(November 23, 2009) The California Chamber of Commerce wants employers and employees to be aware of aggressive salespeople or even fraudsters who try to convince employees to cash in their retirement investments early with misleading promises of big financial returns that simply can’t be sustained.

To prevent these scams, California companies can take advantage of expert resources currently available through the Financial Industry Regulatory Authority (FINRA).

FINRA, an independent, non-profit regulatory organization, works to protect investors by making sure the securities industry operates fairly and honestly. FINRA has several free resources and services to help older workers protect themselves. The resources include free hard copies of the employee brochure that can be included in retiree kits, the “Help Your Employees Achieve Their Retirement Dream: Tips for Spotting Early Retirement Scams” brochure and evaluations of materials used in retirement seminars.

Be Skeptical

Because the allure of a leisurely retirement can be tempting, and those who promote early retirement schemes can be extremely persuasive, FINRA has labeled the following statements as things employers and employees should be skeptical of if approached with retirement advice:

• Everyone can retire early. The reality is that many employees do not have the resources to do so. Early retirement is not feasible for many people, and is particularly risky for workers who haven’t saved enough for an extended retirement and who have limited opportunities for other employment.
• You can make as much in retirement as you can by continuing to work. Promises like this usually hinge on unrealistically high returns on investments and unsustainably large yearly withdrawals.
• You can expect returns of 12 percent or more. No one can predict what an investment will do from one year to the next—and even if an investment performed well in the past, this is no guarantee it will do so in the future. In addition, any return more than 10.4 percent exceeds the historical long-term returns for the stock market.
• You can withdraw 7 percent or more and never run out of money. Being conservative with withdrawals, especially during the first years of retirement, is the wisest decision. Many experts recommend withdrawal rates between 3 and 5 percent per year, especially in the first years of retirement.

More Information Free hard copies of materials are available. Companies also can send seminar information to FINRA to review for consistency with applicable standards.

For more information, contact FINRA Associate Director of Investor Education Peter Chandler, (202) 728-8827, peter.chandler@fi nra.org, or visit www.finra.org.