Aging Options

LIMITED TIME OFFER: First Academy Lesson is Free

When a Loved One with Dementia Spends Excessively, Families Suffer

Save as PDF

Finances and dementia might make for good television comedy, but for families dealing with it every day it’s no laughing matter. That’s how nationally-known financial writer Richard Eisenberg begins this recent NextAvenue article about a difficult topic many families know all too well: the effect of cognitive decline on the spending habits of a beloved family member of friend.

Here at the Blog, we think it’s important to share articles like this one about finances and dementia for at least two key reasons. First, there are essential steps you need to take to protect your family and your loved one from fraud and abuse. Second, you need to know that, in dealing with the pain and awkwardness, you are not alone. Help is available.

Let’s explore this topic through Eisenberg’s insightful eyes.

Finances and Dementia: Funny on a Sitcom, But…

Eisenberg begins his NextAvenue article with a familiar scenario. “In a recent episode of ABC’s ‘Roseanne’ spinoff, ‘The Conners,’” Eisenberg writes, “the sitcom family learns that the family’s 90-something matriarch, Beverly, who has dementia, has run up $10,000 on her credit card, bought a Florida timeshare, donated to a sketchy charity and purchased two puppies now living with her in Illinois.”

In the sitcom, the plucky Beverly has a ready answer. “I know what I’m doing. These are all things I want and need,” she says. “This one (pointing to one of the dogs) won’t do his business in the cold. He needs a warm winter home. That’s why I bought the time share in Miami.”

In Real Life, Finances and Dementia Aren’t So Funny

“The show plays the story line for laughs,” Eisenberg explains, “but in real life, when a loved one with dementia spends excessively or recklessly, it’s anything but funny for the family.” He quotes Professor Lauren Nicholas, a geriatrician from the University of Colorado, who observes that excessive spending by someone with dementia is “a big stressor for families and so unfortunate when the losses are hitting right when you need money for caregiving or long-term care.”

Finances and Dementia: Why They’re Linked

Eisenberg explains that frivolous spending and cognitive decline are connected for various reasons., “Inadvertent spending can be a manifestation of Alzheimer’s or another form of dementia, sometimes as a response to social isolation,” he writes. “It can also happen when someone has mild cognitive impairment, an early stage of memory loss.”

Often, money troubles act as a kind of “canary in the coal mine,” warning of cognitive danger ahead. “What we find is that years prior to a dementia diagnosis, people have a heightened vulnerability to poor financial outcomes,” says Georgetown researcher Carole Rose Gresenz.  “Spending can certainly be one component of it.”

This foolish spending appears in multiple ways. “Sometimes, the spending problems show up as multiple purchases of the same clothing item because the person doesn’t recall buying them repeatedly,” says Eisenberg. Other times, there are gifts or charitable contributions the person really can’t afford.

Finances and Dementia: A Car Warranty but No Car

Eisenberg cites one example of how a bad financial situation launched a new company to protect the vulnerable. He describes how a personal experience with this situation led Howard Tischler to launch the EverSafe tech platform to protect the finances of older adults.

Eisenberg quotes EverSafe co-founder and Chief Operating Officer Liz Loewy. “Howard and I started EverSafe after his mother had been sold an auto club policy when she was 80. She didn’t own a car, was legally blind and didn’t have a license.”

Loewy told Eisenberg how Tischler’s mother Harriet, who had cognitive issues, “had stopped making her long-term care insurance policy premiums so she could pay for the $80-a-month auto policy and other things she didn’t need.” Loewy adds, “Her sons ended up paying for the long-term care, which cost nearly half a million dollars.”

Finances and Dementia: Families Caught by Surprise

Tragically, families are often blindsided by a loved one’s sudden financial recklessness. “In certain cases,” says Eisenberg, “a person known for making careful, researched spending decisions may become impulsive with dementia and the family may not realize it.”

For Georgetown researcher Gresenz’s, that’s what happened with her mother. “She was very frugal in her spending her whole life,” she tells Eisenberg. “Before she had any cognitive impairment, she was the kind of person who would have done checking, looked at the Better Business Bureau, done price comparisons.”

But that all changed after her mom developed dementia. Gresenz explains, “I noticed she made some decisions about repairs on her house that didn’t make sense.” Instead of being cautious, whenever someone recommended a person to make repairs, “she just signed up without doing her normal checking and it ended up being something that cost a lot of money,” Gresenz relates. “None of us were just paying enough attention at the time.”

Finances and Dementia: Preventing Excessive Spending

Eisenberg includes some helpful advice for families dealing with dementia-related spending. “The best time to take preventive actions is before a parent or family member has cognitive impairment or dementia,” he recommends. One strong safeguard: you and your loved one can visit their bank and also their brokerage and get yourself officially registered as a “trusted contact.”

The financial institution will notify you if anything in a loved one’s accounts seems unusual or irregular. “Brokerage firms are now required to ask for trusted contacts on certain accounts; banks are increasingly offering this option,” says Eisenberg.

There are other steps you can take, says the article, such as reviewing your loved one’s bank and credit card statements to look for purchases or charitable contributions that seem uncharacteristic or odd. “You can also try to get a durable power of attorney (POA),” Eisenberg writes, “a legal document giving you the ability to make financial decisions for someone if they become unable to do so.”

(The article adds this important note: some banks and brokerage firms will only honor POAs prepared in-house by their own firm on their own form. This can cause huge headaches in an emergency, so you’ll need to ask the right questions well in advance.)

This all sounds simple and straightforward, but there are major emotional obstacles in the way of these strategies. Many parents will refuse to give their adult children the authority to monitor credit card bills and bank statements, which probably will require a family meeting to put everyone’s mind at ease. Parents are often proud and self-reliant, and they need to be reminded that these safeguards are there for their own protection.

Finances and Dementia: Is a Monitoring Service Worth the Cost?

Eisenberg cites another tool some families use for financial protection. There are third-party services available that will monitor a loved one’s financial accounts for you.

EverSafe, mentioned above, “analyzes daily transactions to identify unusual withdrawals and changes in spending patterns,” says the article. The platform will then alert you to suspicious activity via email, text, phone or through the company’s app. According to Eisenberg, EverSafe services cost about $76 a year for the basic plan, with premium options running roughly $153 or $255 a year.

EverSafe also offers a “trusted advocate” feature which “designates family members to receive alerts and assist in monitoring all of a loved one’s financial accounts,” Eisenberg explains. The service also promises to guard against online scams and other forms of elder fraud.

Another service, called TrueLink, costs $144 a year and takes a different approach to spending issues. TrueLink has what the article describes as “a prepaid Visa debit card and spending monitor service with real-time alerts of recent purchases and reports that keep track of the person’s spending history.”

Finances and Dementia: Getting Refunds Can be Tough

The best time to prevent this kind of financial mistake is before they happen – because getting sympathy after the fact can prove difficult. As Eisenberg writes, “If you wind up finding that a parent or another loved one with dementia has begun making troubling purchases or donations, it can be hard getting help dealing with this.”

If you contact a retailer, a credit card issuer or a charity and tell them what happened and why, they may empathize and reverse the charges. But they’re not really required to. “If your parent paid $6,000 for custom hearing aids they don’t need, the merchant doesn’t have an obligation to refund the money,” one planner told Eisenberg.

One more thing to bear in mind, as the article suggests, is that reporting a loved one’s dementia to the credit care company can cause the card to be cancelled. If a card holder lacks mental capacity, the issuer may elect to close the account. This will probably be a relief for you, but it could cause your loved one to react with anger, so be prepared for the fallout.

Breaking News: Rajiv’s New Book is Here!

We have big news! The long-awaited book by Rajiv Nagaich, called Your Retirement: Dream or Disaster, has been released and is now available to the public.  As a friend of AgingOptions, we know you’ll want to get your copy and spread the word.

You’ve heard Rajiv say it repeatedly: 70 percent of retirement plans will fail. If you know someone whose retirement turned into a nightmare when they were forced into a nursing home, went broke paying for care, or became a burden to their families – and you want to make sure it doesn’t happen to you – then this book is must-read.

Through stories, examples, and personal insights, Rajiv takes us along on his journey of expanding awareness about a problem that few are willing to talk about, yet it’s one that results in millions of Americans sleepwalking their way into their worst nightmares about aging. Rajiv lays bare the shortcomings of traditional retirement planning advice, exposes the biases many professionals have about what is best for older adults, and much more.

Rajiv then offers a solution: LifePlanning, his groundbreaking approach to retirement planning. Rajiv explains the essential planning steps and, most importantly, how to develop the framework for these elements to work in concert toward your most deeply held retirement goals.

Your retirement can be the exciting and fulfilling life you’ve always wanted it to be. Start by reading and sharing Rajiv’s important new book. And remember, Age On, everyone!

(originally reported at

Need assistance planning for your successful retirement? Give us a call! 1.877.762.4464

Learn how 70% of retirement plan fails and find out how you can avoid this

Find out more about LifePlanning

Your Cart is empty!

It looks like you haven't added any items to your cart yet.

Browse Products
Powered by Caddy
Skip to content