12 Scams to Avoid During Retirement Scams use the stereotype of a confused, older person giving their money to a scammer is almost cliché at this point in time. Unfortunately, not many people question this idea,...

Scams use the stereotype of a confused, older person giving their money to a scammer is almost cliché at this point in time. Unfortunately, not many people question this idea, leading them to ask why seniors fall for scams in the first place. A better question may be, why does anyone fall for a scam?

Some experts theorize that perhaps heightened isolation and loneliness that many retirees experience primes them to fall prey to scams. Others hypothesize that some degree of diminishment of cognitive abilities might be at play, making seniors more susceptible to believing outlandish claims.

However, it might surprise you that the "seniors fall for scams all the time" trope is actually a myth. In fact, one annual study suggests that year after year — young people fall for scams and hoaxes more than their elders — losing more money to unscrupulous bad actors every year.

Even so, people do target retirees for scams that seek to separate them from their limited funds and income. That's why it's crucial to protect your assets by avoiding a financial crisis you'll find challenging to resolve later on. Here are the 12 top scams that seek to target people during their retirement years.

1. Pyramid schemes

A pyramid scheme (or Ponzi scheme) depends on a constant influx of new members whose "investments" are then used to pay off earlier members. In many cases, there's no actual product sold, just the promise of easy money. That's what makes pyramid schemes so tempting for many seniors.

In other pyramid variations, there are products for sale from companies passing themselves off as multi-level marketing companies. People tell victims they can earn easy money through sales in a person's "downline." The inherent flaw in any pyramid scheme is that it eventually collapses when not enough new clients come in to cover the scheme's financial obligations to all members.

2. Investment fraud

In addition to traditional pyramid schemes, other types of investment fraud scams exist and are regularly tracked by fraud experts. From affinity scams to pump-and-dump schemes, there are many ways unethical scammers scheme to get their hands on your money through investment fraud.

Even experienced investors can fall for a scam such as promissory note fraud, for example, where an investor delivers a sum of money in exchange for a written agreement that obligates the other party to provide a more significant sum of money (principal plus interest) on a specific date. That's all fine if the promissory note signer actually intends to live up to their obligations, but in many cases, they don't. You'll never see the money, or the fraudster, again. It's another reason to only deal with reputable, licensed professionals with plenty of solid references.

3. Phishing emails

Anyone can fall prey to a phishing email. In this simple yet deceptively effective scam, someone sends an official-looking email to you, requesting you take some action to keep your account in good standing.

A standard version consists of an email that seems to be from your bank asking you to verify some piece of personal information—and providing a handy link to click, which takes you to a website that looks very much like your bank's actual site. But, of course, it's not your bank's website, so you enter your login information to the fake site. Now the scammer has full access to your account and can empty it quickly.

4. Home improvement and repair scams

If a person you've never seen before knocks on your door and offers to repair or perform some improvement task for your home, be extremely cautious. With home improvement and repair scams, people ask victims to pay some amount of the total fee upfront. Workers leave the job half-finished, finished poorly, or not done at all, and the "worker" disappears with your money. Reputable home repair companies do not typically solicit business by knocking door to door. Always ask for local references and check out the company's online and local presence.

5. Health care/insurance scams

Suppose you get a phone call or email from someone claiming to be a Medicare or insurance company representative. In that case, it's very easy for that person to then solicit your personal identifying information. With that information, they can steal your identity. Or they might instead offer to send you free health-related supplies in the mail if you'll hand over your credit card number for shipping and handling fees.

Once you give up your information to someone with evil intent, it's almost impossible to stop the negative consequences. It's far easier to make it a firm rule never to disclose that kind of information over the phone.

6. Grandparent scams

Of all the scams to hit retired people, the grandparent scam is particularly reprehensible. That's because this scam preys on a grandparent's natural love and concern for their family members.

Generally, this scam starts with the target receiving a late-night phone call from a young person falsely claiming to be a grandchild in trouble. For example, they might claim to have been kidnapped or wrongfully imprisoned and need the grandparent to help them by delivering a large amount of money (sometimes in cash, sometimes as a wire transfer, and sometimes in gift cards) to a stranger at a specified time and place.

Of course, the grandchild is perfectly fine. But the late-night call and high-pressure context can make it seem like a true emergency and override skepticism.

7. The IRS impersonation scam

Every year, the U.S. Internal Revenue Service publishes a "Dirty Dozen" list of the 12 top tax-related scams targeting taxpayers. One of the most common IRS scams is an identity theft variation in which a caller or emailer identifies themselves as an IRS agent and asks the person to "confirm" (i.e., provide) their personally identifying information, such as full name, birthday, and social security or taxpayer identification number.

That gives the scammer all they need to steal the victim's identity and run up massive purchases on new credit card accounts that the victim won't ever even know about until they either run their credit report or get hit with dunning letters from debt collection companies.

8. The jury duty scam

Calls or emails may indicate that you're in big trouble for ignoring that jury summons you never received. Of course, you can avoid prosecution by paying a fine today by credit card or bank transfer. Alternatively, the caller or sender may pressure you to divulge sensitive personal data through which they can steal your identity. No U.S. court will ever ask you to pay fines or disclose personal information in this manner.

By the way, this scam has been prevalent enough for the U.S. federal court system to warn the public about how it works and how to avoid it.

9. The utility company scam

A variation of the false debt collection scam is the overdue utility scam, in which you might get targeted by a high-pressure phone call or even an in-person visit from someone posing as a utility company employee threatening to cut off your power immediately if you don't pay some alleged past-due amount. They might even make it look like the actual utility company is calling you by manipulating your phone's caller ID function.

The best solution is to end the call or pause the visit and call your utility company's customer service number yourself to verify what, if anything, you may owe them.

10. Fake charities

This scam attempts to take advantage of the natural compassion and generosity of folks who want to do something to help. Whether it's in response to a recent natural disaster or a more localized charitable need (like responding to an illness or poverty), fake charities unfortunately abound, and they're not shy about pursuing retirees and others for contributions. They can ask for cash at your front door or a credit card (or bank transfer) transaction over the telephone.

Use the IRS website to search for charities among tax-exempt organizations and find out how they're rated at watchdog sites such as Charity Navigator before you commit to anything.

11. Sweepstakes and lottery scams

If you get a congratulatory phone call for your recent sweepstakes or lottery win but have no recollection of ever entering such a contest, consider it a huge red flag. You might even get a check in the mail representing your so-called winnings, only to find that your bank refuses to honor the fake check and be asked to cover fees or even taxes on top of that loss. Or you may be asked to provide your credit card number to pay some processing fees or for taxes upfront.

Legitimate sweepstakes don't operate this way.

12. Phony health and wellness products

From counterfeit drugs to fake anti-aging skin care products, you can find yourself targeted by any number of health and wellness product scams simply by staying up late one night watching TV or surfing the web. A prevalent variation or "add-on" to these scams is the oppressive "membership" or scheduled delivery agreement. This is when you can get regular shipments of these fraudulent products, while scammers charge an exorbitant fee to your credit card—plus shipping, of course.

Keeping your money safe in retirement

The specifics of any particular scam can and do vary from case to case. But, there are a few hallmarks of senior-targeting scams you should look out for and notice to avoid falling for the scam or fraud in the first place. Remember, it's far easier to avoid a scam in the first place than to extricate yourself from its clutches later.

To make sure you avoid becoming a victim of a scam in your retirement years and help you protect those valuable funds and other assets, create a habit of proactive skepticism whenever you're confronted with any out-of-the-ordinary situation that might involve money or any other asset or investment.

Question any deal that seems too good to be true. Also, question any request that appears unusually dire or urgent, as in the grandparent scam. Resolve now to spend whatever time is necessary to thoroughly research the circumstances, including a background check where that might be helpful.

Finally, don't be afraid to run the scenario by a trusted friend, colleague, or family member. It never hurts to get a second, more objective opinion, and it might prevent you from losing valuable assets to a scam.

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