Elder Financial Abuse 

I was hoping for an upbeat topic for the return to the blog, but with the holidays coming up, it seems like a good time to share some important information that you can re-share at holiday gatherings to help others.  Apologies for the gap in blog entries, but a virus (organic, not computer), work, and a vacation pulled me off the path of publication.

Elder financial abuse (EFA) is an increasingly visible issue with elder advocates, law enforcement, and financial services firms.  Per www.preventelderause.org, “Elder financial abuse spans a broad spectrum of conduct, including:
-Taking money or property
-Forging an older person’s signature
-Getting an older person to sign a deed, will, or power of attorney through deception, coercion, or undue influence
-Using the older person’s property or possessions without permission
-Promising lifelong care in exchange for money or property and not following through on the promise
-Confidence crimes (“cons”) are the use of deception to gain victims’ confidence
-Scams are fraudulent or deceptive acts
-Fraud is the use of deception, trickery, false pretense, or dishonest acts or statements for financial gain
-Telemarketing scams. Perpetrators call victims and use deception, scare tactics, or exaggerated claims to get them to send money. They may also make charges against victims’ credit cards without authorization.”

The Better Business Bureau has a great EFA tip sheet here.

Now that I know what to look for, I recognize that my Mom was taken advantage of by telemarketers selling books; I believe she was trying to win their ‘contest’.  Fortunately for her and us, the loss was relatively minor.  For many seniors, the EFA losses are financially significant, emotionally painful, and embarrassing.  Unfortunately, the embarrassment factor keeps many seniors from reporting EFA, so we probably do not know the true extent of the problem.

EFA is a serious problem, with some sources claiming that approximately 6% of the senior population is affected annually, with a $36 billion impact.

EFA is definitely a bad retirement surprise that everyone wants to avoid.  Since we’re approaching the major year-end holiday periods, this will be a good opportunity to review what you can do to understand and protect against EFA and hopefully share the information with friends and family at holiday gatherings.

Facts of Life

We are all getting older, and as we move into older ages, many of us will experience the standard physical and mental decline of aging humans.

The Better Business Bureau (BBB) studied EFA and noted that risks for EFA included, “
-Memory, reasoning, and/or judgment impairments which prevent giving informed consent
-Isolation or limited community connections
-Substantial resources (Social Security, pensions, savings, real estate, investments, assets, insurance, etc.)
-Money matters feel intimidating so the elder allows a family member to oversee/ take over their finances
-Reliance on a family member for housing, transportation, errands, etc.”

Basically, as we get older our cognitive ability declines, including math and critical analysis. Combine that with social isolation and complex finances and there’s an opening for elder financial abusers (aka thieves).

To protect yourself, the BBB suggests, “
-Plan ahead to protect your assets and ensure that your wishes are followed
-Consult with a licensed financial adviser or attorney before signing complex agreements or anything you don’t understand
-Build relationships with financial professionals who can assist you in monitoring for suspicious activity
-Leave a paper trail by using checks and credit cards instead of cash
-Trust your instincts and say, “No.” Remember, it is your money
-Report suspicions to a trusted person if you feel pressured to provide financial information or access
-Ask for details in writing and get second opinions about financial matters before changing your power of attorney, wills, trusts, etc.”

Our Plan

Last year in December, my wife made me gather our three children in the office and talk to them about money (honestly, I would have rather discussed anything else!)  I reviewed our retirement income plan and our savings and investments with them to give them a general overview of where we are.  Moving forward, we will likely repeat this annually until about age 70, when we will start to review income and expenses monthly.  That way if we need to move to less of Grandfather’s DIY financial planning and more of the adult children’s assistance, it will be a smooth transition.

We are fortunate to be a family that communicates well.  If we plan to purchase something, we already likely discuss it with the rest of the family.  While this has some downsides (my son is pretty strict on what car manufacturers are acceptable), it would prevent an EFA door-to-door salesman from ripping us off on siding, because we would already plan on checking with the kids and friends.

Actions you can take include:

-Review this BBB webpage.  The video is engaging and worth the time.

-Plan early – develop relationships with estate planning attorneys (everyone needs a will!), trusted financial advisors, and other trusted coaches (colleagues from work, friends, relatives) before and at retirement.  Then you will have people who you can turn to when you have questions about a pitch from someone that may be an EFA attempt.

-Take a minute and reflect on whether a loved one, a friend, or even yourself may be at risk for EFA.  Ask if they need help and consider referring them to the BBB site.

Questions, comments, or suggestions for retirement surprise areas you want to know more about?
-Leave a comment
-Use ‘Contact’, above, to send an email.