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Senior Safe

Talk to your parents about their finances

The financial well-being and long-term care needs of aging parents can be among the most sensitive, difficult issues for families to discuss. While it may be an uncomfortable topic, it’s important that adult children have these discussions with their aging parents ahead of time to prevent potential problems and misunderstandings down the road.

We encourage Minnesotans to take the time to talk with their loved ones about their financial commitments and long-term care wishes. 

To get the conversation started, Minnesotans can start with these four questions:

  1. Do you and your parents know the red flags of a scam? 

    According to the Investor Protection Trust, one out of every five persons over the age of 65 has been victimized by a financial swindle. One recent study estimated that older Americans are defrauded out of nearly three billion dollars each year.

    Be sure that your parents know how they can protect themselves from fraud. For example, they should avoid giving out personal information to strangers in response to texts, emails or calls, regardless of who they claim to be or where they claim to be calling from. Be alert for behaviors that may indicate your parent is a victim of financial exploitation, such as unpaid bills, an unexplained lack of money or the sudden appearance of a new “friend.” 

  2. What is the plan in case of cognitive issues or other health problems where your parents may not be able to take care of their own finances? 

    Encourage your parent to officially ask someone to serve as their medical and financial proxy or power of attorney. It is best if your parent chooses someone who they trust to make their financial decisions. If possible, there should agreement within the family about who is being entrusted with these responsibilities. This person should also maintain clear communication with all family members. 

  3. Where do your parents keep their accounts, records, insurance policies, and other important financial documents in case they are needed? 

    If an elderly parent’s health suddenly deteriorates, out-of-pocket expenses can add up quickly. Discuss all sources of income and insurance coverage to determine how and if your parent might cover unanticipated medical treatment. If your parents agree, familiarize yourself with their insurance coverage and financial assets such as savings, pension plans, stocks, IRAs and 401K plans. Income, assets and insurance affect Medicaid eligibility and Medicare options. 

  4. What are your parents’ wishes for their assets, estate, and future quality of life?

    Ask your parents whether they have created a will and where it is located. Know your parents’ views on end-of-life care as well, and make sure their preferences are recorded in an official document such as a living will or advanced health care directive long before they no longer are capable of expressing informed consent.

    Is your parent comfortable with the prospect of living in a nursing home, or does he or she have plans to move in with a family member or friend should special care be required? Be open and direct about your ability to honor these wishes. If your parents need nursing home care, it’s important to know if their monthly income meets state eligibility requirements for Medicaid. 

 For more resources, Minnesotans can contact the Senior LinkAge Line, a free service offered by the state that guides older adults and their families to community resources. The North American Securities Administrators Association’s Serve Our Seniors webpage offers also offers information for caregivers. 

Protect your money from scams and fraud

As an older investor, you may be a top target for con artists. It is common for senior investors to be cheated out of savings, windfall insurance payments, and even the equity in their own homes.

You can avoid becoming a victim by following these 11 self-defense tips, developed by the Minnesota Department of Commerce and the North American Securities Administration Association, Inc. (NASAA).

  1. Don’t be a courtesy victim. Con artists will not hesitate to exploit your good manners. Save your politeness for friends and family members, not strangers looking for a quick buck!

  2. Trust, but verify. Say “no” to anyone who presses you to make a quick decision and take time to research the salesperson, firm, and investment opportunity. You can check the status of an individual’s license at BrokerCheck or if an investment is registered with the Commerce Department by calling 651-539-1638.

  3. Stay in control. Be wary of anyone who suggests investing your money in something you don’t understand, or who urges you to leave everything in their hands.

  4. Don’t judge a book by its cover. Successful con artists sound and look extremely professional and can make even the riskiest investment deal sound safe. Don’t be fooled by the sound of their voice on the phone because it has no bearing on the soundness of the investment opportunity.

  5. Don’t make decisions out of fear. Fear can cloud your good judgment and cause rushed decisions. An investment that is right for you will make sense because you understand it and feel comfortable with the risk involved.

  6. Monitor your investments and ask tough questions. Don’t add to the mistake of trusting a fraudulent investment professional or con artist by failing to keep an eye on the progress of your investment. Insist on regular written reports, and look for signs of excessive or unauthorized trading of your funds.Ask questions about cyber-security. Make sure the firm or individual selling you a product has a plan in place to protect your private data from cyber threats.

  7. Ask questions about cyber-security. Make sure the firm or individual selling you a product has a plan in place to protect your private data from cyber threats.

  8. Look for trouble withdrawing your principle or cashing out profits. Some investments do have certain periods when you cannot withdraw your funds, but you must be notified of these restrictions before you invest.

  9. Don’t let embarrassment or fear keep you from reporting investment fraud or abuse. Every day you delay reporting fraud or abuse is another day the con artist is spending your money and finding new victims.

  10. Beware of “asset recovery” scams. These scams pack a “double whammy” by targeting individuals who have already been victims of fraud. They will lure victims with the promise of getting your money back for an upfront fee and its unlikely they will deliver on their promise.

  11. Beware of “Senior Specialists.” Fraudsters may imply a certain level of training on issues important to people 55 and older to give you a false sense of security, however, this “training” may be nothing more than a sales tactic. They often recommend liquidating assets to purchase other, more risky products like indexed or variable annuities.

Report suspected fraud, scams, or financial abuse to the Minnesota Department of Commerce. Your call may prevent others from being victimized.

Tips for smart investing

  1. Check the registration and background of the individual selling the investment with the Commerce Department. Anyone selling a security must be registered with the state, unless they qualify for an exemption. You can check the status of a license using the License Lookup Directory. To check the registration of a specific investment product, call the Commerce Department at 651-539-1638. 

  2. Develop a personal financial plan that meets your needs. Be sure recommendations you receive are consistent with your financial needs, risk profile, and investment objectives.

  3. Beware of promises promoting high or unrealistic returns in a short period of time.

  4. Diversify everything: Your assets, money managers, accounts, and financial institutions. Spreading money around will limit your exposure to risk. Don’t put all your eggs in one basket.

  5. Beware of investments promoting no downside or risk. All investments have some degree of risk.

  6. Do your homework. Ask questions and do your research about investments and those who sell them. Get clear and direct answers before investing, and don’t rely on reputation or word of mouth alone.

  7. Beware of vague or over-complicated explanations of how a business runs and how money is made. If you don’t understand how it works, do not buy it.

  8. Understand the cost. Ask about the risks, obligations and costs before investing. Keep in mind commissions, sales charges, maintenance or service charges, transactions, and penalties associated with the investment.

  9. Understand how to access your funds in a timely manner. Ask about any restrictions or limitations on accessing your money before investing.

  10. Ask questions about cyber-security. Before you make an investment, be sure the firm or individual selling you the product has a satisfactory plan in place to protect your private data from cyber-security threats.

  11. Report investment fraud or securities violations to the Commerce Department. Your call may help prevent others from being victimized. If you have questions or believe you may have been a victim of fraud, contact us at the information below.
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