You’d think that as we get older we get better with our money, but, unfortunately, research is showing it’s actually the opposite.
Financial literacy declines as we reach retirement age.
The timing couldn’t be worse for seniors, as pensions give way to 401(k)s, and the burden of retirement planning continues to shift from companies to the retirees themselves.
In a recent study, researchers found average financial literacy scores fell by half for people between age 65 and 85.
The decline corresponds with memory loss and trouble with problem-solving abilities later in life.
Making matters worse, seniors aren’t aware of the change.
Much like older drivers aren’t aware that their skills are diminishing, they don’t realize their financial ability is slipping.
This leaves retirees vulnerable to elder financial abuse.
Seniors in the U.S. lose about $36 billion per year to various types of financial abuse.
They’re targeted by scammers because of their declining financial literacy and because they come from a more trusting generation.
Seniors (and everyone for that matter) should take the following steps to protect themselves:
Be wary of calls and emails
Don’t ever give out your Social Security number or any other personal information to someone you don’t know who initiates contact with you by phone, email or even in person.
For example, if you receive an email that claims you must provide personal information to claim a refund from the IRS, it’s a scam.
The IRS doesn’t request information from taxpayers by email.
Check your credit report
Take advantage of the free credit report that you’re entitled to once a year.
If you notice any problems, act quickly.
You can contact the credit bureaus and ask them to put a fraud alert or credit freeze on your accounts. See consumer.ftc.gov.
Keep information private
Avoid sharing your personal information on the Internet.
Thieves can predict Social Security numbers based on publicly available information, including your birthday, age and place of birth.
The Social Security Administration began assigning randomized number series on June 25, 2011, to help protect individual Social Security numbers.
Anyone born before then will have a more predictable Social Security number.
Take action after a scam
If you believe you’ve fallen for a scam, take action right away!
Some people are hesitant to report a scam because they’re embarrassed or they’re concerned family members may see this as a sign they’re unable to handle their own finances.
Stop the communication right away if you believe you’ve responded to a potential scammer.
You may have to go as far as to change your phone number or deactivate your email address to cut off communication.
If you’ve gone a step further and given a potential fraudster bank account information, credit or debit card information or personal information like your Social Security number — call your bank, credit card company or one of the three credit bureaus right away.
They can help close accounts or suggest ways to protect your credit file.
There are a number of consumer groups that offer help, such as the Better Business Bureau and the National Consumers League.
You may want to consider financial-monitoring services, which can help you identify any strange or suspicious activity.
There are also tools to help keep track of day-to-day finances.
Some charge a fee, but it may be worth it.
You can also enlist the help of family members who can give you a second opinion if you’re unsure if you’re dealing with a scammer.
Bottom line: Stay vigilant to protect your life’s savings.
Seniors have worked too hard and too long to have anyone cheat them out of their money in their golden years.
Skip Johnson is an advisor and partner at Great Waters Financial in New Hope, a financial planning firm and Minnesota insurance agency. Skip also offers investment advisory services through AdvisorNet Wealth Management, a registered investment advisor. Learn more at mygreatwaters.com.