hero image

As the population of older Americans increases, the prevalence of Alzheimer’s disease and related dementias (ADRD) rises as well. These conditions not only impair cognitive abilities but also, according to recent research, negatively impact financial stability long before an official diagnosis is made.

Debt delinquency increases with Alzheimer’s onset

Researchers from Georgetown University and the Federal Reserve Bank of New York found that, in the five years before being diagnosed with a memory disorder, individuals tend to experience a consistent drop in credit scores and a rise in debt delinquency. The study suggests that these financial issues are caused by the cognitive decline associated with the early stages of the disorder.

The study analyzed anonymized credit report data linked to Medicare claims for over two million seniors, revealing that credit scores dropped by four to six points on average in the year before a medical diagnosis. This decline, though seemingly small, is significant given the typical score range of 300 to 850 and leads to higher interest rates, reduced credit access, and potential foreclosure.

Health economist Carole Roan Gresenz, PhD, a professor at Georgetown’s School of Health and McCourt School of Public Policy, highlights the clear and consistent findings of her study. According to Gresenz, the study shows that financial deterioration parallels cognitive decline in individuals. Specifically, credit scores drop quarter by quarter, and the likelihood of delinquency rises as the diagnosis approaches.

Financial impact profound among minorities

The study highlights that these financial impacts are more severe among Black and female individuals. Black adults showed a more significant pre-diagnosis decrease in credit scores and a higher increase in delinquency rates compared to White adults. Women’s credit scores also recovered more slowly after diagnosis than men’s. These differences likely stem from the documented delays in diagnosing memory disorders in these groups.

Households dealing with ADRD face a dual burden with substantial annual care costs amounting to tens of thousands and reduced financial resources. Before diagnosis, declining credit scores and delinquencies lead to financial repercussions such as higher interest rates and limited credit access, hindering financial flexibility when it’s most needed.