Life in retirement should be all about relaxing and enjoying the time off you worked so hard to achieve. Unfortunately, many retirees are still faced with financial obstacles.
A study conducted by the CFPB reported that since its establishment, nearly 103,000 consumer complaints were received by those who were 62 years of age and up–from people who were retired. Here were some of the issues they were dealing with:
- Scams and identity theft
- Difficulties with reverse mortgages
- Managing finances after the passing of a spouse
- Uncertainty with banking charges and fees
Scams and Identity Theft
A common issue many seniors are faced with in their retirement stages are scams and identity theft and more specifically, recovering from them. Quite frequently, seniors are at the receiving end of scams and identity theft due to their vulnerability.
Especially in the case of seniors with Dementia or Alzheimers, many hackers, scammers, and identity thieves label seniors as an easy target. Due to this, seniors have trouble disputing credit card statements that list unauthorized payments. According to a CFPB report, many complaints about credit reports were mostly filed by seniors. Many complaints regarded the inability to rectify the errors on their credit reports in addition to disputing the purchases on their cards that were unauthorized. In many cases, the seniors would convey their concerns with not knowing the correct steps to take in avoiding these types of situations.
Reverse Mortgage Difficulties
A reverse mortgage is a loan specifically for homeowners that are 62 years old and up. It allows them to turn a portion of their home’s equity into cash, eliminating monthly mortgage payments.
In many cases, homeowners will be required to sell their home to the bank in order to attain a reverse mortgage. Since they are still residing in the home, they are required to continue property tax and homeowner’s insurance payments–something that many seniors have a difficult time remembering.
There have been many instances when homes would go into foreclosure due to the lack of payments made for taxes and insurance. Many seniors are under the false impression–due to insufficient explanation–that since the bank owns their home, they are not responsible for those monthly payments which, unfortunately, is not the case.
Another reason seniors have trouble paying taxes and insurance is because their monthly reverse mortgage payment is less than they expected it to be. Sometimes, reverse mortgages are a senior’s main income throughout their retirement, and if those monthly payments are too low, it will prove to be very difficult to keep up with their other bills.
AARP recommends that investing in a reverse mortgage should be considered as a last resort (Source).
Managing Finances After The Passing Of a Spouse
No matter the situation, losing a spouse not only creates an emotional burden but a financial one, too.
The CFPB has reported that many complaints filed are from seniors regarding difficulties with accessing accounts such as their savings, or having trouble locating the necessary documents in order to access these accounts.
Studies have also shown that many seniors who have lost a spouse and have a reverse mortgage face foreclosure because the agreement was in the deceased spouse’s name and loan services took too long to respond to their inquiries.
Uncertainty With Banking Fees & Charges
There have been many instances when seniors have filed complaints regarding an unfamiliar charge on their bank statements.
Quite often, seniors will spot subscription charges that they don’t recognize or recall signing up for. Studies have shown that a vast majority of seniors tend to sign up for ads they see on TV without reviewing over the fine print. Some services may be free for a limited time, but will automatically charge customers upon the conclusion of their free trial. This is something that is generally overlooked by seniors but causes the most confusion and disputes.
One other aspect of banking that seniors have shown difficulty understanding and have filed complaints to the CFPB about are the interest rates credit cards have.
It is strongly suggested that the families of seniors do their best to help their loved ones attain a better understanding of financial obligations. Educating your loved ones on topics of finance can help them steer clear of any potential scams and manage their accounts with ease.