Step #1: Build long-term support group of friends
The National Elder Mistreatment Study noted that social support has emerged as a central risk or protective factor for virtually all forms of elder mistreatment, including financial abuse. The researchers recommend programs that act against senior isolation from any of reduced mobility, weak health, loss of family or friends. One idea might be to build virtual communities of seniors using video-telephoning (for example, through Amazon’s Echo speaker). However care should be taken to ensure that the social group has no financial interest in the outcomes.
Step #2: Put finances on automatic pilot or delegate to trusted family member or outside advisor
Before a sizeable gap develops between a senior’s ability to handle financial issues and her or his level of self-confidence, put day-to-day finances on automatic pilot with supervision by a trusted family member or outside financial advisor. This might include, for example, direct debit or auto-charge for regular payments such as utilities and insurance, automatic messages for reminders to pay bills and property taxes. Blocking telemarketers (through www.donotcall.gov) is also advised.
Step #3: Use pre-paid credit card with restrictions set on spending
Some financial institutions offer special credit cards to minimize impulsive payments based on fraudulent entreaties. They include, for example, a risk profile established to reflect the age of the client. Donations could be limited to a list of pre-approval charitable organizations. Known scams could be blocked from receiving payments. The credit card could also require that transactions be made in person (rather than on the phone or computer) and the payments be capped at a maximum amount per purchase.
Step #4: Follow warnings by government regulators
A number of government agencies publicize common forms of scams. For example, the Securities and Exchange Commission (SEC) provides a description of the common senior frauds that have been investigated by the SEC. In addition, the Federal Trade Commission frequently issues alerts on scams that affect seniors (and everyone else.) You can sign up to receive the alerts by email here. FINRA also provides warnings to seniors about “pump and dump” schemes using penny stocks and they warn consumers not to send checks to Post Office boxes or addresses that are not associated with registered securities firms, which can be checked through BrokerCheck on the FINRA website. In addition, FINRA’s investor alerts about securities fraud are available here.
Step #5: Follow warnings by AARP
Before investing in a financial product, AARP (formerly American Association of Retired Persons) recommends you ask four questions.
1.) Are these marketing lines familiar?
Listen for telltale warning signs in the marketing spiel. Typical scams use high-pressure sales pitches. You should run from any of the following lines, especially if they are presented in a free lunch. That lunch may be the most expensive food you have ever eaten.
Your profit is guaranteed.
It’s an amazingly high rate of return.
There’s no risk.
You can get in on the ground floor.
This offer is only available today.
It’s a secret investment tip just for you.
I’ll get you the paperwork later.
But the best line is “Just make your check out to me.”
2.) Does the financial product makes sense for your portfolio?
What is its level of risk and are you comfortable with that risk? What are the restrictions on accessing the funds or withdrawing early? When are you likely to receive a return on your investment?
3.) Is the financial investment legitimate?
It is estimated that one-third of us will be suffering from the fog of dementia in our final years. Best to decide what care you want … before others decide that you are not mentally capable of making important decisions.
Most financial investments are some form of security that must be registered with the Securities and Exchange Commission (SEC) or the state securities regulator. You can check that the investment has been properly registered. It’s a little complicated but you can search the SEC’s data-base of filings here.
For the state securities regulator, you can find the right contact by looking at the website of the North American Securities Administrators Association, since all the state securities regulators are part of Association. You can find your state regulator here.
If the financial investment has not been registered with a securities regulator, you are likely on your way to discovering a scam.
4.) Is the broker/advisor legitimate?
As noted above, check FINRA’s Broker Check to see if the broker is properly registered — or if there have been any formal complaints against her or him,
You can also help others by becoming a Monitor of Free Lunches. “Free lunch” seminars are often used to lure people into investing in unsuitable or even fraudulent products. AARP developed the Free Lunch Monitor Program to help older Americans avoid being scammed out of their investments. Protect yourself and help others — become an AARP Free Lunch Monitor.
You should also check AARPs’ Consumer Protection Center here.
Step #6: Prepare Advance Directives on how your money should be used
It is estimated that one-third of us will be suffering from the fog of dementia in our final years. Best to decide what care you want … before others decide that you are not mentally capable of making important decisions.
Some seniors may wish for their personal savings to be used for 24/7 care in their home in case of advanced dementia. A suggestion from the Northern Alberta Gerontological Social Work Interest Group is that Advance Directives be used instruct caregivers (and children) of your preferences in how your money is used if you lack the mental clarity to provide the instructions.
Step #7: Decide when to give up the car keys
How do you decide when it is time to turn the keys to your financial stability to someone else? This is a difficult decision but you might tie it to the decision to turn over the keys to your car to someone else.
For most people (though not for me) the car keys represent independence and freedom and all things young and strong. Unless you live in the middle of a city (as I do in Washington DC) your car is your transport to everything – the grocery store, your kids, your doctors, your gyms, your friends. Giving up the keys to your car feels as if you have given a warden the keys to your cell.
Yet there comes a time for us all when it is better to leave the driving to others. The Traffic Safety Foundation of the American Automobile Association has a self-test that can help you decide if you should keep driving. Too many of the wrong answers will put you in the danger zone – for you and others on the road. You can find the self-test here. Don’t worry, no one will know your test scores. The test has also lots of helpful suggestions on ways to keep driving while senior. After completing a similar online mature driver course by the American Safety Council, I can assure you that such programs are worth every hour it takes to finish them. Here is the course for California drivers. Overnight, their suggestions have made me a better driver.
Our world provides lots of alternative driving options – Uber, Lyft and others – and our future world will bring us still more. But when it is time to say, “George, home, please!” it is also time to consider letting our kids or financial advisors (or both working together) make our financial decisions. For us, we just want to have a good time each and every day — to hell with the driving!