As Baby Boomers continue to retire and advance in age, increasing numbers of American seniors are at risk of falling victim to schemes aimed at separating them from their money.
The risks are substantial. A 2014 survey by True Link Financial claims that 36.9% of seniors lose money to scams, financial exploitation, and abuse over any given five-year period. And while hard to quantify, a 2016 update to Allianz’s Safeguarding Our Seniors study estimated the average loss to victims at $36,000—considered a “major financial loss” or “financial ruin” by nearly half of caregiver respondents. Those respondents also reported that 40% of seniors in their care experienced financial exploitation more than once, up from 20% in its 2014 study. Lamentably, such losses often aren’t reported when discovered and they’re rarely recovered.
But in many cases, there are warning signs—and caregivers and close family members are often in the best position to spot possible financial exploitation. Here are some common red flags.
Listen for tipoffs
Take note if a senior you’re close to says something like:
- “People are asking me for money.”
- “I’ve been pressured to give money away or to change my will.”
- “My money seems to be disappearing.”
- “I think someone may be accessing my accounts.”
- “Sometimes I make loans or give gifts that make me uncomfortable.”
- “My bills are confusing to me.”
- “I don’t feel confident making financial decisions alone.”
- “I don’t understand financial decisions that someone else is making for me.”
Watch for cues
Pay attention to behavioral changes or situations such as:
- Unusual or unexplained withdrawals, transfers, debits or changes in financial habits
- Abrupt or unexplained changes to wills, trusts, powers of attorney or beneficiaries
- Reluctance to discuss financial matters
- Denied access to accounts or account statements
- Frequent password or username resets
- Unpaid bills or mail piling up
- New friends or sweethearts, or withdrawal from existing relationships
- Fearful, distressed, submissive or confused behavior
- Frequent mood swings
- Changes in appearance or personal hygiene
- The onset or worsening of an illness or disability
- Third parties who insist on participating in all financially related conversations or who take an extreme interest a senior’s finances
What to do next
Here’s what you can do if you spot any of these red flags.
1. Act quickly. The sooner you take steps to halt losses and recoup lost funds—which can include notifying law enforcement, Adult Protective Services, and the Federal Trade Commission to report scams—the greater your likelihood of success and your chances of preventing further financial exploitation.
2. Have a calm conversation and don’t blame the victim. Your loved one may become more secretive and make a bad situation worse if they feel cornered or embarrassed.
3. Contact your loved one’s financial institutions. You can institute safeguards to help prevent unauthorized transactions, such as stepping in as a co-signer or establishing power of attorney, or even contact a lawyer.
An ounce of prevention
There are several ways you can help seniors avoid financial exploitation:
- Help your loved one get organized, including locating and filing key financial records
- Ensure that you and your loved ones designate Trusted Contact Persons for your accounts, so trustworthy people can speak to financial institution representatives in the event of suspected financial exploitation
- Regularly review wills, trusts, powers of attorney, account statements, insurance policies and beneficiary designations
- Discuss your loved one’s goals and attitude toward money so that you’re attuned to any irregular spending
- Talk about how to spot and respond to potential scams
- Don’t put off important conversations out of concern that they might become uncomfortable
By staying attentive to your loved ones as they age, you can help them to spot potential scams, minimize financial losses, and focus on what really matters: a happy and fulfilling life in retirement.
What You Can Do Next
- If you’re a Schwab client, designate Trusted Contact—people we can get in touch with on your behalf if we suspect you’re a target of financial exploitation. Learn more about Trusted Contacts.
- Visit SchwabSafe to learn how Schwab is working to help safeguard client accounts.
- Find more resources for senior investors.