Most seniors had a stable plan for retirement, be it a pension plan, 401(k), or for the more savvy, savings in a CD or other bonds. With the 2008 credit crash, obviously some of those assets dwindled to near non-existence, or disappeared altogether. As more in their "golden age" are wary of trusting the market, low yields in CDs have "forced" seniors to take larger risks with their finances, as higher risk will bear the greatest short term reward. Senior investment and fraud is an issue to be highlighted, as they have geared their investment strategies towards retirement, only for the idea to become a pipe dream.

Lewis Braham of Bloomberg.com feels that in this "schizophrenic" market, retirees cannot live off their bonds directly, and it is highly doubtful that they would like to invest in something that may burn them in the long run. However, with the risk/reward factor, they are throwing caution to the wind. Braham cites financial advisor Gary Schatsky, president of ObjectiveAdvice.com in New York City who says:

“It’s a conversation coming up with clients more and more. People who are incredibly risk averse seem willing to throw risk out the window because they’re not getting high rates of return on conservative investments. I have people who’ve been comfortable with thirty percent in equities. All of a sudden they want to put sixty percent and seventy percent in equities. I’m looking at them asking if this is the same person I’m dealing with. Their response isn’t that there’s a great opportunity in equities markets - it's that there are no other opportunities.”

Fraud Against Seniors

The SEC Office of Investor Education and Advocacy issued a guide for seniors entitled: "A Guide for Seniors: Protect Yourself Against Investment Fraud" aimed to educate the elderly to better recognize investment fraud. This document outlines the following types of fraud for seniors to beware of: Pyramid or "Ponzi" schemes, oil and gas scams, promissory notes, and most importantly prime bank and high return "risk free investments."

Regarding prime bank fraud, the guide highlights the fact that fraudsters will often claim investors' funds will be used for the purchase and trade of "prime bank funds" or other high yield investment programs (HYIPs).  These HYIPS are on clandestine overseas markets, and generate massive returns shared by the investor. Unfortunately, none of these instruments or markets where trading allegedly occurs exist.

The document further explains that, in order to gain some semblance of legitimacy: "The sellers frequently tell potential investors that they have special access to programs that otherwise would be reserved for top financiers on Wall Street, or in London, Geneva or other world financial centers."

It is unsettling that seniors have been taken advantage through any of these schemes in the past. The sad state of affairs is that with many reliant on their market investments, our country took a tough economic hit.