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Investment Fraud: 5 Schemes to Watch For As You Near Retirement

You’ve been saving all your working life for retirement, and you’re almost there! While you may think that your financial security is settled, you need to be on the lookout for fraudulent investors who target working-age individuals close to retirement. Your accumulated savings and your desire to be done with work sooner than later makes you both financially rewarding and emotionally vulnerable to predatory investors.

Here are five common fraudulent investment schemes you should watch out for as you near retirement:

1) 401K to IRA: You should never move your money out of your 401K into an IRA unless you have checked the IRA’s validity and security with your personal attorney or a third party investor. If an investor is persuading you to move your 401k savings to an IRA with their investment firm in the promise of higher returns and the promise of early retirement, the investment is likely a scam. The investment may have hidden risks and high associated fees.

2) “Workplace” Investment Events: Obviously, when your workplace is hosting an investment education event held with the firm that manages 401ks, you should go. But don’t assume that all investment events that are advertised in your workplace or occur nearby are sanctioned workplace events. Fraudulent investors often advertise retirement events, particularly ones that focus on early retirement, in a workplace without the employer’s knowledge. You should always make sure that an event is sponsored by your workplace before attending.

3) Big Yearly Draws- If an investor is encouraging you to move your retirement savings to an investment so that you can reap large yearly draws of up to 7%, you should be wary. These schemes can leave you with a cash shortage in just a few years. Draws of no more than 3 to 5% are recommended, particularly in the early years of retirement.

4) Catered Investments: If an investor is going out of their way to “get to know you” and to cater an investment just for you, you could be the target of a fraudulent investor. These investors often work to learn about your family, illnesses, and financial setbacks and then use this personal knowledge to tug at your emotions and persuade you into a bad investment.

5) Too Good to Be True: Always, always, if it sounds too good to be true, it probably is. Any investor promising high return, no risk investment is taking advantage of you.

Thousands of retirement aged people fall victim to fraudulent investment schemes. investment fraud attorney work hard to earn back the savings for their clients who have lost their retirement savings, but there are no guarantees that all or any of the money can be recovered.

Reviewing opportunities with an investment attorney before you move your life savings around can save you pain and financial loss in the long run. Never feel pressured to invest quickly– that is a definite sign of fraud. If an investor doesn’t want you to check with your attorney or another investment professional about the security of the investment, walk out.