This is a guest post by Marina Chernyak.
Given the recent scary economic situation, more people are becoming anxious about ensuring some form of retirement annuity. Annuity program sales went up by 48% from 2007 to 2009, reaching $108 billion in 2009. If you’re planning for your retirement, how do you choose the right one? Use our 15 tips to help you with your decision.
This is a guest post by Biljana Dimovska
Summary
This article explores the recent HSBC bond mis-seliing, how it affected those saving for care home fees, and explains how to avoid getting caught out.
Stories about care home fees are pretty common in the news at the moment. There are some serious concerns in the UK, as it has an ageing population and the amount of investment required for care of the elderly is likely to increase significantly over the next few decades. There are suggestions that people should do more, wherever it is possible, to put money aside for their own care in old age. The fact is that many people are turning to different types of investment in order to make sure that the money is available when they need it.
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‘Nothing is certain but death and taxes’, according to Benjamin Franklin, but in saying that he was perhaps too pessimistic, particularly for seniors. Although taxes can be a major burden for the young, seniors often benefit from the breaks that society wants to give them. However to so benefit it is important to complete a tax return. Even for that, help is often available to elders.
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Most seniors look forward to a good life in retirement. However there are now two key changes that mean that this only comes through careful financial planning for your retirement.
In other words, you may have to trim your spending to make your savings last. Just consider one of the examples quoted in the Star news item:
When Janet and Bob retired at age 55, they were earning a joint income of $400,000. Both were senior executives in the corporate world. Now in their late 60s, they live more frugally. No longer do they own a cottage up north, buy new cars, eat in restaurants or rent condos in Florida with friends. They live on a budget of $60,000 to $70,000 a year, which doesn’t include debt, to make their savings last.
Statistics Canada published a report in 2005, which detailed the spending patterns of older people:
Here are some of the ways you can stretch your savings.
As a retiree, you have fewer work-related expenses, you pay less in personal income tax and you contribute less to public benefit programs. Since there is no need to leave an estate, with careful living you can enjoy what you have to the maximum and hope to die when your time comes just a little better than broke.
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If you have income, then you must pay taxes. That is true even when that income may be only what a Ponzi schemer may have reported to you. That is unfortunately the situation in which the Montréal victims of Earl Jones now find themselves.
Apparently the Quebec tax authorities will try to lighten the tax burden on Jones’s victims even though many should have no tax burden since the income was illusory.
Victims of financial fraudster Earl Jones won’t have to pay taxes on investment income they didn’t actually earn, Quebec Revenue Minister Robert Dutil announced. Jones’s victims will also be able claim a deduction for lost revenues, Dutil said in a statement. “I sympathize with these people who are going through a deplorable situation, and I want to clarify this to help avoid all confusion for these victims,” he said.
When someone is in a precarious financial situation and unable to meet their obligations, the agency follows their case closely in line with the information available.
Some of the fraudster’s victims are finding at the federal level that things are moving more slowly and there are delays in getting some relief for taxes they paid on fictitious income.
Kevin Curran, a member of the Earl Jones Victims Organizing Committee, says the government told victims last summer to file adjusted tax returns for previous years stating that the fake income provided to them by Mr. Jones was erroneously reported, at which point they would receive tax refunds. Many of the more than 150 victims did so, but despite a promise to move swiftly, they are still waiting for their tax returns. Some of these people are struggling to afford daily living expenses. Furthermore, a handful of the victims that would qualify for increased government pensions cannot get them because their income is still wrongly pegged as being too high.
Last year in the United States, the Ponzi Scheme victims of Bernie Madoff received somewhat faster tax breaks although the public resentment about the support the troubled banks were getting may have created a more favorable climate for speedy action.
The Internal Revenue Service announced unprecedented tax relief for victims of Ponzi schemes, saying many of those affected could deduct up to 95% of their losses immediately. The move represents a significant relaxation of longstanding limits on tax relief for victims of investment scams. It reflects the pressure officials are feeling to help individuals who have been hurt in the current financial crisis, when public resentment is growing over the billions of dollars the government is directing into troubled banks and other big corporations.
Meanwhile it is good to see that vigorous action is being taken to prosecute those who perpetrated these dreadful schemes. The Feds are targeting Bernie Madoff’s brother and sons for Tax Fraud.
Last summer, prosecutors essentially made clear they wouldn’t go after Bernie’s wife, Ruth. But that’s not the case in regard to his brother, Peter, or his sons, Mark and Andrew. It is reported that federal tax-fraud prosecutors in Manhattan are pursuing cases against Bernard Madoff’s brother and sons.
To add to this sorry tale of woe, it now appears that there is a Bogus Web Site Reportedly Trying to Rip Off Madoff Victims
A bogus Web site is targeting victims of Bernard Madoff’s record Ponzi scheme in an apparent identity-theft scam, the Securities Investor Protection Corp warned today, The New York Post reported. The site claims that $1.3 billion in Madoff money was recently found hidden in Malaysia, and displays photos of huge stacks of cash allegedly stashed by the mega-crook. The so-called “International Securities Investor Protection Corporation” urges burned investors to submit claims by filling out an online form and mailing in a copy of “your most recent brokerage account statement.”
The site rips off design elements of the real SIPC site. The SIPC wants to be as clear as possible that Madoff victims and other investors should not share any personal financial information via this Web site or rely upon it as an information source.
One would hope that these poor victims have gone through enough to realize that once bitten requires them to be twice shy.
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Earl Jones gets an 11-year sentence for orchestrating his massive fraud scheme.
Victims of the Ponzi schemer had hoped he would get the maximum 14-year sentence but a deal reached between prosecutors and his attorneys agreed on the 11-year sentence. Since he can apply for parole after serving one-sixth of his sentence that means he could be released from prison after 22 months. Many victims who have seen their future destroyed wonder how such an evil fraudster could possibly be spared the maximum sentence allowed by the law.
Earl Jones pleaded guilty last month to running a pyramid scheme that started in 1982 and included at least 158 victims, including several close friends and relatives. The Quebec court Judge Helene Morin was extremely harsh on Earl Jones in her remarks Monday. “Some victims call him a liar, a demon, a parasite, a snake, a financial predator and a social sociopath, as he promised them that their money was not only to be safe with him but growing.”
Many people had trusted Earl Jones but perhaps the most devastating case was that of his brother, Bevan.
Jones’ brother said he never wanted to speak to him again and would never forgive him.
“None of us will ever be the same,” said Bevan Jones who, along with his wife Frances Gordon, was fleeced out of $1 million.
“You work all your life, you sell your printing company and now we live on our government pension,” Bevan Jones said.
“Everything we saved up for and worked for is gone, ruined, by this little … I can’t say the word.”
The judge made sure that Earl Jones understood that his victims are not just suffering financially: she said all have suffered from insomnia and many have seen their health rapidly deteriorate. Some who took pride in never having taken medication are now on anti-depressants.
Jones has been shunned not only by his friends and relatives, but his wife Maxine has also filed for divorce. Jones once lived in the lap of luxury, but recently, he lived anonymously in a suburban rooming house and was penniless apart from a government pension.
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It used to be ‘Diamonds are a girl’s best friend’ was the acceptable message. Money has always had a somewhat tarnished reputation with words like ‘money-grubbing’ setting the tone. It is therefore not surprising to see articles with titles like why women “switch off” over money.
Financial literacy reports continue to tell us that Australian women simply “switch off” when it comes to finance. The Women Understanding Money report found 52% of women find dealing with money stressful and overwhelming, 25% have absolutely no savings for retirement and of the women who do invest, only 5% look at a company’s background information. Is this switch off factor just because we find talking about money boring and unimportant, or is there something else going on?
Even in discussions with high-earning, independently successful women, many women weren’t really tuned in to their own personal finance situation.
Perhaps the reason women don’t tune into their personal finances as much as men do might be because of the different ways of measuring success. Men, from a very young age, compare their salaries and the increasing value of their investment portfolios, and are more likely to spend money on expensive cars as a symbol to the world that they are a success. Conversely women spend so much time worrying about their children, partners and parents, they seldom have time left over to focus on themselves, and their own finances and investments.
There has been a historical exclusion for women in dealing with money in the not-too-distant past. Many women grew up with the expectation that women would rely on men for their financial security.but this is now changing. Women are now much more independent, both socially and financially. If women lack the confidence, the experience or the interest to get involved, then now is the time to change all that.
Women must seek out sound financial information and not hang on to the money myths they may have inherited from Mom, according to MP Dunleavey. Discussions with women make it clear that their mothers are often powerful financial role models. Unfortunately that can be for better or for worse.
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Seniors often may feel the need for someone who can help them in standing up for their rights when dealing with large corporations. Finding who can address your concerns in a satisfactory way becomes increasingly difficult when everyone is trying to push you to their website or insists you navigate their electronic telephone system. Thankfully some corporations take their responsibilities towards their customers seriously and are providing that much needed support.
A recent case with the Royal Bank illustrates what can happen. Seniors are living longer and becoming more educated, and this is forcing bankers to sometimes think outside of the box.
For example, a man in his late 80s went into a branch and asked to take out a five-year mortgage. He was in good physical and mental health, but the bank refused to commit him to a five-year loan that had a penalty for early termination. In this case, getting the senior his rights needed the help of the RBC Ombudsman.
Yes there is such a person: Wendy Knight is the RBC ombudsman. She was able to facilitate a resolution that kept everyone happy.
Banks are a group that is often criticized for poor customer service and the cell phone companies are on the low end of the scale too. Perhaps it is not surprising then that there is a Rogers Ombudsman, who is already making a difference. The company has now appointed its first ombudsman, Donald E. Moffatt. While he is supposed to act as a court of last resort, Moffatt will intervene quickly if he sees an injustice.
As ombudsman, Moffatt says he is independent from Rogers. He has no access to company records and has to ask for authorization from customers to check their files.
To get in touch, you have to go through three earlier steps, then send an email to ombudsman@rci.rogers.com or send a fax to 416-935-3604.
One might hope that the training that customer representatives receive would eliminate the need for an ombudsman. That is clearly not the case yet. Until it is, providing an ombudsman means that you can hopefully get a hearing even if it takes some effort to achieve that.
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Seniors often have financial concerns as they contemplate their future and their perhaps dwindling assets. If they rely on Social Security and state pensions, even those are questioned by some who liken them to a Ponzi scheme. The older members who are drawing out now are being paid out of a fund that is being refilled by contributions from younger members who hope they will find there is something they can draw on in the distant future.
It is all very concerning and is made much more worrying by the deep recession that only slowly may be receding. Many seniors will be worriedly scratching their heads on whether they will have enough to live on, particularly if they are in good health and may have a long life.
Couple that with the many cases of Financial Abuse of Elders that was covered in an earlier post, and you end up with concerned seniors who are not sure who to consult. Some financial abuse cases are perpetrated by the seniors’ sons and daughters or by other family members. Who then to turn to? If a trusted friend suggests a mature person whom they have confidence in, then this may appear less thorny than having to involve the family in your financial matters.
If that mature person gains your trust and confidence, then it may be only a matter of time before they are suggesting ways of investing where you can get better returns than the low interest rates the banks presently offer on savings. Once on the hook, you may soon find that your goose has been cooked (to mangle metaphors).
It is probable that there are many more Ponzi schemes than actually hit the headlines. Bernard Madoff was of course the biggest in history, but others have caused equal misery to many seniors. Last month, we all learned of Earl Jones, the Montreal Ponzi Schemer, who preyed on family members and friends and lived the high life as their savings disappeared.
Last week, here in Vancouver we read that B.C. Ponzi schemers were found guilty of fraud:
Four British Columbia residents, Hal (Mick) Allan McLeod, Kenneth Robert McMordie (aka Byrun Fox), Dianne Sharon Rosiek and David John Vaughan, were ruled guilty of fraud for violating securities laws by a B.C. Securities Commission panel. They lied to investors about how their money was being invested, what they could expect as a return, and the risk level of these investments. Their Ponzi scheme cost some 800 investors more than $10 million US.
Today the news is that a $50 million Ponzi Scheme Is Alleged in Detroit.
A class action suit in Federal Court claims that John Bravata and Richard Trabulsy masterminded BBC Equities and Bravata Financial Group, which stole $50 million from hundreds of people in a Ponzi scheme, . They are said to have promised 8 to 12 percent returns in a real estate scam, guaranteeing “safer returns than other investment options,” according to the complaint. They began by soliciting family and friends for money, then began holding “free lunch” seminars each week to target senior citizens. Half of BBC’s money allegedly came from IRA accounts.
In all these cases, the seniors are likely to see only a fraction of their original holdings. This is financial abuse of the very worst kind. The only safeguard is to seek financial counsel and advice from only reputable and knowledgeable individuals who will not benefit in any way from the impartial advice they may give you.
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It may not be on the billions of dollars scale of Bernard Madoff but Earl Jones of Montreal seems to have turned from a ‘charming’ family man to an even greater ‘monster’ who allegedly defrauded 130 clients of between $50 million and $100 million.
Earl Jones seemed like the kind of guy you’d like as a friend. Those closest to him describe the financial planner as charming and fun, adored by children, devoted father to two daughters. He was generous, quick to pay for drinks, and could be counted on to show up at weddings, funerals and hospital bedsides.
In June, the monthly cheques he issued to his clients for decades stopped coming or bounced, and Jones, 67, stopped taking calls. Investors got a sick feeling in their stomach. They began to fear the generosity of a man known to many as Uncle Earl had been coming directly out of their life savings, and his appearance at funerals and weddings might not have been so selfless after all.
Authorities now say Jones may have orchestrated an elaborate Ponzi scheme that defrauded investors of between $50 million and $100 million, and who has vanished.
He was being sought on Cape Cod where he had been involved with the Living Independently Forever, Inc. facility, which offered supported independent living in condominium communities. Unfortunately clients who thought they had a few hundred thousand gaining interest face eviction from their retirement homes because they can’t pay the rent.
Like Madoff, Jones understood that his greatest accomplice was trust. Madoff earned the confidence of two of the most respected businessmen and philanthropists in his world early on and built on this trust. More disastrously, Jones targeted his family and his immediate circle of friends.
Whatever happened, it’s evident Jones was growing increasingly desperate in the last few years, and especially in the last month. At least five years ago he began convincing widows with paid-off homes to take out a new mortgage so he could invest the loan and get a higher return.
In June, the stories got more far-fetched, with Jones convincing people to remortgage their homes because Bunny Storey, widow of Grey Cup hero and NHL referee Red Storey, or others were desperate for cash and would repay with interest for a short-term loan. It was all lies.
There is nothing redeeming in this tragedy. The only hope is that the bilked widow will soon be a thing of the past as women are now more involved in the family finances. They are thus less likely to hand over their cash to a spouse – or a husbandly adviser who may be peddling a Ponzi scheme.
Update
Earl Jones is arrested in his Montreal lawyer’s office.
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