Retirees are prime targets for scammers. According to a study by investment advisory firm True Link Financial, seniors lose $36 billion per year to scams, and, according to Investor Protection Trust, nearly 1 in 5 Americans over the age of 65 have been victims of financial abuse.
This April, many retirees were tricked by the threat of a "retirement blackout," which would occur unless investors acted quickly to participate in the mysterious 26(f) program by an April 10 deadline. Scammers were spreading misinformation to entice retirees to join a mutual fund, stirring up fear in order to sell the highest-commission funds to the most uninformed customers.
How can you protect your retirement savings from these ruthless scammers? Here's three signs that your investment is at risk:
1. Guaranteed returns. Investments always come with some level of risk. However, if someone promises you a sky-high guaranteed rate of return at a low risk, it might be a Ponzi scheme. It's always important for investors to understand what the associated risk is, especially when promises ring too good to be true.
2. A sense of urgency. Don't fall for "once-in-a-lifetime" opportunities or promises of exclusive information if you act now. Scammers want you to rush into a decision without taking the proper time to think it through. A general rule of thumb: though the price might be slightly higher, any sound investment that's here today will be here tomorrow.
3. Unsolicited offers. If investment opportunities are coming to you, whether by mail, email, online or by phone, approach them with caution. The offer may seem credible - with a professional website, free lunch seminar on retirement planning or links to news articles - but there still might be a catch.
If you've managed your finances your entire life, it's important to find a reputable broker or advisor to handle your retirement savings. The Financial Industry Regulatory Authority's BrokerCheck tool lets users research the backgrounds of financial brokers, advisors and firms.
Check out the SEC's Center for Complaints and Tips for resources on reporting investment fraud. Don't let one bad decision ruin a lifetime of diligent saving.