Could Your Banking Habits Signal Future Dementia?

Long before memory lapses become noticeable, the earliest signs of dementia may show up somewhere unexpected: a person’s bank account.

In America alone, more than 6 million people are living with dementia. Typically, patients begin noticing telltale symptoms such as memory loss and challenges with word recall about three and a half years before they are officially diagnosed. But a new analysis suggests that changes in financial behavior may begin years before a formal diagnosis, potentially offering an early warning sign of cognitive decline.

“Dementia is one of the diseases where you lose a lot of cognitive capabilities over time that are unfortunately closely tied to our ability to manage our own money,” Lauren Nicholas, one of the study’s authors and a health economist and professor of geriatrics at the University of Colorado, told NPR. “We actually see that some of the earliest signs show up in your financial portfolio and your checkbook and kind of not in the standard tests your doctors are doing.”

An Early Warning Sign 

To better understand when and how wealth decline may serve as an early sign of dementia, Nicholas and several colleagues from institutions across the nation analyzed nearly 20 years of data from the Health and Retirement Study to compare the financial behaviors of people who were later diagnosed with dementia with those of people who were not. 

Their findings, which were published in January, pointed to a striking conclusion: People who eventually developed dementia began to see their wealth diverge from that of otherwise similar adults about six years before the condition became clinically recognizable. Those losses were largely relegated to investment accounts, stocks, bonds, and mutual funds — assets that generally require ongoing attention and active decision-making. Checking and savings accounts saw losses as well.

The analysis found little evidence that the decline was driven by outside factors such as reduced earnings, increased health care expenses, or intentional spending. Instead, the researchers concluded that subtle cognitive changes may impair financial judgment and decision-making long before memory problems become apparent enough to prompt a medical diagnosis, or to even seek a doctor’s opinion.

The Bright Side

The findings also suggest that many older adults may not recognize their own cognitive decline. However, there was one encouraging takeaway: People who received a timely memory-related diagnosis appeared to successfully stabilize their finances afterward, suggesting that early intervention and help with money management can make a meaningful difference before small mistakes become costly ones.

Nicholas and her colleagues believe these financial warning signs are unique to dementia, because those in the analysis who were diagnosed with other diseases such as cancer did not see a similar decline in the wealth of their households pre-diagnosis.

“Some personality changes happen early in the course of cognitive decline, which can include propensity to trust people, your risk tolerance,” she told NPR. “What happens commonly is …  even though you’re losing these capabilities, starting to forget about making your bill payments or something, you’re actually getting more confident in your abilities, and … you think you’re crushing it.”

In the future, Nicholas told NPR that the researchers would like to develop a model that looks at activity on credit reports, for example, and creates a financial dementia score that a physician can access to determine if further evaluation is needed. But, as the paper notes, “Addressing this risk requires coordination across multiple sectors, including health care, financial institutions, legal services, and policymakers,” and Nicholas believes a solution is at least a few years away. 

But that doesn’t mean that there’s nothing you can do to protect yourself. In the paper, the authors underscore the importance of putting safeguards — such as simplifying financial accounts or involving family members in financial decision-making — in place before cognitive problems become apparent. The sooner families recognize potential cognitive changes, the more opportunity they have to protect hard-earned savings.

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