Everyone has heard the old adage that as we age, we become “older and wiser.”
However, a recent Economist article suggests that the opposite is true with regard to our ability to manage our finances. While cognitive decline is most severe in those with neurological disorders like Alzheimer’s disease, any senior may struggle with a decreased ability to process new information and recognize risks — skills which are crucial to responsibly spending and investing one’s money. As a result, the elderly are vulnerable to a frightening level of financial exploitation and abuse. A recent study by the financial firm True Link Financial estimated that between $3 and $37 billion are lost annually in the United States by victims of elder financial exploitation.
According to the Economist, some of these losses are the result of scams carried out by strangers against the elderly. Con artists regularly approach seniors claiming to be from the IRS or Medicare/Medicaid and steal personal information from them under the guise of resolving problems with their taxes or insurance. A number of other scams are carried out via cold calls or e-mails, such as the “grandparent” scam, in which callers claim to be the grandchild of their target and ask for money to deal with a supposed emergency. These scams have troubled banks to the point that they have begun training employees to recognize signs of financial abuse and offering rewards to employees who can spot scams.
The biggest threat to seniors’ financial security does not come from anonymous con artists. It comes from their own children.