Released Aug. 19, 2007
MADISON, Wis. — People who are age 65 can now expect to enjoy 20 to 25 years of retirement. However, that can also mean their retirement savings will be stretched beyond their expectations. Increasingly, retired adults are looking to financial planners and investment advisers to help them maximize their life savings. But because of their interest in investments, older adults are at greater risk of being victims of financial scams.
"Keep in mind when you see seminars for estate planning, living trusts and insurance that these people are usually selling something and are expecting to keep at least part of your investment as a fee for their service," says Karen Goebel, UW-Madison/Extension Family and Consumer Economics Specialist.
Consumer advocates and law enforcement officials say the number of aggressive pitches aimed at seniors has increased significantly in recent years. Most older victims of investment scams are well educated and relatively well off financially.
"The approaches and attempts these days are more frequent and more sophisticated, so even the most savvy consumer can become a scam victim," Goebel says. "Before you agree to any financial offer or proposal, get written information on the offer and the firm. Check with local experts you know and trust."
Some questions to ask include how long the investment firm has been in business, what their local reputation is, whether they can provide names and telephone numbers of current customers as references and where their place of business is located.
"Be wary of any company that just lists a post office box," Goebel says.
"On the other hand, some businesses print fancy brochures with pictures of large corporate offices. But their tactics and offers may still remain questionable."
Warning signs that an offer may not be legitimate include:
- High-pressured telephone pitches. If a company wants an immediate response without meeting with you or providing information in writing, it should be avoided.
- Offers of a "low-risk, high-return" investment. No company can guarantee such an offer
- Refusal to give specifics in writing about how the money will be used.
- "Don't trust strangers or even a local celebrity with your money," Goebel says. "Check with local and state authorities about offers made by well-known public figures."
As a general financial rule of thumb, avoid placing more than a quarter of your assets with any one investment company, even if the company is totally legitimate.
"Spreading out, or diversifying, your assets better shields you from the constant ups and downs of short-term investing," says Goebel. "Remember, you may need your money quickly. Diversifying protects you somewhat from having to take a significant loss on your money, should you need it unexpectedly."
For more information about saving strategies and family financial management, contact your county UW-Extension office.
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http://www.uwex.edu/news/2007/08/older-adults-often-targets-of-investment-scams
Contact: Karen Goebel, (608) 262-0080, karen.goebel@ces.uwex.edu
