Retirement plans: How to spot financial abuse of seniors(Read article summary)
Retirement plans can be compromised when senior citizens become the victims of elder financial abuse, which can cost them an estimated $2.9 billion per year. Here's how to prevent elder financial abuse, protecting retirement plans and other investments.
Melanie Stetson Freeman/Staff/File
It's called elder financial abuse and, unfortunately, it's a growing phenomenon that can put retirement plans and other savings at risk.
It costs senior citizens an estimated $2.9 billion annually, according to a MetLife study, a 12 percent increase from 2008. Elder financial abuse takes place when someone uses an elderly person's funds or property without authorization.
The perpetrator can be an outside scam artist offering phony investments or prizes. Even more troubling, it can be a caregiver, friend, or family member who steals cash or household goods, engages in identity theft, or misuses checks, credit cards, or other financial accounts.
Strangers are involved in 51 percent of the crimes, the MetLife study finds, while family members, neighbors, and friends take part in 34 percent of financial abuse cases. (Business and Medicare/Medicaid fraud accounted for the rest.)
Most victims are between the ages of 80 and 89, and women are nearly twice as likely to be victims of elder financial abuse as men. Most victims live alone but need some help with either home maintenance or health-care.
This threat is expected to increase as the population ages. In 2009, there were 39.6 million people 65 years or older, according to the US Administration on Aging. By 2030, that number is projected to nearly double to 72.1 million.
If you are a senior citizen, or help care for one, it is important to recognize the signs of financial abuse:
- Items or cash missing from the house
- Questionable changes in wills, titles, policies, and power of attorney
- Significant or unexplainable withdrawals from the senior's accounts
- Addition of names to financial accounts or credit cards
- Changes in shopping patterns
Here are some tips on how to prevent financial abuse of the elderly:
- Make sure financial and legal affairs are in order. If they aren't, enlist professional help to get them in order.
- Avoid becoming isolated, which increases the vulnerability to elder abuse.
- Shred or dispose of papers with personal information, such as charge receipts, bank statements, expired credit cards, or new credit-card offers.
- Do not give out your Social Security number or personal account numbers unless you made the first contact and know the institution.
- Watch sales people, wait staff, and anyone who asks for your credit card. Anyone who handles a credit card may be able to get access to financial records when they swipe a senior's credit card for a purchase.
- Close unneeded lines of credit and cut up those discontinued credit cards.
- Reduce junk mail and unsolicited credit card offers to reduce your chance of identity theft. Call toll-free 1-888-5-OPT-OUT (888-567-8688) or do it through this online link: https://www.optoutprescreen.com/?rf=t)
- Get on the National Do Not Call Registry to reduce telemarketing calls. Visit its website or call 888-382-1222 to register your phone number.
- Hold monthly meetings with someone you trust to go over financial statements, bills, and credit-card accounts.
- If you are concerned about the abuse of credit cards, switch to a prepaid card. The deposit determines the spending limit.
- Before making a large purchase or investment, talk it over with someone you trust. Don't be pressured or intimidated into immediate decisions.
If you suspect financial abuse has taken place with an elderly friend or relative, contact the elder abuse helpline in your state.