Supporting older people with financial management - Ruth McGuire

 

“Since the start of March to July 2020 - 36,555 victims of fraud, over the age of 55, reported losses of nearly a quarter of a Billion pounds to criminals (£220,186,002).  Compared to the same time last year the losses were £47m (£46,540,006) more for the over 55s.” This was the startling report from an ITV investigation broadcast in September 2020. (ITV TONIGHT's 'Scams: Ripping off the Elderly?') The statistics and the almost daily news stories of pensioners who have been scammed out of life savings, make grim reading. In addition, elderly people also face the challenge of adapting to the ever-changing world of personal finance.  Gone are the days when people could only deposit money or take it out from an account, by visiting a bank, building society or Post Office. Now, many people access personal bank accounts by navigating their way through a mirage of online bank services. 

For some elderly people, bereavement adds another complexity to their personal finances.  This is particularly so for women who were brought up during an era when men were considered to be the ‘breadwinners’ and money managers and women the ‘home makers.’ Once bereaved, for the first time in their lives, these women face the challenge of managing their finances on their own. 

Financial literacy

Discussions about personal finances can often be sensitive. People often become embarrassed when talking about their income, their salaries, their savings or their debts. However, to help elderly people retain their independence and to protect their financial interests, it is important for staff who work with them (and/or their families) to ensure they are financially literate.  Rather than scare an elderly person with all the intricacies of 21st century personal finance, it is best to reassure them by sharing with them the benefits of the new ways of saving and spending. The current Covid crisis presents an ideal opportunity to help elderly people understand the benefits of cashless spending. For example, depending on their age, circumstances and mobility, elderly people can be supported to minimise their exposure to infection by using contactless cards when possible. However, both the risks and benefits of ‘contactless’ spending need to be explained. This includes stressing the importance of keeping contactless cards safe and keeping an easily accessible record of contact numbers to use, should a credit or debit card be lost or stolen. To keep track of their spending, elderly people should be encouraged to always ask for or accept receipts for purchases and to obtain regular bank account statements. This will help them to monitor their spending and savings but also be alert to any unusual or suspicious activity on their accounts.

Moving on after bereavement

Elderly people who have to manage their finances on their own after being bereaved, may face a small crisis of confidence. They will therefore need to be reassured that they are capable of managing their own finances. Although they need time to grieve, as soon as is practical and possible, bereaved elderly people or people authorised to act on their behalf, need to inform companies such as banks, building societies, utility companies and perhaps also the local authority, about their changed circumstances. This ensures they avoid unnecessary debts, receive any relevant benefits and avoid barriers to accessing bank or other accounts that were in joint names and involve financial transactions. Pension providers and perhaps HMRC (tax office) may also need to be notified of changes. 

The death of a partner may also mean that an elderly person has to get used to living on a reduced income. As a result, they may need help to organise a budget that is appropriate to their new circumstances. The easiest way to organise a monthly budget is to list all income and outgoings and identify whether any adjustments need to be made to monthly outgoings. In some cases, there may be ‘tax efficient’ ways of increasing the income of an elderly person. For example, they could save money in Individual Savings Accounts (ISAs) which allows account holders to gain interest on their savings without having to pay tax. Elderly people may also be entitled to benefits that are relevant to their age or status. This could for example include free bus passes, winter fuel payments and bereavement support payments. Elderly people who have disabilities or live with illnesses and need help with personal care tasks such as washing and bathing, getting dressed and so on may also be entitled to attendance allowance payments. 

Financial protection

If at some future point in time they were to become unable to manage their own finances, Lasting Power of Attorney (LPA) registration is a legal way elderly people or others can protect their finances.  LPAs ensure that in the eventuality that a person loses mental capacity, a trusted person of their choice can help them make decisions or make decisions on their behalf. Elderly people should also be encouraged to make wills that are up to date and that reflect their wishes should they or their partner die. 

As mentioned at the outset of this article, elderly people are more vulnerable to financial scams. According to consumer organisation Which? ‘older people can be at greater risk because scammers tend to target people who live alone, are at home during the day, have savings or valuables. Which?’ advises people who look after elderly people to look out for the following warning signs:

 

  • they have unusual amounts of post or letters lying about the house
  • there is evidence of large unexplained cash withdrawals or cheque payments
  • they seem short of money, when they shouldn’t be
  • they seem to get a lot of phone calls from strangers or companies
  • they seem anxious or upset for no apparent reason.

Scammers not only use online methods to try and trick people into giving them money but might also make fake phone calls cruelly pretending to be concerned bank security staff. Elderly people need to be informed that banks never phone customers and ask them to transfer money, not even for security reasons.  Unfortunately, as a result of the increasing number of scams, gaining legitimate access to online bank and building society accounts has become more complex.  In addition to having to remember usernames, passwords and memorable dates, customers often have to provide a telephone number or email address so that a bank can send a one-time passnumber/passcode (OTP) to ensure any transaction made is legitimate.

Whether elderly people need specific support to gain access to online accounts or just need general help to manage their personal finances, those who support them need to strike the right balance. They need to respect an elderly person’s independence and privacy whilst at the same time ensuring they are empowered to navigate their way through the increasingly digitalised world of personal finance.

Further resources and information

Online safety and scam safety

https://www.getsafeonline.org/online-safety-and-security

https://conversation.which.co.uk/topic/scams/

https://www.friendsagainstscams.org.uk/shopimages/Leaflet/Protection_from_scams_guide.pdf

Power of attorney guidance

https://www.gov.uk/power-of-attorney

Benefits guidance

https://www.ageuk.org.uk/information-advice/money-legal/benefits-entitlements/carers-allowance/

https://www.independentage.org/get-advice/money/benefits/attendance-allowance

Financial advice for bereaved people

https://www.moneyadviceservice.org.uk/en/articles/dealing-with-finances-and-insurance-after-your-partner-dies

 Ruth McGuire is an Education Inspector with nearly 15 years of inspection experience. She has taught in both further and higher education. She is also a well-established education and training consultant, writer and freelance journalist. She is a Governor of an outstanding sixth form college and also holds board roles within the NHS.