It seems reasonable to assume that as people age their trust factor diminishes over time as life experiences teach them that much of what we presumed about people and our way of life are not all that we thought and hoped they were. Too many times we have read about or been victim to scoundrels whose self-interests have cost us our treasure, our good health and valuable time. From the incompetent person who handles our payroll at work to the individual who makes a career of deception with the sole purpose of stealing from others, little room is left in our lives to allow trust to take up much space.
Becoming skeptical is a healthy response when dealing with certain unknowns. Not everyone is out to rip us off and we could miss some great experiences and financial opportunities if we shut out trust completely. But if we allow ourselves to go pass the stage of “trust but verify” we are on a downward spiral that isolates us from friends and relatives that we will come to need as we grow old.
Time unfortunately doesn’t teach all elderly people at this critical time in their lives how to measure and restrain their trust for some. Now more than ever they are dependent on others as their bodies deteriorate physically and mentally to the point where they can no longer take care of routine necessities themselves. Hands and legs no longer function at the level they did when you could do a day’s work in the field or at the office. Cognitive skills have also been lost to some degree where making rationale decisions prove more difficult than it ever was.
Trust is often the only thing most retired individuals have when it comes to financial choices. Few actually do the serious leg work to research investments and unique “business offers” that promise increased fortunes. During economic hard times the retirement savings of many elderly are depleted by downward trends in a volatile market. But many of their funds are actually robbed from them through “scams” by the people they trust, and that includes family and close friends.
As we age many elderly people become “susceptible to people looking to defraud or deceive them.” It is estimated that seniors are ripped off each year to the tune of $2.6 billion and that’s with only 1 in 5 cases being reported. In a report issued by MetLife Mature Market Institute (MMI) last year entitled, Broken Trust: Elders, Family and Finances, we find older citizens are often taken advantage most often by family members and caregivers. Of all the abuses the elderly are subject to (neglect, physical, emotional, sexual), more than 1 in 10 is a victim of financial abuse (12.3%). It is a crime however that affects all Americans of upwards to $10 billion a year in the form of health care, social services, investigative and legal costs, and lost income and assets; a crime that goes largely unreported and is under-prosecuted.
Elder financial abuse could become the crime of the 21st Century, thinks journalist J.F. Wasik, as more and more baby boomers retire and look for way ways to spend their retirement savings while also looking for new ways to add to it. Here are some areas where seniors are financially abused and steps that can be taken to reduce the risk:
IDENTITY THEFT – In one year alone (2001-02) 3 times as many people older than 60 were victims of identity theft.
– Never give a stranger your personal information like social security number and bank account number, over the phone or in person unless you can confirm who they are and how they are serving you.
– Make sure any website you purchase goods off of with a credit card is a secure website. The best way to determine this is to check the URL address at the top of your browser. If it is a secure website it will begin with the letters HTTPS. The “S”, for SECURE, following HTTP means you can trust it for financial transactions.
– Shred all documents that have your personal information on them like monthly statements from banks and other creditors. Criminals who have been surveying you will go through your trash.
– If you or a trusted relative suspect financial abuse it should be reported to appropriate agencies such as Adult Protective Services, a law enforcement agency, or compliance department of a suspected financial institution.
FRIENDS AND FAMILY -Not all friends and family are dependable and honest. It is incumbent for seniors to establish early which friends and family are most likely to defend their best interests before their condition deteriorates to a point where they have to rely on another’s assistance in most if not all matters. Make a list of each so that in the event one moves away or passes away, you will have the next best person for the job lined up.
For what it’s worth, in the MetLife study, “Broken Trust: Elders, Family and Finances”, findings suggested that grand-daughters that you have a good relationship with would be the least likely relative to take advantage of you and your finances, while conversely, females in general from ages 20-59 are more likely than males in this age category to exploit your assets. (p.13) Friends and non-relative care takers would fall into this category.
Clues that should keep certain friends and family members off this list will consist of the following:
1. How often do they do things for you without expecting rewards?
2. Do they discuss too frequently what your financial status is and what arrangements you have made for these assets when you’re deceased?
3. What is their financial status like? Could they benefit from your demise or absconding some of your funds on “lucrative opportunities” they claim they’ve come across and present to you?
4. What’s your relationship been with them over your life? Have they all of a sudden gained new interests in you as you’ve become dependent on others? Do they or have they had problems with alcohol and drug abuse? Widows and widowers are subject to “new loves” in their life who take advantage of a person’s loneliness.
5. Do they seem concerned about how your estate will be handled when you’re gone, asserting some sense of “entitlement” while frequently pointing out what little other friends and relatives have done for you?
6. Do children prey on motherhood instincts to provide for them in “their hour of need”.
Though some or all of these indicators could truly be virtuous ones, they must be weighed in terms of your historical relationship with them. People’s vices in the past do not always get better, especially when it is aimed at someone who is less capable of fending for themselves as the elderly are.
MEDICARE/MEDICAID FRAUD – Billions are stolen each year from the Medicare and Medicaid Funds by the acts of unethical doctors, care facilities and medical suppliers who over-charge these federal funds for services and equipment never used by the Medicare/Medicaid recipient. $60 billion alone gets stolen from Medicare says Florida Congresswoman Ileana Ros-Lehtinen who along with fellow congressperson is co-sponsoring the Medicare Fraud Enforcement and Prevention Act (H.R. 5044). Medicare and Medicaid fraud hit you with any out-of-pocket expenses and will ultimately affect what seniors receive in benefits as efforts are made to offset these costs in the form of reduced payments to doctors, providers and suppliers.
– If you suspect fraud from a doctor, care giver or supplier after reviewing your monthly Medicare Summary Notice (MSN) contact those that appear to have over-charged for services rendered to get a clarification. If they are unresponsive call the number on your MSN to report your suspicions.
– Have information available before you call such as the provider’s name and any identifying number, the item or service you are questioning, the date of the incident and the amount approved and paid by Medicare.
– For other pertinent information in handling such claims you can go to Medicare.gov website at www.medicare.gov/fraudabuse/howtoreport.asp or call 1-800-HHS-TIPS (1-800-447-8477).
BUSINESS RIP-OFFS – Aggregate dollar amounts lost through commercial elder abuse are the highest of all forms of elder financial abuse.
– Never succumb to business deals or monetary charity requests over the phone. Call your local Better Business Bureau (BBB) or State Attorney General’s office to validate that any business you are considering investing in or paying for services is registered and licensed to the extent such businesses can be. Always ask home repair vendors for three references.
– Common kinds of commercial theft, fraud, and embezzlement include life and health insurance scams, predatory lending practices from credit card debt, home loans and “once in a life time” schemes. Avoid unknown “professionals” who claim to they can enhance your wealth through annuities, stocks and bonds or set you up with an “unbelievable” property purchase.
– High-pressure telephone solicitations, especially for charities, magazine book publishers’ solicitations and Internet scams dealing with social networks, medications and make-up and age reduction remedies should be avoided. To be sure, employ the impulsive-buying deterrent of waiting 24 hours and adhere to the wisdom that if it’s too good to be true, it probably isn’t.
CARRY VERY LITTLE CASH – Use bank debit and credit cards on all your purchases that will allow it. What income you do receive in the form of Social Security benefits, IRA payouts, or periodical payments from investments like stock dividends can be direct-deposited into your account. The added benefit of statements that can be accessed on-line with a security password helps you and your legal proxy keep track of all expenditures and income and out of sight from those who would take advantage of you.
PRECAUTION AND PREVENTION ARE KEY: A REPRISE
Key points to consider when trying to protect yourself from fraud is to establish early who you can trust while you are still mentally able to. If your finances allow, find a licensed attorney who can assist you with a trust and create a budget that can be monitored by an independent 3rd party.
– Never give out private information, like SS number, bank account numbers, license number or credit card information that can make you a victim of identity theft.
– If you do make loans to friends or family or make investments with unfamiliar risks, do so in partial amounts.
– Never lend out better than 10% of your total assets over a short period (1-3 months) and never turn over all your assets to anyone while you are still alive if economic conditions allow.
– You should have a will in place to reward those who you feel truly had your best interests and well-being in mind while you were alive.
For more information about fraud and financial elder abuse, visit AARP’s Fraud Fighters website.
Broken Trust: Elders, Family and Finances
National Center on Elder Abuse