Seniors Everywhere Are Falling for These Financial Traps

(4 Minute Read)

Retirement doesn’t come without its own troubles, especially when you consider the many scams and financial traps that many seniors find themselves falling into. As William S. Boroughs once said, the best way to keep something bad from happening is to see it ahead of time. Here are some risks you or a loved one may need to be aware of.

Medicare Scams

The National Council on Aging has identified Medicare scams as one of the primary threats facing seniors today. They come in three types: identity theft, Medicare fraud, and improper care. The first occurs when someone pretending to work for the Center for Medicare and Medicaid (CMS) calls to get your personal information to use it against you, like stealing your identity. CMS will NEVER call you to get your information. Medicare fraud occurs when the insurer is billed for services you never received and the biller pockets the money. This could be a doctor or a third party with your information. Improper care is less a “scam” and more a situation a patient must judge for themselves. The National Council on Aging has great tips for avoiding these scams.

Phone Scams

Phone scams come in all types: people pretending to be the government, the police, a sweepstakes house. One of the most nefarious is the grandparent scheme, in which a young scammer targets a senior person saying something like this: “Grandma/Grandpa, do you know who this is?” The grandparent might guess the name of a grandchild, and then the scammer simply plays along. They ask the “grandparent” to send them money via Western Union or another wire service. Some catch on, but others don’t, and lose valuable savings to those pretending to be in need or from an official authority. Another might be an individual claiming to be from the IRS saying that you failed to completed a tax form or something else and that unless you act now, you might have a warrant issued for your arrest.

Scammers on the phone all share similar strategies—they tell you that you must act immediately and they’ll often tell you that you can’t tell anyone else what you’re doing. If you ever find yourself in this situation, hang up and call the person or government office back. You may find you weren’t talking to them at all.

Reverse Mortgages

Reverse mortgages are complicated agreements, and some individuals who see them as an easy solution to financial needs often find themselves in an even harder situation later. A reverse mortgage works because every month a bank sends you a chunk of money to “buy” part of the equity of your home. However, this isn’t a payment, it’s a loan. When you move out of the house, or pass away, the loan will come due. A Senate investigation found that, over twenty years of borrowing, the interest could exceed $300,000 on some reverse mortgages. It’s not always a bad decision, but proceed with care.

Surrendering Unwanted Life Insurance Policies

Many retirees often find themselves holding life insurance policies that they no longer need or want and wish to surrender to obtain the policy’s value while also relinquishing the responsibility of maintaining premium payments. Many seniors see surrendering the policy as the best solution without exploring any additional opportunities, like a life settlement. Sometimes referred to as a viatical, a life settlement is the sale of a life insurance policy to a third party for a value that is significantly higher than the policy’s surrender value.

If you’re interested in learning more about life settlements, or viatical settlements, and how they can benefit you, please don’t hesitate to contact us today or visit our Qualification Calculator to see if you qualify!

Case Study:
Mildred, 85 years of age, was scammed $25,000 out of her savings. Her family did not discover this until they had taken over her finances. Mildred’s son was concerned that she would run out of cash so he sold her life insurance policy for $65,000.

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