The cost of forgetting: Dementia's tax on financial health

The signs were there: unpaid bills, unusual cash withdrawals and, oddly, the mortgage of the family home refinanced — at a higher interest rate. Angela Reynolds worried when her mother’s refrigerator was nearly empty. But she missed the trail of financial flags until it was too late.

The warning came for Sharon Gwinn when the grocery store declined her credit card, despite a healthy account she held with her husband. She contacted her bank, assuming it was fraud. It wasn’t.

As the power-of-attorney agent, Gina keeps careful watch over her grandmother’s finances. But that didn’t stop a relative from allegedly taking $54,000 when an opportunity presented itself.

All three families stumbled into a hard reality that faces more and more aging Americans: The financial consequences of cognitive functions lost to various neurological diseases. The costs of these illnesses — Alzheimer’s disease alone is projected to affect 7.7 million Americans over age 65 people by 2030 — are enormous.

Isolated or ill seniors are more vulnerable to exploitation by scammers or financial abuse from family members. Other times, people buy things without reason, piling their homes with unopened boxes or draining their savings. Or older adults impulsively give away large sums of money. This all puts their homes, retirement savings and inheritances at risk.

Despite the commonality of those risks, solutions remain elusive. Congress hasn’t made it a priority. Financial institutions are slow to act, arguing that they have neither the ability nor authority. Aging parents and adult children alike can be paralyzed by the prospect of uncomfortable conversations, so they avoid them. Until that changes, families are left on their own to navigate a challenging maze of emotions, actions and consequences.

Meanwhile, a growing body of research is clear: Financial problems are not just a result of dementia but can be a predictor of it.

Biology: complexity and inevitability

One weekday during the spring of 2018, Angela Reynolds sat next to her 77-year-old mother in a courtroom in downtown New Haven, Connecticut. She listened in discomfort as strangers revealed intimate details of their finances in a public setting.

Then it hit her: "Wait a second, we're going to have to go up there, and someone's going to be listening to us.”

Reynolds was there with her mother, Jonnie Lewis-Thorpe, because the family home was in foreclosure. The daughter hoped that if she explained to the judge that her mother had Alzheimer’s disease, which had caused a series of financial missteps, then she could stop the seizure of the property.

Alzheimer’s had crept into Lewis-Thorpe’s life. A widow, she had lived alone for several years and had made arrangements, including naming Reynolds as power-of-attorney agent. But Reynolds lived 450 miles away in Pittsburgh and wasn’t there to see the incremental declines. It wasn’t until Reynolds began reviewing her mother’s bank statements that she realized Lewis-Thorpe — once a hospital administrator — had long been in the grip of the disease.

“We thought it was just a normal part of aging,” recalled Reynolds. “By the time we caught on, it was too late.”

Financial problems are a common reason family members bring their loved ones to the office of Robin Hilsabeck, a neuropsychologist at the University of Texas at Austin Dell Medical School who specializes in cognitive issues.

“The brain is really a network, and there are certain parts of the brain that are more involved with certain functions,” said Hilsabeck. “You can have a failure in something like financial abilities for lots of reasons caused by different parts of the brain.”

Some of the reasons stem from the simple act of aging, as Reynolds assumed about her mother. But when a person’s cognition begins to decline, the problems can grow exponentially and follow different paths.

Age, dementia and disease

Alzheimer’s has become a cultural umbrella term for dementia; the two words are often used synonymously. But this is a misnomer. Dementia is not classified as a disease per se, but rather it is a syndrome involving the loss of cognitive abilities. The cause can be one of several neurological illnesses, including Alzheimer’s or Parkinson’s, or it can result from brain damage such as a stroke or head injury.

In most cases an older adult’s dementia is progressive. The first signs often manifest in memory slips along with changes in high-level cognitive skills that deal with organization, impulse control and the ability to plan — all critical for money management. The causes of dementia vary, as do the financial woes it can cause.

For example, with Alzheimer's comes a progressive shrinking of the brain’s hippocampus. That’s the catalyst for memory loss which, early in the disease — sometimes before loved ones notice — can result in a person forgetting to pay their bills.

Lewy body dementia causes fluctuating cognition: A person veers from very sharp to extremely confused, often within short passages of time. “They might be perfectly fine making a financial transaction early in the day,” says Hilsabeck. “Then later in the day they may not be able to do it.”

Those with frontotemporal dementia might suffer a loss of nerves in the part of the brain that governs impulse control and problem solving. That can lead to large, spontaneous purchases — actions a healthy brain would have tempered.

Vascular dementia, which sometimes accompanies a stroke, reduces blood flow to the brain. That can undermine planning, processing and judgment, making individuals easier to defraud.

"They answer the phone, and they talk to the scammers," says Hilsabeck. "The alarm doesn't go off in their head that this doesn't make sense."

Even before or without developing some form of dementia, people can experience mild cognitive impairment, or MCI — a reality that affects 10-20% of people 65 or older. They can be easily confused, struggle to recall names and even have issues with judgment. While this population isn’t as vulnerable as people with dementia, they are at heightened risk of financial mistakes or more likely to become victims of fraud than the general population.

Sometimes MCI is just a facet of aging, along with joint pain and graying hair. But it’s often the early presentation of diseases such as Alzheimer’s or Lewy body dementia. Studies have found that 10-15% of people with MCI develop dementia every year; within five years, roughly half of people with MCI will get it.

“Financial decision making is very challenging cognitively,” says Dr. Jason Karlawish of the University of Pennsylvania’s Penn Memory Center. “So, if you have even mild cognitive impairment, you can make mistakes with finances, even though you're otherwise doing generally OK in your daily life.”

Some of those mistakes are irreversible. Despite Angela Reynolds’ best efforts on behalf of her mother, foreclosure of the family home went through in 2018, about a month before Thanksgiving.

Property records show that Lewis-Thorpe and her husband bought the two-bedroom Cape Cod for $20,000 in 1966. Theirs was one of the first Black families in their New Haven neighborhood. During that half-century, Lewis-Thorpe hosted church cookouts in the backyard and celebrated Christmas with her two daughters and eight grandchildren in the living room. Members of the local chapter of Negro Business and Professional Women Clubs gathered at her dining room table to talk politics and business ventures.

Lewis-Thorpe had achieved the American dream of middle-class professionalism and planned to pass that prize of generational wealth onto her children.

Instead, U.S. Bank owns the property. A 2021 tax assessment lists its value at $203,900.

Financial accountability

Sharon Gwinn and her husband had been married almost 30 years when she cleared out their savings and checking accounts, transferring them to her name only. It felt horrible, like she was stealing, but short of losing everything, she was out of options.

That was some 20 years ago. Gwinn’s husband was still working as a hospital orderly when he started to spend money erratically. One Thursday night he racked up a $3,000 tab at a Pittsburgh cop bar, buying rounds for strangers. Gwinn discovered his splurge — something totally out of character for him — when her credit card was declined at the grocery store. That’s when she realized that her husband was showing the first of a series of cognitive changes that eventually would be diagnosed as Lewy body dementia.

“He drove for years after his financial awareness was gone,” Gwinn says. “It’s just this one area. It’s what attacked his brain first.”

Changes in financial habits are a common early sign of cognitive decline, according to Penn’s Karlawish. He often sees patients who are navigating financial disasters. What he doesn’t see are changes in banking practices or regulations that would mitigate the risks that come with aging and dementia.

“A thoughtful country would begin to say we've got to come up with the regulatory structures and business models that can work for all,” he says, “not just for the 30-year-old.”

The vast population of Baby Boomers is entering retirement age with significant capital. While members of that generation accounts for 22% of the overall population, Federal Reserve Data shows that they hold just over half the household wealth in the U.S.

Gwinn, now 63 and a widow, is part of that generation. While she protected herself and her husband from financial ruin, Gwinn worries that if she, too, develops dementia, she could bankrupt herself before anyone notices. That would leave her at the mercy of taxpayer-funded programs such as Medicaid for her long-term care or burden her children with making near-impossible decisions about her daily life.

“The thing that bothers me the most is my liquid money,” she says. “[My kids] do not know my day-to-day spending habits.”

Political inaction

No firm data tracks how many older adults rely on public assistance as the result of financial mistakes caused by cognitive decline; they get lumped in with everyone else receiving government support.

But a growing body of research shows that people with dementia face worse financial outcomes. A 2020 study from Johns Hopkins University of 81,000 Medicare beneficiaries found that people with Alzheimer's and related dementias started to develop subprime credit up to six years before a formal diagnosis. It is among a cluster of studies that point to financial problems as a possible warning sign — rather than just the fallout — of cognitive decline.

Despite that evidence and the aging of America, the risk-averse financial industry is reticent to act. Nor have lawmakers made the financial safety of older adults a priority.

The last time elder wealth management was addressed in major legislation on the federal level was 2018’s Senior Safe Act. The law gives immunity to financial institutions in civil and administrative proceedings in instances where employees report possible exploitation of a senior — provided the bank or investment firm has trained its staff to identify exploitative activity.

It’s a lackluster policy, says Naomi Karp, an expert on aging and finances who spent eight years as a senior analyst at the Consumer Financial Protection Bureau’s Office for Older Americans. That’s because the act makes staff training optional, and it lacks oversight.

“There’s no federal agency that's charged with covering it or setting standards for what that training has to look like,” Karp says. “There’s nothing in the statute about that.”

One corner of the financial industry that has made modest progress is the brokerage sector, which concerns the buying and selling of securities, such as stocks and bonds. Since 2018, the Financial Industry Regulatory Authority — a non-governmental organization that writes and enforces rules for brokerage firms – has required agents to make a reasonable effort to get clients to name “trusted contacts.”

These trusted contacts are similar to emergency contacts listed for health care providers or even airlines. They’re notified by a financial institution in the case of concerning activity on a client’s account. The notification will include a basic explanation of the situation without revealing specific financial information.

Ron Long, the recently retired director of elder client initiatives at Wells Fargo, explains it this way: “It appears [the client] has fallen in love with someone in Belarus, and it appears to be a person who is taking advantage or exploiting.”

But the trusted contact has no authority. The hope is that once notified, the named relative or friend will talk to the account holder.

It’s a start, but a small one. This low-stakes effort is limited to the brokerage side of operations at Wells Fargo and most other large institutions. The same protection is not extended to clients’ credit cards, checking or savings accounts.

Industry reluctance

When she was at the Consumer Financial Protection Bureau, Naomi Karp and her colleagues put out a set of recommendations for companies to better protect the wealth of seniors. The 2016 report included employee training and tweaks to fraud detection systems.

“We would have meetings repeatedly with some of the largest banks, and they gave a lot of lip service to these issues,” Karp says.

Karp has seen some smaller community banks and credit unions take proactive steps to protect older customers — such as comprehensive staff training and improvements to fraud detection software. But there’s a hesitancy throughout the industry to take more decisive action, which seems to stem, in part, from fears around liability, she says. Banks are concerned that they might get sued — or at least lose business — if they intervene when no financial abuse has occurred or a customer's transactions were benign.

Policy solutions that address financial vulnerability also present logistical challenges. Expanding the use of something such as the trusted contact program isn’t like flipping a light switch, says Long of Wells Fargo. “You have to solve all the technology issues: Where do you house it? How do you house it? How do you engage the customer to even consider it?”

For it to work, people would need trusted contacts for all their financial accounts: savings, checking, loans and multiple credit cards. The extensive list can span several companies — none of which is authorized to talk to each other about an individual client’s account.

The tech world offers some solutions. SilverBills is a concierge service that makes sure bills are paid on time and inspects invoices for fraud and errors. Whealthcare gathers trusted contact information, assesses people’s money management abilities and outlines steps clients can take to keep their finances safe. And EverSafe scans accounts for unusual spending, such as the huge bar tab that Sharon Gwinn’s husband tallied.

“Those really smart scammers aren't just going to steal a huge amount from one account,” says Liz Loewy, EverSafe’s chief operating officer, as well as the former chief of the elder abuse unit at the New York County District Attorney’s Office. “They usually are smart enough to start small and cover more than one account at more than one institution.”

Not everyone can afford a service like EverSafe: packages range from roughly $7 to $26 a month. But such a service might have helped Gwinn, who couldn’t prevent her husband from signing up for new credit cards even after she took control of the couple’s finances. After consulting her four children, she decided to purchase the basic package. Now Gwinn’s oldest daughter, who is designated as her power-of-attorney, will be notified if EverSafe flags anything unusual. This added protection makes Gwinn feel lighter.

“She can hopefully help me nip things in the bud before I get myself into trouble,” Gwinn says.

Fraud and exploitation

A red folder holds records of financial transactions dating back about five years from the savings and checking accounts held by Gina’s grandmother. Combined, the accounts consistently hovered around $54,000 until Oct. 3, 2022. That’s when, according to Gina, the accounts were emptied by a close relative. (At the family’s request, WESA is not using Gina’s last name or identifying her grandmother, who has dementia.)

Gina traces events back to a hospital visit. Her grandmother had taken a bad fall, and Gina and the relative faced off at her bedside. Old resentments boiled over into shouting: another family member who witnessed the incident said security had to be called. The next day, Gina says, the money was missing from her grandmother’s account.

Gina was there when her grandmother phoned the relative about the money. She says the relative deflected, shifting the conversation to the grandmother’s condition, and then denied responsibility about the empty accounts: “At one point, [the relative] blamed other family members.”

A University of Southern California 2019 study of calls reported to the National Center on Elder Abuse found that the majority of calls (55%) alleged financial abuse and that family members are most often cited as the perpetrators of any kind of mistreatment.

Pittsburgh-area elder law attorney Kim Orlando who represents victims of financial abuse, estimates that 80% of her clients suffer from some form and degree of dementia. Many also suffer from loneliness.

“They’re so easy to take advantage of,” Orlando says. “It's almost as if they're being groomed.”

The National Council on Aging estimates that seniors in the U.S. lose $36.5 billion every year due to elder financial abuse. (In comparison, last year Americans spent $45 billion in out-of-pocket costs on nursing home and other institutional care.) The amount of money taken from older adults via abuse and exploitation is likely an undercount: A study from New York found that for every documented instance of elder financial exploitation, another 44 cases go unreported. It's also hard to say what percentage of victims of elder fraud have dementia or MCI, though it's widely agreed these conditions put people at greater risk.

Investigating alleged financial abuse is time-consuming and often requires specialized expertise in accounting and law. That is further complicated when victims are reluctant to accuse a relative or friend, or when dementia leaves them unaware they were victimized.

“There are too many of these cases out there for us to work all of them,” says Brooklynn Riordan, the supervisory special agent of the complex financial crimes section of the FBI’s Pittsburgh field office. To bolster official investigations, the agency launched a campaign to educate older adults about their risk.

The added challenge of investigating cyber-based scams, especially when they originate outside the U.S., makes guilty verdicts rare. But Riordan encourages people to report any suspected fraud. While a single and relatively small loss — a few thousand dollars — might not ignite an investigation, it could add to a pattern of fraud targeting multiple victims.

When Gina tried to recover her grandmother’s $54,000, she says she faced a daunting gantlet. It was hard to convince the bank to provide documentation despite her authority as power-of-attorney. A Pittsburgh police detective assigned to the case told her there was nothing he could do; the relative had been named on her grandmother’s accounts years earlier and those documents hadn’t been updated, although the relative was not participating in her caregiving and did not have permission to withdraw funds. Gina also contacted the Social Security Administration, Pennsylvania’s Department of Aging, and reached out to her state senator and a Pittsburgh city council member. Her efforts went nowhere.

Eventually, Gina emailed WESA; a reporter referred her to the Pittsburgh nonprofit Center for Victims. An advocate there then connected Gina to an investigator at the Allegheny County District Attorney’s office.

An Oct. 13 email from detective Jackie Weibel confirms Gina’s account: “You recently sent an email to a local radio station about a situation with your grandmother. I have been assigned to investigate the matter … What does your schedule/availability look like for the next two weeks.”

That route isn’t open to everyone. Unlike Allegheny County, which is the second-most populous county in Pennsylvania, many local jurisdictions lack specialized fraud investigators. To narrow that gap, the Pennsylvania Department of Aging recently received a federal grant to create a team of specialists to support smaller agencies. But the four-person unit has the bandwidth to cover just a fraction of the state’s elder financial fraud cases. A spokesperson says investigators will focus on more complex cases involving higher dollar amounts and with multiple financial assets.

Orlando, the elder law attorney, says in her experience she hasn’t seen law enforcement get involved unless the potential for recovery was at least $250,000: “That is not something they would want to utilize taxpayer resources to investigate.”

But Pennsylvania AARP's Director of State Advocacy Teresa Osborne told WESA in August that she hopes the unit’s investigations will result in more criminal prosecutions.

"Generally, we see financial elder abuse treated only as a civil matter, which means there is no jail time or criminal record for the abuser,” Osborne says. “The penalty may be just returning the stolen assets or money.”

In Gina’s case, the hint of criminal prosecution may have been enough. She had feared the relative who tapped her grandmother’s accounts would spend the money before it could be recovered through the legal system. But the money was returned. While Gina says she is still angry, she won’t push for criminal charges.

“To drain accounts that bills are still coming out of … They didn’t care about overdraft fees, they didn’t care about utilities being cut off,” says Gina. “It was very shameful.”

Hope and reality

When it comes to the tricky mix of cognitive decline and money management, the deck is stacked against aging Americans. Unless policymakers and financial institutions step up, it’s left to families to make a collaborative plan around aging and finances.

That’s far easier said than done. It requires people to acknowledge the inevitability of death — their own and that of those they love — and of the physical, mental and financial realities of aging. Even in the best of circumstances, money is a touchy subject — one that can raise discomfort and hackles, and one that is often considered no one else’s business.

"Money can represent stability, control, power, autonomy and safety," says New York City-based therapist Matt Lundquist.

Lundquist, who specializes in financial family therapy, says asking a person to relinquish control of their finances can be a massive hit to their sense of self. Think of it as a giant step up from asking someone to give up their car keys.

So, it's crucial not to blindside family members with this big talk; instead, Lundquist advises that people give a heads-up that money issues need to be discussed: "It makes a difficult conversation much more likely to go well."

Again, easier said than done. Attentiveness and love don’t erase those challenges.

Angela Reynolds says household finances weren’t discussed in her family. That, and her busy life two states away, created inevitable barriers to awareness of her mother’s plight. Still, she blames herself for the loss of the family home. "It's my mother. I'm going to feel guilty."

Gwinn wants to protect her children from bearing a similar guilt. But she knows it’s unlikely her bank, credit card company and medical providers will spot red flags in time if dementia siphons away her retirement savings. She subscribed to a basic EverSafe service and will consider adding safeguards as she ages.

Gina’s grandmother got her money back. But Gina regrets not pushing for updates to legal documents, including which relatives had access to the accounts, that would have prevented any exploitation. She knew there was a risk — but deferred to her grandmother, who didn’t want to spark a family conflict.

Carole Shepard, a self-employed geriatric care manager in suburban Pittsburgh, cautions that many hard conversations are necessary and conflicts are inevitable, especially when they involve someone with progressive dementia. Too often, she sees her older clients in crisis because their hope had been that one day they'd peacefully die in their sleep without any of the humiliations of aging.

"Hope is not a strategy," she said.

That's why Shepard and her husband, both in their 60s and both with family histories of vascular dementia, have drafted extensive plans and shared them with their adult children. They appointed their younger son as financial power-of-attorney and their older son as medical power-of-attorney. Shepard thinks she and her husband will sell their home within five years and rent an apartment in Pittsburgh’s Strip District — a walkable area near arts venues and restaurants. Then they’ll start looking for a senior living community that includes a memory care unit.

By making these decisions now, Shepard and her husband believe — hope — they're preserving their autonomy. Yet she knows that all their planning won't protect their children from some degree of hardship, especially if either she or her husband develops dementia. Symptoms are unpredictable and variable: depression, irritability, paranoia, impulsiveness. That creates a dilemma for adult children: Pushing help onto resistant parents incites strife; ignoring reality begets neglect.

There is no reliable roadmap for caregivers of people living with dementia, says Robert Levenson, a professor at the University of California, Berkeley who specializes in the emotional changes that accompany aging. "The truth is it's going to be difficult, and the chances of complete success are not very good."

Levenson's best advice is to include the person with dementia in the decision-making process as much as possible. If a person can't articulate their desires, it's still important to consider the values and interests they held while healthy. For example, perhaps a lifelong Pittsburgh Steelers fan is no longer capable of paying their own bills; the person in charge of their monthly budget could include a cable package that allows them to watch NFL football.

It's crucial to remember that the disease is the enemy, Levenson says: "Somehow, you have to try to find a way to stay on the same side with your loved one and not end up blaming each other.”

Angela Reynolds and her mom have been able to do this. After a traumatic departure from New Haven, Jonnie Lewis-Thorpe moved into her daughter's house in Pittsburgh. Now, Reynolds' primary concern is finding a caregiver to be with her mom during the day.

On a morning with visitors in late November, Lewis-Thorpe struggles to follow conversations but seems content. Mother and daughter are both wearing black slacks and bright red sweaters. They joke easily with each other while looking over old family photos. The scene echoes a day from June. On that morning both women wore silky blouses with bold geometric prints. Sitting in the backyard, where coyotes sometimes visit, Lewis-Thorpe looked over at her daughter and smiled: “She’s done marvelous for me. She really has.”

WESA’s reporting on dementia and financial decision-making is part of a fellowship with the Association of Health Care Journalists, supported by The Commonwealth Fund.