Financial abuse, also known as economic abuse, is a growing problem in America – and the perpetrators might be closer than you think. The aging population is a prime target, given the wealth they’ve accumulated over their lifetimes and their possibly deteriorating cognitive abilities. Unfortunately, the facts on just how many instances of elder abuse, and specifically financial elder abuse, are fuzzy. That is partially because people are less likely to report them, whether out of denial, embarrassment or unawareness.
But the data that are available are alarming: The National Council on Aging reports that one in 10 Americans age 60 and older has experienced some form of abuse, with estimates of as many as 5 million elders being abused each year. Financial elder abuse is an enormous issue on its own, with an equally enormous range of reported costs – from a huge $2.9 billion, according to a 2011 MetLife report, to a massive $36.5 billion, according to 2015 research from financial services firm True Link.
And often, the abuser is well known to the victim. The MetLife study reports that 34 percent of noted incidents were perpetrated by family, friends, neighbors or caregivers. The National Center on Elder Abuse reports a much higher estimate with 57.9 percent of perpetrators of financial exploitation of older adults being family members, 16.9 percent being friends and neighbors and 14.9 percent being home care aides.
“You hear it more and more often,” says Beth Lynch, a certified financial planner and financial consultant at wealth management firm Fort Pitt Capital Group, based in Pittsburgh. “It’s people who are close to you, family or friends, someone you know and trust, who take advantage.”
In the case of one of Lynch’s clients, the perpetrator was a trusted friend. The client had lost her ability to write checks and needed assistance managing bank accounts. Her husband had passed away, and she had no children, so she turned to her friend for help. It wasn’t until the friend asked her to change the beneficiaries on her will that she suspected anything was amiss. “That was the red flag for her,” Lynch says. “We found out later that this very trusted friend who was helping was actually stealing from her … and writing herself checks.
Sometimes, though, the abuse might not be so clear-cut. Dr. Kathy McCoy, psychotherapist and author of “We Don’t Talk Anymore: Healing After Parents and Their Adult Children Become Estranged,” explains one instance in which a patient’s son essentially bullied her out of her pension. When the single mother retired at nearly 70 years old, she took a lump-sum payment. And her son convinced her to use the money to buy him and his wife a house, new furniture, a car and more. With very little left for herself, the overly generous mother wound up having to go back to work for another decade (which she was fortunate to be able to do).
“Kids are not always meaning to be financially abusive, but it can get pretty dire for some parents who will be talked into or will just voluntarily jeopardize themselves by giving too much,” McCoy says. “It becomes abusive when the adult child requests or demands money without considering the impact this could have on the parent. Some parents want so much to give, they’d give their last dollar to their child. So adult children need to be aware and think before asking.”
Of course, that is an extreme and unusual form of financial abuse. “The instances of kids really beating up a parent are not nearly as common as kids thoughtlessly asking for money that parents really shouldn’t be lending,” McCoy says. “Adult children need to understand how finances change for many people when they near or are in retirement, and parents need to stop and think about what they can really afford to do to help their kids.”
One way to stave off any of these issues is to develop a financial plan as soon as possible that includes what your wishes are as you age and if you become incapacitated. “It is really important to do that while you’re of sound mind before you actually need it,” Lynch says. “Start that planning as early as possible.”
You should also have a team in place that knows your plan and can be trusted to play their roles in following it. Keeping multiple people – whether they’re your adult children, other relatives and friends or financial professionals – apprised of your plans allows for a system of checks and balances.
That’s what helped Lynch’s client after her experience with financial abuse. “She could not believe someone so close to her had betrayed her, and she felt like, ‘How do I trust anyone else?'” Lynch says. “The biggest thing [to restore her trust] was making sure there was more than one set of eyes on everything, all of us double-checking each other.”
If you fear you’re already in a problematic situation, “don’t be silent,” says Megan Ford, a financial therapist at the University of Georgia and a former president of the Financial Therapy Association, a professional trade group for this emerging field of finance. “Try talking with a trusted person in your life or seek outside support that can offer professional help and advice. And if you’re concerned for your safety, or certainly if you’re in imminent danger, contact the authorities.”
For non-life-threatening emergencies, you can call the Eldercare Locator helpline at 1-800-677-1116 or the VictimConnect hotline at 1-855-4VICTIM. You can also visit the website of the Department of Justice’s Elder Justice Initiative for resources specifically to assist victims of elder abuse.