In recent years, many Americans have seen firsthand the way the stock market can go through its boom and bust cycles.
But, far from watching as merely interested spectators, millions of Americans have a personal interest in the saga because they are invested heavily in the markets through their retirement accounts.
During the panic of 2008 and 2009, billions of dollars were lost as American cashed out of their retirement accounts, fearing the worst.
And it is just this kind of fear, fear of losing retirement savings, or even fear of not investing at a rate of return which will significantly beat inflation, that sometimes causes future retirees to fall victim to scams which target their retirement savings.
One of the most prevalent ways that current and future retirees fall victim to scams is through the actions of someone acting on their behalf.
For example, after investing a large sum with a broker, some future retirees find that they lose some or all of their money as the result of the broker investing in risky investment vehicles. Additionally, brokers themselves are not immune to being scammed, and may even defraud their clients through fraudulent activities.
The best way to avoid these kinds of losses is to keep a close eye on the investments that your broker makes on your behalf, and to familiarize yourself with reading your financial statements in order to determine just where your money is being invested.
Desperation Can Lead to Bad Decisions
Those looking to retire in the next several years, but find that their retirement savings is not what will be needed in order to stop working altogether, can be especially vulnerable to scammers.
Promises of abnormally high returns for participating in all manner of investments, from real estate development deals to high tech companies, are the primary means by which thousands of future retirees lose their money through scams every year.
In order to avoid falling into this kind of trap, the first step is to make a reasonable and workable retirement plan. Do not count on abnormally high returns, such as 25 to 50 percent per year every year, in order to make your retirement plans work.
Making such a miscalculation not only results in an unworkable retirement plan, but it also makes you more likely to fall into a scam while trying to hit an impossible target.
Early Retirement Scams
According to the Financial Industry Regulatory Authority (FINRA), there are a number of scams which involve early retirement schemes.
These scams may be unwittingly promoted by your employer through a retirement seminar run by a third party. FINRA says that some of these seminars promote scenarios which are unrealistic, such as promoting benefits like voluntary early retirement and unrealistic investment returns.
FINRA recommends checking the background of the people and companies presenting such information, reviewing their credentials and confirming the information presented before deciding to entrust them your retirement savings.
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