Many Americans may find themselves without adequate retirement savings due to rising health care costs, limited Social Security funds, and debt—both personal and public.
Financial literacy is a key element in avoiding financial exploitation and ensuring financial security in retirement. For example, with the decline of traditional employer-based pensions (defined benefit plans), retirees are increasingly responsible for managing their own retirement assets. Effective financial education and enhancing the federal government’s role in this area could help retirees ensure that they have adequate retirement income.
Financial products targeted at older Americans are increasingly complex, and may carry both benefits and the risk of exploitation.
- Reverse mortgages are a type of loan against a borrower's home that provides a lump sum or periodic payments to the borrower—and they can help seniors face financial hardship or improve their quality of life. They are growing in popularity as a supplement to retirement income, but they are also relatively complex and costly, and the population they serve is vulnerable.
- Annuities with guaranteed lifetime withdrawals can help older Americans ensure they do not outlive their assets. However, they do present some risks to consumers. We examined the benefits, risks, and regulation of these annuities.
- Pension advances are lump-sum payments in exchange for a retiree’s pension payments. But these products did not compare favorably with other financial products we reviewed, and there are consumer protection concerns.
- Student loan debt and other forms of personal debt can affect the financial security of older people who are approaching retirement. Student loan debt can be especially daunting because, unlike other types of debt, it generally can’t be discharged in bankruptcy. Additionally, social security benefits can be withheld to pay off student loan debt.
Related GAO Reports on Financial Literacy
Consumer Financial Protection Bureau: Observations from Small Business Review Panels
GAO-16-647, Aug 10, 2016
Retirement Security: Better Information on Income Replacement Rates Needed to Help Workers Plan for Retirement
GAO-16-242, Mar 1, 2016
Highlights of a Forum: Financial Literacy: The Role of the Workplace
GAO-15-639SP, Jul 7, 2015
Financial Literacy: Overview of Federal Activities, Programs, and Challenges
GAO-14-556T, Apr 30, 2014
Private Pensions: Clarity of Required Reports and Disclosures Could Be Improved
GAO-14-92, Dec 17, 2013
Elder abuse is the physical, sexual, psychological, or financial abuse or neglect of older people who may be unable to defend or fend for themselves. The incidence of elder abuse is expected to increase as the size of the older population grows, further straining the social service and criminal justice systems charged with protecting that population.
Guardianship is one way to protect the interests of older people who are mentally or physically unable to manage their personal or financial affairs. State and local courts or federal agencies, such as the Social Security Administration (SSA), may appoint individuals—typically family members—or organizations to manage financial affairs or federal benefits on behalf of these people. But older adults can be exploited by the guardians appointed to protect their interests. We've recommended ways that courts and federal agencies, including SSA, can better screen and monitor guardians, and better coordinate with one another to combat elder abuse.
Related GAO Reports on Elder Abuse
- Elder Abuse: The Extent of Abuse by Guardians Is Unknown, but Some Measures Exist to Help Protect Older Adults
GAO-17-33, Nov 30, 2016
- Pension Advance Transactions: Questionable Business Practices Identified
GAO-14-420, Jul 7, 2014
- Health Care Fraud and Abuse Control Program: Indicators Provide Information on Program Accomplishments, but Assessing Program Effectiveness is Difficult
GAO-13-746, Oct 30, 2013
- Elder Justice: National Strategy Needed to Effectively Combat Elder Financial Exploitation
GAO-13-110, Nov 15, 2012
Services for Older Adults
Many older adults want to age in their homes, but their ability to do so often depends on the availability of services like home-delivered meals, home-based care, and transportation. Some frail older adults may rely on informal assistance from family and friends, while others rely on services from paid providers. But as the older population continues to grow, communities may find it increasingly difficult to meet the demand for these services.
The Older Americans Act (OAA) was enacted to help frail older adults maintain their independence and avoid premature nursing homes and depletion of their income and assets. Programs paid for with a mix of federal, state, and local funding provide a broad range of services, including:
- Nutrition: The largest proportion of funding for major home and community-based services under the OAA goes to nutrition services.
- Transportation: Funding under the OAA helps states provide rides to doctors, grocery stores, pharmacies, senior centers, meal sites, and social events. We’ve recommended ways to coordinate transportation services from across the government.
- Housing: A growing number of older Americans live in "continuing care retirement communities," which aim to provide lifelong housing, household assistance, and nursing care in exchange for an entrance fee and ongoing monthly fees. However, these communities can pose some risks. Additionally, HUD’s Section 202 program, which supports rental housing for very low-income elderly households, could be improved.