Long before people develop dementia, they often start falling behind on mortgage payments, credit card bills and other financial obligations, new research shows.
A team of economists and medical experts from the Federal Reserve Bank of New York and Georgetown University combined Medicare records with data from Equifax, the credit bureau, to study how people’s debt behavior changed in the years before and after their diagnosis. Alzheimer’s or similar disease. disorder.
What they found was surprising: Credit scores among people who later develop dementia begin to drop dramatically long before their illness is formally identified. One year before diagnosis, these people were 17.2% more likely to be delinquent on their mortgage payments than before the onset of the illness, and 34.3% more likely to be delinquent on their credit card bills. The problems start even earlier: the study finds evidence of people who fell behind on their debts five years before their diagnosis.
“The results are impressive in both their clarity and consistency,” said Carole Roan Gresenz, an economist at Georgetown University and one of the study’s authors. Credit scores and delinquencies, she said, “consistently worsen over time as diagnosis approaches and therefore literally reflect the changes in cognitive decline that we are seeing.”
The research adds to a growing body of work documenting what many Alzheimer’s patients and their families already know: decision-making, including on financial matters, can begin to deteriorate long before a diagnosis is made or even suspected. People who are beginning to experience cognitive decline may miss payments, make impulsive purchases, or invest money in risky investments they would not have considered before the illness.
“Not only is there forgetting, but our risk tolerance changes,” said Lauren Hersch Nicholas, a professor at the University of Colorado School of Medicine who has studied the impact of dementia on people’s finances. “Suddenly, it might seem like a good move to shift a diversified financial portfolio into some stock someone recommended.”
People in the early stages of the disease are also vulnerable to scams and fraud, added Dr. Nicholas, who was not involved in the New York Fed research. In a paper published last year, she and several co-authors found that people likely to develop dementia saw their household wealth decline in the decade before diagnosis.
Problems are likely to only increase as the American population ages and more people develop dementia. The New York Fed study estimates that 600,000 delinquencies will occur over the next decade as a result of undiagnosed memory disorders.
This likely underestimates the impact, the researchers argue. Their data only includes issues that appear on credit reports, such as late payments, and not the much broader set of financial impacts that illnesses can cause. Wilbert van der Klaauw, a New York Fed economist who is another of the study’s authors, said that after his mother was diagnosed with Alzheimer’s, her family discovered parking tickets and traffic violations that she had hidden.
“That’s actually kind of an underestimation of the kind of financial difficulties people can face,” he said.
Shortly before being diagnosed with Alzheimer’s, Jay Reinstein bought a BMW that he couldn’t afford.
“I walked into a showroom and came home with a BMW,” he said. “My wife was not happy.”
At the time, Reinstein had recently retired as assistant city manager of Fayetteville, North Carolina. He had been noticing memory problems for years, but dismissed them as a result of his demanding job. It was only after the diagnosis that he learned that friends and colleagues also noticed the changes, but said nothing.
Reinstein, 63, is lucky, he added. He has a government pension and a wife who can control his spending. But for those with fewer resources, financial decisions made in the years before diagnosis can have serious consequences, leaving them without money at a time when they will need it most. The authors of the New York Fed study noted that the financial effects they observed predated most costs associated with the disease, such as the need for long-term care.
The study expands on previous research, in part because of its scale: Researchers had access to health and financial data on nearly 2.5 million older Americans with chronic health problems, about half a million of whom were diagnosed with Alzheimer’s or related diseases. (The records were anonymized, allowing researchers to combine the two data sets without having access to each patient’s identifying details.)
The large amount of data allowed researchers to analyze the data more precisely than in previous studies, analyzing the impact of race, sex, household size and other variables. Black people, for example, were twice as likely as white people to have financial problems before diagnosis, perhaps because they initially had fewer resources, and also because black patients are often diagnosed later in the course of the disease.
The researchers hoped that the data could eventually allow them to develop a predictive algorithm that could flag people who might be suffering from financial decision-making difficulties associated with Alzheimer’s disease – although they emphasized that there were unresolved questions about who would have access to such information. information. and how it would be used.
Until then, the researchers said, their findings should serve as a warning to older Americans and their families to prepare for the possibility of an Alzheimer’s diagnosis. This may mean taking steps such as granting financial power of attorney to a trusted person or simply paying attention to signs that someone may be behaving unusually.
Dr. Nicholas agreed.
“We should be thinking about the possibility of financial difficulties linked to a disease we don’t even know we have,” she said. “Knowing this, people should be aware of these symptoms among friends and family.”
Pam Belluck contributed reports.