The sad truth is we all become more vulnerable to scams and financial abuse as we age into our later years. Here are some sobering statistics from Consumer Affairs:
- Older people are swindled out of more than $3 billion each year.
- More than 3.5 million older adults are victims of financial exploitation each year.
- Older people targeted by fraudsters suffer an average loss of $34,200.
As a financial adviser, I believe it’s crucial to ensure that our clients’ hard-earned wealth remains secure and protected from potential financial abuse. We can play a pivotal role in guiding our clients through the complexities of preventing elder financial abuse. Here are some insights I often share with clients and, with their permission, with their adult children, too, as they are often more concerned about scams and financial abuse than their parents.
1. Raise awareness.
A primary step in the battle against elder financial abuse is raising awareness. You must talk about the potential risks associated with growing older, including scams, fraudulent investments and exploitation by family members or caregivers.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
You can use your own experiences or trending news to start the conversation. A good resource is the AARP Scams & Fraud page with up-to-date information on fraudulent schemes and quizzes about scams.
2. Maintain open communication.
Just like meeting with your financial adviser quarterly, you should be talking about finances with your loved ones this frequently. We encourage honest and clear communication within families because this can lead to early detection and prevention of financial abuse.
Talking about money can be challenging for families, but an open dialogue helps identify unusual or suspicious activities related to finances that could indicate abuse.
3. Arrange for a durable power of attorney.
A durable power of attorney (POA) should be trustworthy and capable of managing their loved one’s finances if incapacitated. Speak with your financial adviser or elder law attorney about selecting the right financial power of attorney for your circumstances.
If you are a solo ager, your attorney may be able to act as your POA. See my previous article on Tips for Managing Money for an Incapacitated Loved One.
4. Get estate planning in order.
Another essential aspect of wealth management for older adults is estate planning. It’s crucial to discuss the importance of creating or updating a will, trust or estate plan. We advise clients to seek legal counsel to understand the legal protections available and explore options for safeguarding your assets. Not only does this protect your assets, but it also ensures that your wishes are followed accurately.
A well-structured estate plan can help transition wealth to the next generation.
5. Regularly monitor accounts.
Reviewing financial statements, bank accounts and investment portfolios monthly is essential. A few simple steps can help avert fraud, such as setting phones to send unknown numbers to voicemail, using a credit freeze and setting stricter privacy controls on social media. Signing up for financial account and credit monitoring helps detect any irregularities or unauthorized transactions.
It may make sense, in some cases, to allow a trusted loved one to also monitor your parents’ accounts, depending on their support needs and comfort level. Timely identification is essential to prevent financial abuse.
6. Safeguard personal information.
The digital world has increased risks, and scams abound online. Using strong, unique passwords is a simple yet effective measure to enhance online security. Consider using a password manager like LastPass, which offers a free password generator.
We also recommend steps like keeping documents secure, shredding sensitive papers and avoiding sharing personal information with unknown parties. These seemingly small actions can make a big difference in safeguarding against fraud.
7. Stay informed about scams.
Financial scams and elder abuse tactics evolve continually. The scams (e.g., romance scams, grandparent scams, investment scams, phone scams, sweepstakes scams, crime scams, Medicare scams, phishing, charity scams, funeral scams, IRS impersonation scams, counterfeit prescription drugs, malware, false investment opportunities, health product scams, home repair scams, lotteries, reverse mortgage scams, account takeover scam texts, cryptocurrency fraud, fake insurance and identity theft) are constantly evolving and regularly threatening older adults. The National Council on Aging (NCOA) explains some of the most common scams.
Vigilance is the key. Being diligent and partnering with an elder law attorney and your trusted financial adviser helps to stave off predatory efforts against older adults.
Related Content
-
Baby Boomers vs Gen X: Who Spends More?Baby Boomers and Gen X are guilty of spending a lot of money. Here's a look at where their money goes.
-
Retire in Finland and Live the Nordic DreamHere's how to retire in Finland as a US retiree. It's ideal for those who value natural beauty, low crime and good healthcare.
-
You're Close to Retirement and Cashed Out: How Do You Get Back In?If you've been scared into an all-cash position, it's wise to consider reinvesting your money in the markets. Here's how a financial planner recommends you can get back in the saddle.
-
After the Disaster: An Expert's Guide to Deciding Whether to Rebuild or RelocateHomeowners hit by disaster must weigh the emotional desire to rebuild against the financial realities of insurance coverage, unexpected costs and future risk.
-
A Financial Expert's Tips for Lending Money to Family and FriendsWhat starts as a lifeline can turn into a minefield if the borrower ghosts the lender. Following these three steps can help you avoid family feuds over funds.
-
What the HECM? Combine It With a QLAC and See What HappensCombining a reverse mortgage known as a HECM with a QLAC (qualifying longevity annuity contract) can provide longevity protection, tax savings and liquidity for unplanned expenses.
-
721 UPREIT DSTs: Real Estate Investing Expert Explores the Hidden RisksPotential investors need to understand the crucial distinction between a REIT's option to buy a Delaware statutory trust's property and its obligation.
-
I'm an Insurance Expert: Yes, You Need Life Insurance Even if the Kids Are Grown and the House Is Paid OffLife insurance isn't about you. It's about providing for loved ones and covering expenses after you're gone. Here are five key reasons to have it.
-
My Professional Advice: When It Comes to Money, You Do YouThis is how embracing the 'letting others be' and 'learning to surrender' mindsets can improve your relationship with money.
-
Direct Indexing Expert Explains How It Can Be a Smarter Way to InvestDirect indexing provides a more efficient approach to investing that can boost after-tax returns, but is it right for you?
