identity.
1.
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Planning For Unexpected Life Events
Planning ahead:
• Gives you control; you make choices for your situation
• Relieves the stress of decision-making from caretakers/family members
• Saves money and helps you avoid financial disaster or setback
• Allows time for gathering information, comparing options, and determining which options help achieve what is most important
Preparing for possible future health problems
The majority of people who need long-term care are older adults. However, the need for long-term care can come at any age due to disabling diseases, car accidents, brain injuries, strokes, and other disabling events.
Families and individuals who plan ahead before a disability will be in a better position to cope in the event of a disability. Consider taking these steps before you or a family member becomes ill or disabled:
• Prepare a plan. Start with reviewing your income and expenses.
• Make sure trusted family members know where to find personal and financial
documents in an emergency.
• Set up direct deposit for income and benefit checks. Direct deposit delivers your Social Security or Supplemental Security Income (SSI) benefit or other income sources
into your bank, savings and loan, or credit union account quickly and safely.
• Consider automatic payment of important, recurring bills.
• Consider a durable power of attorney. As we mentioned in the section on Power of Attorney, this legal document gives one or more people the authority to handle finances
and remains in effect if you become incapacitated.
• Make sure you are properly insured. Speak with a financial planner or an insurance agent you trust. Review your policy regulary because your needs can change.
• Maintain a healthy lifestyle.
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Experts also recommend a health care power of attorney or health care proxy designating a
family member or other trusted person to make decisions about medical treatment. Living wills and health care proxies are intended to ensure that someone’s wishes regarding medical care are honored.
Direct Deposit of your Social Security Benefit
Let’s go into a little more detail about direct deposit of your Social Security and Supplemental Security Income (SSI) benefit payments. Applicants filing for these benefits must now choose either direct deposit or the Direct Express® debit card. Currently entitled beneficiaries and recipients who had been receiving payment by check have had to switch to direct deposit to a checking account or a pre-paid card they select or to the Direct Express® debit card.
How direct deposit of your Social Security benefit works
The U.S. Treasury sends an electronic message to your bank, savings and loan, or credit union crediting your account with the exact amount of your Social Security or SSI benefit. You can withdraw money, put some in savings or pay bills ̶ the ordinary things you do with your money.
The difference is, your check isn't printed or mailed. For more information, please visit the Department of the Treasury’s Go Direct® website http://www.godirect.org
How to Be Financially Prepared for Disasters
Natural or man-made disasters can strike without warning and can happen anywhere. These
include floods, fires, earthquakes, tornadoes, hurricanes, chemical spills or similar events that can force people to evacuate their homes. Even minor disasters can damage or destroy property or other belongings. They can also seriously impair your ability to conduct essential financial transactions for a period of time. In addition to planning for your personal safety and basic needs (e.g., shelter, food, and water), you should be ready to deal with financial challenges, including how to pay for supplies or temporary housing if necessary.
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What to Have Ready
Consider keeping the following documents, bank products, and other items in a secure place and readily available in an emergency:
• Forms of identification: These primarily include driver’s licenses (or state identification cards for non-drivers), insurance cards, Social Security card, passport, and birth
certificate.
• Your checkbook with enough blank checks and deposit slips to last at least a month
• ATM cards, debit cards (for use at ATMs and merchants), and credit cards: Do not assume that merchants and ATMs in areas affected by a disaster will immediately be
functioning as usual. Have other options available for getting cash and making payments.
• Cash
• Telephone numbers for your financial services providers: These include local and toll-free numbers for your bank, credit card companies, brokerage firms (for stocks, bonds, or
mutual fund investments) and insurance companies.
• Important account numbers: These include bank and brokerage account numbers, credit card numbers, and homeowner’s or renter’s insurance policy numbers. You may want to
copy the front and back of your credit cards (and keep them in a safe place).
• The key to your safe deposit box
What to Keep and Where to Keep It
After you have gathered your most important financial items and documents, protect them as well as you can while also ensuring you have access to them in an emergency. Here is a
reasonable strategy for many people:
• Make backup copies of important documents.
• Make an electronic image of your documents so you can more easily store the
information.
• Give a copy of your documents to loved ones or let them know where to find the
documents in an emergency.
• Store your backups some distance from your home in case the disaster impacts your entire community.
• Make a record of all credit/debit cards with the account and contact numbers to report
lost/stolen cards.
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Determine what to keep at home and what to store in a safe deposit box at your
bank.
A safe deposit box is best for protecting items of value and certain papers that could be difficult or impossible to replace, but not anything you might need to access quickly. What should you put in a safe deposit box? Examples include a birth certificate and originals of important contracts. What is better left safely at home, preferably in a durable, fireproof safe? Your passport and medical care directives because you might need these on short notice. Consult your attorney before putting an original will in a safe deposit box. Some states do not permit immediate access to a safe deposit box after a person dies, so there may be complications
accessing a will stored in a safe deposit box. Remember that safe deposit boxes are not
necessarily fireproof or waterproof.
Seal important documents in airtight and waterproof plastic bags or containers
to prevent water damage.
Prepare one or more emergency evacuation bags.
Pack essential financial items and documents (e.g., cash, checks, copies of your credit cards and identification cards, a key to your safe deposit box, and contact information for your financial services providers). Make sure each evacuation bag is waterproof and easy to carry and kept in a secure place in your home. Periodically update the contents of the bag. It will not do you any good if the checks in your bag are for a closed account.
What Else to Consider
• Arrange for automatic bill payments from your bank account. This service enables you to make scheduled payments (e.g., for your telephone bill, insurance premiums and
loan payments), and avoids late charges or service interruptions.
• Sign up for Internet banking services. This also makes it possible to conduct your banking business without writing checks. Only do this if you feel comfortable with
keeping your internet security software up-to-date.
• Review your insurance coverage. Make sure you have enough insurance, including:
personal property coverage, as applicable, to cover the cost to replace or repair your
home, car and other valuable property.
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To learn more about being financially prepared for disasters, visit
www.fdic.gov/consumers/consumer/news/index.html and type disaster preparedness in the search box.
Activity 3: How Financially Prepared Are You?
Think about what you have learned today. In the space provided, jot down what documents you will gather and where you will put them.
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Scams that Target Homeowners
Reverse Mortgage Proceeds Fraud
Scenario
To pay for his recommended home improvements, a handyman convinces an older woman to
appoint him as her Power of Attorney so he can help her get a reverse mortgage on the home she had purchased in the 1950’s and owns outright. When the lender provided a lump-sum
payout, she never saw any of the money because the handyman used it for drugs, among other things.
What is a reverse mortgage?
Although Reverse Mortgages can be legitimate products and are appropriate for many
consumers, scammers also sell these products to the disadvantage of their victims.
A reverse mortgage is a special type of loan that allows homeowners age 62 and older to borrow against the equity in their homes. It is called a “reverse” mortgage because you receive money from the lender, instead of making payments. The money you receive, and the interest charged Money Smart for Older Adults
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on the loan, increases the balance of your loan each month. Over time, the equity you have in your home decreases as the amount you owe increases.
When you take out a reverse mortgage loan, you can receive your money as a line of credit
available when you need it, in regular monthly installments, or up-front as a lump sum. You do not have to pay back the loan as long as you continue to live in the home, maintain your home, and stay current on expenses such as homeowner’s insurance and property taxes. If you move out or die, the loan becomes due and must be paid off.
How borrowers get scammed
Scammers can take advantage of the fact that borrowers can receive the loan in the form of a lump sum payout. The reverse mortgage proceeds scam may include one or several of the
following elements:
• Family members or others who pressure the older adult to get a reverse mortgage and
then “borrow” the money or scam the elder out of the proceeds.
• Scammers who “require” an older borrower to sign a Power of Attorney or to sign
proceeds over to a “loan officer or other agent” for future “disbursals.” The scammers
then embezzle a portion or all of the funds.
• Brokers who pressure or fraudulently require the borrower to purchase annuities, long-
term care insurance, high risk investments or other financial products with the proceeds
from the reverse mortgage in order to generate additional commissions.
Mortgage Assistance Rescue Scam
Beware of anyone who promises you can stay in your home or who asks for a lot of money to
help you. Scammers might promise guaranteed or immediate relief from foreclosure, and they might charge you very high fees for little or no services.
Mortgage relief companies may not collect any fees until they have provided you with a written offer from a lender or servicer that you decide is acceptable and a written document from the lender or servicer describing the key changes to the mortgage that would result if you accept the offer. The companies also must remind you of your right to reject the offer without any charge.
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Don’t get scammed. There is help available at little or no cost to you. Foreclosure prevention counseling is available free of charge through HUD's Housing Counseling Program. Call the
CFPB at 1-855-411-CFPB (2372) to be connected to a HUD-approved housing counselor.
Contractor Fraud and Home Improvement Scams
Scenario
Monica is 76 years old and lives alone in her home. One morning she is outside watering her garden when a truck pulls up and a man approaches her. He tells her that he is a building contractor and that he can see that she has a problem with her roof. He points to a spot near the chimney and tells her he can fix the problem now with the materials he has left over from a job he just finished nearby. He says he’ll give her a big discount if she’ll pay him today in cash.
After going up on the roof and tearing off some roof tiles, he tells her that the problem is worse than he thought, but he can do it for $2,800. When Monica says she doesn’t have $2,800 in
cash, the contractor becomes angry and threatening. He says if Monica doesn’t have the money she will have to take out a loan to pay him.
Contractor Fraud
Home Repair / Home Improvement Scams
Sooner or later every home needs repairs or improvements. Although some home improvement
companies do good work, some may not provide the level of service you expect. Many
homeowners are targeted by scam artists who use high pressure tactics to sell unneeded and overpriced contracts for "home improvements." Often these scam artists charge more than their quoted prices or their work does not live up to their promises. When the homeowner refuses to pay for shoddy or incomplete work, the contractor or an affiliated lender threatens foreclosure on the home.
Impersonating Officials
Con artists may pose as building inspectors and order immediate repairs which they can do on the side. They may also pose as government officials and demand a fee for processing
emergency loan documents.
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Tips for Avoiding Contractor Fraud
Here are some common sense tips to protect yourself from contractor fraud.
• Ask to see identification for anyone representing him or herself as a government official.
Call the government agency to verify the identity if there is any payment of money
involved.
• Get bids from several local, established contractors. Obtain at least three legible bids in writing and don’t sign anything before carefully reading it. Do not do business with
anyone who approaches you door-to-door or on the phone. Note that many states and
local jurisdictions have laws regulating door-to-door sales.
• Avoid contractors who:
̶ Are working door-to-door
̶ Come from out of state
̶ Don’t provide an address and telephone number, or refuse to show identification
• Before beginning any home repair project, ask if the contractor has the required licenses (note license numbers) and is bonded. Seek out references from neighbors or members of
your affinity groups (e.g., place of worship).
• Check with your state licensing agency’s website or hotline to make sure the licenses are valid. Ask the licensing agencies if the contractor has a history of complaints.
• Get several references from previous customers. If possible, visit them to see the work done.
• Require the contractor you choose to provide you with a contract that contains clearly
written payment terms.
• Don’t pay in advance.
• Never pay with cash.
• Don’t provide personal financial information, such as your checking account, credit card or debit card numbers.
• If you need to borrow money to pay for repairs, don’t let the contractor steer you toward a particular lender.
• Do not make a final payment until you are satisfied with the job, all debris is removed from your property, and any necessary building inspections have been completed. If a
contractor shows up at your door and pressures you to go to the bank with him to get cash
to pay for a job you do not want done, if you ask to speak with the branch manager, the
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manager can call the police for you, who can show up at the branch. Being in public
place with video cameras and witnesses should reduce your risk.
To get more information on home improvement, including: how to hire contractors, how
to understand your payment options, and how to protect against home improvement
scams, read the FTC brochure titled Home Sweet Home Improvement. The brochure is
available at www.ftc.gov. Enter home improvement in the search field. You can also call the FTC to request the brochure at 1-877-FTC-HELP (382-4357).
Scams that Target Veterans Benefits
Pension Benefits Filing Scam
The Veterans Affairs’ (VA) pension program provides monthly benefit payments to certain
wartime veterans with financial need, and their survivors. Recipients also may be eligible for one of two additional amounts:
• Aid and Attendance (A&A) may be paid to veterans, or their surviving spouses, who
require assistance with activities of daily living, are bedridden, are patients in nursing homes, or have a qualifying major vision loss.
• Housebound amounts may be paid to veterans or surviving spouses who are
substantially confined to their homes because of a permanent disability.
Tips for avoiding VA pension benefits filing scams
• Be aware that an individual generally must be accredited by VA to assist you in
preparing and filing a claim. To find an accredited attorney, claims agent, or veterans
service organization (VSO), visit VA’s Accreditation Search page at
http://www.va.gov/ogc/apps/accreditation/index.asp
• Never pay a fee to anyone for preparing and filing your initial claim. Although an
attorney may charge a consulting fee for advising you about the benefits for which
you may be eligible, the clock stops running as soon as you indicate your intention to
file.
• Avoid attorneys or claims agents who try to market financial products, such as trusts
and annuities, in connection with filing your VA claim. Older veterans may face
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