Long before memory loss becomes obvious, dementia may begin showing up somewhere unexpected: in a person’s bank account.
For Lauren Nicholas, PhD, a health economist and professor of geriatrics at the University of Colorado Anschutz Department of Medicine, that insight is personal. Watching her grandmother struggle with dementia and the financial challenges it created shaped the direction of her career.
“I saw how difficult it was,” Nicholas says. “Not just emotionally, but financially. It made me want to understand whether there were ways to prevent some of that hardship for other families.”
Years later, Nicholas and her colleagues published research through the National Bureau of Economic Research examining how financial decision-making changes in the years leading up to a dementia diagnosis, building on earlier studies that examined changes in credit scores before dementia was diagnosed.
Looking for dementia in the checkbook
When most people think about the early stages of dementia, they picture forgetfulness — misplaced keys, repeated questions, or missed appointments. But managing money is one of the most cognitively demanding tasks people do in daily life. It requires memory, attention, judgment, math skills, and the ability to weigh risk. It’s why physicians have informally advised families for years to “look for dementia in the checkbook.”
“Financial decision-making is incredibly complex,” Nicholas says. “It’s not just remembering to pay a bill. It’s evaluating options, recognizing risk, and adjusting when something doesn’t seem right.”
Because those skills are so layered, they can begin to slip before more obvious memory symptoms appear.
By analyzing credit reports and wealth data over time, Nicholas and her colleagues found that people who were later diagnosed with dementia started experiencing measurable financial losses years before diagnosis.
Financial wealth, including assets such as stocks, bonds, retirement accounts, and savings, declined first. Non-financial wealth, such as homes and vehicles, tended to decrease later, closer to diagnosis.
“Financial assets require active management,” Nicholas explains. “You’re constantly making decisions. That makes them more vulnerable when cognitive changes begin.”
Caused by mistakes
One assumption might be that wealth declines because of rising medical expenses or reduced income. But the study tested multiple possible explanations and found little evidence to support those theories.
Instead, the data pointed toward impaired financial decision making.
“All evidence suggests these losses are not intentional spending or primarily driven by medical bills,” Nicholas says. “They appear to be mistakes.”
Those mistakes can take many forms: missed bill payments, risky investments, susceptibility to scams or unnecessary purchases. In some cases, individuals may demonstrate increased generosity or make unusually large donations.
A particularly concerning finding is that people experiencing early cognitive decline often become overconfident in their financial abilities.
“As we lose the skills that help us manage money, we can also lose the ability to accurately assess our own abilities,” Nicholas says. “That combination can be risky.”
Protecting against your future self
One of the most important findings is timing.
Financial changes were detectable up to six years before a formal dementia diagnosis, often during a period when someone may otherwise appear cognitively normal.
“That’s concerning,” Nicholas says. “Those are resources people may need later to pay for care. If losses happen years before diagnosis, families may have fewer protections in place when they need them most.”
As Americans live longer and dementia becomes more common with age, Nicholas describes cognitive decline as a “universal risk,” meaning it is something everyone has some chance of experiencing.
While the findings highlight risk, they also point to opportunity — a chance to plan earlier.
Designating a trusted contact on financial accounts, setting up automatic bill pay, simplifying investment portfolios, and considering financial products that provide guaranteed income streams are all strategies that can help reduce risk.
At the same time, she cautions families against granting unrestricted account access without safeguards, as elder financial abuse is also a serious concern.
“We need structural protections,” Nicholas says. “It’s not about personal failure. It’s about recognizing that cognitive decline can affect financial decision making before we realize it.”
Ultimately, Nicholas hopes the research encourages earlier conversations — not just about memory, but about money.
“If someone takes away one thing,” she says, “it’s that planning early matters. We need insurance against our future selves.”
