As senior citizens get closer to retirement, scammers see them as financial prey. Learn about different financial scams so you can protect your money.
Image courtesy Logical Position/Summit Art Creations
By Dan Coconate
Special to Financial Independence Hub
Approaching retirement is an exciting time for senior citizens. You’re about to experience the golden years of your life and have worked hard to save up a nest egg to enjoy this relaxing time.
Unfortunately, many scammers know that you probably have that nest egg, and they want to drain it. Scammers are growing increasingly creative in how they target people. All senior citizens should know about the following four financial scams so they can see through this creative criminal behavior.
Loved-One Impersonation
While some technology has changed the world for the better, some has fallen into the hands of criminals. Scammers can now use various voice-changing and phone-cloning technology to impersonate the people we know and love. They often pretend to be a loved one who is in a sudden difficult situation, such as a grandchild in need of bail money or a friend stuck on an overseas trip.
Before you try to help your loved one, verify who and where they are through another communication channel. For example, contact your grandchild’s parents to check where the family is or hang up and call your friend on the number saved in your phone.
Dating-Service Swindle
The retirement years open up free time for seniors, which is a boon when you’re looking for a special someone to date. However, many scammers know that senior citizens may not be as tech-savvy when it comes to the personals. They create fake profiles on dating websites and try to foster a connection with the senior. Before the relationship can develop in-person, they mention financial trouble or ask for money.
The best way to avoid scams while looking for love is to meet prospective dates in person after getting to know them either through email or phone/video conversations. Arrange to meet in a public place that you’re familiar with. But above all, don’t share financial information or lend/give money.
Job-Interview Scam
Everyone should have a chance to love what they do. As you get ready to retire from one career, you may consider transitioning to a job you love instead of a job you need. Unfortunately, scammers can create fake job posts and even hold fake interviews so they can offer you a job. Once you accept, they request your financial information so they can supposedly start your human resources paperwork. Continue Reading…
Canadians have faced cost pressures in many facets of their daily lives, including housing costs, food and gas prices, and insurance premiums to name a few. At the same time, Canadians may be thinking about how inflation and volatile interest rates may have impacted their retirement savings over Q4.
Canadians that participate in defined benefit (DB) pension plans are likely to have seen the financial health of their DB pension plans weaken in Q4, but show an overall improvement over the whole of 2023. DB pension plans that used fixed income leverage may have experienced stable or improved solvency ratios over the quarter.
The Mercer Pension Health Pulse (MPHP) is a measure that tracks the median solvency ratio of the defined benefit (DB) pension plans in Mercer’s pension database. At December 31, 2023 the MPHP closed out the year at 116%, which is a decline over the quarter from 125% as at September 30, 2023, but an improvement from 113% at the beginning of the year. The solvency ratio is one measure of the financial health of a pension plan.
In the final quarter, plans saw positive asset returns, but these returns were not enough to offset an increase in DB liabilities due to a decline in bond yields. While we saw a decline in the financial health of DB pension plans over Q4, it improved over the whole of 2023. In addition, compared to the beginning of year, there are more DB pension plans with solvency ratios above 100%.
Canadian inflation and interest rates
Canadian inflation came down over 2023 and is approaching the upper end of the Bank of Canada’s inflation-control target of 3%. General views are that inflation will continue to decline in 2024 and reach the policy target of 2% in 2025. In 2023 the Bank of Canada increased the overnight rate to 5.00% from 4.25%, which was a continuation of increases that commenced in 2022, to mitigate inflation and to balance against the risk of a recession.
However, DB pension plan benefits are accumulated and paid over periods that are significantly longer than the overnight rate. Interest rates on Canadian bonds with longer terms were volatile throughout the year and finished at lower levels than at the start of the year. It’s unclear whether the interest rates that apply to DB pension plans will stabilize in 2024, and if so, at what level. As such, interest rates continue to pose a significant risk for many DB pension plans. Continue Reading…
You might have read some of these articles also, you know, the ones that say Americans have not saved enough to retire.
Many of these pieces proclaim that you must save enough in your investments to throw off 80% of your current annual salary so that you can afford a comfortable life away from a job. Lots of them will say that you need US$2 million in investments (or more) and woe to the person who thinks they can do it on less.
Approximately 10% of the households in the U.S. have a net worth of one million dollars or more. What are the other 90% supposed to do? Not retire? What kind of common sense does this make? Expecting the regular “Joe”to meet this $2 million dollar mark is not realistic.
As you know, we have over three decades of financial independence behind us. And while everyone’s idea of a perfect lifestyle sans paycheck is different, we can tell you that for these 33-years, we have kept our annual spending around $30,000.
The secret: Living within your means
In all of our years of retirement and travel we cannot recall one retiree who regrets their decision to retire. In fact, most have told us that they wished they had done it sooner.
The Society of Actuaries (SOA) recently conducted 62 in-depth interviews of retired individuals across both the U.S. and Canada. These people were not wealthy and had done little to no financial planning. But the vast majority of them shared that they had adapted to their situation and live within their means. Translation: they have adjusted their spending to the amount of money they have coming in every month.
So basically, it’s really that simple and this is why we say if you want to know about retirement, Go to the Source.
It doesn’t have to be complicated
In our books and in our articles about finance, we say over and over that there are four categories of highest spending in any household. We personally have made adjustments in all four of these categories, and have therefore reaped the benefits of having done so. We discuss these four categories in more depth below.
The financial guys and gals will have you tap dance all over the place with investment products, and a certain financial goal you must achieve. They will press upon you the seriousness of the decision to leave your job for a couple of decades of jobless living. We say it doesn’t really have to be that complicated, but it’s very important to pay attention to these four categories.
Listen up
Housing is THE most expensive category for you to manage. It’s not just the house itself, it’s the maintenance, the property taxes, the insurance, and any updating you might want to do to a place where you are going to be living for years down the road.
If you want to rebuild that boat dock to the lake where your boat is parked during the summer, that takes money. If you are tired of the style of faucets, sinks, tile and tub areas of your bathroom and want to upgrade, that is a large expense. Now that you are retired and want a more modern kitchen, more counter space, better lighting, prettier cabinet covers – Ka-Ching! You are hearing the cash register tallying up the cost.
If you have a hot tub, an extensive garden, or if you want to build a deck to connect the house to the garden, or put in a Koi pond … Well, you get the idea.
I understand that for some people, their home is their castle, and those homes are gorgeous and a comfortable place to stay. All we are suggesting is that homes will never say no to having money poured into them.
If you want to travel or to snow bird part time, then you will find yourself paying twice for housing – the one you have left in your first location, and the hotel or the vacation home in which you will spend part of the year.
If you are not vigilant, this one category will suck the life out of your retirement. We just want you to know that you have a choice.
Downsizing in retirement is not a bad thing. Relocating to a state or country with less taxation is a smart move. You could move to an Active Adult Community where you could choose to own the land or lease it. Here a variety of social activities are offered and the maintenance of your front yard is taken care of in your lifestyle fees.
When you travel, you could choose to house sit. Or take advantage of better pricing for apartments or hotels that rent for the month and include utilities, WiFi, and a maid. You could try AirBnB for less than a hotel room, and live like a local instead of a tourist.
Do you know how much your home (including the taxes, insurance and utilities) costs you per day? It is a figure that might startle you.
Transportation is the second highest category of expense. Now we realize that especially in the States, it is a bit more challenging to wrap your mind around the idea of not owning a car, or just having one for your household instead of three.
According to the latest AAA’s report on car ownership in 2023, it costs an average of $12,182 every year — $1,015.17 every month — to drive for five years at 15,000 miles per year.
So then, in the category of transportation, if you decide you want to fly to an island for a vacation, you must add in the cost of the flight… and any boat trips you might take, and any taxis from the airport to your hotel, and the price of a car rental for the week or two that you will be vacationing.
It all adds up and it’s all a part of this category. Continue Reading…
Overall, if you were in low-cost, diversified ETFs, including some all-in-one ETFs, it should have been a VERY good year for you!
To answer the question, our portfolio performed just fine – since I/we tend to focus on the meaningful income our portfolio generates to eventually cover expenses along with returns. Staying invested in a number of stocks and low-cost ETFs as we do are designed to generate market-like returns since we don’t trade nor tinker with the portfolio, and low-cost ETFs invested in stocks outside Canada offer growth.
If your bias was more simplicity than my approach and seeking total returns, then these ETFs including some great all-in-one ETFs might have done very well for you in 2023 after a terrible 2022:
ETF
2023
2022
VEQT (100% equity)
16.95%
-10.92%
XEQT (100% equity)
17.05%
-10.93%
ZEQT (100% equity)
16.75%
-5.25%
HEQT (100% equity
22.64%
-19.20%
XAW (100% equity ex-Canada)
18.16%
-11.77%
Beyond some of these great all-equity ETFs for your portfolio, consider these in this post that might hold a mix of stocks and bonds to match your risk tolerance and investing objectives:
No financial advisor or money manager needed for these ETFs. The wise ones would tell you to index invest in some diversified ETFs anyhow. Just food for thought in 2024 if you haven’t considered DIY investing.
Here are some interesting, early YTD returns from the oil and gas sector. Gurgen is a must-follow IMO.
What does 2024 have in store?
I have a few (fun) predictions that I will share soon but they are just that, some thoughts and this is a good reminder that experts know nothing about what the financial future might hold – but they have to put food on the table as well…
Vanguard still took a leap of faith though, will they be right in 2024?
Mark Seed is a passionate DIY investor who lives in Ottawa. He invests in Canadian and U.S. dividend paying stocks and low-cost Exchange Traded Funds on his quest to own a $1 million portfolio for an early retirement. You can follow Mark’s insights and perspectives on investing, and much more, by visiting My Own Advisor. This blog originally appeared on his site Jan. 6, 2024 and is republished on the Hub with his permission.
The link between financial well-being and physical wellness is clearer than ever in the fast-paced world of today.
The purpose of this article is to present a thorough understanding of this complex relationship and emphasize the need of implementing preventative measures in order to ensure long-term security.
Recognizing the Connection
Stress related to money can harm our physical well-being and result in a variety of problems, including chronic illnesses, anxiety, and insomnia. Similarly, low physical health can financially burden finances due to higher medical costs and lower productivity at work. Acknowledging this interdependence is essential to implementing a comprehensive strategy for overall wellness.
How Financial Stress affects your Health and Vice Versa
Financial Stress
Financial stress is the emotional and psychological strain arising from financial problems or uncertainties.
Causes: It can stem from various factors such as debt, job loss, inadequate savings, unexpected expenses, or economic instability. Individuals and families may experience financial stress when they perceive a gap between their financial resources and their lifestyle demands.
Impact of Financial Stress on Health
Mental Health: Persistent financial stress is strongly linked to mental health issues, including anxiety and depression. The constant worry about making ends meet or dealing with debt can contribute to heightened stress levels.
Physical Health: Chronic stress has been associated with a range of physical health problems, including cardiovascular issues, sleep disturbances, and compromised immune function.
Behavioural Responses to Financial Stress
Unhealthy Coping Mechanisms: Some individuals may adopt harmful coping mechanisms, such as excessive alcohol or substance use, overeating, or neglecting self-care, as a response to financial stress. These behaviours can further exacerbate health problems.
Reduced Access to Healthcare: Financial Barriers to Healthcare: Individuals facing financial stress may delay or avoid seeking medical attention due to the cost of healthcare services. This can result in undiagnosed or untreated health conditions, leading to more significant health issues over time.
Job Performance and Productivity
Impact on Employment: Financial stress can affect job performance and may even lead to job loss in extreme cases. The loss of employment not only exacerbates financial stress but also disrupts one’s sense of security and stability, impacting mental health.
Vice Versa: How Health affects Finances
Medical Expenses: Poor health can lead to increased medical expenses, including doctor visits, medications, and possible hospitalization. These costs can contribute to financial strain, especially if the individual does not have adequate health insurance coverage.
Work Productivity and Income
Reduced Productivity: Health issues can result in decreased work productivity, absenteeism, or the inability to perform specific job functions. Financial stress may then be exacerbated due to lower income or job loss.
Breaking the Cycle
Financial Literacy and Planning: Improving financial literacy and implementing effective financial planning strategies can help individuals mitigate financial stress. Understanding budgeting, savings, and investment can contribute to a sense of control and security.
Practices for Health and Well-Being: In a similar vein, embracing a healthy lifestyle, learning stress-reduction strategies, and promptly seeking medical attention can enhance both physical and mental health by interrupting the vicious cycle of stress and its negative effects on finances and health.
Proactive Financial Strategies
Financial Planning and Budgeting for a Secure Future
The first step toward securing your financial future is to create and stick to a budget. Goal-setting, tracking expenses, and making decisions are all included in this section on the practical aspects of budgeting. A well-structured budget acts as a roadmap for obtaining financial stability.
Investment and Savings Tips for Long-Term Stability
Long-term financial stability depends on having a solid savings and investing plan. From determining your risk tolerance to researching various investment options, this section offers helpful advice on accumulating wealth and guaranteeing a secure financial future. Continue Reading…
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