Financial literacy prevents financial abuse and fraud

• In Australia, the National Information Centre on Retirement Investments, an independent body funded by the national government, provides tools on its website to help people plan for retirement and access objective information related to retiring, investing and financial planning.

• In the U.S., the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corporation have developed the Money Smart for Older Adults—Prevent Financial Exploitation curriculum, including a participant guide and training module for instructors. The U.S. government has also created a website on retirement.

• In the U.K., the Alzheimer’s Society has published a report entitled Shortchanged: Protecting people with dementia from financial abuse, based on research conducted with people with dementia, caregivers and Alzheimer’s Society staff

With Canadians living longer and having greater responsibility for funding their retirement, saving and building a personal “nest egg” for the future are more important than ever. Canada’s personal savings rate is increasing but our household debt is higher. A few years ago, only 25% of eligible Canadians, contributed to Registered Retirement Savings Plans (RRSPs) this year 2016 59% of Canadians contributed, and total contributions have gone up. This is good news and it means younger Canadians are starting to save for their retirement.

Older Canadians face difficult financial decisions and unique challenges related to managing their money, including transitioning from work to full or partial retirement. Seniors who have accumulated savings must decide how best to turn those savings into income and make retirement finances last their lifetime.

In addition to day-to-day money management, older Canadians must prepare for life transitions with financial implications, such as changing housing and care needs, the onset of chronic disease or disability, and loss of independence. They may also face age discrimination and faulty assumptions that they have limited ability to deal with personal finances.

Recent research by the Canadian Centre for Financial Literacy suggests that general financial information is often not relevant to the retirement needs of low-income seniors. Some older Canadians, including Aboriginal and immigrant seniors, may face language and/or cultural barriers that can make understanding the financial marketplace difficult. Inabilities to access and/or afford relevant financial advice also interfere with the development of financial literacy. Some may face the potential of diminishing mental abilities as they age, which may affect their ability to make good financial choices.

Financial literacy resources and support to help seniors manage their money and make sound financial decisions are emerging as the seniors’ population grows, but gaps remain. We must better understand the specific financial knowledge and skills that older Canadians need so that we can better target our efforts. It is also important that we better understand the barriers to financial literacy so that we can minimize them and engage seniors. We need to focus on providing more financial education programs and services that are accessible, unbiased, understandable, and relevant to seniors.

Government and others need to work to understand better the financial literacy needs of specific groups of seniors, including low-income, immigrant and Aboriginal seniors, and tailor programs to address their need

Financial abuse of seniors, which often involves the misuse of their money or belongings by a person the senior trusts, is one of the most common forms of elder abuse in Canada and has serious consequences for their security and well-being.

As seniors age, the challenges they face due to lack of financial literacy, or physical or mental challenges, may cause them to rely on others, which can increase their vulnerability to financial abuse.

Powers of Attorney and joint bank accounts are instruments available to assist seniors and others in financial management and protection when they need it; however, these tools have been used to take financial advantage of older adults.

There is a clear need for increased education and action to help seniors identify, report and protect themselves against this problem, and to help prevent financial abuse. It may be possible to expand many already existing activities to reach more seniors.