How not to lose money because of Alzheimer’s disease – Harvard Health Blog
Researchers from Maryland and Michigan recently published an article showing that six years before their diagnosis, people developing Alzheimer’s disease or a related disorder were more likely to miss paying a bill than older adults without such a diagnosis. (7.7% vs. 7.3%), and they were also more likely to develop subprime credit ratings (7.9% vs. 6.9%). As the authors concede, the study posed a number of problems, including the unequal match of the mean age of the groups (79.4 versus 74.0 years), which could mean that the results were in fact due to age rather than Alzheimer’s disease. The authors have attempted to adjust for this difference with their statistical analyzes, but sometimes this does not completely correct for this type of inequality.
Tip of the iceberg
The study’s biggest problem, however, is that it vastly underestimates the true financial hardships people with Alzheimer’s disease face. After reading this article, you might think, “Well, these differences are only 1% or less, that’s okay.” But the article does not address the main financial problems facing people with Alzheimer’s disease: poor decision-making and the related problem of falling victim to financial scams.
How many times per week – or per day – does your phone ring when someone offers you a new credit card, car loan, or investment deal? How often do you get a call from someone saying they are from your credit card company or the Social Security office?
Scams are a huge problem, with one in 18 seniors in the United States exhibiting an intact cognitive state by being the victim of one. But people with Alzheimer’s dementia and those in the pre-dementia stage of mild cognitive impairment are even more susceptible. In fact, research in healthy older people suggests that susceptibility to scams may be linked to the shrinking of memory-related structures in the brain – some of the same structures that shrink in Alzheimer’s disease.
Impaired judgment and decision making
People with Alzheimer’s disease fall victim to scams because they have impaired their judgment and decision making. Making financial decisions requires the coordinated function of many brain systems in order to retrieve previous information from memory, incorporate new information into memory, keep that information in mind, and analyze it. People with Alzheimer’s disease have problems with the brain systems involved in all of these functions.
It is this difficulty in decision making and judgment that leads to the next two biggest financial problems of Alzheimer’s disease. The first is to give too much money to legitimate causes and the second is to make bad financial investments.
You may have been called recently by the local police or fire department, in addition to calls from organizations like Save the Children. You may wish to donate to some of these causes. But have you already donated to this organization last month? How much money should you donate? How often should you donate?
It can be difficult for anyone to keep up with all of these legitimate causes and donate an appropriate amount within your budget. People with impaired memory and judgment have a much harder time knowing which charities they’ve donated to recently – and when to stop giving money to have enough for food, rent. and heating this month!
Even the smartest people with excellent memories will sometimes make bad investment decisions resulting in significant financial loss. Given their complexity, it’s no surprise that many people who eventually develop a memory disorder made poor investment decisions in the years leading up to their diagnosis. Unfortunately, I have seen the life savings of many families wiped out in this way.
Protect yourself and your loved ones
Fortunately, there are some simple steps you can take to protect yourself and your loved ones from these types of financial problems.
- Avoid scams by not answering the phone unless it’s someone you know. Better yet, you can configure your smartphone to silence unknown callers.
- Decide in advance what year you want to donate. Write them checks and do not respond to any other requests.
- Make investment decisions with a family member, friend or trusted financial advisor. Financial investment decisions can always use an extra pair of eyes.
- If you’ve done all of these things and are still having trouble, try setting up a separate bank account that only has a small amount of money and a credit card with a low spending limit.
These measures will allow us to continue to live from day to day without buying expensive items or giving large sums of money.
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