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The Dilemma Of Money And Dementia

Written by: Patricia Faust, MGS, Executive Contributor

Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.


It seems that there is always a looming catastrophe on the horizon as the huge group of boomers move toward their senior years. With boomers turning 65 at a rate of 10,000 per day and this phenomenon continuing until 2030, any problem skyrockets into a catastrophe. Add to the vast number of boomers becoming seniors, the fact that $42 trillion (yes, that’s a T) worth of assets rests in their hands and the hands of their parents. As wealth and large groups of seniors converge, stir in the projected incidence of dementia and you now have a picture of an impending crisis.

Puzzles depicting pills and dollars with the inscription -DEMENTIA

Normal Brain Aging Changes

Let’s step back from the ledge for a moment and get down to the individual impact memory loss has on financial competency. There are normal declines that occur to the brain as we age. Problem-solving skills diminish with age; memory, analytical reasoning and processing speed decline with age. Reasoning skills actually drop steadily after a peak at age 53. Finally, aging erodes financial acumen resulting in mistakes with credit cards, home-equity loans, and how to pay for healthcare.

Financial Capacity

The ability to take care of our finances is termed financial capacity which includes routine tasks like basic monetary skills, carrying out cash transactions, managing a checkbook. bank statement and exercising financial judgment. Financial literacy takes financial knowledge a little further. Concepts of investing and inflation are part of the landscape of financial literacy. And guess what – financial literacy decreases with age. Older investors are less effective in applying their investment knowledge and demonstrate worse investment skills.

Everything I just described occurs with normal aging and sustaining these types of losses puts older people at a greater risk for frauds and scams.

Diminished Capacity

Now let’s look at the financial abilities of someone who is cognitively impaired (e.g. Alzheimer’s disease). Diminished financial capacity becomes apparent when it becomes difficult to identify and count money, understand debt and loans, conduct cash transactions, and pay bills – the most basic of financial skills. Financial capacity is one of the first abilities to decline with the onset of cognitive impairment. These declining skills are apparent even before a diagnosis of dementia is made. Loss of financial skills is a dilemma for this group because in all other aspects of their lives they may appear to be performing normally. So how are these people found out? This might be the first indication to family members that there is a problem. They stop in to say hi and see a pile of unpaid bills sitting on the desk. They could notice receipts for outrageous purchases. And they are usually met with resistance when asking about these issues because there is so much fear on the part of their loved one that they will lose financial autonomy. Even though they are clearly not able to take care of their financial responsibilities, they don’t understand why this is a problem that needs to be attended to.

There are six warning signs of diminished financial capacity:

  1. Memory lapses: bill paying is dependent on memory – forgetting to pay a bill or repeatedly paying the same bill; multiple trips to the ATM or the bank to withdraw money; errors in check writing

  2. Disorganization: handling bills, keeping track of finances, managing important financial documents – actions that are difficult to perform because there is so much disorganization of paperwork

  3. Decline in checkbook management skills: this is one of the very first skills to decline; it requires procedural skills which are dependent on the executive abilities of the brain

  4. Arithmetic mistakes: decline in both written and oral arithmetic skills

  5. Conceptual confusion: new difficulty understanding financial terms and concepts

  6. Impaired judgment: new interest in get rich quick schemes; change in risk preference regarding investment decisions; newfound enthusiasm for questionable investments; new reports of erratic, unusual, or uncharacteristic purchases, withdrawals, or gifts.; with poor judgment comes the risk of succumbing to telephone, mail, and internet schemes; the problem with impulsivity leading to gambling and overspending.

Financial Abuse and Exploitation

The inability to handle financial decisions puts this group at high risk for exploitation and abuse. This group possesses a large portion of our nation’s wealth. The isolation from COVID contributed to cognitive decline and exposed older people to financial vulnerability from scams and fraud. Federal Trade Commission data shows that consumers reported losing more than $58 billion to fraud in 2021 – an increase of over 70% over the previous year.

The Top 5 Financial Scams Targeting Older Adults

1. Government impersonation scams:

a. Scammers call unsuspecting older adults and pretend to be from the Internal Revenue Service (IRS), Social Security Administration, or Medicare.

b. They may say the victim has unpaid taxes and threaten arrest or deportation if they don’t pay up immediately.

2. Sweepstakes and lottery scams:

a. Scammers call an older adult to tell them they’ve won a lottery or prize of some kind. If they want to claim their winnings, the older adult must send money, cash, or gift cards up front – to cover supposed taxes and processing fees.

3. Robocalls and phone scams:

a. One common robocall is the “Can you hear me?” call. When the older person says “yes”, the scammer records their voice and hangs up.

b. The criminal then has a voice signature to authorize unwanted charges on items like stolen credit cards.

4. Computer tech support systems scams:

a. A pop-up message or blank screen usually appears on a computer screen or phone, telling the victim their device is damaged and needs fixing.

b. When they call the support number for help, the scammer may either request remote access to the older person’s computer and/or demand they pay a fee to have it repaired.

c. In 2021, the Internet Crime Complaint Center (IC3) fielded 13,900 tech support fraud complaints from older victims who suffered nearly $238 million in losses.

5. The grandparent scam:

a. The caller claims to be an arresting police officer, doctor, or lawyer trying to help the grandchild.

b. They use high-pressure tactics that play on the emotions of their victim to get them to send cash as quickly as possible.

c. There are even reports of scammers showing up at older adults’ homes, posing as a ‘couriers’ to pick up the money.

(Waterman, G. The Top 5 Financial Scams Targeting Older Adults. July 27, 2022)

These scams are devastating to older adults. In many cases, they lose their life savings and have no means of recovering. I personally have talked to several people whose parents have been victims of these scams and fraud.


Are there any solutions emerging for this impending crisis? The financial industry is taking steps to put safeguards in place to protect their older clients. The Financial Industry Regulatory Authority reported that some financial firms are including paperwork to access referrals to relatives, or others in the event that signs of the diminished capacity surface with their client. Wells Fargo Advisors launched an Elder Client Initiatives team to answer questions from their advisors around the country on how to handle cases of possible dementia. AARP is working with the American Bankers Association Foundation on educational materials for consumers, financial caregivers and bankers on age-friendly banking -> how to address dementia, fraud, and financial caregiving.

This educational push is critical to alert bankers, financial planners, and families on recognizing signs of dementia and appropriate steps to safeguard assets of clients and family members. These solutions and safeguards need to be in place as soon as possible because this problem grows bigger by the day.

For more info, follow me on Facebook, LinkedIn, Twitter and visit my website!


Patricia Faust, Executive Contributor Brainz Magazine

Patricia Faust is a gerontologist specializing in the issues of brain aging, brain health, brain function, and dementia. She has a Master in Gerontological Studies degree from Miami University in Oxford Ohio. Patricia is certified as a brain health coach and received a certification in Neuroscience and Wellness through Dr. Sarah McKay and the Neuroscience Academy.

My Boomer Brain, founded in 2015, is the vehicle that Patricia utilizes to teach, coach, and consult about brain aging, brain health, and brain function. Her newsletter, My Boomer Brain, has international readers from South Africa, Australia, throughout Europe, and Canada.

Patricia’s speaking experience spans the spectrum of audiences as she addresses corporate executives on brain function, regional financial professionals on client diminished capacity, and various senior venues concerning issues around brain aging and brain health.





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