Almost daily we read about a new Ponzi scheme or fraud that’s perpetrated against a friend, relative or neighbor. The sad part is that most of these schemes are carried out against our seniors and it is happening at an alarming rate. Sadly these victims are people who are the most trusting, and who don’t have the time to recuperate from these losses. They have saved diligently and lived prudently, but end up losing allot of their retirement savings which was intended to support their golden years.
I know of one senior couple who were advised by their accountant to invest $250,000 with the promise that they would receive 15% interest monthly from the investment. Although they were normally cautious people, since this was their accountant and a personal friend they had known for 30 years, they bought in. The payments came right on schedule for the first five or six years, and then…nothing. The accountant is in jail, but their retirement nest egg is history.
Another senior couple met a man who talked them into investing in a joint venture real estate development. They were given fake property deeds to the properties, but later found out that this schemer was loaning the money to high risk individuals. When those borrowers failed to make the required payments, and the truth of the scheme was revealed, this schemer also went to jail. Sadly, the money was already gone. Their investment, $500,000.
My last example is a man who had what appeared to be a successful computer business. He began recruiting seniors he knew socially, and convinced them to invest in his business so he could supposedly expand. By using the names of the first few investors, he was able to convince others that the plan was solid and in doing so he was able to collect hundreds of thousands of dollars. Once again, the promise was that they would receive 15-20% monthly as interest payments. The money is history and the payments have stopped.
I’m sure you can see as I have, that the common theme is that investors will supposedly receive much better returns from “these” special investments than they can get anywhere else. And, seniors are the common and easiest target.
What should seniors or anyone else do?
First and foremost, if something looks too good to be true, it probably is. With any investment, you should do all the due diligence you can. Ask trusted friends and advisors, and if you are talking about a significant amount of money, talk to your attorney. Hopefully someone in your personal network can assist you in making the right decision.
For seniors, their personal network should include the following:
1. An Elder Law Attorney who can assist them with wills, trusts, estates and any questions they might have plus they can assist if there is elder abuse.
2. Accountant/CPA/Money Manager- They can assist with yearly taxes, making sure bills are paid, accounts are balanced and insurance policies are kept in force.
3. Financial Planner- these folks are experts on pensions, retirement accounts and how to maximize stretching your money.
4. Insurance agent- to make sure that property, health insurance, auto insurance and other policies are adequate and kept in force.
5. Real Estate Broker- Once a decision has been made to either buy or sell real estate, the right broker can make sure that you receive the maximum return on your sale, and assist you in finding the right type of home for your future.
6. Health Care Providers- this starts with your primary care doctor and extends to specialists, in home care, grief counselors, assisted living, memory care and nursing homes.
7. Family- I list family last, not because I don’t value family, but because often it’s a family member that misleads or takes advantage of a senior relative. If you are asking a family member for their advice, please make sure that they are qualified in the topic at hand, and that they are most interested in your best, not in their personal gain. If you are concerned about a family member pushing you in a particular direction, consult with your elder law attorney.
I would like to make available, at no cost, a great report that was written by the Certified Financial Planner Board of Standards. It is titled “Financial Self Defense for Senior’s”.
If you would like this free report, please email or call and I’ll be happy to send it.
Lee Schmidt is the broker/owner of Realty World South County and a Senior Real Estate Specialist. He can be reached at (408) 782- 9933 x201 or [email protected]. Send your real estate questions to him and they could appear here.
