Guarding Seniors From Scams

Submitted by Dan Crimmins on Friday, March 27, 2015 - 12:00pm
Printer-friendly versionPrinter-friendly version

Old age should come with a caution label for many reasons. Most of us expect to live longer than our parents or grandparents. And with longer life come difficulties – and sometimes financial predators.

We all know the major difficulty of making sure that your income can keep pace with your cost-of-living increases, especially if your retirement lasts 30-plus years. We often speak about the need to plan and have your portfolio designed to account for that length of time.

But another problem is a bit more disturbing: our aging brain. Studies have shown that as people age they become more focused on maximizing positive emotions and social interactions and more determined to block out negative experiences. Researchers call this socio-emotional selectivity.

More simply, this process means some older people pay more attention to those who make them feel comfortable and content. This often leads seniors to overlook signs of danger they might have clearly noticed when younger. Recent research shows that highly intelligent retirees (even those with no signs of dementia) find it harder to distinguish safe investments from risky ones.

The news constantly discusses money thieves close to elderly victims, whether a family member or a care aide. Those older than 65 are 34% more likely than 40-somethings to have lost money on a scam, according to a recent report from the Financial Industry Regulatory Authority’s Investor Education Foundation. 

The Investor Protection Trust (IPT) adds that more than seven million older Americans – one out of every five citizens older than 65 – already fell victim to a financial swindle. Often victims, tricked by an apparently atmosphere of care, allowed the crooks access to a checkbook or personal information that made access to the money easier.

Here are three points to help protect ourselves and our elderly loved ones:

1. Though thieves always preyed on the elderly, such crimes now seem on the rise. In response, many organizations like the IPT established formal programs and publications to educate both seniors and those who love them.

The IPT program, for example, “educates healthcare and legal professionals to recognize when their older clients may be vulnerable to or victims of financial abuse, particularly those patients with mild cognitive impairment, and then to refer these at-risk patients to state securities regulators, local adult protective services professionals” and others.

2. If you’re in your 40s and 50s, you may not realize how quickly your mental processes can decline. You may need now to get your affairs in order, both in terms of estate planning as well as financial planning.

Once your plans are in place, discuss with your partner and financial professionals a stipulated delay before large changes to the plan and estate documents, especially as you age. From here on, always discuss with a trusted advisor big alterations to your financial plans.

3. If you’re a man responsible for dealing with your family’s financial situation, work with a planner who involves you and your spouse.

Even if you can still handle the situation, both you and your partner must understand what the plan entails and the reasoning behind certain decisions. This becomes especially important if you the man die first and your widow then assumes full control over the plan.

Prepare now so that both you and your partner recognize the potential and special financial vulnerabilities of the aging brain.

Follow AdviceIQ on Twitter at @adviceiq.

Dan Crimmins is the co-founder of Crimmins Wealth Management LLC in Woodcliff Lake, N.J. His blog is Roots of Wealth.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

 

Previous: Obama’s Lame Broker Reform
Next: