Retirement is all about enjoying your much deserved relaxation, spending time with friends and family, and being vigilant about elder financial abuse like fraud and scams … Huh? If that last one sounds unlikely to you, you’re not alone.
Millions of older Americans, particularly retirees, who have large savings amassed after years of hard work are the targets of financial scams every year. And yet, despite being at the highest risk of experiencing elder financial abuse, less than a quarter (24%) of retirees worry they may become a victim of financial fraud, according to the Allianz Life 2021 Retirement Risk Readiness Study. That compares with 42% of pre-retirees and 65% of near retirees.1
This interesting disconnect could be due to denial that it could happen to them, or maybe thinking the issue is overblown (perhaps caused by underreporting of scams as a result of embarrassment or by a lack of understanding how to report). But the truth is the issue is indeed prevalent. With seniors often the targets, financial fraud can wreak havoc on a retiree’s financial security and undo years of saving and planning.
Here are some steps to take now to help address these risks in the future.
Break the taboo
Use upcoming family gatherings as a time to talk about the risks associated with fraud. It can be an uncomfortable topic, but a necessary one. While no one likes to face the reality of getting older, for so many it also means health problems associated with aging. According to the same study as above, only 42% of retirees worry about health conditions, such as cognitive decline, which could prevent them from being able to manage finances on their own.
Have these conversations now, instead of during a health or financial crisis when emotions are high and spur-of-the-moment decisions could be more likely. It is also important to note that these conversations aren’t one and done. These are important decisions that take time and consideration, and conversations should be ongoing.
To start, it can be a good idea to build a relationship with a financial professional who can watch for suspicious activity and can also be a resource to help with things like beneficiary designations, insurance policies, financial products, and financial documents. They can also help with identifying a “trusted contact” person who can function as another resource if suspicion of financial exploitation arises.
Financial schemes can be confusing and can make you second-guess yourself. Scammers can also take advantage in times of high-stress or crisis like natural disasters, or the COVID-19 pandemic.
It is important that you trust your instincts. If you feel uneasy about a financial transaction, take time to reconsider it, or check with a trusted family member or your financial professional.
We know the risk of financial fraud is out there. As more Americans reach retirement age, an increasing number of people could face the potential for elder financial abuse and risks associated with aging. By learning more about the potential pitfalls that go along with aging, Americans can take steps to help mitigate risks to their retirement security both now and in the future.