Due to the physical and cognitive limitations that often occur with age, managing one’s finances can become increasingly difficult. That’s why many seniors entrust their finances to someone else, such as a family member, professional money manager, friend or neighbor. And while the majority of these trustees are honest and responsible when managing another’s finances, there are unfortunately financial criminals targeting the elderly who take advantage of this opportunity and use it for their own personal gain.
While thousands of seniors’ retirement savings are stolen each year, it is possible to keep yourself and your loved ones safe from these criminals and scammers by educating yourself about the prevalence of this issue and the steps for preventing financial fraud.
The Reality of Seniors and Financial Abuse
It may not be typically thought of as a threat to seniors’ safety and well-being, but financial abuse among older adults is unfortunately becoming more and more prevalent. According to the National Adult Protective Services Association (NAPSA), one in 20 older adults indicate that they’ve experienced some form of financial mistreatment.
But why are there so many financial criminals targeting the elderly? Not only do factors like cognitive decline, mobility limitations and isolation increase the risk of financial abuse, but scammers also know that seniors have more money than other generations, making them a big target. In fact, Baby Boomers control 70 percent of all disposable income in the United States alone.
While seniors are usually more wary of scammers contacting them via phone or email about a suspicious offer, the NAPSA notes that the majority of financial abuse cases actually aren’t carried out by complete strangers taking advantage of vulnerable adults. Unfortunately, 90 percent of abusers are family members or other trusted loved ones, which makes the whole experience so much more painful and emotionally damaging for seniors.
The Role of Activists in Preventing Financial Fraud
The increasing number of financial criminals targeting the elderly has not gone unnoticed by activists and lawmakers in many states. Last year alone, 33 states in addition to Washington, D.C. and Puerto Rico considered measures against fraud, identity theft and the improper or illegal use of seniors’ money, according to a recent New York Times article entitled “Declaring War on Financial Abuse of Older People.”
Other states have even strengthened their existing laws to address the issue of seniors and financial abuse. Alabama, for example, recently passed a bill called the Protection of Vulnerable Adults from Financial Exploitation Act, which requires brokers and investment advisors who suspect that a client is being exploited to report it to the Alabama Securities Commission and Human Resources Department.
While these bills addressing the issue of seniors and financial abuse are a great start to protecting seniors nationwide, it’s an unfortunate reality that this abuse continues to be widely unreported since there is no national government-run system for intervention. Until such program exists, however, there are still plenty of things you can do to protect your wallet and savings.
6 Steps for Preventing Financial Fraud
In addition to stealing hard-earned retirement funds, financial criminals also cause deep, emotional pain for both the victim and their loved ones. That’s why it’s so important to familiarize yourself with the following steps for preventing financial fraud:
- Get engaged in your finances. Although you may not like thinking about your personal finances, doing so is an essential step in protecting your savings from potential scammers. Even if you haven’t taken an active role in your finances before now, it is never too late to start. From creating a budget to keeping an eye on your credit, there are plenty of simple things you can do to regain control over your finances.
- Surround yourself with trustworthy people. While socialization is a key element of healthy aging, you need to be cautious of who you spend time with, especially if you’re considering them to be the manager of your finances.
- Involve non-family members. Whether you choose to have a financial advisor, banker or attorney help manage your finances, they can provide insight and identify potential problems before they happen. They can even help you take the proper steps should you ever experience financial abuse.
- Don’t give in to pressure. Be wary of anyone -- whether it be a hired caregiver, friend or even a family member-- that is pressuring you to sign or purchase something. Take your time in making any decision, and don’t be afraid to consult with others first.
- Be aware of common scams. There are some common scams that financial criminals targeting the elderly regularly use, and familiarizing yourself with them can lower your risk of becoming a victim.
- Know how to get help. Even after taking all of these steps, however, it’s an unfortunate reality that you can still become the target of a scam. Knowing how to report a scam is essential, and with a Medical Guardian medical alert system, you can use your device to request either your local law enforcement or a loved one to come and help you investigate the situation further should you ever believe you’ve been the victim of a scam or financial abuse.
Regardless of your age, financial abuse is a very real threat in today’s world, but taking the steps to protect yourself and your finances will enable you to maintain your plans for retirement and beyond.