The potentially devastating monetary costs and emotional toll on victims of elder financial abuse have increasingly made their way into the American public’s consciousness through personal experience and warnings from the IRS and other organizations.
Now a new study of active and potential caregivers by Allianz Life Insurance Company of North America indicates that the incidence and financial consequences of such abuse may be worse than previously thought.
Moreover, 40% of active and potential caregivers in the new research said their elder had been subject to financial abuse more than once.
The study was conducted in August with 1,000 respondents ages 18 to 64 who were either actively providing care for a non-spousal elder 65 or older, or could be in a position to do so within the next five years.
According to respondents, the average financial loss to victims was $36,000, 20% higher than estimated in the 2014 study, with nearly half of respondents saying the effect on the elder victim was “major loss” or “financial ruin.”
A vast majority of active and potential caregivers also experienced a financial consequence from the abuse, with the average cost to them also reaching $36,000. This was a direct result of having to compensate for their elder’s loss, Allianz Life said.
“It’s clear that elder financial abuse is becoming more commonplace, and unfortunately, it also appears to be greater than we thought in both scope and impact,” Allianz Life’s president and chief executive Walter White said in a statement. “We’ve also learned that the damaging effects of abuse extend well beyond the seniors themselves to their caregivers.”
White said the financial services industry, government and the general public needed to join forces to bring greater awareness to this issue and help reverse the upward trend in abuse.
Forty-five percent of active caregivers surveyed said the elder they tended to exhibited signs of dementia or a decline in mental abilities. Nearly three-quarters of these characterized that decline as “moderate” or “severe.”
This means that both the frequency and the financial effect of abuse are greater for elders who have experienced mental declines, according to the survey results.
Thirty-four percent of active and potential caregivers reported an incidence of elder financial abuse for those with mental decline, versus 24% for those with no mental decline. In addition, the average reported monetary loss for those with mental decline was $41,000, versus $32,000 for those with no mental decline.
The Emotional Impact
Beyond substantial monetary loss, the study found that elder financial abuse also took an emotional toll on its victims. According to the respondents, 36% of their elders experienced anger, 34% depression, 28% anxiety and 25% guilt.
Many active and potential caregivers in the survey believed elders would report financial abuse if it happened to them.
However, a third of those who believed the elder would not report the abuse said their elder would remain silent mainly because of embarrassment or lack of awareness, or would not know whom to tell. In fact, a quarter of all respondents said they had discovered the abuse themselves or from someone other than the elder under their care.
“We believe involvement of a third party in financial management—whether another family member or experienced financial professional—can be a positive first step,” White said.
“Establishing a dialogue that this is a real issue with potentially devastating implications is also key.”
Allianz Life suggested several ways caregivers could protect themselves and their elders:
- Plan ahead to protect assets and ensure that your wishes are followed
- Consult with a qualified financial professional or attorney before signing complex agreements or anything you don’t understood
- Build relationships with professionals involved with your finances as they can assist in monitoring for suspicious activity
- Limit use of cash; prefer checks and credit cards that leave a paper trail
- Feel free to say “no,” keeping in mind it’s your money
Allianz Life also referred caregivers to a tip sheet on red flags and prevention from the Better Business Bureau.
Article Created by: ThinkAdvisor