5 Essential Tips to Protect your Finances as you Grow Older

January 24, 2019

[vc_row][vc_column width=”2/3″ el_class=”section section1″][vc_column_text]In America, the financial exploitation of the elderly is a growing problem as baby boomers are becoming senior citizens. The following are practical steps that individuals can take to safeguard their money in retirement.

A serious problem within the realms of various states is financial abuse of elderly Americans.

According to the Securities and Exchange Commission (SEC), almost 6.6% of Americans that are 65 years or older have lost their money through exploitation, fraud, or theft. SEC highlights that financial exploitation of the elder is emerging as the form of elder abuse that is most prevalent in the United States. The issue of elder financial abuse is forecasted to get worse in the coming years in this country as each day approximately 10,000 people are turning the age of 65.

Luckily, there are various steps that senior citizens can follow as they age to protect themselves from such fraud and manipulation, either form scammers or in other cases by friends and family. A majority of senior citizens also require protection from themselves as money management can become a difficult task as their physical and cognitive functions decline with age. The following are five ways of protecting yourself:

1. Automate your finances

Most Americans are increasingly being left on their own when it comes to dealing with money management in their retirement. According to Cerulli Associates, an asset management fund, it highlights that in 2017 about $14.5 trillion in the U.S. was held in self-directed retirement accounts. This is a huge amount of money to manage, and in most cases, it becomes difficult for seniors to handle their finances due to a decline in their physical and cognitive functions. Based on this reason, senior citizens should automate their finances. It is important for them to have all their income sources such as Social Security, pension funds, and disability payments deposited into their bank accounts directly. In the same case, regular bills including utilities, insurance, and mortgage or rent payments should be from their bank accounts on certain days every month. Through automating finances, it could be easier to manage and to track all the money that is going in and out of their accounts.

2. Require an authorized signer

Another manner for these individuals to protect their finances is through setting up a signer that is authorized on their bank account. A signer that is authorized will have the authority to sign checks and make deposits and withdrawals on behalf of the account holder. This ensures that they have access to their account information, such as balances and activity. However, the authorized signer will not have ownership over your bank account and has no rights to your account’s assets. This is unless the owner designates them as the account beneficiary in case of their death. The setup is not the same for a joint account. A joint account holder shares the ownership of the bank account and the money in it and has the ability to withdraw all the money in the bank account and close it.

The authorized signer you select should be an individual you trust; whether it is an adult family member, friend, or a neighbor. To make that trusted individual an authorized signer means allowing that person to have a look at what is taking place in the bank account and ensure that nobody makes a transaction that is large or unusual without permission. To choose an authorized signer that you trust is critically essential in this situation.

3. Establish a power of attorney

The most common way elderly Americans protect their finances is by establishing a power of attorney. This translates to giving a trusted individual authority to managing your financial affairs and your property if you cannot manage them on your own, even on a temporary basis. Power of attorney is not similar to a will because it’s specific to making sure that while you are alive your wishes are followed rather than after death. It can be possible to have more than one power of attorney, or agent. A majority of lawyers recommend this approach since it ensures no single individual can act or make a decision when it is regarding your property and money. This can reduce the risk of fraud, theft, or financial mismanagement when you stipulate that two or more agents make combined decisions together about your affairs.

Generally, agents can access your bank accounts, manage investments, file tax returns, deal with health insurance, and sell the property. A power of attorney in place is used when seniors do not have the mental capacity to make financial decisions on their own. It is also used if elderly individuals still possess their mental faculties, but due to infirmity or illness, they require help to manage their finances. It is required that the necessary forms are obtained in order to award the power of attorney in the state that you reside. When the forms are complete they should be reviewed by a lawyer and have your signature, as well as those of the agent(s) you have designated, in front of a notary public. Generally, there are two forms of power of attorney. One is for your financial decisions and the second is for medical decisions.

4. Avoid cash

It is not advisable to keep huge amounts of cash in your house, especially in a wallet or purse where other people can access it easily. Paying using a bank or credit card is more appropriate since it offers an electronic record. This is useful if a person makes fraudulent purchases using your card, as a paper trail can be helpful for the bank or the law enforcement when it comes to identifying the culprit and recovering your money. Furthermore, they are good to spot and decline unauthorized charges before you even noticing any discrepancies. On top of that, even when there is an unauthorized charge that has been accepted, federal law limits your liability to $50, and the majority of U.S. credit card issuers offer a fraud liability of $0.

Elderly people are used to having cash on hand since they used to live in times before ATMs and online banking. However, to deal in cash is a hazard as it can go missing instantly. To try to keep a trail of your financial transactions is safest as you or the signer you authorized, an agent, lawyer, or banker, can review it.

5. Get an annual credit report

You can request for a free credit report from every major credit bureau in the U.S. such as Equifax, Experian, and TransUnion every year since this is a right for every American under the federal law. The credit reports can also be requested at www.AnnualCreditReport.com. A credit report is composed of any financial activity that is unusual or potentially fraudulent involving your accounts. This includes credit cards that you may not have ordered or purchases that are unauthorized. If you or another person notices financial activity that is unusual, it is recommended to report it to the three credit bureaus and financial institutions that you regularly do business with. They can cancel the fraudulent credit cards and put a hold in place to safeguard your accounts.

To grow old is accompanied by a lot of challenges, adjustments, and responsibilities, including making sure to protect your finances from fraud, manipulation, or theft. Financial abuse of the elderly is becoming a real and growing problem. The best way to be sure that your retirement years are comfortable and free from financial stress is to acknowledge the problem and take the necessary steps to protect yourself.[/vc_column_text][/vc_column][vc_column width=”1/3″][vc_single_image image=”15269″ img_size=”292×285″ style=”vc_box_shadow”][/vc_column][/vc_row]