Retirement Scams: As this generation of baby boomers starts to retire, there will be an increase in retirement scam artists.

Older Americans have typically been a target for financial scams because of the assets they've accumulated. This generation has more than $8.5 trillion in investable assets. Over the next 40 years, they stand to inherit at least $7 trillion from their parents according to research firm Cerulli Associates.

Currently, there are scam seminars targeted at these people, offering them a free dinner plus 'education', but are asked not to bring any advisors or brokers with them.

These scam seminars are now drawing more regulatory scrutiny because they're ramping up in areas with large elderly populations. Typically, the people who attend them need advice about leaving assets to their children, managing income or minimizing taxes in retirement.

These seminars are a "major problem", but some agents argue that their financial seminars fill seniors' very real need for education.

But regulators worry that seminars often serve as tools for unscrupulous salespeople. In a typical scenario, financial agents will find out, at the seminar and in follow-up meetings, what assets seniors have. Then they'll recommend these assets be liquidated and put into equity-index or variable annuities. (State regulators say these recommendations could be considered investment advice, and anyone not registered as an investment adviser could face enforcement action.)

Variable and equity-index annuities are complex insurance products whose returns vary with market performance. Variable annuities' returns are tied to the stock market. Equity-index annuities' returns fluctuate with the market but also provide a minimum guarantee.

Both can be appropriate for people who want tax-advantaged savings or an income stream in retirement. But they're generally ill-suited for people in their 60s, 70s or 80s who'll need access to their money over the next decade. These costly products usually have stiff penalties for withdrawing money before the end of a surrender period that can last up to 15 years.


Consumer groups act - Consumer groups are also stepping up efforts to alert seniors to potential scams. In Michigan, AARP, the advocacy group for those 50 and over, has found a way to counter "free lunch" seminars: It holds its own "free lunch" seminars.

No products are sold at the sessions. Still, "They're wildly popular," AARP's Sally Hurme says of the educational seminars, which feature such names as "What You Should Know About Living Trusts" and "How to Tell the Difference Between An Estate Plan and a Sales Pitch."

Says Anita Salustro, who leads the seminars for AARP in Michigan: "People want some consumer protection. They've been to these free lunches and want some balanced information from someone who's not selling a product."

10 tips for avoiding scams

Don't be a "courtesy" victim. Walk away or hang up if something sounds questionable. Con artists will exploit your good manners.

Check out strangers touting strange deals. Say "no" to any investment agent who wants an immediate decision. Check out the salespeople and their firms with your securities department and NASD, a self-regulatory body. Find tips on avoiding fraud at the North American Securities Administrators Association's site: nasaa.org.

Stay in charge of your money. Beware of anyone who suggests you invest in something you don't understand or who urges you to leave everything in his or her hands.

Don't judge a book by its cover. Successful con artists sound and look professional and can make the flimsiest investment deal sound as safe as putting money in the bank.

Watch out for salespeople who prey on fear. Con artists know you worry about outliving your savings or seeing all of your money vanish as the result of a catastrophic event, such as a costly hospitalization. Fear can cloud your judgment.

Don't make a tragedy worse with rash financial decisions. The death or hospitalization of a spouse has many sad consequences. Financial fraud shouldn't be one of them. If you find yourself suddenly in charge of your own finances, get the facts before making decisions.

Monitor your investments and ask tough questions. Insist on regular written reports. Watch for signs of excessive or unauthorized trading of your money.

Look for trouble retrieving your principal or cashing out profits. Beware of advisers who stall when you want to pull out your principal or profits. Some investments restrict withdrawals for a certain period. But you must be told of these restrictions before investing.

Don't let embarrassment or fear keep you from reporting fraud or abuse. Every day you delay reporting fraud or abuse, the con artist could be spending your money and finding new victims. You can file a complaint with law enforcement, with your state securities commissions and with the Federal Trade Commission, at www.ftc.gov or 877-FTC-HELP (877-382-4357).

Beware of "reload" scams. If you're already the victim of a scam, don't compound the damage by letting con artists "reload" and take more of your assets. Con artists will promise victims they can get back the original money lost.

Learn more about retirement planning.