There are deeds, and then there are dastardly deeds. Abuse of the elderly—in any conceivable way—is indeed dastardly.
And the dastards are growing in number. In 2015, SIFMA (Securities Industry and Financial Markets Association) estimated that 1-in-5 Americans 65 or older have been victimized by financial fraud. An even more startling statistic is that only an estimated 1-in-44 cases is reported.
The senior segment of society is growing faster than any other. The number of individuals 65 or over is expected to reach nearly 80,000,000 by 2040, a number which doubles the 65-set of 2000. Longevity for the most part continues to increase; the exceptions are for people who suffer from substance abuse or severe depression. Baby boomers—an increasingly unpopular term—as an identifiable demographic are turning into 70-year-old seniors at a rate of some 10,000 per day. Like the famous robber who said the reason he preyed on banks was because “that’s where the money is,” senior financial abuse is on the increase because many people in the now-retiring demographic have enjoyed substantial economic success. Since the bounce off the bottom in March 2009, the S&P 500 has gained more than 220%. During the forty-year working history of a person going into retirement, the S&P has leaped nearly 10-fold (990% since 1986). Many people over that time have obviously accumulated significant wealth.
Age carries some benefits. For example, settling into a more “time affluent” lifestyle and no longer having to deal with the daily stress and demands of the workplace. There is time and confidence to have more fun, less stress and worry, a strong sense of freedom, and overall emotional well-being. But … it also takes a toll.
On the one-hand, as people age they become more conservative. One the other hand, as people in retirement consume their resources they become worried about running out of money and the attenuated consequences of that happening. To complicate the scene further, as age increase so does the possibility of acquiring some sort of mental impairment or dementia. While there has been some recent, highly encouraging news about a reduction in new cases of dementia, about 14% of people in the US age 71 or older have memory-affected dementia. That number rises to one-third by the time age 85 is realized. You can easily see how the combination of financial concern and even mildly impaired thinking could lead to vulnerability and financial exploitation.
What constitutes financial elder abuse? Because many seniors are quite private about their personal and financial matters, it can be difficult to determine whether they may be being taken advantage of. Be leery of someone suddenly cuddling up to a senior—whether it is a family member, neighbor, or possibly a new-found friend—without a previously demonstrated relationship of substance. Keep in the back of your mind, too, that women are twice as likely to be victims, and the fraud against them often involves either health care, home care, or service providers. Due to women frequently outliving their husbands by several years, and therefore potentially experiencing more acute aging symptoms and frequently (for the current senior generation) may be less financially savvy (although that is rapidly changing). Thus, women can be easy targets. Sadly, grief and loneliness are top risk factors for fraudulent susceptibility.
Here are some things to be on the watch for:
- The individual becomes upset or agitated because they can’t spend money the way she/he wants or used to
- The individual’s bills aren’t paid on time even though they have the financial resources to pay bills
- The person is forced to sell or give away property, sign over Power of Attorney, or change title of property to someone else
- The senior is offered care in exchange for property or access to bank accounts
- Bank and/or financial transactions show activity the senior couldn’t have done, such as making an ATM withdrawal when the senior is bedridden
- A sudden change in their overall financial situation
- Missing belongings
- The individual’s estate plan or will is suddenly changed
- Not fully understating or remembering financial decisions
- Being isolated from friends and/or family
- The person is afraid to speak in front of caregiver/companion/family member
- The individual has purchased items she/he can’t use, such as a lifetime membership at a gym
- The person receives care well below the level he/she can afford
What does senior financial abuse look like?
While financial elder abuse can take many forms, the most widespread abuses include telemarketing fraud, identity theft, predatory lending and home improvement and estate planning scams. According to a publication by the State of California, Americans lose an estimated $40 billion each year due to the fraudulent sales of goods and services over the telephone. AARP has found that 56% of those called by telemarketers are aged 50 or older.
It can be extremely difficult to tell if a telemarketing call is legitimate. This is especially true if you are being pressured to make an instant decision; for example, to send money right away in order to claim a “prize” that has been won. Scams can range from prize offers to travel packages to phony charities.
Be wary of an unsolicited and unwanted telemarketing pitch—they can be high-pressure and convincing:
- “You have won a lottery, but in order to claim the money, you must send a payment to pay the taxes on the money you have won.”
- “We can give you a great home loan at a great price, regardless of your credit.”
- “We are offering you a fantastic buy on your favorite magazines; this is the last day and we must receive your money by midnight to guarantee this offer.”
10 ways to help prevent fraud against seniors or people of any age
- Know who you are dealing with
- Know that wiring money is like sending cash
- Look closely at your monthly investment and credit card statements
- After a disaster, donate only to recognized and reputable charities. Go to them rather than responding to phone, email, or webpage solicitations. Crooks can make it look very plausible that they represent a valid organization
- Talk with your doctor before buying health products or treatments; remember, prescribed drugs are tested and approved by the FDA, most others are not
- Remember that there is no sure, get-rich-quick scheme to investing
- Never send money to someone you don’t know and have not verified
- Don’t agree to deposit a check in return for a larger amount to be wired into your account
- Never reply to email messages asking for personal financial information, and don’t click on links inside, unknown, or unexpected emails
- Never play a foreign lottery (and domestic ones don’t offer that good of odds either)
Making financial decisions
It can be a fine line to walk for financial advisors working with aging people. Aging individuals should be reassured—not threatened—by an advisor asking for a family member or attorney to sit in on financial strategy meetings or large purchase decisions. In some circumstances it may be advisable to have another person without a financial interest in a decision to help review the rationale and advisability of making certain decisions.
Finally, the old advice of “getting your affairs in order” applies to everyone – not simply the elderly. Headlines regularly report that some celebrity, mogul, or politician has died and left things in an indeterminate mess. Only the lawyers profit!
Here are some simple ways to help protect yourself and your family:
- Make sure your family members and attorney know who your financial advisor is, including contact information
- Have your important documents in an accessible place with a trusted person knowing where to find them. What good would those documents do in a safety deposit box having a well-hidden key and restricted access?!
- Have your financial advisor review your crucial documents such as retirement beneficiary designations – a will may not apply to them. Are your documents up to date and will they do what you want them to? You probably don’t want to leave money to a long-ago divorced spouse (or their children)
- Do not hesitate to call us—America’s Retirement Store®—for guidance, reassurance, or fresh ideas about handling your money during what may be the most important time of your life.