Many of us have heard about it or even have our own stories. Often, it is discussed within families and by friends in hushed tones about “so and so” having lost some or all of their savings in a scam or as a result of being victimized.
The “it” is elder financial abuse and the extent of its occurrence and the magnitude of its impact on Americans is troubling.
Once a completely taboo topic, the issue is thankfully starting to get more attention as a new generation gains the unwanted experience of having to tackle the issue with their own parents.
How bad is the problem? To fully address this problem, Americans need to understand this is not an isolated issue which can be swept under the rug. The true scale and scope of elder financial abuse is only now coming into focus. Allianz Life recently conducted its 2016 “Safeguarding Our Seniors” study, surveying family and friends in active caregiver roles or those who could be soon. The study found that more than one-third of active caregivers (37 percent) said the elder they care for has experienced financial abuse with a loss. Furthermore, respondents revealed that elder financial abuse is not an isolated occurrence, with a full 40 percent of all active and potential caregivers confirming that their elder has experienced financial abuse more than once.
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Respondents also noted the average financial loss to victims was $36,000, with nearly half of respondents saying the effect on the elder victim to be “major loss/financial ruin.” Equally troubling, nearly 90 percent of active and potential caregivers said they also experienced a financial impact from the abuse, with the average cost to them also reaching $36,000 — a direct result of having to compensate for their elder’s loss.
In addition, elders experiencing mental decline are particularly vulnerable. The frequency and financial impact are both greater for elders that have experienced mental declines. Incidence of elder financial abuse as reported by active and potential caregivers is 10 percent greater (34 percent versus 24 percent with no mental decline) and average monetary loss is 28 percent higher ($41,000 versus $32,000 with no mental decline).
All of this data is troubling enough, but beyond the substantial monetary loss, the emotional impact is equally startling. A full half of all caregivers said the financial abuse caused that elder to isolate himself/herself with a 15 percent increase in isolation for elders with mental declines (58 percent versus 43 percent with no mental decline). And unfortunately, this isolation creates added vulnerability for the elder as well as an increased chance for repeat victimization.
Where to start? The data makes it very clear that this is a significant problem and the solution is equally as challenging. The first step is to remove the stigma associated with this issue. Openness on the topic itself can lead to increased awareness as well as greater discussion about how to spot and report elder financial abuse, ideally before any financial or emotional loss is incurred.
One of the best ways to bring the issue out into the open is simple: talk about it. Parents and children should have a discussion as to the current state of their financial situation so either party is able to identify if something is not right. In addition to immediate family, other close relatives and friends, as well as advisors such as family lawyers and financial advisors, can play a key role in offering counsel and keeping a watchful eye out for potential issues.
[See: 10 Questions to Ask Before You Hire a Financial Advisor.]
As we enter into the holiday season surrounded by family and friends, the timing is ideal to begin having these discussions if they haven’t already happened. Keep in mind, this will likely not be an easy conversation as it may represent a potential feeling of loss of freedom and independence for the elder. The conversation should be focused on the added layer of security given the times we live in, rather than taking a tone that can be interpreted as condescending or confrontational. And beyond the initial conversation, keep the lines of communication open. Something as simple as a daily call from a family member or friend can be extremely helpful in discovering potential issues.
What to watch out for. Unfortunately, scams targeting the elderly are getting more complex and difficult to detect. In addition, at times there might be people in direct daily contact with elders who are going to take advantage of the situation for their own gain. As a starting point, here are some basic red flags to watch for:
— Phone calls from someone asking for personal information such as bank account information, credit card numbers and passwords. Often the calls are high pressure, demanding an immediate response.
— Phone calls from someone stating they are a member of the IRS demanding immediate payment based on an alleged issue with taxes. (The IRS will mail a bill before calling and will not demand immediate payment in this scenario.)
— Letters stating someone is a winner in a sweepstakes and asking for information to claim the prize.
— Calls or emails claiming to be from a loved one who is in some sort of predicament while traveling and needs financial assistance.
— Fake charities using emotional pitches asking for donations.
— Unexplained credit card charges and/or withdrawals from accounts or changes to investments that seem out of sort.
— The appearance of a new friend or relative asking for a loan or gift or a transfer of funds.
The Better Business Bureau offers several additional helpful tips and resources.
Creating an environment where the topic of elder financial abuse can be openly discussed is a good first step in addressing this important issue. Hopefully, those discussions will prompt caregivers to develop different systems and networks that can help protect their elders who may be at risk.
[See: 9 Stocks to Buy for the Aging Baby Boomer Market.]
Millions of Americans are entering their golden years — by joining together, there is a greater chance to make a difference and protect our loved ones from financial abuse.
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Shining a Light on Elder Financial Abuse originally appeared on usnews.com
