Financial Red Flags and Scams to Watch Out For
As you manage your retirement finances, it’s essential to stay vigilant against scams and costly mistakes. Criminals often target seniors by impersonating government officials, and a simple misunderstanding of the rules can lead to financial strain.
Scam 1: The Social Security Number Suspension Call
One of the most common and frightening scams involves a phone call, often a robocall, claiming that your Social Security number has been suspended due to suspicious activity or a crime. The caller will sound urgent and authoritative, threatening you with arrest or legal action if you don’t provide personal information (like your full SSN or bank account details) or send them money via gift cards or wire transfer to “resolve” the issue.
Red Flag: The Social Security Administration will almost never call you to threaten you or demand immediate payment. They primarily communicate via U.S. mail. If you receive such a call, hang up immediately. Do not confirm any part of your SSN or provide any other information. Report the scam to the authorities. To protect yourself from scams and for consumer information, consult the Consumer Financial Protection Bureau (CFPB) and the FTC.
Scam 2: Phishing Emails Offering “Extra” Benefits
Another prevalent scam arrives as an email or text message that appears to be from the SSA. It might promise a special cost-of-living increase or an extra benefit payment due to a new law. The message will contain a link and urge you to click it to “verify your identity” or “claim your payment.”
Red Flag: The link leads to a convincing but fake website designed to steal your username, password, and other sensitive data. The SSA does not send emails asking for personal information. Never click on links in unsolicited messages. If you want to check on your benefits, type “SSA.gov” directly into your browser to visit the official site.
Costly Mistake: Not Understanding the Annual Earnings Test
This isn’t a scam, but it’s a rule that trips up many retirees. If you claim Social Security benefits before you reach your Full Retirement Age and you continue to work, your benefits can be temporarily withheld if your earnings exceed a certain limit. For 2024, the limit is $22,320. For every $2 you earn above that limit, the SSA will withhold $1 in benefits.
Important Clarification: This money is not permanently lost. Once you reach your FRA, the SSA will recalculate your benefit and give you credit for the months your benefits were withheld. However, it can cause a major, unexpected drop in your monthly income if you aren’t prepared for it. The earnings test disappears completely once you reach your Full Retirement Age; you can earn any amount of money without your benefits being reduced.
