What We’ve Learned About Dementia’s Toll on Family Finances
How a late or missed diagnosis can balloon costs for people with Alzheimer’s and their loved ones
Anyone who has a parent, spouse or partner with Alzheimer's or a related dementia knows the vicious disease can drain the finances of the person with cognitive issues and their loved ones. A flurry of research shows just how enormous these costs can be, especially if dementia is diagnosed late — or not at all.

"Dementia is among the most expensive conditions for the person with dementia and their family members," Tsai-Chin Cho of the University of Michigan School of Public Health said at the 2024 Gerontological Society of America annual conference in Seattle.
Roughly 1 in 10 Americans aged 65 and older has dementia; another 22% have mild cognitive impairment, according to Columbia University researchers. Although just 3% of people aged 65 to 69 have dementia, 35% of those 90 and over do.
The Financial Cost of Alzheimer's
The Alzheimer's Association says that for Medicare beneficiaries with Alzheimer's or other dementias, the average annual out-of-pocket cost is $10,289 for health care and long-term care services not covered by Medicare, Medicaid and private insurance.
But that figure may understate reality. The Alzheimer's Association also says out-of-pocket costs and informal caregiving (typically from family members) add up to $240,046 in the last seven years of life of a family member with dementia, roughly double the amount for those without dementia.
At the Gerontological Society of America conference, USC Leonard Davis School of Gerontology researchers said they found that caregivers of people aged 50 and older with Alzheimer's were 1½ times more likely to experience financial strain than caregivers of those without Alzheimer's.
Researchers worry that too many Americans don't realize, or anticipate, the financial toll dementia can take.
"It's very important for family members to allocate their roles and work together."
"I believe most people are not thinking they might have this situation," said HwaJung Choi, an economist and professor at the University of Michigan School of Public Health who co-authored the JAMA Internal Medicine article, "Changes in Care Use and Financial Status Associated With Dementia in Older Adults."
And, she added, most Americans can't afford the cost of long-term care for dementia. A 2024 study published in the in the JAMDA journal reported that people aged 70 and older with dementia "were at greater risk of facing catastrophic out-of-pocket expenses for long-term care than those without dementia."
A 'Substantial' Financial Burden
Said Choi, citing a Genworth Cost of Care study, "adult day care costs $25,000 a year, assisted living costs $64,000 and a home health aide costs around $76,000."
Choi's article, which called the financial burden of dementia on patients and families "substantial," put hard numbers on it by comparing the annual out-of-pocket medical costs and wealth for older Americans with dementia and for those without it.
"For those who did not have dementia, we didn't see much change at all for out-of-pocket medical costs," said Choi. "But for the dementia group, it almost doubled over two years, starting at $4,000 at the onset of dementia and continuing to increase to $10,000 over the four years of follow-up."
"Financial decisions can very much be impacted by the disease course even before the full onset of dementia."
Over eight years, the people with dementia spent $33,000 in out-of-pocket medical costs, on average, roughly twice the amount for people without dementia.
Similarly, those with dementia saw dramatic wealth drops over eight years — from roughly $80,000 to $30,000. During that time, the median wealth for the older adults in the study who didn't have dementia started at about $80,000 and didn't change much.
The probable chief reason for the wealth decline among people with dementia, Choi said, was the cost of nursing home care or residential care.
Wealth Falls Before a Diagnosis
Two years after the study began, a striking 30% of the people with dementia but without a spouse or adult child were in nursing facilities. By contrast, the figure was about 5% for those who had a spouse without a disability or had an adult child.
For people with dementia, the impact of having a family caregiver on financial well-being, Choi said, "is really, really huge."
University of Washington Professor of Health Economics Jing Li and her fellow researchers have also recently found conspicuous declines in wealth six to eight years before people were diagnosed with dementia.
"Our work highlights the possibility that financial decisions can very much be impacted by the disease course even before the full onset of dementia," Li said.
Li's research team reviewed U.S. Health and Retirement Study data for people 50 and older and their spouses from 1998 through 2018 with probable dementia and those without dementia.
Dementia Drains Family Wealth
They discovered that although median household net worth was similar between the groups eight years before probable dementia (roughly $215,000), its decline accelerated in the years shortly before dementia onset ($104,360).
Similarly, although median financial wealth was about the same for both groups eight years before dementia onset (roughly $25,000), it shrank to $5,418 at probable dementia onset. By that time, median financial wealth had grown to about $30,000 among those without dementia.
The reasons for the significant financial status differences between those with probable dementia and those without dementia?
Difficulty in Managing Money
For one thing, the authors wrote in a JAMA Neurology article, "Declines in Wealth Among US Older Adults at Risk of Dementia," the shrinking wealth figures likely reflect deteriorating financial capacity associated with cognitive decline, including susceptibility to fraud.
Li and colleagues have found that among people 50 and older managing their finances, 57% of those with dementia and 15% with undiagnosed cognitive impairments reported difficulty doing so. By contrast, just 4% of those without cognitive impairment had trouble managing money.
Li's research team also wrote that the people in their study with probable dementia probably had to draw down assets to pay for growing medical and long-term care expenses or qualify for Medicaid coverage of nursing home care.
Early Diagnoses May Help
Another study Li and others conducted discovered that in the six years before people were diagnosed with dementia, they had higher total health costs than counterparts without dementia.
An examination of undiagnosed memory disorders by the Federal Reserve Bank of New York said years prior to the eventual diagnoses, the average credit scores began to weaken and payment delinquencies started to increase.
"I think the leading reason people get dementia diagnoses late may be the unfortunate belief that once you have a diagnosis, there's nothing to be done — you're sort of stuck."
Earlier diagnoses of dementia, researchers say, could make a big difference in preventing wealth losses for people with the disease.
Why do some people with cognitive impairments get earlier diagnoses than others? Li and her team are looking into this. But they have some preliminary ideas.
"We thought maybe the people who got an early diagnosis were more conscientious," she said. "Maybe they have better resources. Maybe they have higher incomes or are more educated."
None of those seemed to be the case.
Instead, Li said, the one difference they think they've found in the likelihood of an early diagnosis is that people getting them tended to have spouses and didn't live alone.
What Prevents Earlier Diagnoses
"They're more likely to have someone in their lives who would notice those symptoms early on and maybe nudge them to get a diagnosis," Li said.
A 2021 study by researchers at the University of Michigan, North Dakota State University and Ohio University found that roughly 75% of people with cognitive impairment consistent with dementia did not have a formal medical diagnosis of Alzheimer's or dementia.
"Many people know about the risks of financial losses that can accompany cognitive decline, but far fewer seem to know about the risks that can happen before an actual diagnosis surfaces," said Julie Miller, director of thought leadership and financial resilience at AARP.
AARP and the MIT AgeLab held an April 2024 symposium about dementia's early financial toll. They just released a new report, co-authored by Miller, Karen Shakira Kali at AARP and Luke Yoquinto at the MIT AgeLab.
Stigma Plays a Role
"I think the leading reason people get dementia diagnoses late may be the unfortunate belief that once you have a diagnosis, there's nothing to be done — you're sort of stuck," said Yoquinto.
Li believes the stigma often associated with dementia makes some people reluctant to get a diagnosis, too. She also thinks there aren't enough doctors trained to diagnose dementia.
Yoquinto said one reason some older adults with cognitive impairments (diagnosed or not) become victims of financial fraud and exploitation is that their money advisors don't recognize the cause. "The financial missteps may be the first indication of mild cognitive impairment," said Yoquinto.
Preserving Finances for You and Your Loved Ones
Researchers suggest a few steps people can take to help preserve finances for loved ones with dementia and themselves:
- If you're in your 50s or 60s, you may want to buy a long-term care insurance policy. This coverage could help pay for care if you later have dementia and need assistance. Don't wait until your 70s or older to shop for a policy; you might be denied coverage or charged steep premiums.
- Older adults with spouses, partners or adult children should talk with them about their finances. These discussions can include how they would pay for long-term care someday, if necessary, as well as how the loved ones could help spot and curb potential financial fraud or exploitation.
"It's very important for family members to allocate their roles and work together," said Choi.
- Adult children of parents in their 70s and 80s should try to get financial power of attorney authority for their parents. With a signed power of attorney form, the child can step in, if need be, to help manage their mom's or dad's money.
Delaying this conversation until after the parent has dementia — diagnosed or not — could be too late to get the signature.
At the AARP/MIT AgeLab consortium, Yoquinto said, "we talked to one woman whose mother had dementia and it was very difficult for the daughter to help her get the care she needed."
- People who've had Medicare Part B for at least 12 months should get Medicare's free annual wellness check from their doctor.
During this visit, the patient fills out a Health Risk Assessment and receives a cognitive assessment for signs of dementia. If the doctor thinks the person may have cognitive impairment, Medicare covers a separate visit for a more thorough review.
"I think an annual cognitive assessment is something that's very important," said Li.
- Brokerage clients should fill out "trusted contact" forms from their advisors. These documents let a client provide the name and contact information of someone the advisor can talk with if the pro is concerned about potential financial fraud or exploitation or suspects the client is suffering from diminished capacity.
- If you suspect your parent may have cognitive impairment, flag it to their banker to keep an eye out for potentially problematic transactions. AARP has a free online program called BankSafe, training bank and credit union staffers in identifying and stopping financial abuse.
In a study following six months of BankSafe training, the program saved nearly $1 million of older bank customers' deposits and led to a 133% increase in the number of suspected incidents reported.
"The more financial service professionals know about the heightened risk for personal financial losses among older adults in the pre-dementia phase, the more tools professionals can have to intervene and help support older adults and those who love them," said Yoquinto.
