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Retirement Savings Scams: How to Protect Seniors from Fraud

Category: Financial News

Seniors are easy targets for unscrupulous financial capers simply because they are perceived as having that bounty of a retirement money. With the way how retirement savings now become a high-profile issue by marketing and investment firms, scammers have a mindset that there is always  some  financial nest egg stashed somewhere.

Likewise, the difference in upbringing, where the elderly are more inclined to be open, accepting and trusting, especially to offers of “help,” “assistance” and “support” being pitched to them also account for many senior citizens falling for these money traps. It is therefore essential that family members should do the best they can to help protect their elderly fight the many forms and shapes of retirement money schemes lurking around.

Saving up for retirement is not an easy thing to do especially for those who have just enough to get by, what with 50 percent of working Americans falling below the median wage of $26,965. And the numbers are not getting any rosier, with median household income falling in February 2013 to $51,404  from the $55,438 six years ago.

It is no surprise then when the National Institute on Retirement Security (NIRS) revealed in its June 2013 report a stark reality where seniors and retirement are concerned: most working households do not have a dependable retirement fund to speak of, with savings not even enough for two month’s cost of living.

In the report The Retirement Savings Crisis: Is it Worse Than We Think?, the median retirement balance is $3,000 for all working-age households, while near-retirement households have only $12,000. Also, two-thirds of American retirees aged 55 to 64 with one person working have savings that are less than one times their annual income. The NIRS emphasizes that such figures are far below what they will need to maintain a good standard of living upon retirement.

And while the US retirement fund shortfall for American families is staggering, there are still those who perpetuate the heinous financial crime of duping the elderly of their hard-earned retirement savings. There are many stories of investment scams, networking schemes and other “lucrative” money-making agenda targeted at retirees.

FIVE COMMON SENIOR RETIREMENT SAVINGS SCAMS

1. INVESTMENT SCAMS

Investment scams targeted at unsuspecting seniors include supposed high-yielding insurance products, medical cards, time-shared properties, gold investments, vacation rental homes and risk-free bonds, among others. Often, these “investment” businesses present professional and even verifiable credentials, boasting of established affiliations with known companies and high-profile clientele.

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While illegal marketing schemes bordering on pressure, harassment and coercion are used to force seniors to commit their money to these senior insurance and other investment products, there are also instances when these investments are totally non-existent. Those who have been victimized by these scams have seen their lifetime of savings and retirement benefits all wiped out.

2. MEDICAL FRAUD

Cowardly crooks preying on the nature of senior citizen’s frailty and increasing healthcare needs employ a number of medical-related frauds where either money is directly taken from the elderly or through their medical insurance.

These tactics include offering “free” or “test” products like medical equipment or services like laboratory and diagnostics to senior citizens, and then later billed through their credit cards or healthcare cards. Some syndicates even go as far as staging “demo” events in retirement homes and public places like malls. Forms are given to unsuspecting seniors to be filled out, where personal details including credit card numbers are asked of them.

3. TELEMARKETING SCHEMES

Fraudulent telemarketing schemes are targeted at senior citizens living alone or without companion in a certain hour of the day (using information syndicates have gathered by data-mining or list buying). The caller offers them non-existing products and services using practiced marketing persuasion and selling tactics.

These products and services include anything from sports subscriptions, discount dining cards, cable or satellite TV subscriptions to hotel room accommodations.

4. FRAUDULENT SENIOR PRODUCTS

Fraudulent products targeted at senior well-being, mostly without verified therapeutic and medical results also abound. These products range from anti-aging, memory strengthening, physical conditioning or organ revitalizing pills and anti-toxic and cancer defense products, among others.

Manufacturers and sellers of these fake products can get away with complaints by citing the (vague or highly technical) precautions on their packaging that some victims don’t even know exist, or cannot read because of their eyesight’s poor condition. During sales pitch, marketers deliberately do not discuss such “precautions” to their target victims.

5. ROBOCALLS FOR DEBT REPAYMENTS

Robocalls have been the subject of the Federal Trade Commission’s crackdown after volumes of complaints from consumers victimized by voice call blasts employed by some sly businesses.

Aside from selling unnecessary products using pesky recorded pitches, majority of these robocalls are from debt collection agencies who harass people into paying credit card debts or home mortgage loans. Once senior citizens take the calls, deceitful telemarketers harass these seniors into paying debts of even their children or relatives.

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Portrait Of Extended Family Group In Park

PRECAUTIONS: PROTECT YOUR ELDERLY’S FINANCIAL FUTURE

  1. Talk with senior citizens in the family and emphasize the need to protect their hard-earned retirement money from unscrupulous scammers targeting them. Be open, sincere and supportive.
  2. Senior citizens can be sometimes sensitive, especially when they feel their cognitive and decision-making capacity are being questioned. If this is the case, nurture trust between you, the family and the elderly, making an effort to let them know that you are not meddling in their financial affairs and decisions, but just want their protection and safety.
  3. Extend help in the area of personal finance education, especially in retirement savings protection. Grandparents and also aging parents, friends and relatives need utmost assistance in helping them get comprehensive knowledge and awareness of the presence of these scams. Review the basics of retirement savings protection to them, such as taking precaution when strangers approach them with the mentioned offers of “senior-friendly” products and services. Emphasize the need to safeguard their personal details all the time.
  4. Seek out the help of government agencies to update with the kinds of senior citizen scams that everyone must be aware of and what to do when a suspected scammer is trying to make a move on an elderly’s retirement savings. Know the local agencies and non-profit organizations catering to the welfare and well-being of senior citizens. A good way to start is the Consumer Protection for Seniors guide by the Federal Government.
  5. Employ protective measures that you yourself can take to protect not only your dear elderly but the whole family in general, like listing your home phone number in the National Do Not Call Registry, the registry where households ask to put their personal phone numbers on a no-call list, and all telemarketers must abide to or else face FTC sanction.

Do you know other forms of frauds that prey on senior citizens’ retirement savings?

By Jenny Chang

Senior writer at FinancesOnline who writes about a wide range of SaaS and B2B products, including trends and issues on e-commerce, accounting and customer service software. She’s also covered a wide range of topics in business, science, and technology for websites in the U.S., Australia and Singapore, keeping tabs on edge tech like 3D printed health monitoring tattoos and SpaceX’s exploration plans.

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