This holiday gift for seniors can save them a fortune

As you celebrate the holidays this year with older relatives and friends, you may want to take the opportunity to alert them to scams that target retirees who have money. Sure, it's not the jolliest topic of conversation, but you could be giving them a valuable present.

"Common scams that pop up around the holidays are fake charities," according to Marti DeLiema at the Stanford Center on Longevity and one of the nation's foremost experts on financial fraud and abuse. "They often approach their victims by email or door-to-door." 

DeLiema recommends that you don't give anybody money who comes to your door and don't hit "reply" to any email that solicits for donations. Instead, check out any charity by going directly to its website. Make sure it's legitimate, and send any donations directly to its mailing address or via an online donation form.

Speaking of charitable giving, some legitimate but aggressive charities continue to send solicitations throughout the year, even if you've already contributed. Some elderly people forget that they've done so and then contribute again and again with each solicitation. One way to address this problem is to contribute to charities just once a year, perhaps at year-end, and write down the dates, amounts and details of your donations.

DeLiema added that fake online deals and product scams are also common around the holidays as people shop for gifts. Once again, don't hit reply to emails you might receive that alert you to bargains. Instead, go directly to the official websites of reputable online retailers.

Then of course, there are the usual grandparent scam, IRS tax scam, Nigerian lover scam and tech support scam (if you haven't heard of these by now, watch out!). Continue using the same tactics to protect yourself: Don't give anybody money who sends you an email or calls you on the phone. Take the time to investigate their claims or situation, and only deal with people who you identify as legitimate. If someone claims that you need to send money right away, that's a red-flag warning you're dealing with a crook.

Many fraudsters target retirement savings and investments for the same reason that famed bank robber Willy Sutton stole from banks: "That's where the money is." Crooks often claim they can deliver superior investment returns, which might be compelling for retirees with modest incomes. 

Scammers might also give you very persuasive arguments that your investments are no good. According to a report from the Stanford Center on Longevity, common consumer investment scams involve a number of vehicles, including:

  • Penny stocks
  • Pre-IPO scams
  • High-yield investment programs
  • Real estate investment trusts (REITs) that aren't legitimate
  • Oil and gas exploration or alternative energy scams
  • Promissory notes
  • Bogus individual bonds 
  • Foreign exchange funds
  • Commodities, precious metals or rare objects frauds
  • Hollywood film scams

You could casually ask your older relatives and friends where they invest their retirement savings. If they mention any of the above, share ways they can fraud-proof their retirement savings.

Simply put, the best places for retirees to invest are often the 401(k) plan where they worked or with reputable banks, insurance companies or mutual fund companies. Appropriate investments for retirees include established mutual funds with lengthy track records that invest in stocks, bonds or REITs. Similarly, low-cost annuities with highly rated insurance companies are also part of a legitimate retirement portfolio.

Fraudsters often mock these "old fashioned" investments, claiming they don't give you a good deal. A common fraudster trick is to arouse their victims emotionally, either with the fear of losing money or by getting them excited about the potential for high returns. That should be another red-flag they're crooks. Most retirees don't need exotic investments -- they should stick with tried and true investments and low-cost annuities.

Social isolation increases the risk of financial fraud, and fraudsters might give your older friends and relatives the attention they crave. Why not give your older friends and relatives a valuable gift this holiday season by inviting them over for dinner or a holiday party? Then look for ways to warn them that crooks are worse than naughty and certainly not nice.

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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.