The rapid aging of the American population is likely to lead to a corresponding surge in the prevalence of chronic neurodegenerative diseases such as dementia. From a long-term care perspective, dementia is a disease of particular importance because the progressive decline in memory and cognitive functions that characterize this condition also lead to a loss in independent functioning, thus necessitating the need for continued support and assistance. Given its wide-ranging impact, a growing research priority focuses on tracking the monetary costs of dementia incurred by individuals and their families.

While adult children are the main source of support and care for elderly dementia patients, much of the previous empirical work on attributing monetary costs of the disease to them has held a narrow research focus. The bulk of this literature examines the financial consequences of providing informal care to parents in terms of opportunity costs of reduced labor market participation. However, not only is this literature yet to reach a consensus, it also fails to account for costs arising from two other potential forms of intergenerational transfers: out-of-pocket expenditures and residential space. In other words, previous studies are potentially underestimating the financial impact of age-related diseases on family members by either failing to include additional costs incurred by an informal caregiver or by failing to analyze financial consequences on those adult children who may not provide informal care but may still incur out-of-pocket expenditures or provide monetary assistance to parents.  

This paper strives to broaden the literature on this topic. It examines the relationship between onset of dementia among elderly parents and wealth accumulation by their adult children (regardless of their status as informal caregivers). Longitudinal data from seven waves (1998-2010) of the Health and Retirement Study are used to analyze these questions. Preliminary results from quantile regressions find that dementia onset in parent reduces household wealth of an adult child by a large amount in the upper quantiles of the wealth change distribution. For instance, the 90^th percentile of wealth change for those whose parents received a memory disease diagnosis is about $24,000 less than those whose parents did not receive such a diagnosis. In addition, because wealth figures only represent what is in the name of a household and ignore the present value of anticipated inheritances, I plan to examine how between-wave onset of dementia among parents influences the change in expected value of anticipated inheritance among adult children.