Financial Elder Abuse

Managing Generational Wealth: Part 1

Financial Exploitation and Financial Elder Abuse


Financial exploitation is by far the most common form of elder abuse. Not only does it lead to bad health outcomes including depression, nursing home placement, and increased mortality. It also leads to horrible financial outcomes for America’s Senior Citizens.

Financial Elder Abuse is a severe form of Financial Exploitation. Elder Financial Abuse occurs when someone nefariously takes or misuses the assets of a vulnerable senior adult for one’s own personal use or purpose. It is a serious problem, crossing all social and economic lines, and unfortunately, it is widespread and growing. More than 3.5 million older adults are victims of financial exploitation each year. Seniors targeted by fraudsters suffer an average loss of $34,200. Seniors over the age of 80 reports even higher financial losses.


Three of America’s six generations are ripe for Elderly Financial Fraud:

  1. The ‘Greatest Generation’ is commonly known as the GI Generation. They were born in 1924 or earlier.

  2. The ‘Silent Generation.’ They were born 1925 to 1945. Sometimes listed as 1925-1942

  3. ‘Baby Boomers.’ They were born 1946-1964…Sometimes listed as 1943-1964. They typically have a regular source of income, such as Social Security or a pension. Younger Baby Boomer may still be working full-time or part-time jobs. They may not be financially sophisticated or educated about financial matters. Some may not have the physical ability to disassociate from an environment in which they are being pressured to make financial decisions.

America’s seniors lose over three billion dollars each year to financial scam artists. Surprisingly many losses stem from the downright selfishness and greed of family members who cry for help. As you have already suspected, it can be more difficult to detect than physical abuse and neglect because it’s often done by family members, trusted friends, and caregivers.


America’s Senior Citizens, when confronted by a family member or other person who appears to be in financial trouble, want to help and may have difficulty turning down a request for money. Faced with these situations, they agree to provide money “just this once,” and yet help is usually needed again, resulting in a series of financial exploitations over time. Valuable resources are lost that were meant to provide lifetime income streams and to pay for unexpected long-term care costs. It costs victims as much as $36.5 billion each year, according to the National Council on Aging.


The factors that make these generations most vulnerable are ego and shame. They are less likely to report fraud by a family member or caregiver due to fear of being abandoned or causing family strife. Predatory caregivers have access to a person’s home and assets as the senior may have disabilities that make them dependent on others for help.


Many experts agree that our nation’s elderly tend to be dependent on caregivers who may share their living space. These predatory caregivers know how to ‘pitch’ fraudulent scams to the psychological needs of seniors. These predatory caregivers also know that memory loss makes it difficult for seniors to understand financial schemes and to understand that they were swindled.


Case Scenario -Jason: An advisor gets a call from a client. Jason is a widower, in his late 70s. Jason did quite well as a certified welder in the shipyards in his hometown. But as all-loving fathers, he had helped his sons and daughter out of rough financial patches. This had impacted his retirement savings in a big way. Jason's advisor most recently had warned him that this behavior has significantly reduced his assets over the years. What was alarming about this call was that Jason was upset that the daughter he had entrusted to handle his affairs had lied about the transfer of a large amount from his emergency fund account. The daughter did not transfer the funds to Jason's regular checking account. Instead…the transfer was to the daughter’s account. Fortunately, the advisor had developed a relationship with Jason's daughter. The daughter’s confessed that she and her husband had hit another financial rough patch. The main air condition unit at their home was beyond repair. With the husband out of work…she was desperate. She promised she would not do this again. The damage was done. The advisor was furious. The advisor simply…had to step back.


Case Scenario - Majorie: Bloomberg News featured an article titled ‘How Criminals Steal Thirty-Seven Billion Dollars a Year from America’s Elderly’ The author tells the story of 82-year-old Marjorie who trusted the man who telephoned her to tell her she’d won a sweepstakes prize, saying she could collect the winnings once she paid the taxes and fees. After she wired the first payment, he and other callers kept adding conditions to convince her to send more money...and she did. As the scheme progressed, Majorie, who was legally blind and lived alone in a two-story house in Moss Bluff, Louisiana, depleted her savings, took out a reverse mortgage, and cashed in a life insurance policy. She didn’t tell her family, not even the sister who lived next door. The scammers often push victims to keep promised winnings a secret.


The family didn’t realize something was wrong until she started asking to borrow money. After all, she was a woman they admired for financial independence. But by then it was too late. One of Majorie's granddaughters reported that she had lost all of her life savings…hundreds of thousands of dollars. About one week after calling her granddaughter to borrow $6,000, Marjorie Jones committed suicide. Days later, after the funeral when family members went to her home to try to make sense of it all…they found a caller-ID filled with numbers they didn’t recognize and three bags of wire transfer receipts in her closet. Jones had $69 left in her bank account.


Perfect Civil Rights

African Americans and other people of color have perfect civil rights when it comes to forms of Elder Financial Abuse. There is no discrimination from:

  1. fraud

  2. scams by family members

  3. abuse of powers of attorney and guardianship

  4. identity theft

  5. Medicare and Medicaid fraud.


Wealthy People in their 80s

Wealthy Americans over 80 years old control the wealth of the nation. Bloomberg Business stated that Americans in their 80s and 90s control billions of the nation’s wealth. Wealthy people in their 80s have the highest average net worth of any age bracket. One reason is that octogenarians have less than half the debt, as a percentage of their total assets than adults under 60. Wealthy people in their 80s have the highest average net worth of any age bracket. The numbers we just mentioned are higher as this article was published several years ago.


Another scary statistic is that elderly women are more than twice as likely to become victims. Men tend to die earlier and the widow ends up harboring the wealth that is the result of years of savings and investing. Maybe this is the reason that most female victims are between the ages of 80 and 89.


Elder Financial Abuse is an inconvenient truth. Evil or nefarious caregivers are not the only culprits. Age-Associated Financial Vulnerability (AAFV) is real and it is one of the most common and devastating problems of aging…the decline in patients’ ability to manage their own financial affairs. It plays out as a pattern of risky behavior related to money that places an older adult at substantial risk for a considerable loss of resources. This behavior destroys generational wealth. It also results in dramatic changes in their quality of life and is inconsistent with choices the person made when they were younger.


Safety Net

Highly qualified financial planners trained in the issues of Gerontology and Geriatrics are as equally important as highly qualified occupational therapists. Also, minimize the opportunity for phone scams. Please register with the National Do Not Call Registry at DoNotCall.gov or call 1-888-382-1222. Please call from the phone number you wish to register.


Resources and References

  • International Risk Management Institute, Inc. IRMI ‘ELDER FINANCIAL ABUSE’ Published by WebCE, Inc.

  • How Criminals Steal $37 Billion a Year from America’s Elderly: Nick Leiber ‎May‎ ‎3‎, ‎2018, |https://www.bloomberg.com/news/features/2018-05-03/america-s-elderly-are-losing-37-billion-a-year-to-fraud

  • Octogenarians Rule the Rich - Ben Steverman - Bloomberg Business

  • Dr. Mark Lachs - Weill Cornell Medical College in New York and Duke Han - Rush University Medical Center in Chicago, coauthors of: ‘Age Associated Financial Vulnerability (AAFV)” October, 13th, 2015; Annals of Internal Medicine. |https://www.sciencedaily.com/releases/2015/10/151020140946.htm

  • Discover Magazine - The Science of Aging Well |http://discovermagazine.com/2015/oct/11-age-and-enlightenment

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