Senior citizens are routinely targeted by disreputable telemarketers, investment brokers, and charitable agencies, among others. One study estimated the financial losses by victims of elder abuse at $2.9 billion annually.1 Another estimated the losses experienced by senior victims of financial abuse to be, on average, $50,000 per person.2
What can you do to help your parents or other elderly loved ones avoid becoming the victim of a scam or losing control of their finances? Below are some tips.
- Look for clues. Are your parents having a hard time managing their finances? Have they stopped paying their bills? Are they overextending themselves with purchases or charitable contributions? Talk to your parents about their situation. Let them know that you are willing to help them maintain a certain level of independence, but that they may need assistance.
- Get a second opinion. Consider speaking to their primary care physician, or bring in a geriatric care manager, who can help you assess the mental clarity of your loved ones. You can find a local care manager at the National Association of Professional Care Managers or at Eldercare Locator.
- Assess their finances. Go through your parents' tax records, bank and investment statements, and credit card accounts. Be sure you have their account numbers and online passwords and keep a record. If they have a financial advisor, set up a meeting. Check over their investments. Are they suitable for them or do they need rebalancing?
- Bring in additional family members, if necessary, and set up a plan. Consider getting a durable power of attorney, which would allow you (or someone else) to make financial decisions for them if they can no longer do so. Check to see that your parents have a will and that it has been updated to meet all of their wishes. Also determine if they have a health care proxy or life insurance policies.
If you do take over your parents' finances, be aware of the following:
If you co-sign for a loan or credit card, you become responsible for paying it off if your parents cannot or if they die. Instead, ask your parents to grant you third-party access to their accounts. You could even arrange to have an alert sent to you if their charges go above a certain amount.
Instead of opening a joint bank account, consider having a joint signature on the account. Doing so will enable you to sign checks to pay their bills, but the account remains in their names. You can also request to have alerts sent to you if there are any lapses in payments.
1Source: MetLife, "The MetLife Study of Elder Financial Abuse," June 2011.
2Source: Certified Financial Planner Board of Standards, "2012 Senior Americans Financial Exploitation Study," August 2012.
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