There is a reason for that old saying that “a fool and his money are soon parted”. After a lifetime of working and saving money for early retirement as an ex-pat, it is crushing to have your funds stolen right from under you. This is the retirement mistake you could ever make, and how to avoid it.
I get triggered by things l read, and l am always amazed at how people only look for answers or help after the damage has been done. It´s hard for me to feel sorry for people sometimes because they do foolish things that a bit of research (even just a few minutes on the computer) would have prevented the disaster that followed.
The biggest retirement mistake to avoid as an expat
Table of Contents:
The hugest mistake is cashing in your pension and moving the funds to a shady outfit overseas. It is frightening the level of vulnerability people display when they choose to trust an unknown group just from the promises of bigger returns and empty promises. This is even bigger than the biggest lie we tell ourselves as far as ex-pat mistakes go.
How do pension scammers find their victims?
Easy. On the internet. Everyone can attest to being bombarded with ads for whatever Google search you do. For instance, I googled Skechers arch-fit sneakers and for the next two months, I was awash with ads, not just for Skechers, but with every other similar brand when l didn’t take the bait of the Skecher Ads.
The same goes for pension scammers. For expats in Valencia, and the rest of the world for that matter, your browser keeps track of your movements so they can target ads tailored to you. You can always try blocking cookies, but it’s not 100% effective.
Getting wowed by the glitz:
These “investment companies” gain your trust with the ads they run on whatever sites you visit. The more you see them, the more you begin to pay attention and you start to trust them. The use trigger words like “pension liberation” “loopholes”, “guarantees” and “tax avoidance” amongst many other trigger words and phrases.
Common sense starts to go out the window and greed takes over. The vision of doubling your money or even more so you have plenty eventually leads you to not entertaining monthly distributions, but instead a lump sum. Cashing out the whole thing and transferring that sum to the investment company.
Fast forward a few months, and your account is drained through bad investments, trading with very high fees for the company and little profit for you, or outright scamming with your money disappearing completely.
How to avoid pension scams:
Don’t believe the hype.
Anyone with a computer and little money can start an online ¨business¨ in this day and age, no matter what kind. It doesn’t take a genius. I am always amazed that people would trust an unknown entity with their entire life savings without a second thought.
They will, however, not pay a hundred dollars to have a consultation or get proper financial advice about what to expect in their ex-pat lives. These same people will write me later after being scammed out of flat deposits, and then want to know what to do. Sigh… nothing. Chuck it up to experience.
Do a bit of research:
I just read an article saying that Google and Facebook etc. should take some responsibility for this because they let scammers advertise on their platform. Meh… No! Good luck with that!. The internet comes with both good and bad. Individuals need to take responsibility for their own actions, first and foremost.
The slightest bit of research, ironically on Google would have clued you in on this. It took me less than two minutes to look up the name of the company that this other victim was now asking about on my FB group after losing his life savings to see that they had scammed at least 70 people out of their pensions, going back almost five years.
Leave your money where it is:
Many ex-pats before you have been doing fine taking a monthly withdrawal, and leaving their funds intact with the company that has been there for all their working lives and then some. It’s a good time to rebalance your portfolio and move into more stable funds that are less volatile for sure, but leave it there unless you know it’s a well-known global company you’re moving to.
Check out the firm:
It comes as no surprise that a lot of these companies are registered in places like Bermuda, Cayman Island, and Malta. That alone, should make you suspicious, and prompt you to do your due diligence because chances are your money will disappear into the Bermuda Triangle. While the U.K numbers for scamming were higher, it seems the U.S ex-pats are playing catchup, and Malta is now one of the dirty dozen.
Stop trying to look for loopholes:
You are not Amazon or any of the other gigantic companies and individuals who pay little or no taxes. The IRS or HMRC will eventually catch up with you, and despite being scammed, you could still end up with a very heavy fine or tax bill.
If you have a 401k for instance, the money was put in PRE-TAX. This means you need to pay taxes upon withdrawal. Nobody can help you avoid taxes due legally. Stop trying to fight a losing battle.
The biggest retirement mistake Wrapup:
The moral of the story is that if something looks too good, then it probably is. You worked so hard for your money, you should get to spend it too. Falling for a fraud like this means your retirement is in jeopardy, and more than likely you will lose some, most, or all of your savings. This is one of the retirement mistakes to avoid, and a pretty easy one too.
The victim l wrote about above? His money is gone. The company is in Malta, unregulated and unlicensed of course, as that is not a requirement, probably why they are operating from there. He now has to go back to work and start from scratch. The chances of recovering his money are probably nil. You should be living your best life, not worrying about having to fund it all over again. A cautionary tale for all.