Fraud is the number one crime against older Canadians – hitting as many as one in five seniors – according to bankrate.com.
People over the age of 65 are especially vulnerable to fraudulent schemes for a number of reasons:
- They often live alone and are home most of the day to answer the phone and the door.
- They have excellent credit, have more disposable income, and often keep large sums of cash around the house. My mother-in-law kept a pile of cash “hidden” under a place mat on her kitchen table. My mother kept her “secret stash” in the linen closet.
- They are generally more trusting, and often lonely. Con artists must gain the trust of the victim. He or she will be friendly, helpful and appear to have the victim’s best interest at heart. When you have a lonely person and somebody with a big friendly smile at the door, there’s a bit of a bond formed immediately.
Related: 4 Big Rip-Off’s To Watch Out For
A widowed senior living alone is most likely to be targeted.
Here are some common scams that target seniors:
Telephone scams
You should be concerned if your elderly parent receives lots of telephone sales calls. Scammers know senior citizens answer the phone and are reluctant to hang up on anyone.
- Recently, seniors were blasted with robocalls claiming they were eligible to receive a free medical alert system. Once the target agreed to receive the device they were transferred to an operator who took their billing information and immediately began charging them.
- “Hi, Grandma. This is your favourite grandson.” This scammer claims to be in trouble with the law or in an accident and needs money wired immediately. “And, please don’t tell Mom.”
- Henry received a phone call telling him he won a free trip and explaining all the exciting details. The caller told him he needed to pay a small fee in order to claim the prize. Henry knew not to give his credit card information to a stranger on the phone, so he hung up.
Related: Why I Cancelled My Landline
It’s in the mail
Check to see if your parents’ mail is filled with free gift offers, sweepstakes notifications and charity solicitations. Also be aware that some organizations are perfectly legitimate, but once donors have proven to be receptive, they will be inundated with solicitations.
My father donates to cancer research. He receives at least one or two requests a month from various cancer organizations – from his home town, Vancouver, Ottawa, Toronto, Edmonton and Halifax, etc – all wanting donations.
The knock on the door
Home renovation fraud. Someone who claims to be a contractor working in the area approaches the homeowner. They have noticed their chimney bricks are decaying/driveway needs repair/roof is in bad condition. They advise that they have some extra material on hand and can give a special deal or senior’s discount. The senior then hands over cash or a large cheque to cover the supplies. The contractor leaves and is never seen again.
Public utility imposter. The scammer claims to be doing inspections for water quality or gas leaks. There are at least two versions of this scam. In one, a phony metre is used to show impure water, or a faulty connection, or some other irregularity. The danger of the situation is emphasized and an offer is made to remedy it – for an immediate large payment.
In the other scam, while the homeowner is showing the imposter the metre, his companion will search the home for valuables, medication and/or personal information.
Fraudulent investment and real estate schemes
With people living longer and traditional “safe” investments paying measly returns, many seniors are worried about outliving their money. This makes them especially vulnerable to investment schemes that promise high returns.
Trusted people
The most unscrupulous crooks are ones in a position of trust – children who deplete bank accounts, caregivers who take cash and valuables and “helpful” friends who do errands and shopping while gathering personal information.
- Vera gives her granddaughter, Caitlin, her bank card to withdraw $100. Caitlin takes out $200 and keeps $100 for herself. Vera doesn’t believe a relative could be dishonest. It must be a bank error.
What can we do to protect Mom and Dad?
How do you talk to your parents without sounding like you’re their parent? You can use the direct approach. I’m constantly warning my mother against giving out personal information to strangers and not leaving her bank book and money laying around in plain view.
Related: How To Talk To Your Elderly Parents About Money
Those who don’t feel comfortable looking through their parents’ bank statements to see what cheques they are writing can be more subtle.
When you’re with your parents say something like. “I read an article about this happening to somebody,” or “I just got a phone call telling me I won a fabulous prize. Do you ever get calls like that?” Hopefully, the conversation can flow from there.
Final thoughts
Many frauds are not reported. The victims are embarrassed at being deceived and don’t want to admit it. They may not want to report a friend or relative, or they don’t even realize that they have been defrauded.
Tell parents not to worry about being impolite – hang up or shut the door. If they are not sure, ask someone – call a family member, trusted friend or neighbour.
When two of my elderly banking clients were approached with the infamous “bank inspector” scam, they immediately called me and asked what they should do.
The best remedy is to keep trusted lines of communication open.
Two prominent Canadian personal finance experts have released new books this year that focus on how to simplify and improve your finances.
Preet Banerjee’s Stop Over-Thinking Your Money, and Bruce Sellery’s The Moolala Guide To Rockin’ Your RRSP, offer smart and straightforward advice on how to manage your money, with each author breaking down their subject matter into 5 simple steps.
Stop Over-Thinking Your Money!
Preet Banerjee can be found everywhere these days. He blogs at Where Does All My Money Go, writes a column for the Globe and Mail, and is the money expert for the W Network, the host of Million Dollar Neighborhood on the Oprah Winfrey Network, and is a panelist on CBC’s The National with Peter Mansbridge. Preet also hosts the Mostly Money, Mostly Canadian podcast.
In this book, Preet explains how to cut through the noise and focus on the information that truly matters to your finances. He breaks this down into five simple rules that anyone can follow to confidently take control of their finances. What are the rules for personal finance success?
- Disaster-proof your life – why you should protect yourself with disability insurance, life insurance, a will and power of attorney, and an emergency fund
- Spend less than you earn – figure out your old budget, figure out a new budget, track your spending more diligently, save the savings, and plan for non-monthly expenses
- Aggressively pay down high-interest debt – transfer high-interest balances to low-interest balances, then develop a plan of attack for paying down your debt
- Read the fine print – the smaller the print, the more likely it is to contain something that might give you second thoughts about signing
- Delay consumption – tackling the keeping-up-with-the-Joneses phenomenon, lifestyle inflation, and the monthly payment trap
That’s part-one of the book. In part-two, Preet gets into investing basics:
- On DIY investing he says, “I’m a big fan of DIY investing, but I’m also a fan of advice and financial planning.”
- On active vs. passive investing he says, “Most people are better off in a low-cost, passively managed portfolio.”
- On the role of financial advisors he says, “In the future, I can see financial advisors and money coaches working in tandem as they can perform very different functions – both of which can be integral to your long-term financial success.”
Related: A New Fee-Only Financial Planning Service
The book concludes with a chapter on insurance, which isn’t exactly going out with a bang, but at least Preet made it interesting. Overall, Preet has written a high quality book filled with plenty of action steps for readers to take away to help them manage and improve their finances.
- Order on Amazon – Stop Over-Thinking Your Money!
The Moolala Guide To Rockin’ Your RRSP
Easily the most entertaining speaker at the Canadian Personal Finance Conference in Toronto last fall, Bruce Sellery has written a fun and inspiring guide to help Canadians get a handle on their retirement savings.
In the book he says getting a handle on your retirement savings is a function of three things: knowledge, skills, and habits. You need some basic knowledge about personal finance, taxes, and investing; you need a few skills to be able to do the right things; and you need to develop a habit of doing those things consistently over time.
The Moolala method is a five-step process:
Step 1: Lay the Foundation – this includes the basics of the RRSP and an overview of how to develop a simple plan, but it also includes gaining knowledge about your own wants and needs when it comes to your own retirement.
Step 2: Determine how much you need – the math isn’t hard to do – and yet most people don’t know how big their nest egg will need to be. Why? Because it is scary. It feels easier to remain oblivious than to address the reality of how much you’ll need to save to retire.
Step 3: Develop the plan – aim to come up with the simplest plan possible – no binders or fancy software or massive to-do lists, just a few key actions that will give you the biggest bang for your buck.
Step 4: Take action – this step focuses on giving you the skills to move that plan from your notebook into your real life, including a few super simple actions to give you momentum.
Step 5: Stay engaged – this step looks at the most important habits to foster and how you can “set it and forget it”, so you can continue to save while spending very little time working on your retirement savings and lots of time on the things you love about your life.
This quote sums up for me what makes Bruce’s personal finance style so fun and engaging without the irresponsible “YOLO” cry of today’s youth:
“I am not a fan of frugality – life is too short to count every penny. But I am a big believer in sustainable spending – setting up your life so you can make a few big, conscious choices about your money and then don’t have to think about it every five minutes.”
The best part of the book is that Bruce lists a ton of questions from people in various ages and stages of their lives, and just as he does in the “Ask MoneySense” feature in MoneySense magazine, Bruce answers with smart, witty, and sound advice.
- Order on Amazon – The Moolala Guide To Rockin’ Your RRSP
When I worked in banking, January and February were known as the dreaded “RRSP Season”. It was the approximate equivalent of the retail “Christmas season” with long extended hours, lines of desperate people wanting a quick RRSP purchase, and the inevitable sales quotas.
Related: How an RRSP loan turned my $12,000 contribution into $20,000
With the said line-ups, there was no time for proper planning or consultation, it was a quick “sign the loan document here, park your funds in a savings account or money market mutual fund, and we’ll get back to you later.” Next!
Since my experience was several years ago, I assume that most people now have a retirement plan that they contribute to regularly, thereby avoiding the last minute rush to the bank. However, there are still the procrastinators who have to wait until the last minute.
Retirement polls and surveys
Financial institutions tend to commission surveys on retirement at this time of year. Are they aimed at those procrastinators – a type of scared-straight approach?
“Look at these seniors who don’t enough money to retire and now have to keep working until they’re 90 years old! START SAVING NOW or you’ll end up in the same situation! We can help you.”
Related: How to overcome financial inertia
Personally, I have a love/hate relationship with surveys. On the one hand, I like to see other people’s opinions (do we agree, or am I the only strange one?). On the other hand, I suspect that answers can be biased from:
- How the questions are worded and,
- Respondents often give answers they think are expected.
When do we expect to retire?
Back in the late 80’s, London Life had a great advertising campaign promoting “Freedom Fifty-Five.” The ad showed a man in a business suit running for the bus, suddenly transported to the year he will turn 55 and running down the beach with his future self.
“We look pretty good,” he says to his handsome, silver-haired and trim self.
People still strongly associate Freedom 55 with early retirement even though an Ipsos Reid survey indicated that Canadians have not seen age 55 as a realistic benchmark for some time.
The odds of retiring earlier are not as good as they used to be. In 2008, 51% expected to be fully retired by age 66. Now it’s down to 27%. The younger the respondent, the lower the age, while those 55+ find they will likely not be in a position to stop working until at least age 67.
Related: What’s all this retirement planning for, anyway?
At what age do you expect to retire from your main employment?
Retirement Income
The average retirement income desired is $59,000, with 36% wanting $25,000 – $50,000 and 31% desiring $50,000 – $75,000.
Many Canadians are surprised by how much they need to save to fund their desired income and that their income is going to plummet. Is this because the financial institutions (and media) highly promote a retirement portfolio of at least $1 million? Is the desired income unrealistic considering most expenses will be reduced or eliminated in retirement?
The reality, according to Sun Life Financial, is that six in 10 Canadians expect to retire with less than $250,000 in savings, while 38% will retire with less than $100,000.
Nearly 25% feel there is a serious risk of outliving their savings. Over 58% feel they are not prepared financially. A mere 26% think they are saving enough.
Related: Are you counting on an inheritance?
Have you prepared a realistic retirement budget? How much do you really need?
Hi Ho! It’s off to work we go.
Retiring used to mean working until age 65, then spending your free time working on your hobbies, or sitting on your deck with a beer in one hand and the latest best seller in the other.
Some retirees choose to re-enter the work force. Two friends of mine work part-time in a big box retail store. One uses the funds and extended vacation time to travel with her seniors’ club. Since retiring she has enjoyed her dream of visiting China, Africa and New Zealand. The other works to fund her expensive sewing hobby.
A recent survey found that more than half of boomers are considering or have started a small business – for extra money, but also to keep themselves engaged.
An ING Direct survey, however, shows that 48% of retirees are being forced back to work due to financial reasons. One-third of respondents did not have enough money saved and 31% faced increased living costs. 31% had to return to work full time!
Related: 16 habits that helped me retire wealthy
Have you considered a “second act” career?
Final thoughts
Are the surveys successful for their intended purposes? Are Millennials (those aged 18 – 34) preparing for retirement? ING Direct shows that 64% contribute regularly to their retirement savings and are confident they will retire when expected. They intend to avoid debt and save more, and stick to a financial plan.
WOW! I’m impressed!