuals and families affected by Alzheimer’s. It is crucial to provide proper financial planning and management assistance to individuals experiencing cognitive decline to safeguard their financial well-being. By doing so, it can help mitigate the financial challenges faced by individuals long before an official diagnosis of Alzheimer’s is made.