The elderly are vulnerable in many ways, but financial fraud is one of the more pernicious. About 1 in 8 of the cases reported to the National Center on Elder Abuse relates to finances, and the average fraud takes $30,000 out of a senior’s pocket.
Like other types of abuse, most elder financial fraud happens in the shadows: Seniors are ashamed, or worried about losing their autonomy. By some estimates, just 1 in 44 instances of elder financial fraud is reported. (Tweet This)
But a simple move can help seniors protect their savings. According to newly released survey data from Allianz Life, when seniors discuss their finances with a friend, family member or professional, they are significantly more likely to take preventive measures to keep financial abuse at bay.
Some 85 percent of the elderly respondents who discussed their finances regularly shredded or tore up sensitive financial documents, compared with 69 percent of those who kept quiet. Seniors who talked about their finances were also significantly more likely to check financial statements and avoid signing documents they did not understand.
“While the study doesn’t necessarily demonstrate in a definitive way that this is a sure-fire method of prevention, it does show people feel more confident when they are talking to a professional or a family member,” said Walter White, president and CEO of Allianz Life.
Allianz distributes its products through independent financial advisors, but a senior’s confidant “could be an accountant or an attorney, not necessarily a financial advisor,” White said. “While we do have a vested interest in financial advisors, I wouldn’t contain our recommendation just to that field.”
In fact, the survey results indicated that talking to a friend or family member had nearly the same effect on behavior as talking to a professional.
The findings on elder financial fraud have special import for older women, as women tend to outlive men and in the past had less access to financial education. Amy Nofziger of the AARP Fraud Watch Network said two-thirds of the victims in their its are women.
Partly because they live longer, women also account for the majority of people with Alzheimer’s disease. A study by MetLife found that an elder financial fraud victim is typically a woman age 70 to 89 who lives alone or feels isolated and has some cognitive decline. (Tweet This) And there will be more and more people fitting that description in coming years: The Census Bureau projects that more than 20 percent of the U.S. population will be over 65 by 2030.
“If for no other reason than that you are going to have a lot more women at those ages, it’s an issue of unique importance to them,” White said.
White has personal experience with older women and their finances. He said his mother “was a woman who saved every receipt” until a few years ago, when it became clear she could no longer manage her finances independently. “Now I know she is very vulnerable. I had to do a lot of thinking about how to protect her,” he said.
Seniors may benefit from talking to others about money, but they don’t do it often. Among the respondents to the Allianz survey over age 65 who had been victimized, just 8 percent were talking to others about their finances.
That may be from an excess of caution: Family members are the people most likely to perpetrate elder financial fraud. Seniors should be cautious about the loved ones with whom they share financial details. But they can also discuss their finances with financial professionals.
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Nofziger said one way to initiate a conversation about financial fraud is by bringing it up in a casual way, perhaps mentioning an article or a friend who has had a problem.
“Don’t lecture. Engage them in the conversation. Say, ‘Mom, have you heard about the grandma scam? What would you do?'” Nofziger said. “If your parent does fall victim to a scam or a fraud, empower them to report it and then empower them to talk about it,” perhaps relaying their experience and their feelings about it to friends. “It really does have an impact on others.”
AARP’s Fraud Watch Network sends out a monthly email describing prevalent scams, and it offers a map showing instances of financial fraud in different states.
Talking won’t stop elder financial abuse. But if the Allianz data are correct, seniors who let trusted others into their financial lives could go a long way toward keeping themselves safe.