Fraud and financial abuse against elders is more widespread than you may realize — and may be on the rise due to a slower economy and an aging population. It appears in many forms, affecting millions of senior citizens and their families. These crimes go largely unseen; many seniors do not recognize when it happens to them or may be ashamed to speak up if they do. If you have elderly parents or other older family members or friends, you can help them protect themselves.
Financial abuse often involves a trusted person — such as a family member, friend or caregiver — stealing or defrauding elders of their assets, such as an in-home caregiver stealing physical assets. More insidious cases can involve trusted people using power of attorney rights to siphon funds from the unsuspecting elder. Sometimes, unlicensed investment advisors or brokers use confusing tactics to sell unregistered products or fraudulent investments.
One out of every five citizens over the age of 65 — a total of 7.3 million older Americans — have been victimized in a financial swindle, according to a 2010 survey conducted by the Investor Protection Trust, a nonprofit organization devoted to investor education. Other survey findings include:
• Half of older Americans exhibit one or more of the warning signs of current financial victimization. For example, 37 percent report that they are currently receiving solicitations for money, lotteries or other schemes.
• Only 19 percent of adult children suspect that their parents are being pressured in such a fashion.
• Almost half of those aged 65 or over (44%) answered two of four basic investment knowledge questions incorrectly.
All elders are at risk. For the seniors in your life, watch for red flags such as social isolation, dependence on others for daily care and/or the recent loss of a spouse. Here are some precautionary steps for helping them avoid financial abuse:
• Make sure your older family members and friends are aware of current common financial scams that criminals use to prey on elders. The National Council on Aging (www.ncoa.org) and the FBI (www.fbi.gov/scams-safety/fraud) list common scams targeting seniors on their websites.
• Elders — and all people, for that matter — should look for easy-to-understand yet detailed information when considering financial or investment offers. If the details are not available in writing, be wary. If the information is confusing, ask a friend, family member or trusted financial advisor for assistance.
• Reassure the seniors in your life that they can reach out to you or others for help in uncomfortable or confusing financial situations. Any trusted person — a medical professional, pastor, accountant or advisor — can be someone to turn to when help is needed.
• Encourage them to stay connected in their communities by joining a club or signing up for classes. With a social network, they will have access to others for assistance in the event of a question or potential scam.
We all have elderly family members and friends. By taking the time to learn about the warning signs of elder financial exploitation, you can help protect yourself and your loved ones from this kind of abuse. Take a moment to check in with your friends and family to ensure that they have the ability to manage their finances confidently and have an adequate support network in place. More online resources can be found on the Investor Protection Trust website at www.investorprotection.org.
By Erin Eddins, CFP®, StanCorp Investment Advisers
Erin is a Certified Financial Planner professional and Chartered Financial Consultant with an emphasis on investment and retirement planning services. She specializes in Social Security maximization, pre- and post-retirement planning strategies, and asset management. Erin graduated from Seattle University’s Albers School of Business with a Bachelor of Arts degree in business administration and a minor in economics.