The Growing Need For Seniors To Protect Themselves Against Elder Fraud

America is aging. Between 2011 and 2050, the United States is projected to experience rapid growth in it’s senior population. The 78-million member baby boom generation (born between 1946 and 1964) began turning 65 in 2011.  Over the next 10 years the older American segment is projected to grow 23%. By 2020, this market segment should be nearly 119 million people and represent 35% of the total population.

The number one fear expressed by many seniors regarding their retirement years, is the fear of outliving their money. Managing financial resources wisely for this generation has become more important than ever before. A rising concern for many seniors and their family members is the issue of elder fraud.  

Seniors tend to be trusting and charitable to strangers making them more likely to fall prey to a solicitation for money. They often live alone, isolated from family and friends who could otherwise advise them.

Con artists, unethical repairman and contractors are aware of the possible effects that age has on memory, and a seniors’ potential lack of financial savvy. These individuals realize that seniors are often poor witnesses. Being victimized or taken advantage of can also make seniors so embarrassed that they are reluctant to come forward or even tell family members.

Seniors are often dependent upon family members and caregivers, making them susceptible to being taken advantage of by these very same people. Children and grandchildren often approach their loved one for a loan. Too often these loans go unpaid creating a financial hardship for the senior later in life when they need that money to provide supplemental income or to pay for long-term care expenses.

One solution that many seniors and their caregiving family members are turning to is to hire the services of a professional daily money manager (DMM) to pay bills, reconcile accounts, maintain records, prepare monthly or quarterly financial statements, and more. 

Studies have shown that DMM services can help seniors to maintain their independence and remain in their homes longer avoiding costly nursing home care. DMMs also provide adult caregivers relief from some or all daily money management tasks while at the same time providing outside financial controls which can reduce or eliminate claims of caregiver fraud.

The best way to start your search to locate a DMM is through referrals from trusted friend, family members, and community organizations. You may also wish to contact the American Association of Daily Money Managers (AADMM). This organization will provide referrals to DMMs in your area. You can visit their website at www.aadmm.com.

Preparing a Personal Balance Sheet

Taking control of your financial future is a process. And, as with any process, it is important to monitor your progress. One of the best ways for you to measure financial progress is to periodically prepare a personal balance sheet to determine your net worth.

Calculating your personal net worth is also the best way to know exactly what your starting point is as you begin to develop a financial plan and set goals for yourself. A balance sheet calculates your net worth by comparing your financial assets (what you own) with your financial liabilities (what you owe). The difference between the two is your personal net worth. Don’t be discouraged if your net worth is negative, keep in mind that this should be an accurate depiction of your financial situation. Setting goals is much easier once you know what your current net worth is.

Before you get started, pull together all of the information that you have available. You’ll need your latest bank statements, as well as the principal balance of any loans you have. Once you have all of that information available, start developing your balance sheet by listing all of your assets (financial and tangible assets) with the values.

• Cash (in the bank, money market accounts, or CDs)
• All investments (mutual funds, college savings accounts, individual securities)
• Home value (the resale value of your home)
• Automobile value (the resale value of your car)
• Personal Property Value (resale value of jewelry, household items, etc)
• Other assets

The sum of all of those values is the total value of your assets. Your goal should be to continually increase your assets.

Next, you can look at your liabilities, which should be everything you owe. Here are some common liability categories:

• Remaining mortgage balance
• Car loans
• Student loans
• Any other personal loans
• Credit card balances

The sum of all of the money you owe is your liabilities. As you start to pay down your debt, your total liabilities will decrease. The difference between your assets and your liabilities is your net worth. You can start to increase your net worth by decreasing your liabilities, increasing your assets, or by doing both! For many people developing a debt reduction plan is the best place to begin taking control of their personal finances and growing their net worth. Remember, a dollar saved is a dollar earned, and reducing debt and interest payments can eventually lead to financial freedom. Make sure you continuously update your personal balance sheet (I recommend quarterly) to ensure that you are tracking the progress toward reaching your financial goals.