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Scams targeting retirees are surging. Americans over 60 years of age reported $7.7 billion in losses in 2025.[1] As scammers grow increasingly sophisticated, awareness and prevention have become essential tools in protecting older adults’ financial security, independence, and well-being. The scams are targeting older adults who are no longer in the workforce. When older adults are no longer in the work force there is less social engagement, little fraud detection training and/or alerts to new cybersecurity risks. By way of example, mandatory corporate protocols keep all staff members updated on current scams, whereas reduced daily oversight and greater recreational time can create vulnerabilities.  Adding to the financial pain of being scammed out of assets, as stated below, the retirees may also face significant tax consequences in which they may have little relief.

1. Investment Scams

Investment scams remain the costliest fraud category for older adults.[2] These schemes promise guaranteed or unusually high returns, often in complex areas such as cryptocurrency or real estate.[3] Fraudsters may use professional-looking websites, testimonials, and fabricated account statements while demanding large upfront investments or fees to access supposed “profits.”

Older adults are encouraged to slow the process, ask detailed questions, confirm registration with securities regulators, and consult trusted professionals before making any investment decision.  An older adult may believe they are purchasing a type of cryptocurrency on what appears to be a legitimate platform that displays accurate market values.  However, accurate pricing information does not mean that any real cryptocurrency is actually being bought or sold.

2. Government Impersonation Scams

One of the most prevalent scam categories involves fraudsters impersonating government agencies, particularly the Social Security Administration.  These scams rely heavily on fear and urgency, often threatening benefit suspension or alleging criminal misuse of personal information.  Victims are pressured to “verify” information or make immediate payments—frequently via gift cards or wire transfers.

Legitimate government agencies do not initiate contact to request sensitive information or payment in these forms. When in doubt, individuals should hang up and contact the agency directly using an official phone number.

3. Other Impostor and “Grandparent” Scams

Scammers may also pose as representatives from familiar companies, financial institutions, or even relatives in distress.  These schemes often involve claims of compromised accounts, emergencies, or legal trouble involving a grandchild.  To heighten credibility, scammers may use artificial intelligence to mimic a loved one’s voice.

The common thread is urgency.  Victims are urged to act immediately and keep the situation confidential. Verifying the story independently—by contacting the company or another family member—is one of the most effective safeguards.  Common scams involved one of these two statements: (1) Someone is using your accounts; or (2) Your information is being used to commit crimes.

When faced with these types of messages, individuals should not attempt to move money to protect it.  According to the Federal Trade Commission, wire transfers accounted for 32% of reported scams in 2024 when losses exceeded $100,000.[4]

4. Tech Support Scams

Tech support scams typically begin with alarming pop-up warnings or unsolicited calls claiming a computer security issue.  Scammers may request remote access or personal information, install malware, or demand immediate payment for fake services.  Older adults are disproportionately affected, partly due to the rapid pace of technological change.  The safest response is to immediately shut down the device, block the contact, and never provide information to someone who initiates this interaction.

5. Potential Income Tax Implications

When falling victim to these types of scams, older adults may take steps, such as liquidating individual retirement accounts (IRAs) or selling highly appreciated securities, that result in large amounts of additional taxable income.  These scam victims may find that they have little relief from this compounded financial distress. The Tax Cuts and Jobs Act introduced I.R.C. Section 165(h)(5), which temporarily prohibited taxpayers from claiming offsetting theft loss deductions for tax years beginning after 2017 if such losses are classified as “personal casualty losses.”  This provision has been extended indefinitely by the One Big Beautiful Bill Act.  However, taxpayers may still be eligible to claim a deduction under I.R.C. Section 165(c)(2) for theft losses if those losses are “incurred in any transaction entered into for profit.” If so eligible, a scam victim can claim an itemized deduction equal to the victim’s adjusted basis in the stolen property, which may fully or partially offset this additional taxable income.

On January 17, 2025, IRS Chief Counsel issued an advice memorandum clarifying when theft losses arise from transactions deemed to have been “entered into for profit.”[5]  Although there is no statutory definition of a “transaction entered into for profit,” courts have traditionally required a taxpayer to primarily have had a profit motive for engaging in the transaction.[6]  The advice memorandum presents several helpful examples in which  scam victims either had or did not have sufficient primary profit motive for complying with a scammer’s requests and clarifies that making a determination as to whether a scam victim may or may not be eligible to claim a theft loss deduction under I.R.C. Section 165(c)(2) requires a careful and highly fact-dependent analysis.

In conclusion, a range of resources is available, including local and Federal enforcement, the National Elder Fraud Hotline, and the AARP Fraud Watch Network Helpline.  In cases involving loss of assets, tax and elder law attorneys can assess the extent of the damage, assist with associated income tax issues, and provide guidance to prevent recurrence.

[1] FBI’s IC3 Annual Report for 2025 from https://www.ic3.gov/AnnualReport/Reports/2025_IC3Report.pdf

[2] Note that “Older Adults” are defined as those 60 years of age and older.

[3] https://www.ftc.gov/news-events/news/press-releases/2025/12/ftc-issues-annual-report-congress-agencys-actions-protect-older-adults

[4] False Alarm, real scam: how scammers are stealing older adults’ life savings, published August 7, 2025,  www.ftc.gov.

[5] CAA 202511015.

[6] See Helvering v. National Gallery, Co., 302 U.S. 282 (1938); Dewees v. Commissioner, 870 F.2d 21 (1st Cir. 1989); Fox v. Commissioner, 82 T.C. 1001 (1984); Ewing v. Commissioner, 20 T.C. 216 (1953), aff’d 213 F.2d 438 (1954); Wright v. Commissioner, T.C. Memo 2024-100 (2024).