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Financial Planning > Behavioral Finance

Why elder financial abuse is not going away

By Paul Wilson

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As the U.S. population ages, more attention is being paid to elder financial abuse. And the growing mountain of data and victims’ stories is beginning to provide a clearer picture of the threats seniors and their family members face, as well as clues about the best ways to battle the onslaught.

Last year, Allianz conducted a study of more than 2,000 Americans titled “Safeguarding our Seniors,” polling both potential victims (ages 65+) and their friends and family (ages 40-64) in an attempt to uncover the most common threats, the impact on victims and their families, and the most effective strategies for prevention and fighting back.

“As America’s population gets older and age-related cognitive impairments escalate, greater awareness about the frequency of elder financial abuse will foster more discussion about ways to keep our seniors safe from financial exploitation,” said Allianz Life President and CEO Walter White.

The threats

When asked where the biggest perceived threats came from, many respondents displayed a lack of awareness consistent with results found in other studies. Survey respondents listed outside threats such as:

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However, seniors who have been taken advantage of financially or those who personally know a victim revealed a different and often far more personal threat. When asked who took advantage of them or their family member, they cited:

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Among those who reported experiencing financial abuse, the incident was far more likely to have been perpetrated by a family member, friend, neighbor or caregiver (52 percent) than a stranger (22 percent).

A growing (misunderstood) threat

Victims surveyed for the study suffered an average financial loss of approximately $30,000, with more than 10 percent of victims saying they suffered losses of $100,000 or more. Because victims are often targeted based on age, wealth and decreasing mental capacity, cases of elder financial abuse are expected to increase as baby boomers continue to age in the coming years.

Prevention

Allianz partnered with the Better Business Bureau to create the Safeguarding Our Seniors volunteer program to educate and encourage discussion on the topic of elder financial abuse. The following steps can help protect seniors and prevent financial abuse:

  • Plan ahead to protect assets and ensure that wishes are followed.
  • Consult with licensed financial advisors or attorney before signing complex agreements or anything you don’t understand.
  • Build relationships with professionals who are involved with your finances and can assist in monitoring suspicious activity.
  • Limit your use of cash (checks and credit cards leave a paper trail).
  • Trust your instincts and feel free to say “no.” Remember, it’s your money.
  • If you feel someone is pressuring you for info/access to your finances, report it to another family member or friend.
  • Always ask for details in writing and get second opinions before changing your power of attorney, wills, trust, etc.

Victim’s voices

The number of elders who reported having suffered financial abuse in the Allianz “Safeguarding Our Seniors” study was a relatively small 5 percent, yet this was likely an underestimate, as nearly 20 percent of friends and family reported being aware of someone who has been a victim in the past. In fact, AARP has estimated that just 4 percent of elder financial abuse cases are ever reported, while other estimates put the overall reporting of financial exploitation at just 1 in 25 cases, suggesting there are at least five million financial abuse victims each year.

As part of the Allianz study, elders and their families were asked whether incidences of financial abuse had been reported. If they answered “no,” the survey asked them to explain why not:

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