How Affluent Retirees Get Poorer

In an earlier post, we noted Jeff Opdyke's Wall Street Journal column recounting how annuity peddlers tried to rip off first his grandmother, then his mother.

Opdyke has followed up with other articles on senior scams. The latest surveys a variety of costly products being pitched to older citizens:

A host of ill-suited financial products -- from reverse mortgages, to life-settlement contracts and variable annuities -- are being targeted at retirees with pitches designed to tap into deep-seated fears about the affordability of retirement.

Regulators say the size of the problem is impossible to quantify. Still, it has reached such a magnitude that the National Association of Securities Dealers, a self-regulatory agency for the financial industry, this year will launch a campaign to teach people how to see through the selling techniques used by pitchmen to pry open their wallets.

Some products are perennial favorites among unscrupulous salespeople: complex variable annuities, top-heavy life-insurance policies, and living trusts. Others reflect efforts among agents, brokers and planners to benefit from increased interest in relatively new creations such as long-term-care insurance, reverse mortgages, life settlements and even Medicare Part D prescription coverage.

The most egregious scams, Opdyke notes, combine products. Sell the old guy a reverse mortgage, then get him to put the proceeds into a deferred annuity. Or, sell the old gal a costly albeit canned living trust, then follow up with pitches for unneeded insurance or annuities.

In Washington State, Opdyke writes, sales of boilerplate trusts have become such a plague that the attorney general has asked the legislature to ban the sale of trusts by nonlawyers.

Here's some good news: For about 20 years, the living trust salesperson in this news item will be otherwise occupied.