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Superannuation has revolutionised the way people retire.  Many ordinary, working Australians are finding themselves entering retirement with more than a million dollars in retirement savings.

While this should set them up for a long and happy life, living with financial security, sadly it means many will become the victims of various rip-off schemes. Rip off schemes that can be easily avoided with a little bit of knowledge.

Online Scams

The most obvious are on-line scams. ASIC estimates Australians lose some $30 million to online scams every year and sadly, once your money is lost, there is very little that can be done to get it back.

Online scams come in many forms, from bogus emails just appearing on your computer requesting you to send money to clear a tax debt or outstanding judgement, to the infamous on-line love affair scams.

The best advice is just don’t. Don’t send money to an online bank account and never give your bank account details or identification documents like your driver’s license to anyone online without knowing exactly who you are dealing with.

Simplistic Investments

The next biggest scam to avoid is investments that are simply too good to be true. The most common, are companies promoting investments they describe as being like term deposits or secured against property, but which offer a much higher return.

Typically, if you dive into these investments you will learn your funds are being used to provide ‘mezzanine’ finance to property developers and instead of being secure, usually, they are totally at risk should the development not prove profitable.

Watch out for family

Unfortunately, another keyway retirees end up losing money is at the hands of their family or loved ones. Too often on entering retirement, people will discuss with their loved ones just how much money they have in superannuation.

In doing so, it is easy for family members to think you can or should spare just a little of it and give it to them. This can be as simple as making you feel guilty if you don’t, through to actually breaking the law to get their hands on your precious savings.

The best way to avoid all of this is to never discuss your finances in detail with family members or loved ones. Unless you are very confident about your financial situation, you should keep every cent of retirement savings to provide for you in retirement.

While many will argue this is not strictly a rip-off, I believe maintaining a self-managed super fund, or do-it-yourself super fund, in retirement is.

Self-managed super

Self-managed super funds can be a great vehicle for creating wealth but typically, they lose their reason for being in retirement and just become a time consuming and costly way of keeping your superannuation savings.

They require your accountant to lodge reports and tax returns for the fund, which in turn means accounting and compliance bills of several thousand dollars each year.

This money can be saved by simply closing the SMSF and moving your savings into a quality retail fund. Typically, you will have the same level of control over your savings as you do with an SMSF but at a fraction of the cost.

Be wary of retirement homes

Finally, many people choose to move into retirement homes for the easier lifestyle they offer and for the support and comfort of having a strong community around them. However, this can often end in tears. Make sure you find a good solicitor to review any paperwork and ensure your financial rights and obligations are fully explained to you before you sign on the dotted line so you know exactly what you can expect in the future.

Patricia Howard, author of The No-Regrets Guide to Retirement: how to live well, invest wisely and make your money last (Wiley), is a licenced Australian financial adviser. She has a Commerce Degree from the University of Melbourne, holds her own Australian Financial Services Licence and recently passed the FASEA Financial Adviser exam. Find out more at www.patriciahoward.com.au

Note this is general advice only and you should seek advice specific to your circumstances.

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