6 Tips For Avoiding Early Retirement Seminar Scams

The idea of retiring early — putting the workday behind you and living a life of leisure before you’re too old to enjoy it — is incredibly tempting and there is no shortage of not-so-nice people out there willing to stoke that pipe dream at seminars where smooth-talking speakers make it all seem so attainable. Alas, it’s not so simple and a lot of these seminars will do nothing but leave you with less money than you had beforehand.

This is why the folks at the Securities and Exchange Commission (better known as the SEC, but not the one with all the good football teams), have put together a helpful document to inform consumers about the things to be on the lookout for the next time you consider attending one of these early retirement seminars.

Among the SEC’s suggestions:

1. Be skeptical of “free lunch” seminars. Even if those events take place at or near the workplace, don’t assume that your employer is behind the event.

2. Be wary of early retirement pitches based on little-known loopholes. While IRS Section 72(t) is a “little-known loophole” that allows you to access your retirement funds early, there’s a lot more to a successful early retirement than avoiding a 10 percent tax penalty.

3. Figure out the unintended consequences of early retirement. You may also wish to consult an attorney about any other unintended consequences, especially if you are in debt or owe child support or alimony. Depending on the laws in your state, cashing out of your retirement plan may mean that your creditors can collect against that payment you receive–even if you’re rolling the assets to a traditional IRA.

4. Be mindful of “guaranteed” returns. Trading any type of securities carries some degree of risk, and the level of risk typically correlates with the return an investor can expect to receive. Low risk generally means low yields, and high yields typically involve higher risk. Fraud promoters often spend a lot of time trying to convince investors that extremely high returns are “guaranteed” or “can’t miss.” Don’t believe it. High returns represent potential rewards for investors who are willing and financially able to take big risks.

5. Check the speaker’s credentials. Find out whether the person offering you investments is registered with FINRA, which regulates brokers. Use FINRA BrokerCheck at www.finra.org/brokercheck or call the FINRA Hotline at (800) 289-9999. If he or she is registered, be sure to check out any red flags raised by employment or disciplinary history. To check out an investment advisor, use the Securities and Exchange Commission’s Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov or contact your state securities regulator at www.nasaa.org or call (202) 737-0900.

6. Get a second opinion. Before committing to an early retirement strategy, consult with a financial professional of your choosing before taking the advice of someone who “found you.”

Early Retirement Seminars 101 [PDF]

Investor Alert: Investment Seminars – Trading Seminar Scams [investor.gov]