People reach their peak decision-making abilities sometime in their 50s, and then decline slowly until after age 70, when the decline starts to take off more dramatically. This helps explain why sweepstakes frauds, Nigerian investment schemes, and other scams target seniors and retirees.
What can you do to protect yourself—or your parents—from fraud and bad financial decisions? Parents and children can start by drafting powers of attorney, one for health care decisions and the other for financial decisions. It’s extremely important to have these documents in place before anyone becomes incapacitated.
You can also simplify the financial lives of aging parents by consolidating the checking accounts at one bank, and the investments at a single advisor or brokerage account. If there are many credit cards, cut up all but two: one for daily purchases and one for automatic bill payment.
You should keep an eye out for signs that your parents need help. It’s unlikely that they are going to broadcast their need. One strategy is to gently ask questions such as, “Keeping up with all the bills can be a hassle. Do you want some assistance?”
Adult children should also make a habit of communicating with their aging parents about potential scams. Scam artists do their best work when their victims are isolated, without family and friends looking for signs of exploitation. A weekly visit might help you spot the variable annuity salesman who’s getting too friendly.
Some places to learn about the more creative elder fraud schemes include StopFraud.gov, AARP’s Fraud Watch Network and the IRS, which offers consumers alerts and an annual list of the “Dirty Dozen” top tax-related scams. Adult children can discuss common frauds, such as telephone imposters pretending to be IRS agents or Microsoft tech support.
Meanwhile, many financial institutions offer text or email alerts to notify their customers (and their advisors) of unusual account activity. People over 65 can have these automatically forwarded to an adult child who functions as an extra pair of eyes on what’s going on in the account.
For many older retirees, there comes a point when the financial issues become too complex and overwhelming. That’s the time to have a trusted successor take over the management of finances.
The best advice here for parents is: don’t resist giving up the dayto-day financial minutia. Experts report that most older Americans don’t recognize their gradual impairment, and often try to hang onto financial control beyond their capacity—and then hide the fact that they fell for a scam out of embarrassment until the next one comes along.
At Bay Point, we are committed to helping you care for those you care about. If you have any concerns about your aging parents or other family members, please let us know. We will work with you to find solutions.