Elderly Lack Pocketbook Facts

ELDERLY Americans are far less financially sophisticated than might be assumed, given their high levels of discretionary income. Moreover, they are likely to have less understanding of their basic rights as consumers than many younger people in the United States, according to a new report just issued by the American Association of Retired Persons (AARP) in Washington. The AARP study - which was based on an analysis of both younger and older Americans throughout the US - is almost certain to trigger renewed debate about the financial and economic problems of the elderly, according to some consumer experts.

``Essentially, older people in the United States have far more assets than the rest of the population. But most people are shocked to find out that perhaps less than 10 percent of the elderly went to college; many older persons don't have a high school education. And most elderly Americans grew up at a time when our society was far more trusting than is now the case,'' says Stephen Brobeck, executive director of the Consumer Federation of America, in Washington.

Mr. Brobeck believes that older Americans are most vulnerable to fraud and deception in issues involving financial solicitations, and usually relating to their homes. In the case of the elderly, Brobeck notes, the home is usually their main source of personal wealth. Another area of potential abuse, he says, involves insurance.

The AARP study, conducted by Market Facts Inc., a research organization, was based on interviews with some 1,300 people over the age of 25. Among the findings: Older Americans are less likely than younger people to know that they have several days to cancel a purchase from a door-to-door salesman; they were less likely to know that they are not responsible for charges made to stolen credit cards, provided that they notify the credit card company; they were less likely to know that consumers can't cancel orders made over the telephone, or that a company cannot advertise a product it has never carried.

Older persons are also far less likely to take action to correct a situation in which they have been ``burned'' on a purchase - or, AARP found, to have ever taken such action.

Finally, older persons are far more trusting of businesses in general than is the case with younger people, according to AARP. While two-thirds of consumers under age 65 believe that businesses tend to mislead customers at least half the time, less than half the older consumers felt this to be the case. But one result of such a trust is that older Americans are placed at a ``disadvantage'' in dealing with contemporary business situations, according to Horace B. Deets, executive director of the AARP.

``Younger people in general have grown up in the age of deregulation, which may make them more aware of financial matters,'' says David Steece, an investment counselor with Fraser Management Associates, based in Burlington, Vt.

According to consumer experts, the AARP study is consistent with federal and state legislative reviews, which have concluded that older people are often victimized by unscrupulous salespeople. There have been a number of hearings at the state level in recent years about fraudulent practices directed at the elderly dealing with housing, insurance, and land schemes.

Financial experts note that there are a number of resource organizations that older persons could go to for financial help, including local consumer groups, Better Business Bureaus, the AARP, and financial organizations such as the National Association of Individual Investors, based in Royal Oak, Mich. AARP now has a joint ``hot line'' program underway with the US Administration on Aging in six states to provide legal counsel.

Consumer experts stress that it is wise for persons over 65 to be alert in at least three situations: when buying insurance; when undertaking any project dealing with their home; and when considering investments. Indeed, the best rule is always to ``shop around,'' says an official of AARP.