7 Ways to Protect Your Retirement From Investment Fraud

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This story originally appeared on NewRetirement.

Selling bogus investment products to older Americans is big business: In June 2018, the U.S. Securities and Exchange Commission’s Office of the Investor Advocate released a report on Elder Financial Exploitation.

While they could not make a good estimate of total national financial costs to victims, in the state of New York, a rigorous study estimated victims’ annual losses were approximately $109 million at that time.

It’s a common scenario: You receive an email, letter or phone call promising easy money (or dire consequences to you if you don’t take action). If it sounds too good to be true, that’s because it probably is.

Financial fraud schemes are a common way that older Americans are scammed out of financial assets that are critical to their retirement stability.

“You’ve got to be really cautious and suspicious of what seems too good to be true,” says Florida-based attorney Mitchell Kitroser, of the firm Mitchell I. Kitroser, P.A. “It’s human nature that we all want something for nothing, and in a lot of these cases, particularly with older people, they want to think they’ll have enough money for retirement and still have a legacy for their children, and [people] will prey on that.”

Fraud solicitation is just one way older people are scammed. They’re also targeted by investors, who promise unrealistic or guaranteed returns, as well as their own family members, who may feel entitled to their money.

Here are several ways to protect your retirement from investment frauds.

1. Know the facts about investment returns

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Many older Americans are particularly vulnerable because they often lack an understanding of reasonable returns on retirement investing, making them targets for fraudulent pitches.

Even though annual returns over 100% are highly unlikely and virtually no investment is riskless, fraudsters lure victims with pitches offering inflated returns and guarantees.

2. Get a second opinion

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Before making any investment, you should get a second opinion from a trusted adviser, lawyer or an accountant, says Kitroser, who specializes in a variety of practice areas, including elder financial exploitation.

“If you go to an investment adviser and he says you need to buy an annuity, the right response should be, ‘Tell me why’ and ‘I want to share it with a different adviser to weigh my options,'” says Kitroser.

“There is nothing wrong with saying, ‘Let me think about it.’ Anyone who says you must do this right now is probably scamming you. There’s no investment that can’t wait,” he adds.

Maryland-based attorney Ron Landsman of the firm Ron M. Landsman, P.A., agrees that immediacy is a red flag for fraudulent investor schemes.

“If you have to decide today, don’t,” Landsman says. “Go slow [and] check with someone else you trust.”

Understanding the warning signs and getting a second opinion can help save you from a scam that might just deplete your retirement savings.

3. Keep your Social Security number and account information to yourself

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While it is impossible to never share your information, you should be extremely careful with all account numbers and especially your Social Security number.

A few tips:

  • Keep your Social Security card and any unused credit cards in a secure location. Do not carry with you unless necessary.
  • Consider keeping copies of your account information in a safety deposit box.
  • Be careful about disposal of bank statements or other paperwork that has account numbers.

4. Be wary of unsolicited pitches

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If you receive an unsolicited phone call, email or letter and they ask for any account numbers, be very careful — even if they say they are with an institution you are associated with.

You can always hang up and call back the company using the number found on your statements or via the company website.

5. Be cautious with online passwords

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Make sure to keep your passwords secret and make sure that they are fairly robust; they should include both upper and lower case letters, a combination of letters and numbers, and additional symbols such as *, %, $, etc.

It is also a good idea for you to update your passwords regularly.

6. Monitor your credit report

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You should regularly check your credit report to look for suspicious or unknown transactions. There are services that will monitor your credit report for you — you can inquire at your bank — or you can check it directly via any of the three major credit bureaus:




7. Protect yourself from your own family members

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You might be shocked to learn that some elder financial abuse is perpetrated by family, friends and neighbors.

And it can be tricky to protect yourself from friends and relatives. Often, older Americans are vulnerable because of their trusting nature and their desire to help out those who are in financial distress.

“If there’s any kind of significant amount of money involved, [older] parents have to first watch all of their children,” Kitroser says. “In a lot of families, the kids look at the parents’ money as their money or their inheritance, and it creates potential problems.”

In some cases, adult children may offer to manage their parents’ money or ask that their names be added to their accounts. These behaviors, Kitroser says, are “danger signals” of financial fraud waiting to happen.

So with your retirement income on the line, it’s critical to be savvy to financial fraud schemes and to be skeptical about investments or financial decisions, even when they involve your own family members.

“It’s better to educate clients and possible victims than it is to try to fix the problem after it’s happened,” Kitroser says.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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