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How to Recognize and Avoid Financial Abuse

Stroke survivors with cognitive impairments face increased risk of fraud

How do we protect ourselves or our loved ones from financial abuse? A recent MetLife study shows that financial abuse of elders is growing to an estimated total cost of $2.9 billion, a 12% increase since 2008. Financial abuse includes stealing credit cards, forging checks, transferring assets and otherwise stealing money. Women are twice as likely to be targeted as men, partly because they live longer and are often living alone. The impact on the elderly is magnified by the fact that there is little or no opportunity to recover the loss by going back to work or growing remaining assets.

Cognitive impairment can make individuals more vulnerable to financial fraud. Studies show that people in general tend to make poorer financial decisions as they age. Elder abuse is sometimes hard to recognize if the person is normally very private about their financial status. Adult children often do not find out about a problem until it is too late to correct. Seniors may also feel that any attempt to oversee their finances by their children means having to give up control, or implies that they are not capable of handling their own money. It is important for family to talk frankly with their older parents or relatives about the problem of elder abuse, and how they can work together to prevent it.

Tips for Avoiding Financial or Investment Fraud

  • Do not give personal information over the phone (i.e. Social Security number, date-of-birth, bank account number, credit card number, or Medicare number) if you did not initiate the call.
  • Do not give in to pressure tactics from a caller. A legitimate business or organization will not pressure you into purchasing or donating.
  • Know your “do-not-call” rights.
  • Retain confidential and important documents in a safe place (i.e., safe-deposit boxes, safes, etc)
  • Be mindful of the Bernard Madoff’s Ponzi scheme. Investments that seem too good to be true, most likely are.
  • When selecting a financial planner or advisor, confirm that they have taken a “fiduciary oath” which requires them to put the interests of the client first.

By: Susan J. Veligor CFP, Principal, Cornerstone Financial Planning

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"Financial abuse of elders is growing to an estimated total cost of $2.9 billion."

5 Possible Signs of Financial Abuse

  • Sudden withdrawals from bank accounts
  • Additional unwarranted names added to accounts
  • Substandard care even though funds are available
  • Sudden changes to the will
  • Unexplained transfer of assets

Visit the Alliance for Investor Education for a list of 10 websites with resources to help the elderly recognize scams and fraud.

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