How Cognitive Decline Leaves the Older Population Vulnerable to Elder Financial Abuse

According to a 2011 Government Accountability Office (GAO) study, approximately 14.1 percent of adults age 60 and older in the United States have experienced some kind of physical, psychological or sexual abuse; potential neglect; or financial exploitation in the past year. Cognitive decline is a key factor that makes the aging population susceptible to elder financial exploitation, according to the Elder Financial Exploitation 2018 report by the U.S. Securities and Exchange Commission’s Office of the Investor Advocate. 

The aging brain is marked by a decline in fluid intelligence, while crystalline intelligence usually remains intact or increases. Fluid intelligence in financial terms, the report explains, “refers to the ability to manipulate and transform financial data,” and it is generally associated with the capacity to hold multiple distinct pieces of information in one’s mind. Crystallized intelligence, in contrast, refers to a person’s store of knowledge and “involves knowledge and experience with financial products.” 

With a decline in fluid intelligence, older adults are likely to experience a decreased ability to manage money and make financial decisions. However, this decline might be offset by greater financial knowledge and experience from increased crystallized intelligence. However, their store of financial knowledge still leaves them vulnerable to deception and scams as their ability to judge riskiness or trustworthiness is diminished. This type of cognitive impairment might be caused by different brain diseases, including Alzheimer’s disease, other types of dementia and mild cognitive impairment (MCI). 

Most victims of elder financial abuse are between the ages of 80 and 89, and they require support for day-to-day activities. Women are almost twice as likely to be victims of financial abuse compared to older men. This might be because older women are more likely to live alone and require more assistance in daily living for a longer term. 

Perpetrators of elder financial abuse typically include family members; paid home care workers; financial advisors; legal guardians; or strangers who defraud older adults via mail, telephone or internet scams. Examples of elder financial exploitation, as outlined by the U.S. Securities and Exchange Commission’s Office of the Investor Advocate, include stealing an older adult’s cash; withdrawing money from a victim’s account; cashing a victim’s checks or using his or her credit card without authorization; transferring property deeds; misusing power of attorney; and identity theft. 

There are few options for protecting older Americans from financial abuse. As family members are often the perpetrators, victims who have had their assets stolen are less inclined to want their relatives or loved ones to be criminally prosecuted. In addition, many times they feel alone or don’t have anyone else to help them. They would rather have the comfort of someone being there despite the associated costs rather than suffer loneliness. In these cases, civil actions are a common route for recovering stolen assets. 

Unfortunately, few civil attorneys are trained in issues related to older victims of financial abuse. Stolen assets from older victims are rarely recovered, which affects their ability to support and care for themselves. Therefore, the burden often falls on different state and federal programs to care for older adults who are exploited. 

Learn more about elder financial abuse and preventative measures in Volume V: Aging Population of the 2019 NAWRB Women Housing Ecosystem Report (WHER). Purchase your copy today!