The latest issue of Bloomberg Businessweek reports that financial abuse of older people is increasing as more seniors are being lured into investments that are unsuitable or outright swindles.
According to the Washington-based Investor Protection Trust, a nonprofit that promotes shareholder education, one out of five Americans older than 65 has been the victim of a financial scam. Which means more than 7.3 million seniors have been taken advantage of financially through inappropriate investments, high fees, or fraud, and comes at a cost of more than $2.6 billion a year says a study from MetLife Mature Market Institute.
Several groups offer to help former soldiers sign up for a $2,000-a-month needs-based benefit from the Department of Veterans Affairs in Washington. While the program is real, some groups are telling seniors in order to qualify they have to first liquidate their assets and purchase a private annuity, which usually comes with a hefty sales commission.
Kent Smetters, a professor of insurance and risk management at the University of Pennsylvania’s Wharton School in Philadelphia tells Bloomberg another unsuitable practice affecting senior citizens involves taking out a reverse mortgage and then locking up the proceeds in a multi-year annuity, even though a ban has been in place since 2008 on cross-selling the mortgages with other financial products.