There are plenty of risks to watch out for in retirement that can potentially harm your savings. Things like healthcare costs, long-term care costs, or withdrawing too much money too soon can all cause you to run out of cash, no matter how hard you worked to establish a robust retirement fund.
However, there's one risk that can potentially sabotage your savings that often flies under the radar: elder financial abuse.
Elder financial abuse is more common than you may think
Older adults lose a staggering $36.48 billion every year to financial abuse, a study from True Link Financial revealed. Even more worrisome, though, is the fact that $17 billion of that is a result of deceptive (but legal) exploitation tactics, such as organizations or individuals using misleading language to get money from seniors.
More than half (53%) of Americans say they're concerned that financial abuse could hurt their chances of enjoying a comfortable retirement, according to a recent survey from AIG and Morning Consult. Furthermore, 65% say they're worried that this type of abuse could hurt a loved one in retirement.
Elder financial abuse is a sensitive topic, because while nobody wants to believe that they could be a victim of abuse during their golden years, it can be difficult to spot the warning signs. This is especially true if the abuse is coming from a trusted friend or family member, which is sadly often the case. Although more than 80% of older adults say they don't think a loved one would ever take advantage of them, AIG found, seniors lose approximately $6.7 billion per year from those they trust the most, according to True Link Financial.
Financial scams are also frequently targeted at retirees, asking for money or personal information. Oftentimes, these scammers will say you have unpaid debt you need to take care of, and you need to provide credit card or bank account information. Other times, fraudsters will say they're with the Social Security Administration and there's a problem with your benefits or account. They may ask for your personal information, such as your Social Security number, then steal your identity (and your money).
Although scams and other forms of financial abuse can be difficult to detect, it's essential to understand what they look like so you can avoid them the best you can.
Preventing abuse in retirement
It's tough to face the reality that you could be subject to financial abuse from those you love, which makes it tempting to brush off the red flags. Those who are struggling with mental decline are at a greater risk of being abused, and they may not even recognize the warning signs.
That's why it's important to have a circle of people you know are looking out for your best financial interests. The more isolated you are, the easier it is for someone to take advantage of you. But when you have multiple people checking in on you, abusers may be less inclined to scam you if there's a higher probability they'll get caught. And if you do fall victim to abuse, having a circle of people who will notice something seems off makes it more likely the abuse will be uncovered quickly.
It's also smart to give someone power of attorney (POA) for when you're no longer able to make financial decisions. Just be careful when granting POA, and make sure you can truly trust the person. Watch out for any suspicious signs -- like a family member you're not close with suddenly trying to convince you to give them control of your finances -- because that could be a signal that someone is attempting to take advantage of you.
Be sure to stay on your toes to avoid scams from those you don't know, too. Financial institutions and government organizations will never ask for information like your bank account number or Social Security number over the phone, so if you get one of these calls, hang up and file a complaint with the FTC. Don't provide personal information via email either, and avoid clicking on any suspicious-looking links. The more vigilant you are about staying safe, the less likely it is you'll fall victim to a scam.
Elder financial abuse happens more frequently than you might expect, and everyone is at risk. But by understanding what financial abuse looks like and watching out for the warning signs, you can protect yourself and your retirement savings.