Wednesday, April 19, 2017
Caregivers at Risk of Financial Fraud, Scams Targeting Elderly
And it doesn’t just harm retirees and seniors, but also those who take care of them, as elder financial abuse has a profound financial impact on the caregivers of those who are victimized -- and can have a negative impact on their ability to save for their own retirement, according to a new study from Allianz Life Insurance Company of North America.
“As America’s population ages, more people will be caregivers,” said Allianz Life President and CEO Walter White. “Unfortunately, these caregivers will be at risk of experiencing the negative effects of elder financial abuse perpetrated against the person they’re caring for. While a focus on protecting seniors from financial exploitation is vital, we also need to provide resources to caregivers who increasingly will become collateral victims of the elder abuse.”
Katie Libbe, vice president of Consumer Insights for Allianz Life Insurance Company of North America, discussed the study with Fox Business and offered tips on how caregivers can protect themselves.
Boomer: Why are caregivers likely to experience a financial impact when their loved one is a victim of financial abuse?
Libbe: It is well established that elder financial abuse has a significant effect on the finances of elder victims. In fact, our recent Safeguarding Our Seniors Study found that each incident costs them an average of $36,000. Perhaps more surprising, however, is that this abuse has equally negative effects on the finances of caregivers, also costing them $36,000 on average.
Although we were surprised that this number was so high, it’s understandable given the responsibility caregivers feel to protect their elders and help manage all aspects of their lives, including finances.
Three-quarters of current caregivers in the study said that providing care for their elder is almost like a full time job, so it’s logical that caregivers would take on a great deal of the financial burden necessary to help make their elder whole again after a financial abuse incident.
Boomer: Why are those providing care for past victims spending more than those caring for elders with no history of financial abuse?
Libbe: Even without any history of financial abuse, we know that caregiving is expensive. The study found that the average caregiver spends more than $7,000 per year and provides more than 10 hours per week in noncash support (driving to appointments, paying for groceries and supplies, delivering meals, social engagement, etc.). Furthermore, less than half of current caregivers receive some form of financial assistance for that support.
When you add a calamity like elder financial abuse to this equation, it’s important to understand that the elder is now behind the eight ball, facing an uphill battle to stay afloat and manage daily expenses. So, it stands to reason that meeting financial obligations may be more difficult as that elder tries to dig themselves out of the financial hole that they’ve created. As a result, it’s common for caregivers to spend more – 56 percent, or $3,000 more each year on average – than caregivers caring for elders with no history of financial abuse.
Boomer: What drives the cost of care for these seniors that have been abused?
Libbe: In cases where the elder is a past victim, the need for those elders to receive some sort of direct financial assistance from their caregiver is more than double that of situations where financial abuse has not occurred. It’s difficult to say exactly what is driving these costs, but it’s safe to assume that it takes a significant amount of time, effort and money to get a past victim back to square one.
Another unfortunate aspect of elder financial abuse is that once a victim is on the radar of an abuser, that elder is very likely to be targeted again. In fact, four in 10 of the caregivers in our study confirmed that their elder has experienced financial abuse more than once. This is bound to have an effect on overall cost of care, putting both the elder and the caregiver in a more precarious financial position.
Boomer: How does caring for victims impact the caregiver’s ability to save for their own retirement?
Libbe: Two-thirds of active caregivers said the cost of providing care is having a significant effect on their finances, and they worry about having enough money to retire. As noted before, these caregivers feel a tremendous responsibility to manage every aspect of their elders’ lives, to the point that the vast majority say they’re often overwhelmed by the task. It’s also quite possible that caregiving is impacting their ability to work full time, which will have a negative effect on their retirement savings.
Once again, when past elder financial abuse is part of the equation, that anxiety is even greater. Nearly 80 percent of caregivers responsible for a past victim indicated concern about the effect caregiving is having on both their current finances and their retirement savings.
In addition, this financial stress has created a moral gray area that many caregivers are constantly struggling to reconcile. Although the majority of current caregivers agree that it’s okay to accept some of the elder’s money to cover expenses, if offered, significantly fewer agree that it’s okay for a caregiver to reimburse themselves for any expenses without informing the elder every time.
Boomer: What can caregiver’s do to better protect their financial security in retirement?
Libbe: There are three essential steps that caregivers should take to protect their own financial security in retirement: 1) Start planning now and build your emergency fund; 2) Make sure you understand your elder’s health insurance ; and 3) Talk to your elder about their finances, including a third party in the discussion.
If you are a caregiver now or know you will likely be one in the future, it’s crucial to have a long term financial plan that addresses your role as caregiver and the budget necessary to fulfill that role for as long as necessary. But, as our study reveals, it’s probably not enough to save only for expected costs. Boosting your emergency fund is a good idea in order to help deal with the unexpected, including the fallout from elder financial abuse.
In addition to understanding their own finances, it’s crucial that caregivers understand their elder’s health insurance and everything that Medicare covers. It may be possible to qualify for respite care or home health care under Medicare, which could provide significant cost savings. The good news is that more than 90 percent of current caregivers in the study said they were confident in understanding health insurance and Medicare rules.
Another smart move is for caregivers to begin having discussions with their elder about their finances – today. Seven in 10 caregivers are currently talking to their elder about financial abuse and scams, but many feel these discussions are challenging. As a result, they are hesitant to have frequent conversations for a variety of reasons, including the belief that it’s none of their business, feeling that the elder is capable of managing their own finances, or belief that it makes the elder uncomfortable.
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Caregivers at Risk of Financial Fraud, Scams Targeting Elderly