Difficulty managing bills could be an early sign of dementia, according to a recent study. It also revealed that individuals who eventually received a dementia diagnosis experienced a significant drop in credit scores – well before the official confirmation of their condition.
Economists from the Federal Reserve Bank of New York and medical specialists at Georgetown University teamed up to examine data from Equifax on how borrowing habits shift in the years surrounding an Alzheimer’s or dementia diagnosis, as The New York Times reported.
The study “The Financial Consequences of Undiagnosed Memory Disorders” aimed to investigate the financial impact of undiagnosed memory disorders on individuals.
Dementia’s Ripple Effect, Financial Warning Signs
Individuals who would later be diagnosed with dementia exhibited a significant decline in credit scores well before their official diagnosis. Even a year before diagnosis, this group was 17.2 per cent more likely to be behind on mortgage payments and 34.3 per cent more likely to be delinquent on credit card bills than before the illness began.
The problems begin even earlier, as the study shows evidence of missed payments or delinquency on debts starting five years before diagnosis.
“The results are striking in both their clarity and their consistency,” said Carole Roan Gresenz, a Georgetown University economist who was one of the study’s authors. Credit scores and delinquencies, she said, “consistently worsen over time as diagnosis approaches, and so it literally mirrors the changes in cognitive decline that we’re observing.”
This research strengthens the growing body of evidence that aligns with the experiences of many Alzheimer’s patients and their families.
“There’s not just getting forgetful, but our risk tolerance changes,” said Lauren Hersch Nicholas, a professor at the University of Colorado School of Medicine who has studied dementia’s impact on people’s finances.
“It might seem suddenly like a good move to move a diversified financial portfolio into some stock that someone recommended,” Hersch added.
Beyond Credit Scores: The Wider Impact
A separate study also revealed a staggering $10 billion lost to online scams in the US last year and that a good number of victims are those suffering from some sort of mental disorder. Dr. Nicholas, independent of the New York Fed research, emphasised that individuals in the early stages of dementia are very susceptible to such financial exploitation.
Last year’s research by Dr. Nicholas and colleagues revealed a significant decrease in household wealth among individuals at risk of dementia, starting a decade prior to diagnosis. As the US population ages and dementia prevalence increases, these financial challenges are likely to become even more widespread.
However, a recent UK Biobank study offers a glimmer of hope. It identified depression and vitamin D deficiency as potential risk factors for young-onset dementia, suggesting modifiable targets for preventative strategies.
The New York Fed study predicts a troubling rise in missed payments, potentially reaching 600,000 over the next decade due to undiagnosed memory disorders.
The researchers acknowledge that their findings only captures credit report-related issues, like missed payments, neglecting the wider range of financial difficulties these diseases can trigger.
