Financial Abuse – 6 Ways to Protect Yourself
6 Ways to Protect Yourself from Financial Abuse in Retirement
Many of us are familiar with seniors who have been/are victims of financial abuse. Unfortunately, so many of them go unnoticed and the abuse isn’t discovered until they pass away.
There are millions of elderly American citizens that have health issues and some diminished level of intellectual competency that places them at risk for financial abuse. There are steps that you can take to reduce your chances of being one of these victims.
In our modern society, telemarketers and other individuals looking for a fast buck are a fact of life. Government agencies that tried to place some level of control on the telemarketing industry were an absolute failure. There are increasing numbers of our elderly citizens who are falling for the hype of these scammers and losing many dollars as a result.
A recent study was made that revealed twenty (20%) percent of seniors have been the victim of some financial scam. It’s very disturbing to hear about these individuals, especially those who have insufficient money to take care of their daily needs.
In so many cases, the scammer will focus his efforts on a senior that are designed to appeal to their emotions. Unfortunately, this is probably the root cause of elder financial abuse…the victims are too trusting.
We hear of many situations also that involve seniors being exploited by friends and even family members. Estimates of these types of losses are at three (3) billion each year! A sad fact is that many elderly victims don’t even realize that they have been financially abused. Unfortunately, many individuals in their 80’s or 90’s suffer from dementia or some other cognitive issue & are a target for financial abuse.
All too often, the elderly individual may realize that one of their children has taken money, but they are too embarrassed to report it. Worse, they may fear some type of harm from a family member, and this can be very real. There are times when a caregiver has been stealing money, and the elderly victim knows that reporting it may cause other issues. It may mean losing their independence and being moved to a nursing home or an assisted living center.
A review was made of elder financial abuse cases in the Los Angeles County court system using a random sampling of 60 cases. The losses in that sampling were almost twenty (20) million. Just extrapolating those numbers to a national level, the losses would be well in excess of three (3) billion. Other studies that were done place the losses of elder financial abuse in excess of thirty (30) billion a year. What a sad note for our country. In those studies, the elderly victims were in failing health and suffered to some degree with mental incompetence. They also relied on others to some degree for their care. In some cases, family members and other trusted caregivers were the ones that financially abused the elderly.
As we mentioned above, there are ways that you can safe guard your finances. Follow our guidelines to protect yourself or some other older relative from financial abuse.
- Start by setting up checks and balances
If at all possible, don’t give any one individual complete control of your finances no matter how competent or trustworthy they are. Try to have other family members involved who will also have access to your records. They will also have the ability to see to it that your wishes are being carried out.
- Have a capable financial professional involved
This can be an accountant, financial planner, or a broker who would have access to your financial records. They would be able to see all transactions that were made by your caregiver.
- Be aware that you may have some eventual cognitive issue
As we get older, there is a strong possibility that we may be unable to make informed financial decisions. This is a fact of life. Start now in preparing for your future needs while you are able. Don’t wait until it’s too late.
- Get your financial records & other important documents organized now
Give a copy to all those who you want to be involved. Include a list of all of these individuals along with their telephone number and e-mail address so that they can communicate with each other.
- Have legal documents prepared
In most cases, it’s a good idea to have a durable financial power of attorney prepared so that someone will be able to make financial decisions for you. Even before old age, there is a possibility that some accident or other situation could cause you to not be able to make your own decisions. This individual should not be your primary caregiver if at all possible.
- Review and update all of your paperwork
At least once a year you need to review your documentation. Changes are inevitable, especially in the area of taxation, and you need to change accordingly.
Start now in planning for your retirement years, especially in areas where financial scams or abuse can occur. Don’t be a victim of financial abuse.
An accountant and tax preparer by profession, Gust’s true passion lies in his company blog titled “HBS Financial Group, Ltd.”. Through this venue, he not only tries to teach individuals about budgeting, money management, and taxation but he writes the majority of the articles as well.