Caring for ourselves becomes more and more difficult as we age, and this includes managing our money effectively. Most people view this sympathetically and want to help, but there are always those few unscrupulous individuals who look for ways to turn seniors' ignorance into their profit.
Elder financial abuse costs seniors billions of dollars annually, according to the National Council on Aging, and this can have dire consequences for seniors living off of their retirement savings. Here are three things seniors can do to avoid becoming victims of financial abuse.
1. Know the common scams
Scammers use a variety of techniques to trick seniors into handing over their cash. Some of the most common ones include:
- Claiming they are from the Internal Revenue Service, the Social Security Administration, a charity, or another legitimate business and asking for money.
- Creating fake online dating profiles to woo single seniors and then requesting money for an "emergency."
- Telling the victim they have won the lottery or another large sum of money, but that they must pay a small fee upfront in order to claim the winnings.
- Sending emails with phishing links that collect financial information.
This isn't an exhaustive list, but it gives you some idea of what to watch for. If you come across any of the above situations, or if someone is requesting your financial information and you don't feel comfortable sharing it, don't do so. If you question whether it is a legitimate company contacting you, look up its phone number or email online.
2. Don't be afraid to stand up to family
We tend to think that financial abuse involves anonymous scammers on the other side of the country or the other side of the globe, but all too often, it involves people we know well -- our own friends and family. Approximately 90% of financial abusers are family members or other trusted individuals, according to the National Adult Protective Services Association (NAPSA).
This doesn't mean you shouldn't ever share your financial information with family members, because many of them mean well, but you should be alert for suspicious signs, like family members who haven't been around suddenly taking an interest in you, or someone who tries to pressure you into giving them control of your finances. These could be signs that they don't have your best interest at heart.
If you are getting financial assistance from a family member, make sure they keep you in the loop about any financial decisions they make on your behalf, and periodically review your own credit reports and financial accounts to check for anything amiss.
3. Consider employing a financial advisor
If you don't trust your family members to manage your money effectively, consider employing a financial advisor to do it for you. Choose a financial advisor who's certified by the National Association of Personal Financial Advisors (NAPFA) or a similar organization. Look for one who has a certification such as Certified Financial Planner (CFP) after their name. This tells you you're working with someone who has detailed knowledge of how to manage your money effectively. Choose a fee-only advisor whenever possible over a fee-based advisor, who earns commissions when you purchase assets he or she recommends, which could create a conflict of interest.
Consult with a few financial advisors before you choose one, and make sure you get a copy of their fee schedules. Ask each advisor about how and how often you may contact him or her and their plans for your money. Stay away from anyone who appears too inaccessible or cannot explain anything to you in plain English.
What to do if you're a victim of elder financial abuse
If you're a victim of a financial scam like the ones described above, notify the Federal Trade Commission (FTC) and your local police department. Provide any information you can about the scammer, including any phone numbers or emails they used to contact you. You might not get your money back, but you can prevent others from being scammed.
When you believe a family member is taking advantage of you and making financial decisions on your behalf that you disagree with, you should also notify the police. If you've given them durable power of attorney, see if you can revoke this to prevent the individual from making more decisions on your behalf. You should also contact your local Adult Protective Services agency for further assistance.
No one likes to think they'll fall for a scam, or that a family member will take advantage of them, but it does happen. The best way to make sure it doesn't happen to you is to know the common scams and stay aware of how your family member or financial advisor is handling your money. Ask questions when you need to, and don't be afraid to say no if you disagree with some of their decisions. It's your money, after all.