Senior Financial Fraud is Now a $3 Billion Dollar a Year Issue
Financial fraud against people 50 and older is a growing concern. Older Americans lost $1.6 billion in 2018 due to financial fraud, and the average victim lost $1,023 according to the FTC.
Protect your retirement savings from financial fraud.
Financial manipulation is subtle and can take place over a number of years, explains Peter Creedon, CEO of Crystal Brook Advisors in New York, NY. Here are tips that can help you avoid and detect when you may be the victim of financial exploitation.
1. Avoid Financial Fraud and Appoint Someone You Trust
No, you don’t need to give up all control over your money, but Creedon suggests appointing a trusted family member to look over your shoulder and help with your finances as you age.
“Try to appoint someone who is geographically close to you and use them as a resource,” says Creedon. “You don’t need to make them power of attorney, but you should be able to have them take a second look at your finances each month to help catch when something is off.”
This also goes for keeping your spouse involved, he adds. Both people need to be on the same page about the household finances to help protect each other in the case that someone gets sick or can no longer make financial decisions.
2. Use Financial Institutions You Trust
According to the BankSafe report, older adults prefer financial institutions that provide protection from exploitation. Of those surveyed, 87 percent want their bank to notify them of unusual account activity and 85 percent of people prefer their bank’s employees to be highly trained to detect and prevent exploitation, the report states.
3. Separate Friends and Finances
Money has the tendency to bring out the worst in people, especially when it comes to close friends, Creedon explains.
“Friends are friends. You have to separate your finances from that,” he says. “They may ask you for a loan or start bringing up their financial hardships, but don’t feel like you are obligated to help them out.”
4. Do Your Homework
When you are hiring anyone to come into your home, whether it be for renovations, caretaking purposes, or even legal services, Creedon warns to always check everyone out before you hire them.
“Talk to people in your community and always get a second opinion when you are looking at service costs, because unfortunately, a lot of people see an older person home alone and try to jack up the prices,” Creedon says.
“You can even look up disciplinary records when you’re seeking a financial planner on the Certified Financial Planner Board of Standards to find out if they have had any complaints.” You can research planners who have been disciplined on the Certified Financial Planner (CFP) web site. Just note that not all advisors are CFPs.
Another tip Creedon adds is to always let someone know when you’re having work done in your home and if you can, have someone be there with you while the work is being done.
“You have to keep a close eye on people in your home,” says Creedon. “Make sure they aren’t wandering around in rooms they shouldn’t be in or going through your belongings.”
5. You Even Need to Watch Out for Family
It’s a sad thought, but Creedon shares that he has seen a lot of people who have been taken advantage of by their own family members. “If there is a family member with a drug problem or who is emotionally unstable, they may try to come to you first,” he says. “I’ve had clients threatened or guilted into handing over a lot of money.”
Watch out for a steady increase, because a lot of times it may start with a few dollars here and there or an item they may ask you to help purchase for them, but it can get out of hand before you know it, Creedon explains.
Financial exploitation is a growing problem, but it doesn’t have to be your problem. If you know what to look out for and how to protect yourself, you will be less likely seen as a vulnerable target. For more tips on navigating tough circumstances during retirement, contact a retirement advisor.
6. Know and Track Your Finances to Protect Yourself from Financial Fraud
You won’t know it is missing, if you don’t know what you have.
Having a firm grasp over your finances can help protect you from financial fraud, but a good retirement plan can also ensure that you have a secure and happy retirement overall.