Elder financial abuse is a widespread problem in the U.S., and with more and more Americans reaching retirement age, opportunities for both scammers and family and friends to take advantage of them abound.
Consider that 53% of respondents in a new survey said elder financial abuse was likely to undermine their ability to live a long, financially secure life. Sixty-five percent said the same thing about a close relative or friend.
Also consider that 47% of survey respondents 65 or older reported that they manage their finances entirely on their own.
This means that many seniors are vulnerable to financial abuse, whether by strangers or financial exploitation carried out by family or friends, according AIG Life & Retirement, which commissioned the study.
Morning Consult conducted the online survey in June among a national sample of 2,200 adults. It is part of the AIG Plan for 100 series.
The survey uncovered other worrying trends. Not only do many seniors handle their own money, but 25% invite a family member or someone they trust into conversations regarding their money, compared with 21% of all adults.
A durable power of attorney is one protection against senior financial abuse, but 84% of all adults and 66% of seniors don’t have or don’t know whether they have one in place.
Four in five respondents claimed that if they should fall victim to elder financial abuse, they would feel comfortable telling friends or family or a financial professional.
In fact, the overwhelming majority of cases go unreported, according to the study. It found that 31% of Americans would not know how to report an elder financial abuse incident.
“We all want to age with grace, maintain independence for as long as possible, and have the freedom to manage our money accordingly,” Kevin Hogan, CEO of AIG Life & Retirement, said in a statement.
“But with 10,000 Americans turning 65 every day, the number of people living with Alzheimer’s and dementia is reaching unprecedented highs — leaving many vulnerable to manipulation and deceit. Longer lives and longer retirements often require a collaborative effort to help seniors protect themselves and ensure their savings can last a lifetime.”
AIG cited academic research showing that as we age, our confidence in our financial abilities stays constant, while our financial literacy drops off dramatically. In other words, even if we feel perfectly capable of going it alone, we may be slowly losing the faculty to continue to make prudent financial decisions.
Financial scams conducted by strangers are a big component of elder financial abuse, catching seniors unawares on the phone or through the internet to manipulate them into sending money.
Asked what they knew about financial scams, a majority of senior respondents were unaware of some of the most common ones.
For example, 60% hadn’t heard of pigeon drop scams whereby victims are told that a large sum of money was found and would be shared with them upon receipt of an upfront payment.
Fifty-seven percent weren’t aware of romance scams, where a victim involved in an online romance is asked for money, or invoice scams, where a victim is contacted by someone claiming to be a fee collector for a company, such as a utility.