Some of the early signs of dementia are financial: forgetting to pay bills, for example, or having trouble calculating a tip. People who develop dementia also are more likely to miss credit card payments and have subprime credit scores years before they’re diagnosed, according to a study published last year in medical journal JAMA Internal Medicine.
Researchers linked health records for more than 80,000 Medicare beneficiaries to credit bureau data and found that people who developed dementia had a higher risk of skipping credit card payments starting six years before their diagnosis. The study found the chances of incurring subprime credit scores – indicating multiple or serious delinquencies – rose as early as two and a half years before diagnosis.
Researcher Lauren Hersch Nicholas, a health economist and associate professor at the University of Colorado School of Public Health, says the study was inspired by horror stories of people suffering catastrophic financial losses because of undetected cognitive decline.
“They and their families had no idea that they were in the early stages of dementia until something happened, like the house would get foreclosed on,” Nicholas says.
If a loved one is struggling to manage money, there may be ways to protect their finances and credit rating while preserving their dignity and autonomy. If you’re concerned about your own vulnerability to cognitive decline, you can also set up guardrails to protect yourself.
SIMPLIFY, AUTOMATE AND ALERT
EverSafe, a technology service that monitors people’s financial accounts for signs of fraud and identity theft, has some clients with dozens of bank, brokerage and credit card accounts, says EverSafe co-founder and CEO Howard Tischler. Even without cognitive issues, “it’s hard to stay on top of that,” Tischler says.
Consolidating to one bank, one brokerage and one or two credit cards can make monitoring accounts easier. Putting bills on autopay can prevent missed payments, although bank balances still have to be monitored so that those payments don’t deplete the account, Nicholas notes.
Most accounts allow customers to set up alerts so that they’re notified by text or email of low balances, transactions that exceed a limit you set or other potential issues. Often you can add more than one phone number or email address so that a second person is notified, as well.
Alerts can be set up online, or you can call the financial provider’s customer service number, says Amy Goyer, AARP’s national family and caregiving expert. If you’re setting these up for someone else, that person probably will need to be on the call with you and give permission for the changes, Goyer says. In addition, some companies allow customers to designate a trusted person who can be contacted if unusual transactions are detected and the institution can’t get a response from the customer.
Meanwhile, monitoring a credit score can alert you to missed payments or identity theft. Many banks and credit card companies offer credit scores for free, or you can sign up for a free service online.
DESIGNATE A CO-PILOT
Estate planning attorneys say that virtually every adult should have a financial power of attorney, which is a legal document that designates someone you trust to make financial decisions for you if you’re incapacitated.
Beyond that, there are a number of ways to monitor finances. An older person may feel comfortable adding an adult child or other trusted person as a joint owner of a checking account, for example, or be willing to share login credentials for financial accounts. Another option is to share login credentials for an account aggregation service, such as Mint or Simplifi. The trusted person wouldn’t be able to log in to the bank, brokerage or credit card accounts, but would be able to see balances and transactions.
Unfortunately, not everyone has a trusted person, and elder financial abuse is often perpetrated by family members. An attorney, certified public accountant, certified financial planner or other fiduciary may be willing to serve as a trusted person, Goyer says. (Fiduciary means they’re required to put your interests ahead of their own.)
Goyer says another option is to call the local Area Agency on Aging , which are public or private nonprofit agencies designated by the states to coordinate and offer services for older people. She suggests asking the agency for recommendations of people or services that are vetted and experienced in helping older adults deal with money.
ADAPT AS NEEDED
Goyer warns against going overboard. Trying to take over someone’s finances prematurely can cause resentment and may not be good for them.
“Don’t take away all their freedom or independence or responsibility, because that’s not really good for them cognitively,” Goyer says.
When Goyer’s father struggled with managing money, she took over paying the bills. But she also set up a separate checking account for her dad and transferred spending money there every month.
“He was still able to go to the grocery store, buy gas for the car, pay for Mom’s hair appointments,” Goyer says. “He managed that just fine for two or three years.”