Many seniors are going it alone in managing their finances, leaving themselves vulnerable to financial abuse, whether it’s through scams perpetrated by strangers or financial exploitation conducted by family or friends, according to a report by AIG Life & Retirement.
AIG’s survey on elder abuse, conducted in June and including 2,200 adults, found that almost half of seniors 65 or older (47%) manage their finances entirely on their own—whether it’s paying bills or handling investments. Not only do many seniors handle money matters on their own, the survey found, but only one in four of them (25%) invites a family member or someone they trust into conversations about their money, while 21% of all adults do.
The survey is the latest research from AIG Life & Retirement’s “Plan for 100,” an initiative focused on educating and empowering individuals, employers and financial advisors to help Americans prepare for lives that could exceed 100 years. The possibility of living that long means seniors and their family members have to defend themselves against threats like elder financial abuse, the report noted.
It’s a pervasive and expensive problem. According to the National Council on Aging, the cost of abuse and fraud to elder Americans is estimated to be $2.9 billion to $36.5 billion every year. And the abuse is likely underreported.
One component of elder financial abuse, AIG noted, is scams, which are typically conducted by strangers reaching seniors by phone or through the internet and manipulating them into sending money. A majority of seniors are not aware of some of the most common financial scams.
Sixty percent of seniors, for example, are not mindful of “pigeon drop” scams (when the victim is told that a considerable sum of money was found and will be shared with them if an up-front payment is received), while 57% are not aware of romance scams (where seniors are courted online and asked for money). Fifty-seven percent of seniors don’t know about invoice scams (when the victim is contacted by someone claiming to work on behalf of a company such as a utility to collect fees), and 52% are not aware of prepaid credit card/debit card scams (in which the victims are asked to make payments to a utility or other company to address a debt). Ten percent don’t know of any of the 10 common financial scams.
Despite the lack of awareness, the report found that Americans—seniors in particular—are taking some steps to safeguard their personal information and wealth. It showed that 92% of seniors are not responding to phone calls, texts or e-mails asking for urgent personal information. Eighty-nine percent said they are not clicking on links in e-mails from unknown senders; 65% said they are reviewing their credit report; 63% are setting up alerts from their financial institutions. And 60% of seniors said they are providing personal financial information over the phone only when they initiated the calls themselves.
Also, 81% of respondents indicated that if they were to fall victim to elder financial abuse, they would feel comfortable telling friends or family, and 80% would feel comfortable telling a financial professional. But in reality, the overwhelming majority of cases go unreported, the report noted. Furthermore, it said, 31% of Americans would not know how to report an elder financial abuse incident.
Another key finding of the report is that 66% of seniors (84% of all adults) do not have or do not know if they have a durable power of attorney, a protection against senior financial abuse, in place.
The report suggested that those who work with a financial advisor increase their chances of making smart choices, and are more than two times as likely to have a durable power of attorney in place (36% versus 16%).