Who doesn’t look forward to retirement? After all, it’s a much-deserved break after decades of work. During this time, you can travel, enjoy hobbies, and spend quality time with loved ones. Unfortunately, scammers tend to strike during this time as well. Due to their savings, home ownership, and perhaps less familiarity with digital threats, retirees are prime targets for financial fraud.
In 2023 alone, Americans over the age of 60 lost more than $3.4 billion to scams. Furthermore, despite fraud being underreported, older victims who file complaints often report higher losses than younger victims. Specifically, scams resulted in $1,450 for those 80 or older, compared with less than $500 for those 20 to 59.
Suffice it to say, this should be a wake-up call. The good news? Your best defense is awareness. This post will explain how to protect yourself and your financial future from common retirement scams.
Understanding the Predator’s Mindset: Why Retirees Are Targeted
To understand the underlying reasons why older adults are often the targets of common scams, it is imperative to understand the following;
- Accumulated wealth. Often, retirees have substantial assets like retirement accounts, pensions, and home equity, making them attractive targets for financial gain.
- Lower technological familiarity. Many retirees may not be familiar with sophisticated online threats, like phishing emails, website spoofing, and other forms of fraud, making them more susceptible to deception.
- A more trusting nature. Older adults may have grown up when trust was more readily given. Consequently, they may be less inclined to question seemingly authoritative figures or strangers who seem overly friendly.
- Social isolation and loneliness. It is common for scammers to prey on feelings of loneliness and isolation, especially in those who have lost their spouses or have limited social interaction. Ultimately, they exploit their victims by cultivating false friendships or romantic relationships.
Recognizing these inherent risk factors is crucial to enhancing retirees’ and their loved ones’ protection from financial abuse.
Unmasking the Deception: Common Retirement Scams and Their Tactics
Now, let’s examine some of the most common scams targeting retirees, dissecting how they work and the telltale signs to watch out for.
Imposter scams: Authority Cards (IRS, Medicare, or Social Security).
During this scam, unsolicited calls will be received from individuals who impersonate official government agencies such as the Internal Revenue Service (IRS), Medicare, or Social Security Administration. Typically, scammers claim you owe back taxes, have problems with your Medicare coverage, or are about to lose your Social Security benefits. Often, they threaten arrest, legal action, or immediate suspension of benefits if you do not act immediately.
- Red flags. A red flag might include threats of immediate arrest, demands for payment through unconventional and untraceable methods like gift cards, wire transfers, or cryptocurrency, and a false sense of urgency.
- How to protect yourself. No legitimate government agency will demand payment over the phone, especially in unconventional ways. When you receive such a call, call the agency directly. Never provide your Social Security or Medicare number if you did not initiate the call.
Tech support scams: The digital distress call.
It typically starts with a pop-up message that says, “Warning! Your computer has been infected! Call this number right away!” You may also receive an unsolicited call from someone pretending to represent a well-known tech company such as Microsoft or Apple, offering to “remotely fix” a problem you do not have.
- Red flags. Unexpected popups that ask you to call a specific number, unsolicited phone calls about alleged computer problems, and requests for remote access to your computer.
- How to protect yourself. If you receive an unsolicited tech support offer, do not trust it. In case of a pop-up that appears suspicious, do not call the number displayed. Also, you should never grant remote access to anyone who contacts you unexpectedly. Further, ensure you have reputable antivirus software installed and that your operating system and applications are up-to-date. Whenever you need technical assistance, contact a trusted and verified company yourself.
The grandparent scam: Exploiting familial love.
The grandparent scam manipulates older adults by exploiting their emotional bonds through urgency and fear. Typically, this begins with a vague call—“Hi Grandma, do you know who this is? ”—inviting the grandparent to guess. When a name is offered, the scammer pretends to be the grandchild in crisis, asking for money to pay for car trouble, rent, medical expenses, or bail.
The scammer often asks the grandparent not to tell anyone else, adding emotional pressure. In more elaborate schemes, a second caller calls pretending to be an authority figure, like a police officer or doctor. Due to AI, scammers can now clone authentic voices to make their impersonations more convincing.
Usually, they request payment through untraceable methods like wire transfers or gift cards. Rarely but alarmingly, scammers send couriers to collect cash.
- Red flags. A stranger pretending to be a grandchild, urgent requests for money, secrecy, muffled or off-sounding voices, and demands for untraceable payments.
- How to protect yourself. When telling a story to your grandchild or a family member, you should always pause and verify the story. You should never send money to someone until you have verified their identity. Never trust anyone who insists on secrecy or a fast turnaround.
Romance scams: The illusion of love and connection.
Typically, this scam is perpetrated online, via dating websites or social media sites. During the scam, the scammer establishes a romantic relationship with the victim, showering them with affection and declarations of love. When they have gained the victim’s trust and established an emotional connection, they will inevitably ask for money, often claiming a sudden medical crisis, a promising but urgent business investment, or a plane ticket to a destination.
- Red flags. Oftentimes, the individual avoids meeting in person or engaging in video calls, and their stories often contain inconsistencies or change frequently.
- How to protect yourself. Whenever you interact with individuals online, exercise extreme caution. Be wary of people who express their feelings too quickly. Never send them money or share your financial information if you haven’t met someone in person. If unsure, talk to a trusted friend or family member who can provide an objective perspective on the relationship. You can also check their profile pictures for stolen identity by performing a reverse image search.
Investment and retirement account scams: The siren song of guaranteed riches.
These schemes involve scammers posing as legitimate financial advisors or brokers and offering unrealistically high returns. Sometimes, investors might be pushed to make quick decisions or invest in obscure or unregistered securities.
- Red flags. Frequently use high-pressure sales tactics, promise high profits with no associated risk, lack proper documentation or registration, and refuse to provide verified credentials.
- How to protect yourself. Before entrusting your money to any financial advisor or broker, thoroughly research. You can verify their credentials and disciplinary history through FINRA’s BrokerCheck or the SEC’s Investment Adviser Public Disclosure (IAPD) website. Also, do not rush into investing decisions based on pressure or unrealistic promises. Never give access to your account to anyone you do not know well and do not trust implicitly.
Financial services scam: The illusion of legitimacy.
A financial services scam mimics the behavior of a genuine financial institution, such as a bank or loan company. It is common for fraudsters to use phone calls, texts, or emails that appear and sound authentic. It is possible for them to claim your account was compromised or to offer fake services such as better loan rates. You might even be threatened with arrest if you do not pay your medical bills.
Scammers can appear convincingly legitimate with spoofed caller IDs and near-identical email addresses. Under the guise of security or assistance, they will ask you for sensitive information, such as passwords, Social Security numbers, or payment via peer-to-peer (P2P) apps.
- Red flags. There will be unexpected communication about account issues or offers, pressure to act quickly, requests for sensitive data, suspicious links, and payment demands via P2P apps.
- How to protect yourself. Personal or financial information shouldn’t be shared unless you initiated contact via a verified phone number or website. You should also avoid clicking links or opening attachments from unknown senders. Whenever in doubt, hang up and call your bank or lender directly.
Sweepstakes and lottery scams: The phantom prize.
Scammers typically call, email, or mail you unexpectedly, claiming to have won a prize you didn’t even enter in a sweepstakes or lottery. You are, however, instructed to pay upfront fees or taxes to claim your supposed winnings.
- Red flags. There are no records of you entering the contest or lottery; you are asked to wire money, purchase gift cards, or make other upfront payments to claim your prize, and there is no legitimate verification that you won.
- How to protect yourself. Winners of legitimate sweepstakes and lotteries will never have to pay upfront fees or taxes to claim their prizes. If a prize sounds too good to be true, it is likely a scam. As such, you should never send money or provide financial information to claim a prize.
Business impostor scams: Exploiting trust in familiar names.
An imposter scam targets older adults by posing as a well-known company or charity representative. Scammers use fake caller IDs, emails, or websites to appear authentic. Their goal? Pretending to resolve an issue or confirm a transaction to steal money or information.
They might claim that your account is locked, your payment is late, or you won a prize. Some of these sites ask for gift cards or ask for sensitive information so that you can “verify” your identity. People often comply without suspicion because they impersonate familiar names like Amazon, PayPal, local utilities, or national charities.
- Red flags. You may receive unsolicited messages from companies or charities, urgent demands for payment or donations, gift card payments, and personal information requests.
- How to protect yourself. Never trust a familiar name without verifying it independently. For confirmation, call the company’s official number or visit their official website. If you receive an unexpected or high-pressure communication, do not give out any personal information or send money, no matter how convincing it may seem.
Proactive Measures: Smart Ways to Protect Yourself and Your Money
Besides recognizing red flags of specific scams, you can also enhance your security by adopting these proactive habits;
- Guard your personal information. Shred any documents containing sensitive data before discarding them. Unless you initiated the contact and are certain of the recipient’s legitimacy, you should never share your Social Security number, bank account details, credit card information, or passwords.
- Employ strong passwords and two-factor authentication. Keep your online accounts secure by using unique, complex passwords. If two-factor authentication is available, enable it, as it adds another layer of security beyond your password. If you have many passwords to manage, consider using a reputable password manager.
- Monitor your accounts diligently. Check your bank and credit card statements carefully each month for unauthorized transactions. If you notice unusual transactions or withdrawals, set up account alerts through your financial institution. For identity theft protection, obtain and review your credit report annually with AnnualCreditReport.com.
- Communicate openly with trusted individuals. If you notice any suspicious activity, feel free to discuss financial matters with trusted family members, friends, or your financial advisor. A second opinion can often help identify scams. When considering a significant financial decision, talk to a trusted friend or family member about it thoroughly.
- Stay informed and educated. Follow updates from reputable organizations like the Federal Trade Commission (FTC) to stay up-to-date on scam trends and fraud prevention tips. Participate in local seminars or webinars to increase your knowledge of elder fraud protection. Whenever you doubt the legitimacy of something, always ask questions and verify the information.
Taking Action: What to Do If You’ve Been Targeted by a Scam
Unfortunately, even the most vigilant individuals can fall victim to sophisticated scams. If you believe you have been targeted or have fallen for a scam, remember that you are not alone and that swift action is imperative.
- Cease all communication. You should immediately cease all communication with the suspected scammer. Please do not answer any further calls, messages, or emails.
- Report the incident. The following authorities should be notified: the Federal Trade Commission (FTC): ReportFraud.ftc.gov, the FBI’s Internet Crime Complaint Center (IC3): www.ic3.gov, and the AARP Fraud Watch Helpline: 877-908-3360. You can also contact your local police department, especially if you have suffered financial loss.
- Contact your financial institutions. You should immediately freeze your bank account or credit card if you provided any details to the scammer.
- Monitor your credit. To help prevent further identity theft, place a fraud alert or a credit freeze on your credit report.
- Talk about your experience. In addition to providing emotional support, telling others about your scam experience can prevent others from falling prey to similar scams and reduce the stigma associated with scam victims.
Final Thoughts
In retirement, you should feel peaceful and fulfilled, not stressed and concerned about your finances. Being vigilant, informed, and open to conversations about money will help you protect yourself from ever-evolving scams.
It is important to remember that legitimate organizations will never pressure you to make quick decisions, ask for sensitive information over the phone, or demand payment in untraceable forms like gift cards. If you’re unsure, pause, verify, and speak up.
It’s worth protecting because you’ve worked hard for your financial security.
FAQs
Why do scammers often target retirees?
Many retired people are targeted by hackers because they may have accumulated savings, own a home, be less familiar with internet threats, and sometimes be more trusting. Scammers can also take advantage of feelings of loneliness or isolation.
What are some red flags I should watch out for in potential scams?
Keep an eye out for;
- Urgent money requests.
- Payment requests via gift cards, wire transfers, or cryptocurrency.
- Arrest or legal threats.
- Unsolicited calls or emails asking for personal information.
- No-risk guarantees of high returns.
- Secrecy requests.
- You are prompted to call a specific number by pop-ups.
- Avoid in-person meetings or video calls.
- You are promised a prize, but you must pay an upfront fee to claim it.
How can I protect my personal information from scammers?
You can protect your personal information by following these steps;
- Shredding documents that contain sensitive information.
- Never give out your Social Security number, bank information, or passwords without initiating the contact.
- Enabling two-factor authentication and using strong, unique passwords.
- Keeping your online sharing to a minimum.
Where can I find more information and resources on avoiding scams and fraud?
More information and resources can be found at;
- AARP Fraud Watch Network (aarp.org/fraudwatchnetwork)
- Federal Trade Commission (FTC) (consumer.ftc.gov)
- FBI’s Internet Crime Complaint Center (IC3) (ic3.gov)
- Your local law enforcement agency.
Is it ever too late to learn about avoiding scams?
Short answer? No.
You and your finances need to stay informed and vigilant at any age. Further, to keep safe, you need to learn and communicate with trusted people continuously.
Image Credit: Tara Winstead ; Pexels
