American retirees with undiagnosed memory loss face tens of thousands of dollars in lost savings — primarily through bad investments. How to help loved ones suffering cognitive decline

The Wall Street Journal also highlighted the problem of memory loss in a November article. It pointed to sobering data collected between 1998 and 2014 by the University of Michigan Health and Retirement Study. The data found that among older Americans with memory loss, only 20% rated their memory as being worse than it was two years prior. The participants in the survey were from varying household incomes, as they averaged about $379,000 in net worth, with a median of about $190,000.

Here's what's scary, though. Participants who experienced a severe memory-loss event over the last two years — and were unaware of it — saw an average $31,000 decline in their net worth. Those who experienced severe memory loss and knew about it saw their wealth decline by just $5,400.

In some cases, monetary losses and other adverse events can be a sign of cognitive decline. A 2020 study from Johns Hopkins University found that people with dementia started to exhibit financial symptoms up to six years before an actual diagnosis.

If you have a loved one you suspect is suffering from cognitive decline, it’s important to help them manage the situation. Here’s what to do.

1. Get a proper diagnosis

As of 2023, nearly 10% of people over age 65 had a diagnosis of dementia, according to the Kaiser Family Foundation. The first step in helping a loved one with cognitive decline is to seek medical assistance and to get an accurate diagnosis. From there, a medical team can strategize a treatment plan to manage your loved one’s condition.

Genworth reported that the average cost of a home health aide, which may be necessary for someone with dementia, is $6,292 per month. If a loved one suffering from cognitive decline needs hands-on care, it comes at a steep cost, so it’s important to do what you can to protect their assets.

2. Establish a durable power of attorney

A durable power of attorney is a legal arrangement that allows you to make financial decisions on a loved one’s behalf. With the help of a lawyer, you can solidify an agreement that grants access to your loved one’s financial accounts and make sound decisions with their assets.

3. Set up automatic bill payments

A loved one with severe memory loss may not be in a position to keep paying their bills. But that could have negative consequences. An unpaid mortgage, for example, could lead to foreclosure. You can get ahead by setting up automatic bill payments to ensure their essential expenses are managed.

4. Hire a financial adviser for your loved one

If you’re a savvy enough investor, you may be able to take over your loved one’s assets and manage them yourself. For example, you understand that a more conservative approach is best for an older person. You may also recognize that if your loved one’s assets are largely invested in a high-risk stock, a shift toward more stable income producers, like bonds, may be best.

But if you’re uncomfortable managing your loved one’s money, don’t do it alone. Find a financial adviser who can set your loved one up with age-appropriate investments and quarterback their portfolio. Financial advisers commonly charge a fee of about 1% to manage assets. That may be worthwhile just for the sound advice and peace of mind.