When a senior is living with Alzheimer’s disease or a related disorder, the family often worry about their loved one’s physical safety. Yet in the earliest stages of dementia, a senior may face a different danger: trouble managing their money. In fact, say experts at 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. “People in the very early stages of Alzheimer’s lose financial capacity,” said the study’s lead author, health economist Carole Roan Gresenz, Ph.D. “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.”
Protecting the Money of a Person with Dementia
A senior’s lessened ability to manage money can have severe consequences. A senior may 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!
Seniors with memory loss are a prime target for fraud, whether it’s making bad investments, lending money to a 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 crooks. Family caregivers then have to dip into their own savings to make up for the money that is lost.
How to Help a Loved One With Dementia Manage Their Money
It’s best to talk about 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 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.
This can be a difficult conversation. Consider calling a geriatric care manager, an elder law attorney, or a trusted financial planner to help. If you are managing your loved one’s money, protect their sense of independence by giving them small amounts of cash or a debit card with a small balance. The National Institute on Aging offers more advice.