Financial fragility and scam susceptibility in community dwelling older adults

Abstract

We tested the hypothesis that financial fragility is associated with higher scam susceptibility in older adults without dementia. Data came from nearly 900 community-dwelling participants from two ongoing cohort studies of aging. Financial fragility was determined by assessing an individual’s ability to access $2,000 within a month for an unexpected expense. Scam susceptibility was assessed via a 5-item instrument that measures perceptions and behaviors that predispose older adults to financial fraud and scams. On average, participants were 82 years of age. Nearly 10% reported financial fragility. Financial fragility was higher in Blacks and among those with fewer years of education, lower income, lower global cognition, lower literacy, and poorer financial decision making. Regression analysis revealed that financially fragile older adults were more susceptible to scams. These data suggest that targeted efforts to reduce financial fragility and improve literacy and cognitive health are needed to prevent elder exploitation among diverse populations.

Introduction

Each year, millions of Americans lose money to fraudulent schemes, and these come in a variety of forms and are propagated through a host of medium (Morgan, 2021). Older adults are disproportionally targeted by fraudsters and scammers and may be at particularly high risk of exploitation (Burnes et al., 2017). Moreover, victimization appears to be on the rise. In 2020, more than 105,000 fraud complaints filed through the FBI’s Internet Crime Complaint Center came from victims over the age of 60, double the number reported in 2015 (Federal Bureau of Investigation, 2020). Financial losses among older adults surpass those of all other age groups, racking up nearly 1 billion US dollars in 2020, according to the same report. These numbers are expected to be much higher as data suggest that, in addition to being targeted, older adults are less likely to acknowledge fraud victimization (Shadel & Pak, 2017), which can also lead to repeat victimization. Financial exploitation is particularly problematic among older adults not only because it is difficult for them to fully recover financially, but also because the adverse impacts extend far beyond monetary loss to adverse physical and mental health outcomes. Older fraud and scam victims tend to have higher mortality (Burnett et al., 2016), higher rate of hospitalizations (Dong & Simon, 2013), and greater symptoms of depression and anxiety (Weissberger et al., 2020). Identifying factors that predispose older adults to financial fraud and scams therefore has significant financial and public health implications for our growing aging population.

Prior research has identified financial fragility as an important risk factor for financial fraud and scams among the general population. According to the third Federal Trade Commission survey on consumer fraud (Anderson, 2013), compared to participants without debt, those who reported more debt than they could comfortably handle were twice as likely to have been victimized by fraud. A similar finding was reported specifically for internet fraud (Shadel, Pak, & Sauer, 2014). A more recent survey of approximately 1,500 Americans and Canadians also showed that financially fragile individuals are more susceptible to scams (Marti DeLiema et al., 2019). Notably, while the proportion of financially fragile individuals is relatively low among baby boomers and the silent generation (Mitchell, 2021; Society of Actuaries, 2019), financial fragility remains an issue for some and may predispose older adults to financial fraud and scams. Financial fragility in older adults, and in particular its relation to scam susceptibility, is poorly understood.

We hypothesized that financial fragility is associated with susceptibility to financial fraud or scams in older adults. This hypothesis was built upon the recent findings on fragility and fraud, as well as a large psychology literature that suggests that high stress or emotional arousal may compromise decision making. Specifically, the dual process theory posits that stress and emotional arousal skew cognitive processes away from deliberate or reflective processes (Type-2) and in favor of autonomous or intuitive processes (Type-1) (Evans & Stanovich, 2013). The theory proposes that Type-1 processes are fast, nonconscious and automatic, while Type-2 processes are higher order and require cognitive resources, working memory in particular. Further, while Type-1 processes are default responses, Type-2 processes are the foundation of rational thinking and are capable of overriding the default intuition. As this and related theories posit, with constrained time horizons and other pressures that arise in aging, older adults are likely to devote limited resources (e.g., cognitive) to emotionally salient information (Carstensen, Mikels, & Mather, 2006), particularly when faced with high emotional distress or arousal, and this leaves little resource for Type-2 processes. Indeed, experiments have shown that with induced emotional arousal older adults are more susceptible to misleading advertisements, and may not be able to detect false advertising (Kircanski et al., 2016). A newly released report by AARP finds emotional arousal and stress to be a major correlate of scam susceptibility (Shadel, Williams, Pak, & Choi-Allum, 2021). Similarly, studies on poverty and cognition have shown that preoccupation with monetary concerns consumes cognitive and mental resources, and distract the financially disadvantaged from proper decision making (Mani, Mullainathan, Shafir, & Zhao, 2013).

To test the hypothesis that financial fragility is associated with greater scam susceptibility in older age, we leveraged data from nearly 900 older adults who on average were 82 years of age and are participating in Rush Alzheimer’s Disease Center (RADC) community-based cohort studies of aging. Financial fragility was determined by participants’ ratings of their confidence in the ability to come up with $2,000 within a month if needed for an unexpected expense. Scam susceptibility was determined by a 5-item instrument that measures perceptions and behaviors that predispose older adults to financial fraud and scams. The analyses were conducted using a series of linear regression models controlling for demographics and potential confounders including cognition and financial literacy.

Methods

Study Participants

Data came from participants of the Rush Memory and Aging Project (MAP) and the Minority Aging and Research Study (MARS), both are epidemiologic cohort studies of aging and dementia (Barnes, Shah, Aggarwal, Bennett, & Schneider, 2012; Bennett et al., 2012). Started in 1997, MAP recruits older adults who live in retirement communities, senior housing, and individual homes in the greater Chicago metropolitan area. Notably, over 90% of the MAP participants were older Whites. MARS was initiated in 2014 and recruits older Blacks who live in the same geographical area. To facilitate combined analyses, recruitment and data collection for MAP and MARS follow essentially the same protocol and are conducted by a single team, and the studies share a large common core of measures that are identical at the item level. Participants were enrolled without known dementia, and all agreed to annual home visits that include detailed clinical and neuropsychological evaluations, as well as a decision making substudy. A questionnaire that includes a financial fragility assessment was added to the decision making battery in 2019.

Both cohorts and decision making sub-studies were approved by an Institutional Review Board of the Rush University Medical Center, and each participant provided written informed consent for the parent cohort and sub-studies. All studies are ongoing. At the time of these analyses in September 2021, 1,602 participants had completed the baseline decision making evaluation, of which 916 further completed financial fragility questions. The visit for financial fragility assessment serves as our analytic baseline. To reduce recall bias, all analyses were restricted to 873 participants who were dementia free at the analytic baseline.

Financial Fragility

Financial fragility was determined by assessing older adults’ ability to cover unexpected expenses within a specified timeframe. Specifically, participants were asked to rate confidence, on a 4-level scale (i.e., extremely confident, fairly confident, a little confident, or not at all confident), of their ability to access $2,000 in a month to cover an unexpected expense if necessary. The metric has been widely used to assess households’ capacity of coping with a financial stressor or shock (Marguerite DeLiema, Li, & Mottola, 2021; Lusardi, Schneider, & Tufano, 2011; Worthington, 2003). Participants who responded a little or not at all confident were categorized as financially fragile.

Scam Susceptibility

Scam susceptibility was determined by assessing older adults’ perceptions and behaviors believed to predispose them to financial fraud and scams (Boyle, Yu, Schneider, Wilson, & Bennett, 2019). The instrument includes 5 items which are based on contents from AARP (American Association of Retired Persons, 1996) and questions from the FINRA Risk Meter (Financial Industry Regulatory Authority, 2013). Briefly, participants rate their tendency of (1) answering, (2) listening to, and (3) having difficulty ending, phone calls from strangers or telemarketers. Participants also rate their agreement on the statements: (4) older persons being common targets by con-artists and (5) something is not true if it sounds too good. Each item was rated on a 7-point Likert scale that ranges from 1 (strongly agree) to 7 (strongly disagree). Ratings on the first 3 items were flipped so that higher scores correspond to greater susceptibility, and individual ratings were then averaged to obtain a summary score. The scam susceptibility measure has proper psychometric properties, as previously described (Yu et al., 2021). The measure’s validity was further supported by its associations with various age-related vulnerabilities and adverse outcomes.

Financial Literacy

Financial literacy was measured by assessing older adults’ financial and institutional knowledge as well as numeracy (B. D. James, Boyle, Bennett, & Bennett, 2012). The 23-question instrument was adapted from the Health and Retirement Survey. Of which, 7 questions assess financial knowledge that covers topics on stock and mutual funds, bond price in relation to interest rate, and credit card debt payment; 5 questions assess institutional knowledge specific to the definition and function of FDIC (Federal Deposit Insurance Corporation); and 8 questions assess numeracy, which is an important aspect of financial decision making (Lusardi, 2012). These questions involve comparing and converting percentages, calculating sale prices, and determining savings return based on interest rate and inflation. The remaining 3 questions assess skills of projecting earnings given different investment options. The financial literacy score was the percentage of the 23 questions that were answered correctly, and higher scores indicate higher financial literacy.

Financial Decision Making

Financial decision making was measured using a performance-based measure that mimics real-world materials used for choosing mutual funds. Tables of information on various funds are presented to the participants followed by 6 questions of varying difficulty levels. Easy questions ask to retrieve specific information from the table (e.g., to state account management fee of a fund), and more challenging questions involve integrating multiple pieces of information (e.g., choosing a fund with best return rate considering the cost of the management fee). The financial decision making score was the number of correct answers to these 6 questions, and higher scores indicate better decision making.

Cognition

Cognition was measured by summarizing older adults’ performance on 18 cognitive tests, as previously described (Wilson et al., 2013). Briefly, test-specific scores were standardized using the baseline mean and standard deviation of the parent studies, and the resulting z-scores were averaged across the 18 tests to obtain a composite score. Higher scores indicate higher cognition. The composite score outperforms individual test scores analytically by minimizing floor and ceiling artifacts as well as random fluctuation. Throughout this paper, we use the term global cognition when referring to this cognitive measure.

Other Covariates

Participants’ age was calculated using date of fragility assessment and date of birth. Sex and education were self-reported and recorded at the baseline interview of the parent studies. Race was self-identified using the categories according to the 1990 US Census. Income was determined using a show-card method, and the participants chose one of the following 10 levels (1: $0 – $4,999, 2: $5,000 – $9,999, 3: $10,000 – $14,999, 4: $15,000 – $19,999, 5: $20,000 – $24,999, 6: $25,000 – $29,999, 7: $30,000 – $34,999, 8: $35,000 – $49,999, 9: $50,000 – $74,999, 10; $75,000 and over) that best represents their total annual income.

Depressive symptoms were assessed using a 10-item version of the Center for Epidemiologic Studies Depression scale where participants reported the total number of 10 symptoms they experienced in the past week (Wilson et al., 2002). Psychological distress was assessed using a 12-item version of the neuroticism scale from the Revised NEO Personality Inventory. Participants rated each item on a 5-level scale. Ratings for all 12 items were aggregated to obtain a total score, with higher scores indicating greater distress (Krueger, Wilson, Shah, Tang, & Bennett, 2006).

Statistical Analysis

Characteristics of older adults with financial fragility were identified using student t-test, Chi-squared test or non-parametric Wilcoxon rank sum test, as appropriate. Multivariable linear regression analyses examined the association of financial fragility with scam susceptibility after controlling for age, sex, education, race and income, where the scam susceptibility rating was the continuous outcome. Robustness of the association was assessed by further controlling for previously identified correlates of scam susceptibility that include global cognition, financial decision making and financial literacy. Additional regression analyses explored factors that may explain the association of financial fragility with scam susceptibility. Racial difference in the association was examined using a regression model with an interaction term as well as a stratified analysis.

The analyses were done using SAS/STAT software, version 9.4 of the SAS System for Linux (SAS Institute, Cary, NC). Statistical significance was determined at α level of 0.05.

Results

Characteristics of Study Participants

The participants were, on average, 82 years of age (Standard deviation [SD]: 7.3, Range: 63.1–100.3). Over three quarters (N=685) were female, and 35% of the participants were Black. Overall, participants had high socioeconomic status, such that the mean years of education was 16 (SD: 3.1, Range: 8–30), and the median personal income was $35,000–$49,999 (Interquartile range: $25,000–$29,999 and $75,000 and over). All participants were free of dementia at the financial fragility assessment, and approximately 15% (N=127) had mild cognitive impairment. On average, the participants correctly answered 4 out of the 6 financial decision making questions (Mean: 3.7, SD: 1.3, Range: 0–6), and 75% of the financial literacy questions (Mean: 74.5, SD: 17.3, Range: 17.4–100).

Characteristics of Older Adults with Financial Fragility

Nearly 10% of the participants (N=82) reported that they had little or no confidence in their ability to access $2,000 in a month. Older adults who reported financial fragility were more likely to be Black, had fewer years of education, lower income, lower global cognition, poorer financial decision making, and lower financial literacy (Table 1).

Table 1.

Characteristics of study participants by financial fragility

	Not fragile (N=791)	Fragile (N=82)	p value
Age†	82.0 (7.3)	81.9 (7.3)	0.911
Male sexΔ	177 (22.4%)	11 (13.4%)	0.060
BlackΔ	252 (31.9%)	59 (72.0%)	<0.001
Education†	16.1 (3.0)	14.0 (2.5)	<0.001
Income§	9 (7–10)	5 (3–7)	<0.001
Depressive symptom§	1 (0–2)	1 (0–2)	0.018
Psychological distress†	13.0 (6.6)	15.1 (6.9)	0.008
Risk aversion§	0.08 (0.06–0.45)	0.45 (0.11–0.83)	<0.001
Global cognition†	0.32 (0.58)	-0.11 (0.55)	<0.001
Financial literacy†	75.8 (16.7)	61.9 (17.8)	<0.001
Financial decision making†	3.8 (1.3)	3.0 (1.4)	<0.001
Scam susceptibility†	2.1 (0.8)	2.6 (0.8)	<0.001

^†Mean (Standard deviation), p values were obtained from student t-test;

^ΔN (%), p values were obtained from Chi-squared test;

^§Median (Interquartile range), p values were obtained Wilcoxon rank sum test

Income: 1: $0 – $4,999, 2: $5,000 – $9,999, 3: $10,000 – $14,999, 4: $15,000 – $19,999, 5: $20,000 – $24,999, 6: $25,000 – $29,999, 7: $30,000 – $34,999, 8: $35,000 – $49,999, 9: $50,000 – $74,999, 10; $75,000 and over.

Financial Fragility and Scam Susceptibility

The mean scam susceptibility score was 2.2 (SD: 0.8) on a scale of 1 to 7. Older adults who were financially fragile were more susceptible to scams than those who were not (Figure 1). In a regression model that controlled for demographics, the mean scam susceptibility score for older adults with financial fragility was 0.348 standardized unit (standard error [SE]: 0.123, p=0.005) higher than those without financial fragility (Table 2 Model 1). To contextualize this result, in the same model every 1SD (~7 years) older in age was associated with 0.231 unit higher (SE: 0.034, p<0.001) in scam susceptibility score; therefore, the difference in scam susceptibility between older adults with and without financial fragility was equivalent to the difference of a decade of age.

Figure 1.

Scam susceptibility by financial fragility. The figure illustrates the difference in scam susceptibility between older adults who were financially fragile (orange) and those who were not (cyan). The half-violin plots visualize the distributions of the scam susceptibility scores by financial fragility. The boxplots, overlaid with raw jittered scam susceptibility scores (dots), further summarize the distributions using summary statistics of median, lower quartile (lower hinge), upper quartile (upper hinge), lower extreme (lower whisker) and upper extreme (upper whisker).

Table 2.

Financial fragility and scam susceptibility

	Model 1	Model 2	Model 3
Age	0.231 (0.034)***	0.080 (0.040)*	0.078 (0.040)
Male sex	0.206 (0.082)*	0.203 (0.091)*	0.205 (0.091)*
Education	−0.024 (0.012)*	0.019 (0.013)	0.019 (0.013)
Income	−0.037 (0.016)*	−0.007 (0.018)	−0.007 (0.018)
Black	0.173 (0.075)*	−0.248 (0.093)**	−0.236 (0.095)*
Financial fragility	0.348 (0.123)**	0.350 (0.132)**	0.493 (0.231)*
Financial literacy	-	−0.248 (0.054)***	−0.251 (0.055)***
Financial decision making	-	−0.016 (0.042)	−0.017 (0.042)
Global cognition	-	−0.482 (0.081) ***	−0.483 (0.081)***
Black × Financial fragility	-	-	−0.204 (0.272)

^***<0.001

^**<0.01

^*<0.05

Statistics reported in each cell are regression coefficient (standard error).

Notably, participants who were financially fragile had poorer cognition, financial decision making, and financial literacy, and cognition and financial literacy were also strongly associated with scam susceptibility (Bryan D James, Boyle, & Bennett, 2014). We therefore augmented the primary model by including terms for global cognition, financial decision making and financial literacy. As expected, both lower global cognition and financial literacy were strongly associated with greater scam susceptibility (Table 2 Model 2). However, the result for financial fragility persisted and the magnitude of the association (i.e., regression coefficient) remained essentially the same. These findings suggest that the relationship between financial fragility and scam susceptibility is relatively independent of other important correlates of scam susceptibility.

As emotional distress may link fragility to scam susceptibility, we next investigated the extent to which the association of financial fragility with scam susceptibility was attributable to depression and psychological distress. Compared to older adults who were not financially fragile, those who were financially fragile were more distressed (Mean score 13.0 versus 15.1, t₈₄₈=−2.65, p=0.008). Separately, the Wilcoxon rank sum test also revealed a group difference in depressive symptoms (p=0.02). Notably, however, neither depressive symptoms nor psychological distress were associated with scam susceptibility in the regression analyses. This null result suggests that the association of financial fragility with scam susceptibility is not mediated through these two specific measures.

Prospect theory (Kahneman & Tversky, 1979) suggests that financial fragility may be linked to scam susceptibility through risk taking. In a post-hoc analysis, we examined the association of financial fragility and scam susceptibility by including a measure for risk aversion. The measure assesses individuals’ preference of taking an unknown but possibly larger payoff in favor of a certain but smaller payoff (Boyle, Yu, Buchman, & Bennett, 2012). We observed that financially fragile older adults were more risk averse, and there was a weak positive correlation between risk aversion and scam susceptibility. The association of risk aversion with scam susceptibility, however, was not significant in a regression model after adjusting for demographics and other covariates.

Finally, approximately a third of our study participants were Black, but older Blacks accounted for more than 70% of individuals who reported financial fragility (Table 1). Given this striking difference, we added a race by fragility interaction term to examine whether the association with scam susceptibility differed by race. We did not observe such an interaction (Table 2 Model 3), suggesting that although older Blacks were more financially fragile the association of fragility with scam susceptibility was not significantly different between races. Stratified analyses further confirmed that financial fragility was associated with greater scam susceptibility for both races (Results not shown).

Discussion

In this study, we examined financial fragility in older adults who live in northeastern Illinois. About 10% of these older adults were financially fragile (i.e., they were very unlikely to have the financial means to access $2,000 within a month if needed for an unexpected expense). Financially fragile older adults tended to have fewer years of education, lower income, and were more likely to be Black. Further, financially fragile older adults also had lower global cognition, lower financial literacy and poorer financial decision making. Consistent with prior reports on financial fragility and financial fraud and scams in the general population, we observed a robust association of fragility with scam susceptibility in older adults without dementia. The association persisted after adjustment for key demographics, global cognition, financial literacy, and financial decision making. These findings advance knowledge on financial vulnerability in our aging population in several important ways.

First, our study reveals a robust association of financial fragility with scam susceptibility in the older old. Importantly, this association persists even after controlling for cognitive ability and other covariates. Further, we showed that financial fragility, low global cognition, and low financial literacy are independent risk factors for scam susceptibility, which suggests that even in the presence of adequate cognitive and decision-making skills, financial fragility may still predispose older adults to fraud and scams. We hypothesized that the association of financial fragility with scam susceptibility is based, in part, on the dual-processes theory whereby older adults may overly attend to stress or emotional distress caused by financial constraints, and consequently information processing and decision making is largely driven by intuitive Type 1 processes rather than the more deliberate Type 2 processes. In testing this theory, we examined the extent to which the association of financial fragility with scam susceptibility works through depression and psychological distress. While our data showed that financially fragile older adults do have more depressive symptoms and higher level of psychological distress, the analysis failed to detect an association of depressive symptoms or psychological distress with scam susceptibility. Importantly, the measures used here capture negative affect and the general trait of proneness to psychological distress, but they do not capture situational stress directly. This distinction could explain why the measures failed to link financial fragility to scam susceptibility per dual-process theory. However, we also note that tendency to experience negative affect and distress plays a crucial role in affecting how individuals respond to daily stress. Separately, prospect theory offers an alternative pathway that could potentially link financial fragility to scam susceptibility. In essence, it proposes that individuals with financial constraints are less risk averse and more willing to take gambles. Contrary to this hypothesis, our data showed that financially fragile older adults were more risk averse, and risk aversion was not associated with scam susceptibility when accounting for other covariates. Together, these findings suggest that neither psychological distress nor risk aversion seem to account for the relationship between financial fragility and scam susceptibility. Future studies are warranted to further explore the underlying factors that link these two important concepts.

Second, this study informs our understanding of financial vulnerability in the older old. Many of the existing studies on financial fragility focused on individuals of working or near-retirement ages. Using the same metric, a 2009 study on global economic crisis surveyed US participants between the ages of 18 and 65 and reported that as many as 50% were unable to come up with $2,000 in a month (Lusardi et al., 2011). The percentage of fragile individuals is the highest among younger adults, approaching 60% for those between the ages of 18 and 34, and gradually declines with age (48% for respondents between 35 and 54, and 36% for respondents between 55 and 65). Data from the FINRA Foundation’s 2015 National Financial Capability Study (NFCS) indicated that 36% of American adults between the ages of 25 and 60 were unable to come up with $2,000 in a month, and interestingly the percentages remain relatively stable within this age range (Hasler, Lusardi, & Oggero, 2018). A recent report from the same study reveals that, moving beyond age 60, there is a decline in the percentage of financially fragile individuals (Lusardi, Mitchell, & Oggero, 2020). In particular, approximately 15% of the respondents over the age 74 reported financial fragility, a reduction by more than a half compared to younger age groups. While the percentage of financially fragile older adults in the current work is lower at 10%, overall our result is consistent with recent estimates and lends further support that financial fragility is less common in the older old than in the general adult population, but still an important problem among older old adults.

Third, our study complements prior literature by identifying the correlates of financial fragility among men and women over 65 years of age. Our results are highly consistent with a prior report (Lusardi et al., 2020) on the younger old where investigators examined financial fragility in two age groups, i.e., people near their retirement age (age 56–61) and people who are slightly older (age 62–66). Briefly, both studies showed that age was not associated with financial fragility within these age groups. Correlates of financial fragility in the younger old, including household income, education, and financial literacy, also were important determinants in the older old. Approximately 10% of older females and 5% of older males reported financial fragility in our study. While the sex difference did not reach statistical significance (p=0.06), it is again consistent with the report on the younger old that males tend to be financially less fragile. Separately, a racial difference in financial fragility was reported for the younger ages (Lusardi et al., 2011), where 48.6% of Whites and 62.9% of Blacks aged between 18 and 65 reported they were unable to come up with $2,000 in a month. Here we observed a more striking difference for older Blacks. Compared to the other races where only 4% of the participants reported financial fragility, the percentage was more than quadrupled in older Blacks (reaching nearly 19%). Notably, this difference was not accounted for by other correlates of financial fragility. In an exploratory analysis using logistic regression, older Blacks were over 4 times more likely to be financially fragile, after adjusting for demographics, income, cognition as well as financial literacy and financial decision making. While the analysis failed to reveal factors that contribute to the higher proportion of financial fragility in older Blacks, we speculate that history of structural racism against Blacks likely plays a major role in this difference. This (i.e., more older Blacks being financially fragile than older Whites), together with the result that financial fragility was associated with scam susceptibility for both races, provides evidence that more minority older populations are financially fragile and consequently more are vulnerable to scams and/or unexpected financial shocks.

Finally, our findings have important implications for combating financial fraud and scams in aging populations. First, this study expands our prior work on correlates of scam susceptibility in older adults (Bryan D James et al., 2014; Yu et al., 2021) by demonstrating that financial fragility is yet another robust risk factor. The issue of financial fragility becomes even more relevant in the wake of the COVID-19 pandemic. The current pandemic put financial stress on thousands of households (Clark, Lusardi, & Mitchell, 2021), and COVID-related fraudulent acts are also on the rise (Ma & McKinnon, 2021). As the pandemic continues, financially fragile older adults likely will be particularly vulnerable to fraud and scams. Not only are they more susceptible to financial fraud and scams, but recent data also suggest that older victims suffer the higher monetary loss than younger age groups (Payne, 2020). This leads to a vicious cycle that further deteriorates the financial wellbeing of older adults. Understanding who is at risk of financial fragility (e.g., low socioeconomic status, low cognition, low financial literacy, and poor financial decision making) can help regulatory and consumer protection agencies prioritize resources toward the most vulnerable populations. Together, the present study suggests that having the resources and the capability to adeptly manage these resources is needed to safeguard the financial wellbeing of older adults. As such, scam prevention and intervention strategies are likely to be more effective via multipronged approaches that (1) promote cognitive health, (2) improve financial security to minimize the impact of unexpected financial shocks, and (3) leverage educational programs to build financial knowledge and skills in older adults.

Conclusions and Limitations

In conclusion, our data reveal a robust association of financial fragility with scam susceptibility among community dwelling older adults without dementia. The association persisted even after controlling for cognition and financial literacy, suggesting that even in the presence of adequate cognitive and decision-making skills, financial fragility may still predispose older adults to fraud and scams. Together, our findings highlight that policies and other efforts to reduce financial fragility and improve literacy and cognitive health are needed to prevent elder exploitation.

This work is among the first studies that specifically looked at financial fragility in relation to scam susceptibility in older adults over 65 years of age. All participants agreed to detailed interviews for demographic, psychosocial, personality and behavioral economic measures and the data are readily available for characterizing financially fragile older adults. All participants were free of dementia, minimizing the bias due to overt memory impairment. Financial fragility was assessed using an established metric that has been widely adopted in economic and finance studies, which allows us to compare the burden of fragility with younger populations reported in other studies. Some limitations warrant discussion. The outcome of scam susceptibility only captures individuals’ awareness of fraudulent tactics as well as tendency of engaging in risky behaviors, but not actual victimization. In addition, distinct from studies that survey nationally representative samples, participants in this study are older volunteers enrolled in cohorts for study of aging, who had relatively high socioeconomic status. The findings need to be replicated in participants more representative of the general aged population.

Data Availability

Data used in this study can be requested through the RADC Research Resource Sharing Hub at https://www.radc.rush.edu.