At a time when our population is aging, it may not be a surprise that elder abuse is becoming a more significant issue. Yet many may be startled at just how prevalent the problem has become. According to the National Council on Aging, “approximately one in 10 Americans aged 60+ have experienced some form of elder abuse. Some estimates range as high as 5 million seniors who are abused each year. One study estimated that only one in 14 abuse cases of abuse are reported to authorities.” However, far fewer financial exploitation cases are reported.
“While many think of abuse as being physical in nature, financial exploitation may be a more commonly occurring form of abuse that involves the taking or misuse of an elderly person’s financial resources,” says Wendy Johnson, vice president at U.S. Bancorp Investments, Inc. “As parents reach their 70s, 80s and 90s, they may rely on the support of others‑children, caregivers, financial advisors, etc.—to help them manage their money. In cases like these, elderly individuals have put their trust in the hands of someone else—a relative or professional, with the belief that the trusted person will be working in their best interests.”
In some cases, it doesn’t work out that way and people become unwitting victims of the very people they trusted. It is estimated that $2.9 billion is lost each year as a result of financial exploitation perpetrated against seniors, according to a study published in 2011 by the MetLife Mature Market Institute in collaboration with the National Committee for the Prevention of Elder Abuse and the Center for Gerontology at Virginia Polytechnic Institute and State University. According to the National Adult Protective Services Association, it is estimated that only one in 44 cases of financial abuse is ever reported.
While historically women have been the victims of elder abuse, more men are now becoming victims. Perpetrators tend to be families, friends, neighbors and caregivers—the very people who are most trusted by a dependent elderly person. And the internet has created a whole new venue for exploitation. Business opportunities, online dating, chat rooms and online shopping are some of the ways that other perpetrators use to exploit the elderly who may be isolated, lonely or just bored.
Examples of financial exploitation that can occur include:
• The outright theft of a senior’s financial resources.
• Manipulating or coercing the senior to give the perpetrator money or property.
• Using the senior’s credit or debit cards to make purchases for personal needs.
• Borrowing against the value of the older person’s home as a way to access money.
• Misusing power of attorney control that has been granted.
An awareness of the potential for financial exploitation is a big first step. Open and honest communication between parties involved in any financial relationship is critical. As seniors grow older, they should try to remain active and socially engaged. Retirees should retain as much control as possible over their financial lives. For couples, it is imperative that both be engaged in their financial planning and decision-making.
On a day-to-day basis, seniors who are capable should continue to write and sign their own checks, open and send their own mail and email, set up direct deposit for any payments received (like Social Security or annuity payouts), use voicemail to screen phone calls (as a way to avoid unwanted or deceptive solicitors) and do their best to keep track of all of their money and possessions.
“Planning is also a critical part of making sure you or a loved one is protected from potential abuse,” says Johnson. “A wealth management financial professional can help you review your readiness for retirement and what may occur throughout the rest of your life. A trusted financial advisor, who is committed to serving your best interests, can also help you make decisions and provide guidance for a time later in life when you may not be able to manage your finances alone.”
As an older customer, here are some important steps that you can take to prevent financial exploitation:
· Ensuring that you have updated your will and any other important documentation, such as advanced health directives, trusts and powers of attorney.
· Ensuring that you communicate well with any person you have assigned as a power of attorney, that they understand the role they are taking on, and that you are confident that they will continue to carry out your wishes if you become incapable of making important decisions later in life.
· Reviewing all beneficiary designations for retirement accounts, bank accounts and insurance policies to make sure they are current.
· Communicating your goals, objectives and future plans to carefully chosen individuals who you trust. Make sure that they are a part of the conversation early and that you are clear about your goals and wishes.
· Learning about common financial exploitation schemes and ploys so that you can be on the lookout and well prepared in the event that you are targeted.
· Monitoring your statements and being on the lookout for transfers that you didn’t authorize or charges to your accounts that you do not recognize.
· Carefully considering who may access your accounts and keeping your passwords, PINs, devices and sensitive information safe.
· Reviewing a financial institution’s products, services and features for ways you can help guard against exploitation.