Economic Abuse Of Older Adults: How Financial Elder Abuse Affects Mental Health

Financial elder abuse is a serious concern. It involves exploiting older individuals for one’s own economic gain. This form of abuse is often more subtle than other types, but it can significantly impact an older adult’s well-being, financial stability, and quality of life. Knowing the signs and effects of financial elder abuse—as well as how to address it—can help increase awareness and improve prevention efforts. Here, we’re providing an overview of financial elder abuse, discussing common signs of this type of exploitative behavior, and outlining solutions for responding to this type of mistreatment. 

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An overview of financial elder abuse

Financial elder abuse is a form of mistreatment that involves economic harm to an older adult for one’s own financial gain. This form of elder abuse may occur through fraud, scams, theft, coercion, or other acts. Older individuals may be vulnerable to this type of abuse for several reasons, including increased social isolation, physical or mental limitations, and greater reliance on others. 

This, however, can be challenging, as scams and other forms of abuse have become increasingly sophisticated and common in recent years. Research suggests that 6.8% of adults aged 60 and over will experience financial abuse at some point. 

Why older adults may be more vulnerable to financial abuse

Financial abuse can be a particular concern for older individuals who are experiencing cognitive impairment. Memory loss, processing difficulties, trouble focusing, and other challenges can be common as we age. These concerns may be exacerbated by neurodegenerative conditions, such as dementia. Reduced cognitive functioning can make it harder for older individuals to identify scams, safely invest their money, or remember important financial information. Being less familiar with technology and common internet-based scams can also be a risk factor that’s common among older adults.

Older individuals are also more likely to experience social isolation, potentially making them more vulnerable to people who engage in mistreatment. Plus, in many cases, older adults who are experiencing economic violence live with their abusers, which can make it even harder to separate themselves from the situation or reach out for help. 

Additional risk factors for elder financial abuse

In addition to age, there are several contributors that can increase one’s risk of experiencing elder financial abuse. Some of these risk factors include functional dependence, mental health challenges, the need for activities of daily living (ADL) support, and pre-existing economic instability. Additionally, a history of abuse is a risk factor for future financial elder abuse. 

Fraud, scam attempts, and other types of elder financial abuse

Older individuals are often living on fixed incomes, making them targets for various forms of financial maltreatment. The following are common forms of elder financial abuse. 

Fraud

Involving the unauthorized use of personal details for one’s own financial enrichment, fraud is a common form of elder abuse. Often, fraud is perpetrated by someone who is close with an older person—a caregiver, family member, friend, or other individual. Because of their proximity, it can be easier for perpetrators to gain information about bank accounts, investments, and other financial information. 

Fraud may involve illegally signing over assets, opening accounts, or making changes to an insurance policy. A perpetrator may use various means to achieve these ends, including threats, surreptitious actions, coercion, and purposeful isolation. 

Theft

Perpetrators of financial abuse may also steal money, property, or other assets from older individuals. This can include anything from taking cash from someone’s possession to transferring funds from a bank account electronically to engaging in identity theft. An older individual’s savings accounts, credit card accounts, cars, jewelry, or even businesses may be targets. 

Scams

Scams are attempts to deceive an individual into voluntarily giving over financial information for one’s monetary or personal benefit. Scammers may pose as legitimate businesses selling a product, a financial institution offering an investment, a government agency requiring payment, or a relative needing monetary support. Scams are becoming increasingly complex and sophisticated as technological advances—specifically artificial intelligence (AI)—make it easier to more convincingly impersonate different people and organizations. 

Unlike fraud, scams are often conducted by strangers. Older individuals are often targets of scams, partly because they can sometimes be more trusting than younger people. Those who are experiencing loneliness or isolation may be more receptive to interpersonal interactions with strangers or offers of companionship (a common scam involves feigning a romantic relationship). Memory loss and other forms of impairment may also prevent older adults from identifying a scam, as could unfamiliarity with red flags that someone who uses technology (such as email or text messaging) more regularly may be likelier to recognize.   

The effects of financial abuse

Economic violence can impact every aspect of an older individual’s life, including their well-being, relationships, and overall quality of life. The following are common effects of elder financial abuse. 

Economic instability

Research suggests that elder financial abuse leads to an annual economic burden of $28 billion. Because they often live on fixed incomes, older individuals may be especially sensitive to losses of real or personal property. If they are living on pensions, retirement savings, or Social Security benefits, it might be hard to make up for such losses, particularly if they have already left the workforce. Even if they still have earning potential, their ability to work regularly may be impacted by their age—and, in some cases, even working full time may not be enough to make up what they’ve lost. 

Mental health impacts

Research suggests a strong link between elder financial abuse and psychological concerns. According to researchers in one study, this form of mistreatment can lead to “emotional distress, social isolation, and compounded mental health challenges.” 

How to address financial abuse of older adults

If you suspect elder financial abuse may be happening to you or a loved one, there are several steps you may be able to take to rectify the situation. The following are solutions for responding to elder financial abuse.

Know how to spot a scam

Awareness of common scams can help you protect yourself or your loved ones from being taken advantage of. Signs of a scam include an urgent request for funds, a desire to leave others out of the process, and need for personal details. The Department of Justice (DOJ) has a list of common scams that are often perpetrated against older individuals. 

Report the abuse

It can be important that you report elder financial abuse to the appropriate authorities, which may be law enforcement agencies, Adult Protective Services, and/or local prosecutors. Gathering plenty of information about the abuse can be helpful, including specific times, locations, and dates as well as who perpetrated the acts, if you know. 

Understand the law

It can also help to know the laws that apply to elder financial abuse in your area. Laws on elder or dependent adult abuse are often listed in the health and safety code sections of civil financial exploitation statutes. For example, California’s Elder Abuse and Dependent Adult Civil Protection Act outlines the specific criteria for when financial abuse of an elder or dependent adult occurs (with dependent adults including people “who have physical or developmental disabilities, or whose physical or mental abilities have diminished because of age”). 

Talking to a mental health professional about elder abuse

If you’ve been affected by elder abuse, financial instability, or related concerns that may impact your mental health, you might consider working with a therapist. By participating in therapy, you may be able to address the emotional impacts of financial harms and process any trauma associated with abuse. 

Additionally, some mental health professionals may be able to evaluate the ability of older individuals to recognize and address financial maltreatment. According to the American Psychological Association (APA), providers can “assess a client's arithmetic skills and basic financial knowledge, as well as his or her ability to make informed financial decisions.” 

How online therapy can help

For older individuals, commuting to an office to participate in talk therapy may not always be feasible. In such cases, online therapy can be a more convenient and cost-effective way of working with a licensed mental health care provider. 

Navigating the effects of financial elder abuse with online therapy

With an online therapy platform like BetterHelp, you can get matched with a therapist based on your needs and preferences, meaning you’ll have a good chance of connecting with someone who can address your specific concerns regarding elder abuse, financial health, or other challenges. Online therapy can also be an affordable option, with sessions typically costing less than in-person sessions without insurance.

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The effectiveness of online therapy

Research suggests that online therapy can help individuals who have experienced elder financial exploitation manage symptoms of mental health concerns. For example, in one study, researchers indicate that online therapy led to reductions in depression in participants who had experienced elder abuse of some kind. The study notes that online therapy was as efficacious as in-person treatment for the same challenges.