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Ten Ways To Wipe Out Retirement Savings

Thursday, September 5, 2013 - 11:40 AM
From MarketWtach.com:

10 ways to wipe out your retirement savings - MarketWatch

Worth repeated readings and reminders.  Bottom Line: Treat your retirement money as your life and spend/invest it as prudent as Rosie43:-)
9
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427
1. Thursday, September 5, 2013 - 12:53 PM
Excellent article 51hh. Thanks for posting.
5
ShorebreakShorebreak2,675 posts since
Apr 6, 2010
Rep Points: 14,527
2. Thursday, September 5, 2013 - 12:57 PM
I have been bitten by a couple, but thankfully not to the tune of a Code Red.  And I posted about a month ago about a scam that did almost cost a client their life savings. 

So, I encourage everyone to read through this list, print the bullet items, and put it on your 'fridge.

Thank you, 51hh.

cd :O)
3
ChrisCDChrisCD70 posts since
Nov 18, 2010
Rep Points: 457
3. Thursday, September 5, 2013 - 2:04 PM
Re:  #8:  You can trust prestigious people in your community. That's why you should do business with them, right?

In the early 80's, a good friend and her husband were approached by one of his closest friends of many years to participate with him in a broad deal that involved buying certain land, reselling for a higher price, and then repeating the cycle for higher stakes.  The husband was ready to write a check for the balance of their modest savings.  My friend privately asked for my advice and I told her to run the other way as fast as they could because it had fraud written all over it.  They went back to their friend, and he insisted it was risk free - after all, a number of big names in the community were involved.  She  came back to me, asking "Are you sure?" and I maintained my "Don't touch it with a ten foot pole" counsel.  Their friend finally gave up. 

Their friend ended up rubbing elbows with the big names in the community - in jail.  He was one of more than 100 convicted in the scheme, lost his professional license after completing his sentence, and was never able to sell financial products again other than under someone else's agency. 

The real estate fraud bankrupted five savings and loans and eventually cost the U.S. government $1 billion - and this was in the '80s. The main figure in the scheme fought an expensive legal battle for at least 10 years but ultimately lost and served 4 years of his 20-year sentence (he was released early due to a serious health condition but lived another 14 years or so).  Another prominent figure, the mayor of a local city, also was convicted and served a number of years. 

It was just too good to be true - and the fact that prominent people were in it didn't make it any more attractive.   In this instance my friends would have wiped out their retirement savings and done time in jail as well.    That would have definitely been a Code Red problem.
4
pearlbrownpearlbrown1,473 posts since
Nov 2, 2010
Rep Points: 6,397
4. Thursday, September 5, 2013 - 4:51 PM
There were a lot scams in the 80's. In the late 90's many were told that the computers would all fail at midnight Dec 31 1999. They were told to stockpile food, water, take your money out of the banks, and get guns, ammo, and secure locks on your homes and if you can build an underground bunker do it. Ya right. Just another scam. 

A local baptist church with a big resort on a lake in Michigan lost 1 million dollars in the 80's. 

Lets hope the consumer protection agency gets some traction. 
2
Ally6770Ally6770932 posts since
Jan 16, 2010
Rep Points: 2,712
5. Thursday, September 5, 2013 - 6:32 PM
Rosie, I wouldn't characterize the Y2K warnings as a scam, although IMO they were in some cases carried to an extreme. 

I started my IT career in the mid 70's and saw plenty of code that would not have passed muster for the transition into 2000 and beyond.  At the time, it wasn't fixed because:
  • a) every software change, no matter how seemingly simple, needs to be rigorously tested to make sure that not only does it work but that it hasn't affected something else - and extra testing means extra effort (impacting resource requirements), extra time (impacting project schedules) and extra money (impacting project budgets),
  • b) 30 years before the event, it wasn't a business priority:  the thinking was "this software probably won't be around in the year 2000"
  • c) even if you did fix that particular piece of potentially questionable code, there was plenty of other code in other interfacing systems which also had to be identified, changed and tested. 
Thirty years later, as 2000 approached, nothing had changed:  a) systems had to be tested just as rigorously to make sure operations weren't disrupted by the transition into 2000 and b) the old software was still being run, especially (but definitely not limited to) financial systems in many companies.  These were old legacy systems written in the 60's and 70's which were still running and at the heart of the enterprise, whether the business was in manufacturing, transportation, or telecomm.  The only difference was that now it was showtime, and it was a business priority across all enterprises. 

It is also important to note that for many companies, Y2K readiness was an audit issue, to which companies had to respond, as well as a major interest for the Boards of Director.  Disruption to business operations was not an option and yes the potential problem was taken seriously. 

What I remember of New Year's Eve 1999 is participating, along with other members of the industry, in a twelve-hour-long open conference call with a government agency, while we each monitored and reported on operations in our companies and any problems which had been identified.   Internally, in parallel, we worked as usual side by side with our business counterparts to monitor operations and we had programmers available around the clock to allow a rapid response to any issues which surfaced.    We were proud that our teams did their jobs well and that our company encountered no problems in the transition and in the days after.  The cost in terms of effort and money was huge, but I can tell you that it absolutely needed to be done. 

Was it a scam?  No - it was real.  It was a non-event and that was exactly what we had planned for and worked so hard to achieve.

The warnings to stockpile food, water, have some money on hand, etc should have been simply common sense precautions in case of disruptions much like the precautions you might take when blizzards and other disasters are expected.  Guns, ammo, and underground bunkers?  Not so much - but when people don't know what to expect, they come up with scary scenarios.  
6
pearlbrownpearlbrown1,473 posts since
Nov 2, 2010
Rep Points: 6,397
6. Thursday, September 5, 2013 - 6:56 PM
Rosie:  Yes, I remember the good ole days of stockpiling but back then I actually had a house and a place to put the tons of canned food etc.  It was a big waste of money because a lot of it expired on me so we couldn't even use it when we felt the "dire event" was not going to happen.   I don't think they were "scams" exactly but more like money hungrey people who wanted to sell their books scaring everyone.  We still have them on the internet but now I have to disregard them since I have no place to stockpile anything.
2
paoli2paoli21,401 posts since
Aug 10, 2011
Rep Points: 6,135
7. Thursday, September 5, 2013 - 7:33 PM
I did not work in IT but did work in a bank and know the tests they went through trying to make sure that everything would be OK. To make people panic just to make a profit is what to what I was referring. There were back-ups as always in case of an emergency. There are back ups of transactions. They are or were stored in 3 places that are fireproof, at the big banks anyway. I had a local credit union that last year actually lost the paper copy of beneficiaries on my husband's IRA and evidently had no back-up and they refused to accept a copy that we were given at opening with their managers signature. That evidently was the only copy they had. It ended up OK but only because I also had a copy of the original disclosure. They wanted it to go through probate and if it did I could not have disclaimed it to the contingent beneficiaries or it would have more difficult and more expensive I should have written. 
1
Ally6770Ally6770932 posts since
Jan 16, 2010
Rep Points: 2,712
8. Thursday, September 5, 2013 - 8:26 PM
Great post, pearlbrown.

Society mocks the Y2K warnings because they do not understand the potential problem.

After the global financial crisis, society blames anyone and everyone for not warning and preventing it.  

Now, those who warn of future problems are mocked.

Until the next crisis.  

Then society will pout/mock/pout again and again and again.

 
Rosie, I wouldn't characterize the Y2K warnings as a scam, although IMO they were in some cases carried to an extreme. 

I started my IT career in the mid 70's and saw plenty of code that would not have passed muster for the transition into 2000 and beyond.  At the time, it wasn't fixed because:
  • a) every software change, no matter how seemingly simple, needs to be rigorously tested to make sure that not only does it work but that it hasn't affected something else - and extra testing means extra effort (impacting resource requirements), extra time (impacting project schedules) and extra money (impacting project budgets),
  • b) 30 years before the event, it wasn't a business priority:  the thinking was "this software probably won't be around in the year 2000"
  • c) even if you did fix that particular piece of potentially questionable code, there was plenty of other code in other interfacing systems which also had to be identified, changed and tested. 
Thirty years later, as 2000 approached, nothing had changed:  a) systems had to be tested just as rigorously to make sure operations weren't disrupted by the transition into 2000 and b) the old software was still being run, especially (but definitely not limited to) financial systems in many companies.  These were old legacy systems written in the 60's and 70's which were still running and at the heart of the enterprise, whether the business was in manufacturing, transportation, or telecomm.  The only difference was that now it was showtime, and it was a business priority across all enterprises. 

It is also important to note that for many companies, Y2K readiness was an audit issue, to which companies had to respond, as well as a major interest for the Boards of Director.  Disruption to business operations was not an option and yes the potential problem was taken seriously. 

What I remember of New Year's Eve 1999 is participating, along with other members of the industry, in a twelve-hour-long open conference call with a government agency, while we each monitored and reported on operations in our companies and any problems which had been identified.   Internally, in parallel, we worked as usual side by side with our business counterparts to monitor operations and we had programmers available around the clock to allow a rapid response to any issues which surfaced.    We were proud that our teams did their jobs well and that our company encountered no problems in the transition and in the days after.  The cost in terms of effort and money was huge, but I can tell you that it absolutely needed to be done. 

Was it a scam?  No - it was real.  It was a non-event and that was exactly what we had planned for and worked so hard to achieve.

The warnings to stockpile food, water, have some money on hand, etc should have been simply common sense precautions in case of disruptions much like the precautions you might take when blizzards and other disasters are expected.  Guns, ammo, and underground bunkers?  Not so much - but when people don't know what to expect, they come up with scary scenarios.  
2
MikeMike327 posts since
Feb 22, 2010
Rep Points: 876
9. Thursday, September 5, 2013 - 11:56 PM
Thank you, Mike.

Rosie, we also left nothing to chance and took backups of backups before Y2K rolled around.  Our business partners dusted off, reviewed and updated their business disaster recovery plans so that if the worst happened and everything started falling apart, they could use them to run the company for a VERY limited window of time without the supporting systems.  But I emphasize the VERY limited part because we would start losing massive amounts of revenue quickly as our customers would turn to our competitors.    They did have a party to burn the contingency plan (but not before they made backup copies to be stored at different sites just in case LOL). 

I do understand your scam angle better now, and yes a lot of people made obscene amounts of money by scaring others with wild tales of what could happen.  Through fortunate circumstances, it just so happened that these same people had just the right solutions.  Unfortunately snake oil salesmen are everywhere and eager to slither out from under a rock and take advantage of those who are unsuspecting, ill-informed, or otherwise vulnerable.   Listening to them and following their advice is a quick way to wipe out years of hard work and retirement savings. 
3
pearlbrownpearlbrown1,473 posts since
Nov 2, 2010
Rep Points: 6,397
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