Retirees are a favorite target of scammers and con artists. Not only do many retirees have a large nest egg that they might not know how to invest, but they also might feel reluctant to involve their family in their decisions, for fear of losing independence. These two factors mean that retirees are particularly vulnerable to scams.
But forewarned is forearmed. Just knowing that scams are rampant among seniors can be enough to help you have a healthy skepticism about any new offer. But it’s also useful to know what scams are most common.
Here are three scams that you may find yourself facing:
1. Social Security Fraud
With this scam, identity thieves will steal an individual’s personal information and use it to contact the Social Security Administration in order to change payment information to the thieves’ bank accounts.
How do the thieves get the personal information, such as Social Security number and bank account information? Generally, they just ask. Many identity thieves will call their victims and tell them that they’re from Social Security or their bank and ask them to confirm some information. Alternatively, they might tell the senior that they’ve won a cash prize that will be deposited in their bank account, but that the prize department needs their account number.
To combat this scam, be sure to never give out your information to anyone who calls you. If you suspect that you’ve been scammed in this way, you can contact the SSA’s inspector general. In addition, seniors can block all account changes not made in person at www.socialsecurity.gov/blockaccess.
2. Discount Prescription Scams
The cost of prescription drugs can often overwhelm elderly patients who are living on a fixed income. Con artists target this demographic — who are already feeling somewhat desperate because they might have to decide between important medication and money for food and other necessities — by offering prescription drugs for as much as 50% off. The scammer will explain that there’s an enrollment fee to join the discount club and will get a credit card number or bank account from the victim.
This is another situation wherein it’s clear that anyone who contacts you should be treated with suspicion. If you get a call about discount prescription drugs, ask for information in writing and hang up. You can do your own research and avoid the heartache of lost money.
3. Free Dinner Seminars
This particular scam can be very difficult to suss out, since there are legitimate advisers who sell products through dinner or lunch seminars. However, the majority of the investment seminars that you’ll encounter will offer investment advice that is, at best, a bad fit for you, and, at worst, a disastrous financial decision that only lines the pockets of the “adviser.”
In particular, variable-rate annuities are often sold at these types of informational seminars — with the promise of guaranteed retirement income for life. What the presenters won’t tell you is just how large a commission they’ll receive to get you to sign up for an “investment” that you probably won’t completely understand — and will likely leave you high and dry when you need your money.
When it comes to these sorts of seminars, simply say no to any high-pressure sales and always make sure you get a second opinion before you sign up. It’s probably best to just avoid free meals in exchange for investment advice, since there ain’t no such thing as a free lunch.
The Bottom Line
When it comes to your retirement nest egg, it’s not a bad idea to be a little paranoid. Better to double- and triple-check backgrounds and opportunities than to find yourself scammed.
Have you or a loved one been victim to any scams? Any advice?
Editor's Note: I've begun tracking my assets through Personal Capital. I'm only using the free service so far and I no longer have to log into all the different accounts just to pull the numbers. And with a single screen showing all my assets, it's much easier to figure out when I need to rebalance or where I stand on the path to financial independence. They developed this pretty nifty 401K Fee Analyzer that will show you whether you are paying too much in fees, as well as an Investment Checkup tool to help determine whether your asset allocation fits your risk profile. The platform literally takes a few minutes to sign up and it's free to use by following this link here. For those trying to build wealth, Personal Capital is worth a look.