Financial Wellness for Older Americans: A Guide to Avoiding Scams and Fraud

As you enter retirement, financial security becomes a top priority. Unfortunately, older Americans are often targeted by scams and financial fraud, with scammers seeking to exploit their savings and investments.

“Financial fraud among older adults is on the rise, with billions of dollars lost annually to scams targeting retirees. Fraudulent schemes can range from identity theft to deceptive investment opportunities, putting your hard-earned money at risk,” says Joseph Aspelund, Director of Insurance Sales & Asst. Branch Manager at David Lerner Associates, Inc.

According to the FBI’s Internet Crime Complaint Center (IC3), older Americans lost over $3.4 billion to scams in 2023 alone, with investment fraud and tech support scams among the most common schemes.  These alarming numbers highlight the importance of staying vigilant and informed.

Why Are Seniors More Susceptible to Financial Scams?

Scammers often target seniors because they may be more vulnerable due to factors such as:

• Cognitive decline, which can make it harder to recognize fraud.
• Social isolation leads them to trust unfamiliar individuals more easily.
• A tendency to be more trusting, making them easier to deceive.

The good news is that by staying informed and taking proactive steps, you can safeguard your assets and maintain your financial wellness. This guide will help you recognize, prevent, and respond to scams, ensuring that you retain control over your financial future.

1. Recognizing Common Scams Targeting Older Americans

   Scammers use a variety of tactics to manipulate individuals into giving away personal information or money. Understanding the most common types of fraud can help you stay vigilant.

   • Phone Scams: Fraudsters often pose as government officials, banks, or even family members, pressuring you to provide sensitive information or send money. They may claim that your Social Security benefits are at risk, or that a loved one is in trouble and needs financial help immediately.
   • Investment Fraud: Unscrupulous individuals may offer too-good-to-be-true investment opportunities that promise high returns with little risk. Ponzi schemes and unregistered investments are common forms of financial deception.
   • Medicare and Healthcare Scams: Scammers impersonate healthcare providers or insurance representatives to steal personal data or charge for services never rendered. They may call pretending to be Medicare officials asking for verification of sensitive details.
   • Tech Support Fraud: Since many seniors may not be as familiar with technology as younger people, they can be more vulnerable to tech-support scams. A common scheme involves a fake call from “tech support” claiming your computer has a virus and requiring payment for unnecessary repairs. Some scammers gain remote access to your device, compromising your financial accounts.
   • Charity Scams: Fraudsters take advantage of goodwill by soliciting fake donations for non-existent organizations, often preying on people’s desire to help disaster relief efforts or medical research.
   • Grandparent Scams: A criminal pretends to be a grandchild or relative in distress, pleading for money to escape a fabricated emergency.
2. Steps to Protect Your Financial Security

Taking a proactive approach to safeguarding your finances can help you avoid scams and keep your assets secure.

Here are some essential steps to consider:

Step 1 – Verify Before You Trust: Always confirm the legitimacy of a caller, email, or business before providing any financial or personal information. If someone claims to be from a bank or government agency, hang up and call the official number to verify.

Step 2 – Monitor Your Accounts Regularly: Keep an eye on your bank and investment accounts for unauthorized transactions. Setting up alerts for suspicious activity can help you react quickly to potential fraud.

Step 3 – Use Strong Passwords and Security Features: Enable two-factor authentication and create unique passwords for online accounts. Avoid using easily guessed passwords like birthdays or common phrases.

Step 4 – Stay Educated: Keep up to date with the latest scams by following consumer protection agencies and financial institutions. The Federal Trade Commission (FTC) and AARP Fraud Watch Network provide valuable resources on emerging scams.

Step 5 – Limit Sharing Personal Information: Be cautious about sharing financial details over the phone, through email, or on social media. Scammers often gather information from social media profiles to make their schemes more convincing.

Step 6 – Freeze Your Credit if Necessary: If you suspect fraud, freezing your credit can prevent scammers from opening accounts in your name. This added layer of protection can help prevent identity theft and financial loss.

Step 7 – Beware of High-Pressure Tactics: Scammers often push you to act quickly, creating a sense of urgency to prevent you from thinking critically. Always take time to verify claims before making decisions.

3. Reporting and Recovering from Fraud

Taking immediate action is crucial if you suspect you have been targeted by a scam.

• • Contact Your Bank or Investment Counselor: Report any unauthorized transactions and secure your accounts. Many financial institutions offer fraud protection services that can help recover lost funds.
  • File a Report with the Authorities: Notify agencies like the Federal Trade Commission (FTC)  and your local law enforcement. Reporting scams helps prevent others from becoming victims.
  • Place Fraud Alerts on Your Credit Report: This can help prevent further fraudulent activity on your accounts. Contacting credit bureaus like Experian, Equifax, and TransUnion can help protect your credit history.
  • Talk to a Trusted Friend or Family Member: Scammers rely on secrecy; discussing your concerns with someone you trust can help you take the right steps and avoid further financial harm.
  • Learn from the Experience: Use the situation to reinforce security measures and educate others about potential scams. Sharing knowledge within your community can help protect more people from fraud.
  • Check for Identity Theft: If a scam involved your personal information, monitor your credit reports for any unusual activity. The Identity Theft Resource Center offers guidance on recovering from identity fraud.

The faster you act, the better your chances of minimizing damage and recovering your assets.

Financial wellness means more than just saving and investing wisely—it also requires protecting yourself from fraud. You can secure your financial future by recognizing scams, taking preventive measures, and knowing how to respond if targeted.

If you’re concerned about financial scams and fraud, speaking with an investment counselor from David Lerner Associates can help you develop a strategy to safeguard your assets!

---

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.