A large number of retirees find that money becomes tight once they no longer have a paycheck coming in from a job. That's why older Americans are commonly advised to proceed with caution when it comes to retirement planning, budgeting, and filing for Social Security.
In fact, many seniors rush to sign up for Social Security before reaching full retirement age, which is the age at which they're entitled to their full monthly benefits based on their wage histories. Claiming Social Security early will generally slash your monthly benefit for life. And that could translate into many thousands of dollars in lost income throughout your retirement.
But that's not the only mistake you might make later in life that could cost you a lot of retirement income. If you end up falling victim to a financial scam, your losses could be even greater.
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Don't get roped in
It's unfortunate that the elderly are highly likely to be targeted by financial scammers looking to make a quick buck. And a recent Motley Fool research study found that seniors commonly fall victim to romance and confidence fraud.
In a romance scheme, a criminal might attempt to establish a romantic relationship with a victim to gain their trust. From there, they can gather personal data and use it to steal money (or in some cases, convince an elderly person to just hand over money willingly).
Confidence fraud doesn't have to be romantic in nature, though. You might have a situation where someone calls an elderly person pretending to be their child, grandchild, or nephew asking for money to be bailed out of a financial jam.
Either way, the Motley Fool found that the average financial loss associated with these types of scams is $56,422. And worse yet, between 2019 and 2021, losses due to these scams grew by 84.8%.
Avoid being a victim
Romance and confidence schemes may be common among the elderly, but criminals have a host of tricks up their sleeves to get unsuspecting people to hand over personal information and money. The best way to protect yourself is to know what red flags to look for.
If you're in your 70s and someone in their 40s or 50s comes on very strong in pursuit of a romantic relationship, it may be a red flag. And if someone calls you in distress claiming to be a family member, verify the number. Consider it bogus if it's blocked or doesn't match the phone number you have on file. If you're worried that it's a true emergency, hang up and call the family member in question right back.
Along these lines, make an effort to safeguard your personal data so criminals can't access your bank account, rack up charges on your credit cards, or attempt to steal your Social Security benefits. Sign up for electronic communications if you're comfortable doing so, and make a point to shred all documents containing financial information.
Filing for Social Security early could result in a huge financial strain. But so could falling victim to a scammer who has no qualms about stealing your money.
