The top 7 financial scams targeting your clients’ retirement savings

By Marshall Heitzman, Vice President, Advanced Planning Consultant TruStage™
These top 7 financial scams threatening your clients’ retirement can be devastating. Learn how to protect your clients from scams and financial fraud.
Fraud remains a pressing issue threatening clients’ retirement savings and long-term financial security. In 2023, consumers reported a loss of more than $10 billion to popular scams. This marks a 14% increase since 2022.¹
The expansion of digital channels has enabled scammers to diversify their tactics. Voice calls, text messaging, mail, Artificial Intelligence (AI) and social media platforms are among the tools used in scams to look out for.
While older adults have long been targeted, the Federal Trade Commission reports that younger generations were actually more likely to lose money to certain types of fraud in 2021. This is due to the rise of new online shopping scams, cryptocurrency investment schemes and fake job postings.²
To help safeguard their hard-earned retirement savings, it's essential to educate clients of all ages on the latest scams.
1. IRS impersonation and tax-related scams
How the scam works:
According to the Internal Revenue Service, scammers have stolen millions of dollars by targeting taxpayers with identity theft scams.
Scammers impersonate IRS officials and contact individuals through phone calls or emails, making aggressive claims that back taxes or penalties are owed due to new healthcare laws. More recently, they’ve also been claiming their targets are owed unclaimed refunds. Scammers may intimidate individuals with threats of arrest or hefty fines and demand immediate payment through wire transfers or credit cards. In refund scams, they’re often trying to get Social Security numbers so they can steal their identities.
How you can help:
Make sure your clients understand that the IRS will never initiate contact through phone calls, emails or social media. Nor will they threaten individuals with incarceration or use of other high-pressure tactics. Any legitimate IRS dispute provides opportunities for appeal or verification.
2. Medicare fraud
How the scam works:
Medicare fraud often targets seniors, since every U.S. citizen over 65 qualifies for this important healthcare coverage. Scammers’ tactics include emailing, calling or even visiting in-person to impersonate Medicare representatives. Often their goal is to obtain personal information or money.
How you can help:
Advise your clients never to pay fees for new supplemental policies, provide payment for compliance with new healthcare regulations or share their Social Security numbers for new insurance cards. They should only provide Medicare cards and numbers at approved healthcare facilities when getting services or treatment.
3. Timeshare scams
How the scam works:
Timeshare scams often lure individuals through free seminars or luncheons followed by high-pressure sales pitches. Clients may find themselves wanting to sell soon after purchase, opening more opportunity for fraud through timeshare exit scams. Scammers may request money for advertising or title searches under the pretext of aiding the sale, only to disappear after payment.
How you can help:
Encourage your clients to consult with you before making significant purchases like timeshares. Also, instruct them to be wary of high-pressure sales tactics for major purchases. If a client wishes to sell a timeshare, recommend working directly with the resort and ensuring commissions are paid only upon completion of the sale.
4. Phishing scams
How the scams work:
Phishing scams target millions annually via email, websites, social media and text messaging. Thieves entice users to click on malicious links or visit counterfeit websites mimicking reputable companies. There, users are tricked into entering personal information.
How you can help:
Educate your clients on how to identify phishing scams. The latest email scams utilize unexpected email attachments, request account information for updates and often have inconsistent URLs or poor grammar.
Spoof calls: tools of the trade for scammers
Whether they’re posing as government officials, charities, tech support or even friends in need of help, fraudsters often use caller ID spoofing to make their calls appear from a local or trusted source. Advise your clients not to answer or return calls from unknown numbers, to hang up on suspicious callers and avoid disclosing personal information over the phone.
5. Romance scams
How the scams work:
Romance scams, sometimes referred to as “catfishing” schemes, pose a significant risk as online dating becomes more popular. Beware of scammers who use fake identities or dating profiles to build romantic relationships and gain the trust of their targets. Over time, they develop elaborate stories to solicit money, often under the guise of a family crisis or wanting to meet in person. Widowed clients may be particularly vulnerable to these scams.
How you can help:
Advise clients to verify the identities of individuals they meet online and be wary of appeals for money, even if the requester claims to be in a romantic relationship with them.
6. AI investment scams
How the scams work:
AI is being used to deceive victims and lure investors into fraudulent schemes. Scammers have been using generative AI to create “deepfake” audio, video and images to clone voices or identities. The recent hype around predictive AI is another AI fraud tactic used to trick would-be investors into fast-money schemes, often involving cryptocurrency.
In the first half of 2023, 53% of the $658 million lost to scammers using social media went to investment scams. A lot of that money was paid out in cryptocurrency.³
How you can help:
Investors should be cautious of platforms claiming the use AI to generate returns and promoting these investment options online. Any sort of investment opportunity that requires recruiting new investors or promising high returns with low risk should be treated with suspicion.
7. Lottery or prize scams
How the scams work:
Lottery scams prey on individuals looking for fast financial gain. Whether the lottery scammer contacts victims via email, phone or other means, they operate under the premise that the victim has won a prize or lottery they don’t remember entering. Scammers typically ask victims to “verify” their personal identities with private information and bank account details.
How you can help clients:
Teach clients about the prevalence of lottery or prize scams where they need to pay fees or provide account information to claim the winnings. Advise them they should never need to provide financial or personal information over the phone or through email to claim such prizes.
With personal data stored in the cloud and information shared online through social networks, criminals are likely to continue evolving their methods of defrauding victims. When you connect with clients, be sure to talk about the dangers and increasingly deceptive tactics of cybercriminals to help them protect their hard-earned savings and avoid compromising their future financial security.