How to Avoid Retirement Account Scams

The old G.I. Joe cartoons used to end with G.I. Joe explaining a situation to a group of children and then saying, "And knowing is half the battle!" While the phrase applies to all types of situations, it's particularly apt when discussing scams. When you know what to look out for, it's easier to spot a scam coming your way.

If you're retired or moving toward retirement, these tips can help you know what you're looking for and avoid some of the most common scams aimed at separating you from your 401(k), individual retirement account (IRA), or other savings.

Phone and text

It's a numbers game for scammers. They toss out as many lures as they can and hope that you (or someone else) will grab onto one. What's worse is that they can do it from the comfort of their home with nothing more than a smartphone to assist them.

Here are three common scams that involve you either receiving a phone call or a text message.

IRS scam

With this scam, someone claiming to be from the IRS contacts you. They may say that you've made a mistake on a tax form or forgot to report a portion of your retirement income.

Whatever they say, it's all about gaining access to your personal information and either stealing your identity or gaining access to your retirement funds. For example, they may say something like, "I have your Social Security number here, but I wonder if you can tell me what it is so I can verify that I'm speaking with the right person."

Package delivery scam

This scam is so prevalent that you may have already experienced it. You receive a text from someone claiming to be from UPS, FedEx, or another delivery service. The text claims the delivery service is having trouble delivering a package and needs you to verify information. Conveniently, they include a link that takes you to a website.

When you click on the link, the scammer downloads malware onto your phone or asks you to enter personal information, like a username or password. Once they have your username or password, they will try to use it to get into your retirement account.

Wrong number scam

The wrong number scam depends on people being lonely enough to engage with them or too polite to delete the message and report it as junk. If you tell them that they've reached the wrong number, they attempt to strike up a conversation.

Think of it as a long con, as these scammers will often spend days or weeks trying to make you believe you've made a new friend. Then they'll try to get you to send money or share private information that can later be used to clean out your retirement or bank account.

How to avoid these scams:

• Know that the IRS will never contact you via phone or text, making threats or asking for information. Do not engage with them.
• Ignore all text messages from anyone you don't know personally.
• Never click on a link sent by anyone you don't personally know and trust. This includes links sent via text or email.

Technology

Scammers can also rely on modern technology to separate you from your retirement savings.

Tech support scam

A tech support scam involves someone contacting you to say there's something wrong with your computer, and it can be an especially easy one to fall for if you're not tech-savvy. For example, someone may call and say they work in tech support at your brokerage and need help accessing your online brokerage account. Or, a pop-up may appear while you're on the internet, telling you that you've been infected with malware.

To "fix" the problem, you're instructed to provide personal details. Scammers use these details to get into your retirement account. If they're not sure which brokerage your retirement account is with, they'll keep you on the phone in hopes that you'll mention the brokerage's name.

Social media scam

Scammers are able to hack into an account or create an account that appears to belong to one of your friends. Because anyone can be on the other side of an online conversation, they may spend considerable time convincing you that they're who they say they are.

Once they believe they have you, they may ask for money to help get them out of trouble. Since you're retired, they assume that you have a fair amount saved.

AI scam

Artificial intelligence (AI) makes it easy for scammers to make you think someone you know is contacting you. A popular scam involves someone claiming to be a grandchild in trouble, for example.

They ask for money, and naturally, you're inclined to send it. Even if the scammer includes an audio or video clip, it may be a fake, thanks to AI.

How to avoid these scams:

• Be suspicious of anyone who reaches out to you.
• Never share personal information. Ever. This includes details involving your retirement income.
• Never send money using a method that's difficult to trace, like gift cards or cryptocurrency.
• Report any contact that feels threatening to the police.

After working hard for your money, you deserve better than to deal with scammers. However, since they're out there, it's smart to have a defense plan before they ever make contact.