Those who have saved consistently are likely to enter retirement with a large nest egg. While your accumulated savings can provide a comfortable living, this strategy also has certain risks. Predators know that many retirees have spent years saving, and thieves set up specific schemes geared toward seniors. Here are some common scams to be aware of in retirement, as well as what to do to protect your finances.
1. Medicare scams. A person calls you or knocks on your door and claims to be a Medicare representative. You’ll then be asked to share personal information, including an insurance identification number. Once you share this information, the scammer will use it to bill Medicare for fake services, and then pocket the money. “If someone says you need a replacement Medicare card or that you need a new supplemental policy, hang up the phone or close the door,” says Justin Lavelle, chief communications director of BeenVerified, an online background check platform. Medicare will not be calling individuals about the new Medicare cards that will be mailed out in 2018 and 2019, and there is no charge for the updated card.
[Read: How to Keep Your Social Security Number Safe.]
2. IRS phone call. Someone claiming to be from the IRS calls you, and may even have some of your personal information, such as the last four digits of your Social Security number. You are then told you owe back taxes and must pay with a debit card or by wire. “Be cautious of any communication you get from the IRS claiming you owe back taxes,” says Brian Wainscoat, a tax specialist at Personal Capital. “Generally speaking, an agent from the IRS will never call you out of the blue demanding tax payments.” If the organization needs to get in touch with you, they will contact you through the postal system.
3. The grandparent scheme. A person claiming to be your granddaughter or grandson calls and quickly asks for money. The caller will try to make you act fast before you can fully evaluate the situation. Before sending funds, hang up and contact your family.
4. Fake prescription drugs. If you order medications online, be careful when you spot an advertisement promoting a cheaper drug alternative. “The scammer will set up a website that advertises fake, cheap prescription drugs,” Lavelle says. If you send payment, you might receive medicine that will not help your condition. To make sure you’re buying the medication you need from a legitimate source, check that the pharmacy is licensed by your state and has a licensed pharmacist on staff.
[See: How to Pay Less Taxes on Retirement Account Withdrawals.]
5. Rogue movers. If a mover advertises extremely low rates online and offers to give a moving quote over the phone, the price could be too good to be true. “There is a common scam in the moving industry that typically preys upon seniors,” says Mike Glanz, founder of HireAHelper. “It occurs when seniors unwittingly hire a rogue moving company that will load their belongings into a moving truck, and then hold them hostage until an above-quoted price is paid.” To avoid the scam, make sure the mover is licensed and comes to your home to give a quote. Check with several movers to compare rates, and ask friends for company recommendations before relocating.
6. Lottery scams. You receive a letter or a phone call with a message that you have won a prize. To claim it, you’ll be asked to send in a payment to cover taxes or other fees. Once you wire the funds or send money, the scammer might send a fake check to be deposited in the bank. The bank will reject the phony check, and the scammer will take the money you sent in. Your best defense against lottery tricks is to know that legitimate winnings don’t come with upfront financial fees. “Do not give money to anyone to claim a prize,” Lavelle says.
7. Investment schemes. A person calls and offers investment help, claiming to be a financial advisor. The individual then asks for information related to your retirement funds and savings. If you share these details, the scammer will access your accounts, take the money and disappear. “Make sure you verify that the financial advisor you are trusting with your financial records is not a fraud,” Lavelle says. If you choose to work with a financial advisor, do some research before trusting someone with your money. Look at credentials, experience and membership in established professional organizations.
[Read: How to Get Reliable Retirement Planning Advice.]
8. Deceptive family members. If you are healthy and active, and a loved one offers to manage your finances, proceed with caution. That person could use your money to buy a new car or pay off school loans without your consent. To protect your funds, consider signing a springing power of attorney. This type of document only becomes effective if you become incapacitated. “You can even include specific provisions on who can make the determination of capacity, such as a doctor or family member or both,” says Victor J. Medina, founder of Medina Law Group in Pennington, New Jersey.
9. Spontaneous repair offers. If a man in a worker’s uniform with a company logo appears at your door and offers to do some service, be careful. The person might ask for money upfront and then not do the work, or do a poor job and walk away with the cash. “A legitimate company does not go door to door,” says Robert Siciliano, an identity theft expert with Hotspot Shield.
10. Misuse of your funds. If you have given your financial advisor the authority to send money to others on your behalf, it may be time to make a change. “One of the most common ways money is stolen from retirees is when they grant their advisor the ability to send ‘third party checks’ to outside individuals,” Medina says. “It opens up the opportunity for the advisor to send out a check to a third party without your approval.” To be safe, remove this authorization from all your accounts. “It’s less convenient to get the check or wire into your account first before you send it out to someone else, but it will help prevent fraud,” Medina says.
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10 Financial Scams to Avoid in Retirement originally appeared on usnews.com
