No Place Like Home . . . Except for Your Valuables

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Seniors are often concerned about the security of their retirement savings. A plummeting stock market can destroy the value of retirement investments. Most 401K programs make safe investments, but companies like Enron that invest in their own businesses can cause employees to lose their pensions if the business fails. While bank failures are not common, the second-largest bank failure in American history occurred in 2023. 

Faced with horror stories about seniors who lost their life savings, some seniors opt to convert their savings into cash or commodities (typically silver or gold) that can be hidden in their homes. A June, 2024 article in the New York Times exposes the perils of that strategy.

Risks of Hiding Loot

Banks keep cash in vaults for a reason. Successful bank robberies are uncommon. Since the FDIC insures the first $250,000 of most bank deposits, seniors who want access to cash can assure that their savings are protected by opening a second account with a different bank when a savings account approaches $250,000.

Money in a bank account earns interest. High-yield savings accounts offer a smaller return than stocks or money market accounts, but FDIC insurance protects the depositor. Other safe investments offer a higher return. Even if seniors are wary of the stock market, an investment in government bonds, treasury bills, or certificates of deposit carries almost no risk and assures that the investment will grow.

Cash in a home, on the other return, earns no interest. It can also be difficult to protect. Cash and valuable commodities can be stolen. Seniors may be particularly vulnerable to theft if rumors circulate that a homeowner is stashing cash in an attic. The contents of a home may also be lost in a fire, flood, hurricane, or other disaster.

A homeowner’s insurance policy may cover the contents of a home from fire and theft, but it can be difficult to prove the amount of cash that the homeowner kept hidden. Insurance companies are unlikely to take a homeowner’s word that he kept thousands of dollars hidden under the mattress. 

Contents coverage is also subject to a policy limit. Cash is treated like all other home contents, from appliances to clothing. When a policy limit is less than the amount of cash a senior keeps in the house, some of the loss will be uninsured. 

Seniors also face the risk of forgetting where they hid their assets. While most older adults do not develop dementia, the risk increases significantly for people in their 80s and 90s. Seniors who do not immediately tell children about hidden assets might die unexpectedly before making that disclosure. Hiding wealth always creates an appreciable risk that it will stay hidden.

Headaches for Family Members

In addition to creating a risk of loss and depriving seniors of a return on their investments, hiding assets in a home can be burdensome for family members who inherit an estate. Unless seniors tell their heirs about the silver bars hidden under the couch cushions, the heirs may toss the couch into the trash. 

Yet telling one child about hidden wealth may tempt the child to conceal that knowledge from his siblings. Even if the child makes an honest disclosure of the assets to other heirs, the opportunity to steal may spark distrust among siblings who wonder whether some of the hidden assets were spirited away.

Some assets can be difficult to value. Seniors who decide to invest in baseball cards, for example, place their heirs in the position of searching for a buyer so the cards can be converted into cash. Heirs might argue about whether to sell the cards quickly for a reduced value or to hold them until they are confident they have received the best offer.

Adult children who learn that their parents are stashing money under the mattress might want to urge them to invest the money safely. If parents insist on keeping wealth in the form of cash or precious metals, perhaps they can be persuaded to safeguard their assets in a safe deposit box.

Adult children might also ask whether cash hoarding is a sign of cognitive impairment or mental illness. It might be best to persuade an older loved one to visit with a neurologist or psychologist to determine whether a fear of financial institutions is part of a deeper paranoia that might be amenable to treatment.

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