Peace of Mind in Uncertain Times: Part Three

By Boyd Casselman

Protecting yourself from many of the common risks that stand in the way of preserving retirement savings is not only an important task, but it can be a daunting one, too.  For seniors, understanding those risks is half the battle; taking action is the other. 

This is the third installment of a series addressing some of the risks that many seniors face today. In the September issue, we addressed Risk #3 – “Health Concerns.” Continuing with our theme, this article features information on  additional risks: fraud, giving away control, and needy children.

Risk #4: Fraud 

Betty was a bright and intelligent single senior woman. She capably ran her household, paid her bills, and managed her investments. Unfortunately, her lack of guile made her particularly vulnerable to scam artists. One day, she received a phone call from a nice gentleman who claimed to be calling from a well-known magazine. He informed her that she had won $25,000. All she had to do to “secure her winnings” was to wire $2,000 into two separate accounts (a total of $4000!) and her check would be sent to her overnight. She became immediately suspicious, but stayed on the line and continued talking to the impostor. After over twenty minutes of grilling him with questions, she became more at ease with the caller. Why? Simply because he had a believable and plausible answer to every question she threw at him. She finally determined that she really had won the money and headed off to wire $4,000 to the scam artist.

Jill, a nurse in her fifties, had a wonderful life until she received an e-mail informing her that she had won a million dollars. She was thrilled. She only had to wire a few thousand dollars to secure her money—and so she did. But instead of the winnings, she received another e-mail requesting more money—and so she sent more money. This pattern continued for months, until she had maxed out her credit cards, pulled out all the equity from her home, and borrowed from friends and family. Soon she found herself $500,000 in debt in an attempt to secure the $1,000,000 promised to her. Jill finally realized that she would never see her “winnings” and that she had fallen prey to a scheme that had ruined her financially. During all the months she was wiring the money, she had never told her husband about her “prize,” wanting to surprise him with the cash. Humiliated, ashamed, and unable to face those she loved, Jill took her own life.

Mary, a 44-year-old homemaker, received a call from a telephone solicitor who requested information about her mother’s checking account, saying they needed to “update their system at the bank.” Not to be fooled, she quickly hung up the phone without responding to any of the caller’s questions.

These are three real-life examples of fraud—fraud that can happen to anyone, anytime. Unfortunately, fraud is something that is all too common among seniors, but it can be avoided by taking simple precautions. 

  •  The first—and simplest—thing to remember is that if it sounds too good to be true, it is. 

  •  Second, guard your personal information with your life. Be very careful of people who contact you by e-mail, telephone, or through correspondence making amazing offers, requesting money, or asking for your personal information (such as social security or banking account numbers). Never give this type of personal information out to any solicitor for any reason—no matter how convincing they may be, how legitimate they may sound, how urgent their requested action, or how exciting their offer may seem. 

  •  Third, if you are asked to provide personal information or send money to “secure your winnings,” hang up the phone, delete the e-mail, close the door, or tear up the correspondence. Distance yourself from the scam artist as fast as you can. 

While these three suggestions sound simple, guarding yourself this way will keep you from being taken in by evil and greedy people whose only goal is to steal from you.

For more information about becoming familiar with common scams to seniors and to learn how to better protect yourself from scam artists, search out advice from reputable sources, such as a certified financial advisor. You can also locate useful information on the Internet. Three reputable sites on fraud are:

Risk #5: Giving Away Control

Bob was a disabled Vietnam Veteran. During his last years, a trusted relative was put in charge of managing Bob’s affairs. She happily did so—to the tune of $10,000 a month for her own personal expenses.

Dora wanted her daughter, Jenny, to have access to her checking account in the case of her death or incapacitation, so Dora added her name to the account. A short time later, Jenny fell on hard times. Afraid to ask her mother for money, Jenny simply started writing checks from Dora’s account to cover some major medical bills and other personal expenses.

Kathy added her daughter to the title of her home. She was the sole heir to the property, and Kathy believed this would make the transition easier after her passing. What she hadn’t considered was the lawsuit that was levied against her daughter only one year later. Now, she was in jeopardy of losing her home to some stranger through unforeseen litigation.

When seniors give up control of their assets to loved ones or others, they expose themselves and their assets to undesirable consequences. Most people tend to believe that fraud only occurs when some nameless, faceless person takes advantage of us. However, over my career, it has been my unfortunate experience that, more often than not, it is a child or other trusted person in a senior’s life that commits this kind of fraud. 

By giving away control of your assets to those whom you may think you can trust, you subject yourself to the risk of lost assets and a lot of potential heartache. At the same time, you expose your loved ones to unnecessary temptation and opportunity. You may think this could never happen to you and your family—but it can. Before putting someone on your checking account or on the title to your home, consult with someone who can give you sound and unbiased advice. Tell your advisors what you are trying to accomplish, so they can help you find ways to realize your goals without exposing yourself to undue risk.

Risk #6: Needy Children

The son of an elderly couple incurred some unexpected debt totaling about $15,000, and he approached his parents Hank and June, for the money to pay the bill. Hank and June, who were in there late seventies, had already used up the lion’s share of their retirement savings in the years following their retirement. Their total savings now equaled just over $30,000, and letting go of half of their retirement nest egg would put them into a precarious situation. 

At this point, Hank and June went to their financial advisor for help.  Upon reaching an understanding of their plight, the advisor asked them if their son had any assets. They replied that he had equity in his home along with a little savings, and that he and his wife both worked and were doing quite well. Their advisor then proposed that their son pull equity from his home to take care of his own financial obligations. To this, Hank and June replied that they had suggested this to their son already, but that he did not want to use his home equity to repay the debt he had incurred. In other words, he would rather put his parent’s retirement in jeopardy than use his own resources to meet his own obligations.

Other examples of needy children include giving or lending them money for unnecessary debt payments, unneeded toys, trips, furniture, or other extravagances, all of which simply enable them to continue living beyond their means. 

This kind of risk can also occur when children nickel and dime Mom and Dad to death. Children or other family members may truly have legitimate money needs. Unfortunately, it is usually not in your best interest to give or even lend your retirement savings to them. The bottom line is, when you compromise your retirement savings in an effort to help another person in need, it puts you at risk of not being able to take care of yourself. A certified financial advisor can tell you about strategies that can help protect your retirement savings from the bottomless money pit of needy, though much loved, children.

Take Action Now!

If any of the risks detailed in this series of articles are of concern to you or someone you love, don’t procrastinate. Do something about it! Especially if you don’t know what to do, find a qualified advisor who can guide you through the complexities of planning for the retirement years. You’ll be happy you did—and you’ll probably enjoy some added peace of mind in the process.

The preceding article is the third in a series on “Risk” and is provided by Boyd Casselman – Utah’s Premier Retirement Resource. Contact them at (801) 544-5583 or toll free (877) 544-5583.

Kylee WilsonComment