When the COVID-19 pandemic began in March, no one could not have imagined senior financial isolation would be one of its side effects. Life insurance company, AIG, warns that is exactly what is happening and shares ways to combat financial exploitation against seniors.
Senior Financial Isolation
We now know that older Americans are at risk for severe illness from COVID-19. As a result, the CDC urged anyone aged 65 years and older to limit interactions with other people as much as possible. Adult children and grandchildren avoided loved ones for fear of infecting them. Nursing homes and assisted living communities began closing their doors to visitors. While these precautions were necessary, it exacerbated an already prevalent issue: social isolation among seniors.
In addition to the emotional impact, social isolation worsens financial abuse among older Americans which is estimated to affect more than 5 million people and cost billions of dollars a year. Emerging evidence indicates prevention could save lives and prevent illness, injury, and suffering. Furthermore, stopping financial abuse among seniors will yield major cost savings. One in ten victims turns to Medicaid as a direct result of their own money being stolen from them, creating a public health crisis. “Financial exploitation causes large economic losses for businesses, families, elders and government programs, and increases reliance on federal health care programs such as Medicaid,” warned a 2014 elder justice report.
AIG Advice to Seniors
AIG explains that senior financial isolation can be damaging but implementing a set of checks and balances before an issue arises may prevent financial exploitation.
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Appoint a trusted advocate: Research shows that many Americans face cognitive decline as they age. This can lead to out-of-character financial decision making, from forgetting to pay utility bills to falling victim to fraud. We all want to maintain our independence as long as we can, but simple precautions, such as naming a trusted contact and putting into place joint Powers of Attorney can help safeguard senior assets and preserve retirement income. The key is to take these steps before an issue arises.
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Involve loved ones to spot vulnerabilities: Elder financial abuse is a pervasive and expensive problem estimated to rob America’s elderly of billions per year. By virtually visiting with loved ones and staying engaged in their lives (albeit at a distance), family members are often able to recognize warning signs of vulnerability, such as withdrawal or forgetfulness. They may also be able to assist with reconciling account statements and finding local resources. Loved ones can also help keep seniors informed about prevalent scams, such as COVID-19-related scams offering fraudulent tests and cures or soliciting donations. Educating seniors about these scams is especially important in this climate, since when we’re feeling lonely or scared, we’re more likely to stay on the phone with a stranger or click on a link touting a treatment.
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Engage a financial professional to help prevent exploitation: Sadly, seniors are most likely to be taken advantage of by those they know. A financial professional can serve as a final line of defense in catching these instances of financial exploitation. Advisors can notice uncharacteristic financial behavior in their clients, and help to flag, investigate and prevent suspected financial coercion and manipulation from family, friends or caregivers. This is one of many reasons it is critical that advisors pick up the phone to call their older clients during this challenging time. Recent research conducted by MIT AgeLab sponsored by AIG Life & Retirement found that just 24% of Americans ages 61-75 had discussed COVID-19 with their financial advisor.
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We hope this information on Senior Financial Isolation is helpful.
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