Millions of older Americans face financial abuse each year. In fact, one in 10 seniors report being financially mistreated, according to the National Council on Aging.1 While likely under-reported, estimates of elder financial abuse and fraud costs to older Americans range from $2.6 billion to $36.5 billion annually.
The problem is only getting worse as baby boomers age. The average adult over age 50 has a net worth of $1.3 million, making seniors highly desirable targets for scammers.3
Luckily, there are ways you can keep yourself and your loved ones safe and protect their financial future for years to come. Education and planning are the first steps.
What is financial abuse?
Financial abuse describes the misuse of financial resources or financial control that violates trust and causes harm to an individual.
Financial exploitation can take many forms, including:
- Identity theft
- Property theft
- Lottery, sweepstakes and charity scams
- Investment schemes
- Predatory lending
- Internet scams
- Misuse of authority
- Counterfeit or fraudulent drugs and anti-aging products
- Homeowner and reverse mortgage scams
Protecting loved ones from elder financial abuse
Spot the warning signs
Unusual bank activity (such as frequent withdrawals), new joint accounts or unexplained credit cards are major red flags. Keep your eyes open for checks noted as "gifts" or "loans," and suspicious signatures, as well.
Keep your loved one active
Contact with family and friends reduces loneliness and isolation, making your loved one less vulnerable to abuse. Call and visit regularly. Movement also matters. Research from the O'Donnell Brain Institute shows that exercise contributes to better focus and mental alertness, which can stave off cognitive decline.
Talk to your loved one about schemes and scams
Caution your loved one to keep their credit card numbers private and to never give them out over the phone. Help them create strong passwords and teach them how to spot email phishing scams. Encourage them to speak up and reach out if they ever feel unsafe or coerced.
Consider a power of attorney and a revocable trust
Power of attorney gives you or a trusted person authority to manage your loved one's finances if they become unable to do so. The document can name co-agents as an additional safeguard. An attorney can also help you create a revocable trust, sometimes called a "living trust," so you can manage and protect your loved one's accounts.
Set up direct deposit and bill pay
This ensures you can monitor money coming in and out of your loved one's accounts. You can also sign up for bank alerts and receive notifications to stay on top of transaction patterns.
Develop a relationship with caregivers
Sadly, people who spend the most time with your older loved one are also more likely to be financial crime perpetrators. That's why it's crucial to develop a relationship with your loved one's caregivers. Get to know the caretaker's background, personality and interests. Work to establish rapport, trust and open communication.
Reporting elder financial abuse
If you believe your loved one has been the victim of elder financial abuse, there are a handful of steps you can take.
- Report it to the proper financial institutions. That way you can freeze the accounts, block future charges, and file a claim to recover losses.
- In the case of identity theft, file an FTC identity theft report.
- Contact your local Adult Protective Services office.
- File a police report.
- Notify the governing probate court if someone is misusing a power of attorney or their role as guardian.
As your loved one ages, they'll look to you for more support. And with these tips, you can help to ensure the safety of their financial future. Want to learn more? Check out this financial checklist for aging parents.