Source: Social Security Administration.
Based on the latest U.S. Census Bureau data from 2010, there
are more than 40 million senior citizens aged 65 and up within
the United States. As time goes on, this number is expected to
soar. Improved health education, greater access to medical care,
and improved medicine, diagnostics, and medical devices have
helped push the average life expectancy up by roughly nine years
over the last five decades to 78.8 years according to data from
the Centers for Disease Control and Prevention.
I mention these statistics because seniors play an important
role in society: they are the primary holders of wealth within
the United States. A 2010 Survey of Consumer Finances report
broke down household wealth by age group, and found that those
aged 75 and up hold nearly 14% of all wealth, while 65 to 74
year-olds hold a little more than 19% and 55 to 64 year-olds make
up 31% of this nation's household wealth. That's nearly two
thirds of all household wealth for persons aged 55 and up (note
that the defined age range of a senior citizen isn't set in
stone, and for some organizations can be anyone aged 50 and
Ensuring that seniors have ample funds to live comfortably in
retirement is critical to the success of future generations.
Whether it comes from Social Security income designed to help
seniors pay their monthly expenses, Medicare to help soften the
blow of potentially high medical costs, or individual defined
benefit and savings plans to help fill in the gaps, having
sufficient wealth that'll see you through the length of your
lifetime -- and perhaps provide a boost to your beneficiaries --
is a must.
But since senior citizens possess a vast chunk of this
nation's wealth, they also make for an easy target for
Source: Flickr user David Goehring.
reports that an estimated 5 million cases of financial fraud
against seniors occur each year, but government officials are
only made aware of a scant 4% of these instances of fraud.
A study published by AARP outlined some of the reasons why
senior citizens are so easily duped by crooks. First, AARP notes
that seniors expect honesty in the marketplace, and they tend to
be less likely to take action when they're defrauded.
Additionally, seniors aren't as knowledgeable about their rights
compared to today's younger generation. Lastly, seniors are at
home more often than younger adults, meaning they're easier to
reach via telemarketing and home soliciting scams.
3 financial scams seniors need to watch out for
With this in mind, let's have a brief look at some of the more
common financial scams that senior citizens should be on the
lookout for, and then we'll take a look at steps seniors can take
to reduce their chances of being defrauded.
1. Medicare, Social Security, and tax identity scams
Entitlement programs like Social Security and Medicare are
arguably some of the easiest targets for criminals because they
provide quick, guaranteed income, and the government is often far
too busy (or understaffed) to ensure that payments are being made
to the right people and businesses. Something similar can be said
of tax fraud, with so-called "suspicious" returns nearly tripling
between 2010 and 2012 to 2.5 million from 900,000.
Source: National Council on Aging.
In this type of scam a criminal will call a senior citizen and
pose as a Medicare, Social Security, or IRS representative. Once
gaining the trust of a senior (which AARP notes isn't tough to
do), criminals can obtain social security numbers, addresses, and
potentially even income histories to collect Medicare benefit
checks, Social Security benefits, or tax refunds before a senior
knows what's happened to them.
2. Investment fraud
Another source of criminal activity against seniors is investment
fraud. As seniors get older, they may entrust their everyday
finances to the hands of a financial advisor. To be clear, many
financial advisors are great and honest people -- but there are a
few bad apples among the bunch that can take advantage of seniors
who don't understand their cash flow.
One tactic employed by dishonest advisors is to skim money
from defined benefit (e.g., pension) or savings plans (e.g.,
401(k) or IRA), or from the dividend income of a senior's managed
investment portfolio. Unless the family members of a senior are
paying close attention to the money coming in or out, it could be
difficult to catch these dishonest advisors, who are expected to
act in the best interests of their clients.
3. Homeowner scams
Scams targeted at senior homeowners are another source of
In one particular scam, explained in detail by the National
Council on Aging (NCOA), criminals in San Diego sent unsuspecting
seniors personalized letters letting them know the property value
of their homes had risen, and that they would need to make up the
property tax difference unless they wanted to pay a fee for a
reassessment. The letters were apparently very realistic and sent
on behalf of the San Diego County Assessor's Office.
Bait-and-switch scams are worrisome as well, with criminals
promising money or a house somewhere else in exchange for the
title of a seniors' current home. This type of scam can lead to
seniors losing their homes according to the NCOA.
Actions seniors should take to protect their money
As you can see, scams are a very real concern for seniors. The
good news is there are steps that can be taken to help reduce
your chances of being swindled in your golden years.
Source: Social Security Administration.
For starters, be vigilant with your personal identification
information, such as social security and Medicare numbers. In
fact, the Social Security Administration will
call you and ask you for your social security number, so if
you're getting a call from the SSA asking for this information
it's most likely fraudulent.
Additionally, consider shredding paperwork that has your
personal information on it. This includes your social security
number, date of birth, name and address, income history, and
anything that criminals could easily use to manipulate your
entitlement or tax benefit checks in criminals' favor. Along
similar lines, before shredding important paperwork, check it for
accuracy. Does your Medicare bill match what you were expecting
to be charged? Is your tax refund correct? Keep in mind a lot of
today's information can be found online, so shredding your
paperwork doesn't mean the data is gone forever -- but it could
mean removing easy access to your data from would-be thieves.
In terms of reducing your chances of being an investment fraud
victim, your best defense is to have a good offense. In this
respect you need to take ownership of your financial decisions
and regularly stay on top of your cash flow via monthly
statements. If this isn't possible, go to someone you can trust
-- a close family member, for instance -- who can help you manage
your month-to-month finances to ensure their accuracy.
To reduce your chance of becoming a homeowner fraud victim,
the Federal Trade Commission has a handful of suggestions. First,
the FTC wants people to know that its Mortgage Assistance Relief
Services Rule provides all homeowners certain rights and
protections against fraudulent activity such as the "forensic
audit" or bait-and-switch. According to MARS, consumers are under
no obligation to pay any money to a lender until it's provided
you with a written loan modification offer
you've accepted the offer. Also, MARS requires lenders to spell
out important information upfront to homeowners, including the
risks associated with potentially not paying your mortgage while
waiting for assistance. Lastly, the FTC suggests consulting with
a lawyer with a proven track record to minimize your chances of
If you're looking for more great ideas on how to reduce your
chance of becoming a fraud victim, I'd encourage you to visit
and peruse its valuable list of suggestions and resources.
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3 Financial Scams Senior Citizens Should Be on
the Lookout For
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