Windsor Wealth Management LLC

Investment service in Topsfield, Massachusetts

Windsor Insights

Happy Thanksgiving + Power of Gratitude, Explained

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With Thanksgiving around the corner, we wanted to take a moment to say how genuinely grateful we are for you.

We truly look forward to working with you every day.

Image by Priscilla Du Preez, Unsplash

Thank you for your trust, your great questions, and the chance to be part of your financial journey.

It means the world to us.

We hope the long weekend brings you time to relax, enjoy good company (and maybe too much pie!).

Happy Thanksgiving to you and your family!

If you have downtime this holiday, you might enjoy this quick, inspiring read on what science says about the power of being thankful. Research shows cultivating an ‘attitude of gratitude’ is a great way to boost overall well-being. Read the article, An attitude of gratitude: What science says about being thankful.1

Warmly,

Dave and Julie

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Source:

1: Florida International University, An attitude of gratitude: What science says about being thankful, https://news.fiu.edu/2024/an-attitude-of-gratitude-what-science-says-about-being-thankful

Today’s Economy: What’s Actually Going On?

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There’s been a lot going on in the financial news recently.

Let’s take a closer look at what’s behind the headlines and how we’re responding within your portfolio.

Marriner S. Eccles Federal Reserve Board Building in Washington, D.C.

Today we discuss:

  • Interest Rate Cuts
  • AI Trends
  • Consumer Spending
  • Your Portfolio

Interest Rates: A Delicate Balancing Act

The Fed continues its tug-of-war between trying to reduce inflation and supporting a weakening labor market.

Inflation has fallen sharply (from about 9% in 2022 to about 3% today). However, getting from 3% down to the Fed’s 2% target is proving tricky due to the weakening labor market.

In late October, the Fed cut rates by 0.25%, following a similar move in September.

The key reason for these cuts is the softening job market. The tricky piece is that rate cuts can sometimes lead to inflation.

How?

When the Fed cuts rates, borrowing becomes cheaper for:

  • Consumers (e.g., lower mortgage, credit card and auto loan rates)
  • Businesses (e.g., lower costs for borrowing and new projects)

This generally stimulates spending and investment, which increases overall demand in the economy.

However, if demand outpaces supply, prices rise and inflation follows.

Many analysts anticipate more rate reductions in the months ahead. However, the Fed reiterated during their October meeting that future decisions will depend on incoming data, not political pressure or market expectations.

Consequently, with much of the government still shut down, the Fed’s relying heavily on private sector sources such as payroll data and state-level unemployment claims.

In fact, to help make up for missing data, ADP is now publishing a weekly version of its National Employment Report.1 ADP facilitates payroll for about 1 in 6 workers in the U.S.2

Zooming out, remember the current job cuts are largely a correction for over-hiring during the pandemic, amplified by a slowing economy. Also, the low unemployment rate (currently about 4.3%) suggests the economy is near full employment (meaning nearly everyone who wants a job has one).

AI Trends: Innovation Meets Speculation

AI continues to dominate headlines and investment dollars. While the potential is enormous, profits have yet to catch up with the spending (and likely won’t for some time).

Many of the major players, including Microsoft, NVIDIA and OpenAI are deeply intertwined through partnerships and cross investments.

For Example:

Microsoft has invested billions in OpenAI, which in turn relies on Microsoft’s cloud servers to power its technology.

NVIDIA supplies specialized chips that make advanced AI possible, and also invests in AI ventures like OpenAI.

This circular web of relationships accelerates innovation, however, it also concentrates immense power, which increases risk.

The opportunities are real, but so are the risks.

Insightful AI Resources:

Article: For an in-depth read, check out Capital Group’s recent article, Are we in an AI bubble?3

Podcast: During this podcast, a forensic accountant highlights what others are ignoring in regard to AI and more, No. 1 Forensic Accountant: the Coming AI Collapse.4

Consumer Spending: The 10% Driving the Economy

There’s another trend we’re watching closely: the concentration of spending among higher earners.

The top 10% of Americans now account for nearly half of all consumer spending.5

This dynamic can mask underlying economic weakness, especially if the job market softens further.

Despite headlines about layoffs at big companies, unemployment remains low. However, younger workers entering the job market are finding fewer openings.

Overall, if spending from the “top 10%” slows, it could weigh on GDP growth even without an official recession. Currently, GDP growth is forecasted at a healthy 3%.

Your Portfolio: Staying Prepared, Not Predictive

Periods like this—when economic indicators present a mixed picture—are why we emphasize planning over prediction.

Our disciplined investment process blends diversification, research and risk management to help protect your investments and long-term goals.

For retired clients drawing income, we’ve already set aside sufficient cash reserves to help avoid selling investments during downturns. We’ve also been taking profits from positions that have appreciated sharply and watching for new buying opportunities supported by data—not headlines or hype.

In times of uncertainty, discipline means focusing on what we can control; specifically, how we plan, prepare and respond. Markets will always move, but our process remains steady.

Learn more about our AI diversification approach in our post, AI Is Booming, Diversification Matters.

Sincerely,

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Sources:

1: ADP, ADP Announces National Employment Report Preliminary Estimate Publicly Available on a Weekly Cadence, https://mediacenter.adp.com/2025-10-28-ADP-Announces-National-Employment-Report-Preliminary-Estimate-Publicly-Available-on-a-Weekly-Cadence

2: ADP, https://www.adp.com

3: Capital Group, Are we in an AI bubble?, https://www.capitalgroup.com/advisor/insights/articles/are-we-in-an-artificial-intelligence-ai-bubble.html

4: YouTube/The Knowledge Project: No. 1 Forensic Accountant: The Coming AI Collapse, https://www.youtube.com/watch?v=E4wXp-DaW8g

5: Morning Brew, The top 10% of Americans account for nearly half of consumer spending, https://www.morningbrew.com/stories/wealthy-americans-account-half-consumer-spending

3 Later-in-Life Conversations; Important Decisions as Life Changes

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With the holiday season approaching, many of us are looking forward to favorite traditions like gathering for a big family dinner, watching a classic movie or relaxing by the fire together.

It’s also an ideal time to discuss how important decisions should be handled as your life changes.

Of course, these conversations are not always easy.

In fact, a new Fidelity study on later-in-life conversations found that as families age, they actually talk less about the topics that matter most.1

Even among financially prepared households, discussions often stall when it comes to three critical issues:

#1—Decision-Making and Change of Control: Who steps in if you can’t make financial or medical decisions?

#2—Dependence and Dependent Living: What’s the plan if living independently becomes difficult?

#3—Thinking Ahead for a Health Incident: Do loved ones know your wishes and how to access important information?

Fidelity’s research shows these conversations drop sharply around age 70, just when they become most urgent.

Also, nearly nine in ten baby boomers say at least one emotional barrier keeps them from talking about later-life issues, including not feeling prepared or not knowing how to start.

According to the study, baby boomers rank thinking ahead for a health incident as one of their most relevant topics. Yet, it’s the topic they’re most unwilling to talk about.

And while many describe their family communication as “open,” two-thirds admit they aren’t actually discussing the topics they consider most relevant.

The study also found that families who have active, ongoing conversations report more confidence that their plans will unfold smoothly, and feel closer as a result.

If you haven’t revisited your plan for these situations, now is the time.

We’re happy to help you:

  • Review or update your powers of attorney and health-care directives.
  • Clarify who makes what decisions and where key documents are stored.
  • Model how long-term care or a sudden health event could affect your finances.

[RELATED]: Longevity plays a major role in how long your plan needs to work for you. We discuss this and two other key considerations in our post, 3 Critical Retirement Planning Dynamics.

Let’s make sure your financial plan reflects both your wishes for care and decision-making.

Sincerely,

–David Bunker, Financial Advisor & Licensed Fiduciary

P.S., In case you missed it, check out our latest blog post: 5 Financial Moves to Make Before Year-End

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Source:

1: Fidelity, Later-in-Life Conversations Study, https://www.fidelity.com/bin-public/600_Fidelity_Institutional/fidelityinstitutional/Application/AP168302/family/TGP_LIL_Report_FCFE_FINAL.pdf

5 Financial Moves to Make Before Year-End

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Fall brings more than changing leaves. It’s also an ideal time to revisit your financial plan before the holiday rush begins.

By making a few smart updates now, you can take advantage of valuable year-end opportunities and set yourself up for a strong start to the new year.

Let’s look at five key moves to consider:

#1—Revisit Retirement Plan Contributions

Now’s a great time to revisit your retirement plan contributions.

Even a small bump can make a big difference down the road. Plus, if your employer offers a match, that’s essentially free money. Also, consider directing a portion of any bonus or raise to your retirement accounts.

And don’t forget the power of compounding—it’s what turns small, consistent contributions into meaningful long-term growth.

Learn more in our post: Maintaining Retirement Lifestyles: Compound Interest’s Role

#2—Review Major Life Changes

If you’ve experienced any major life event, please contact us as soon as possible, including:

Employment Changes: New job, raise or retirement coming up? Let’s review your benefits, income, health insurance and tax withholdings. If you’re retiring soon, we’ll also help you determine whether your life insurance is portable and if you still need it.

Family Changes: Marriage, divorce, a new child or caregiving responsibilities? These often require adjustments to estate plans and insurance coverage.

Selling, Buying or Inheriting: Transactions like selling a home or receiving an inheritance can impact your taxes. Be sure to review your 2025 withholdings and be prepared for any capital gains or losses.

#3—Recognize OBBBA Impact

Tax laws changed earlier this year with the introduction of the new One Big Beautiful Bill Act (OBBBA).

One key benefit (the Senior Bonus Deduction) is for those age 65 and older.1

It’s a new “bonus” deduction, including $6,000 for qualifying individuals and $12,000 for qualifying couples. This benefit is in addition to the standard deduction. It’s available to both itemizers and non-itemizers but begins to phase out once income exceeds $75,000 for individuals or $150,000 for couples. This bonus deduction is temporary, and is effective for tax years 2025-2028.

Here are two resources on our website describing key takeaways from OBBBA:

#1—2025 Tax Changes: One Big Beautiful Bill Act (OBBBA) (Includes a “SALT Deduction Savings Example” highlighting how the higher SALT deduction cap now allows many households to deduct more of their state and local taxes than in previous years—and how you may save more by itemizing rather than taking the standard deduction this year.)

#2—Key Financial Data spreadsheet (Includes updated 2025 tax brackets, standard deductions, child tax credit and more.)

If you’d like, we can run year-end tax modeling to show how these changes may affect you.

Our Holistiplan tax software helps us forecast your taxes, model different scenarios, and identify opportunities such as Roth conversions or itemizing under the new, higher SALT deduction cap.

#4—Prepare for Year-End Charitable Giving

If you’re planning to give before year-end, start now to maximize your impact and tax benefits.

Consider using some of the following tax-smart strategies. We’re happy to help you decide which ones fit best.

Appreciated Assets: Donating stocks or mutual funds that have grown in value enables you to deduct their fair market value and avoid capital gains tax.

Donor-Advised Funds (DAFs): Gain an immediate tax deduction by making a contribution now, and enjoy the flexibility of distributing the funds to your favorite charities over time. This is a powerful tool for managing multi-year giving.

[RESOURCE]: Fidelity does a great job explaining what DAFs are, and you can take a quick quiz to see if this resource may work for you (or call us).2

Matching Gifts: Ask your employer if they’ll match your donation.

Qualified Charitable Distributions (QCDs): If you’re 70½ or older, you can donate directly from your IRA to help reduce Required Minimum Distributions (RMDs).

#5— Manage Income to Avoid Future Medicare Surcharges

When managing your 2025 taxes, it’s important to keep IRMAA (Income-Related Monthly Adjustment Amount) for Medicare on your radar.

IRMAA surcharges are based on your modified adjusted gross income (MAGI) from two years prior, meaning your 2025 income will determine what you pay for Medicare premiums in 2027.

Strategic tax planning can help you stay below key IRMAA thresholds by managing income sources such as Roth conversions, capital gains and RMDs. Timing these activities (especially toward year-end) can help reduce future surcharges and keep your overall retirement healthcare costs in check.

Medicare Resources Available on Our Website:

Will I avoid IRMAA surcharges on Medicare Parts B & D?

Medicare Premiums and Deductibles for 2025

BONUS MOVES: Other Tax & Retirement Savings Strategies

  • Roth Accounts: Consider whether shifting from a traditional 401(k) or IRA to a Roth option makes sense given your tax outlook. Remember, withdrawals in retirement from Roth accounts are tax-free, creating flexibility later on (e.g., reducing taxable income in years when you draw more from other sources).
  • Health Savings Account (HSA): If you’re eligible, consider maxing out your contributions. HSAs offer a triple tax advantage; specifically, contributions are tax-deductible, grow tax-deferred and can be withdrawn tax-free for qualified medical expenses. For example, a family contributing the 2025 maximum of $8,550 could reduce taxable income by that same amount, and individuals age 55 and older can add an extra $1,000 catch-up contribution. To qualify for an HSA, you must be enrolled in a High Deductible Health Plan (HDHP).
  • Tax-Loss Harvesting: Even with markets trending higher, we continue to look for tax-loss harvesting opportunities where appropriate to help offset gains and improve your after-tax returns. Keep in mind, if you have other accounts that we don’t manage, be sure to coordinate with us so you achieve maximum impact.

Quick Reminder

Many of the federal energy home improvement credits expire on Dec. 31, 2025. If you’re planning to replace your front door, add better attic insulation or similar, consider doing it now to take advantage of the credits.

Please reach out with any questions.

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Sources:

1: IRS.gov, One, Big, Beautiful Bill Act: Tax deductions for working Americans and seniors, https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors

2: Fidelity, What is a donor-advised fund (DAF)?, https://www.fidelitycharitable.org/guidance/philanthropy/what-is-a-donor-advised-fund.html

Bay Colony Advisors, DBA Windsor Wealth Management, is not a Certified Public Accountant and does not provide tax, legal, or accounting advice. Any tax-related information provided is for general informational purposes only and should not be construed as legal or tax advice. Each individual’s tax situation is unique, and you should consult with your own tax, financial, or legal advisors before making any decisions. We strongly recommend seeking the advice of a qualified CPA or other professional for personalized tax advice.

The Fed Cuts Rates, Here’s Why It Matters

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Here’s a quick update on the Fed’s recent rate cut.

What happened?

On Sept. 17, the Fed announced a 0.25% rate cut in response to a softening labor market and a slight uptick in inflation. This move brings the federal funds rate to about 4% to 4.25%, the key benchmark for many other interest rates across the U.S. economy.

Why the rate reduction?

The main reason behind this decision is the Fed’s concern about the labor market.

The Bureau of Labor Statistics’ August jobs report showed a clear slowdown in job gains, and the unemployment rate inched up.1

Remember, the Fed’s dual mandate is to keep both inflation low and employment high.

In simple terms, this cut is aimed at making it cheaper for businesses to borrow and invest—potentially encouraging more hiring.

Fidelity’s chart below highlights the job slowdown since 2023. You can also see the unemployment rate trending up:

Chart Source: Fidelity2

Two More Rate Cuts Possible by Year-End

Analysts are forecasting the possibility of two more rate cuts before year-end.

The prospect of more cuts is good news for consumers with adjustable-rate debt, e.g., mortgages, credit cards and auto loans.

However, it usually also means lower interest earnings on savings and money market accounts. Also, rate cuts can trigger concern, i.e., if businesses and consumers believe the economy is headed for a slump, they may reduce spending and investment regardless of lower interest rates.

Looking Ahead

We’ll be watching key economic indicators like the upcoming jobs report and the latest inflation data, which will give us a clearer picture of the Fed’s next move at their October 28-29 meeting.

Please reach out with any questions.

–David Bunker, Financial Advisor & Licensed Fiduciary

P.S., In case you missed it, see our post: September 2025 Market Update & Key Trends

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Sources:

1: Bureau of Labor Statistics, The Employment Situation—August 2025, https://www.bls.gov/news.release/pdf/empsit.pdf

2: Fidelity, Rate cuts are here, https://www.fidelity.com/learning-center/trading-investing/the-fed-meeting

September 2025 Market Update & Key Trends

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It’s been an interesting year in the markets, and with just a few months left in 2025, now’s a good time to pause and take stock of where things stand.

In today’s update, we cover key market trends:

Year-to-Date Performance: Markets are up about 11%, led by tech and industrials.

Corporate Earnings: Strong results are driving markets to new all-time highs.

Inflation & Jobs: Inflation rose slightly last month and jobs have slowed.

AI Spending: Tech giants are in a race for market share.

Interest Rates: A future Fed rate cut looks likely.

Global Markets: International stocks are outpacing the U.S.

Your Portfolio: We’ll discuss why rebalancing remains critical.

A Strong Year for the Market

Year-to-date, the market is up about 11%—a solid number for just over eight months.

Much of the strength comes from a few sectors, including technology (Microsoft, Nvidia) and communication services (Google, Netflix). Also, industrials are performing well, up around 15% (Raytheon, Boeing, Caterpillar).

However, healthcare has barely moved, gaining about 1%. It’s hampered by political and regulatory uncertainty. Specifically, concerns are over potential changes to drug pricing and Medicare policies.

Other market activity included a brief hiccup back in April due to tariffs, when uncertainty pulled the market lower. However, markets have recovered and are now hitting new all-time highs.

Remember, tariffs only effect about 15% of U.S. GDP. We discussed the “real” impact of tariffs earlier this year in our post: The Economy, Tariffs & Consumer Sentiment. Suffice it to say, the media often leaves out vital information.

Earnings Drive the Story

At the end of the day, daily headlines create noise, but company earnings give us the real signal.

Overall, corporate profits are strong. In fact, much stronger than analysts expected coming into the year. Early-year forecasts predicted about 5% growth, but companies are on track for closer to 10%.

This strength has helped push markets higher despite ongoing worries about jobs and tariffs.

In fact, Morgan Stanley’s top equity analyst details three reasons for continued market growth in the coming months. (Note: the article allows one free view before a paywall.)1

Inflation & Jobs

Inflation is at 2.9% (up from 2.7% in July). The Fed’s long-term target is 2%. The rise is primarily being driven by increases in housing, food and energy costs. For a deep dive, read the August Consumer Price Index report.2

The job market has continued to soften. Government jobs are shrinking (includes early retirement packages), and many companies are trimming staff while raising prices to keep profits steady.

The August jobs report showed the U.S. added just 22,000 jobs, June was revised to a –13,000 job loss, and the unemployment rate rose to 4.3% (July was 4.2%), signaling a clear slowdown in the labor market.3

This Reuters article provides some simplified charts showing monthly changes in U.S. jobs, government jobs, and job gains and losses by sector.4

A key question in the months ahead is whether slowing job growth will become a bigger drag or if the economy can grow through it.

The AI Market Share Race

AI spending continues to be a major driver of economic growth.

Big tech companies, e.g., Microsoft, Nvidia, Google, etc., are pouring hundreds of billions into AI infrastructure.

It’s expensive, but unlike the dot-com bubble of the early 2000s, these are well-established, profitable companies with the resources to sustain the investment. This is a major contrast to the dot-com era, when many companies were newly formed and had no profitability history.

Overall, it’s a market share race; specifically, a competition to become leaders in a transformative technology.

Interest Rates & Global Markets

Markets are currently pricing in a 95% chance the Fed will cut rates soon, likely by 25 basis points. Overall, we’re anticipating a 1% cut by year-end.

Lower rates will help ease pressure on mortgages, boost housing activity and support continued growth.

Finally, international stocks are up about 20% this year, outpacing U.S. markets (for a change). Our decision to increase your exposure earlier this year is helping your portfolio take advantage of this momentum.

Portfolios

Tech’s fantastic run has been great for portfolios, but it can also make the sector a little too big.

This is why we’re constantly rebalancing, taking some of those profits and reinvesting them to keep portfolios diversified.

It’s an especially smart move in non-taxable accounts, since we can do it without a tax hit. We’re always watching your portfolio’s sector weightings to help keep it balanced and strong.

Please reach out with any questions.

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Sources:

1: MarketWatch, The stock market is hitting records — three reasons why top Morgan Stanley strategist sees more room to run, https://www.marketwatch.com/story/the-stock-market-is-hitting-records-three-reasons-why-top-morgan-stanley-strategist-sees-more-room-to-run-33892ee8

2: Bureau of Labor Statistics, Consumer Price Index – August 2025, https://www.bls.gov/news.release/pdf/cpi.pdf

3 & 4: Reuters.com, US unemployment rate near 4-year high as labor market hits stall speed, https://www.reuters.com/business/us-unemployment-rate-near-4-year-high-labor-market-hits-stall-speed-2025-09-05/

Stress-Free Retirement Spending: The “Bucket” Strategy

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A few months ago, we shared thoughts on how to spend confidently in retirement without regret.

Today, we’re adding to that idea with a simple strategy: the “bucket” approach to retirement income planning.

What is the bucket strategy?

The idea is simple: instead of treating your retirement savings as one big pot of money, we divide it into time-based “buckets.”

  • Near-term needs (0–3 years): Cash-like investments for everyday expenses (still earning interest).
  • Short- to mid-term (3–7 years): Conservative investments for stability.
  • Longer-term (7–25 years): Growth-oriented investments that have time to weather market ups and downs.

Capital Group’s chart below does a great job of showing five buckets that tie directly into the three timelines we emphasize: near-term, short- to mid-term and long-term:1

Why It Works

What makes this system powerful is how the buckets generally stay replenished over time.

As growth-oriented investments in the longer-term buckets mature, we gradually move a portion “down” to refill the nearer-term buckets. That way, you know your next few years of spending are covered—while the rest of your portfolio continues working for the future.

For Example:

Imagine you’ve spent down most of your 3–7 year conservative bucket. We’d replenish it by shifting gains from your 7–13 year growth bucket, helping to ensure the money you’ll need next is already set aside—without having to sell investments at a bad time.

It’s a structured, practical way to reduce worry about market swings while keeping your retirement income flowing. (Here’s more about our disciplined investment approach.)

Please reach out with any questions.

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Source:

1: Capital Group: The bucket approach to retirement income, https://www.capitalgroup.com/advisor/insights/articles/ir-bucket-strategy-putting-it-into-practice.html

Today’s New Reality: Spotting Scams

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It’s never our intent to alarm you. Instead, our goal today is to keep you informed.

Our new reality is that you must be skeptical of every call, email or text you receive.

Why?

Because 73% of surveyed U.S. adults have experienced some kind of online scam or attack. What’s more, most get scam calls, texts and emails at least weekly, according to a Pew Research Center study.1

For Example:

The following text message is a social engineering scam.

The scammer sends a vague message from an unknown number to see if the recipient will engage. A response confirms the number is active, and the scammer then tries to gain your trust and, eventually, your money.

Social Engineering Text Scam Example
Called “smishing” a blend of SMS and phishing

In today’s post, we:

  • Explain scams that frequently impact adults aged 60 and older. (See our Scam Awareness handout below.)
  • Describe how scammers use text messages and social engineering—the psychological manipulation of people—to get you to divulge confidential information or take specific actions.
  • Suggest steps to help protect yourself from scams, including creating a safe word.

Let’s start with some background information:

According to the Pew Research Center study, the most common scam attacks are:

Credit/Debit Card Fraud (48%): Online hackers stealing credit or debit card information and making fraudulent charges.

Online Shopping Scams (36%): Buying an item online that was either counterfeit, never arrived or for which a refund was never received.

Account Takeovers (29%): A personal online account being accessed or taken over without permission.

Phishing Scams (24%): Scammers using an email, text message or call to trick people into giving away personal information.2

2 COMMON SCAMS TARGETING ADULTS AGED 60+

#1—Government Impersonation & Other Imposter Scams

How it works: Scammers pose as government officials (IRS, SSA, Medicare) and use scare tactics, including threatening arrest, lawsuits or loss of benefits if immediate payment or personal information isn’t provided. They might “spoof” caller ID to make it look like a legitimate government agency is calling.

Criminals also pretend to be: the police, from large companies (e.g., Amazon), an agency claiming you have unpaid tolls/traffic tickets, or your future boss, rushing you to provide your bank information for payroll purposes.

Why it targets older adults: Older adults often rely on government benefits and may react quickly to official-sounding threats, especially regarding their Social Security or Medicare.

#2—Grandparent & Emergency Scams

How it works: A scammer calls or emails, pretending to be a grandchild or other relative in distress (e.g., in jail, sick or needing emergency money for travel). They often beg the grandparent not to tell anyone else and request money via wire transfer or gift cards, which are difficult to trace. They may even use AI to clone a grandchild’s voice.

Why it targets older adults: These scams prey on the love and concern grandparents have for their family. The emotional appeal can override caution.

[RESOURCE]: Download and share our new handout: Beware of Scams Targeting Older Adults Aged 60+. It addresses scams related to: tech support, investments, sweepstakes/lottery, romance and more!

Another Example: Incoming Scam Email

TEXTING SCAMS

While many text scams rely on malicious links, another sophisticated tactic involves social engineering (This article discusses 10 types of social engineering attacks) through conversation.3

Generally, there are three steps to text scams:

Step #1—Initial Contact (The Bait)

During step one, scammers “bait” you so you’ll respond.

Examples Include:

Wrong Number Scam—This is a very common starting point. You’ll receive a text like: “Hey, is this Sarah? Long time no see!” or “Hi, did I catch you at a bad time?”

Your natural inclination might be to politely correct them: “Sorry, wrong number.” This is exactly what the scammer wants—they’ve gotten you to engage.

Random, Innocent-Sounding Messages—Sometimes it’s as simple as “Hello” or “How are you doing today?” They’re casting a wide net, hoping someone responds.

Fake Alerts (without a link)—They might send a text pretending to be from a bank, a delivery service or a government agency, but instead of a link, they’ll say something like: “Suspicious activity detected on your account. Reply ‘YES’ to verify or ‘NO’ to block this charge. For immediate assistance, call [fake number].”

Step #2—Build Rapport (Social Engineering)

Once you respond, even with a simple “wrong number,” the scammer shifts into building a relationship.

This is where social engineering comes in.

They might:

Apologize Profusely: “Oh, I’m so sorry! My mistake. It’s so hard to keep track of numbers these days. But since I have you, how are you doing?”

Pretend Interest: They’ll ask about your day, your hobbies, your work or something generic to keep the conversation going. They might share “details” about their fake life (e.g., successful business venture, exotic travel or a recent family tragedy) to make themselves seem more credible and relatable.

Manipulate Emotions: They might express loneliness or seek advice to create a bond. This is particularly effective in romance scams.

Encourage Investing: They may say, “I’ve been making a lot of money with this new crypto platform, and I think you’d be really good at it! I can show you how.” As an aside, if you see a friend talking a lot about crypto on a social channel, their account has likely been taken over by scammers.

Step #3—The “Ask”

Eventually, the scammer will ask for money or sensitive information. Because they’ve invested time in building trust, the victim may be more likely to comply.

They might request:

  • Wire Transfers: Untraceable and irreversible.
  • Gift Cards: Popular because they’re like cash and hard to trace.
  • Cryptocurrency: Increasingly common for its perceived anonymity.
  • Bank Account Details: To “send you money” or “invest for you,” but actually to steal from you.
  • Personal Information: Social Security numbers, dates of birth, addresses, which can be used for identity theft. (In reality, due to past security breaches, a great deal of this information is already possessed by hackers.)
  • Login Credentials: For online banking, email or social media, giving them direct access to your accounts.

BE AWARE OF THE FOLLOWING

HOW TO PROTECT YOURSELF FROM SCAMS

GENERAL PRINCIPLES:

Be Skeptical: If something sounds too good to be true, it probably is.

Guard Personal Information: Never share sensitive data (SSN, bank account details, credit card numbers, passwords) unless you initiated the contact and are certain of the recipient’s identity.

Resist Pressure to Act Immediately: Scammers often create a sense of urgency to prevent victims from thinking clearly or consulting with others.

COMMUNICATION RED FLAGS:

Unsolicited Contact: Watch out for unsolicited contact from unknown numbers or emails. This is a major red flag, even if they claim to know you.

Vagueness: Scammers often keep their initial messages vague (“Hey, is this you?”) to get you to fill in the blanks and reveal who you are.

No In-Person Meetings: If it’s a romance or friend scam, they’ll almost always have an excuse for why they can’t meet in person or via video.

Caller ID and AI: Be aware that scammers can spoof caller ID to impersonate trusted numbers and use AI to clone voices, often using audio from social media or even a voicemail greeting.

DIGITAL AND ONLINE SAFETY:

Verify, Verify, Verify: If someone claims to be from a company or government agency, hang up and call them back using a verified phone number from the agency’s official website, not a number given by the caller, text or email.

Avoid Clicking Links: Go directly to websites instead of clicking links from unexpected emails or texts.

Social Media Monitoring: Understand that scammers actively monitor social media to gather personal information like your pet’s name or birthday. They use these details to create convincing and targeted scams or answer security questions.

FINANCIAL PRECAUTIONS:

Refuse Untraceable Payments: Never agree to requests for payment via gift cards, wire transfers or cryptocurrency. These methods are nearly impossible to trace, making them a favorite for scammers.

CREATE A FAMILY SAFE WORD

With scammers now able to clone voices, a family safe word is a crucial defense. This should be a secret, unguessable word with no connection to your personal information, i.e., don’t use your pet’s name, etc.

How to use it:

Never volunteer the safe word. The person receiving the call must ask for it. A scammer might try to manipulate you by claiming they’re too upset to remember it.

To further protect yourself from scams:

  • Change your passwords often.
  • Enable two-factor authentication (2FA) on your accounts, and when possible, use an authenticator app (like Google Authenticator), which is generally more secure than receiving a code via text message.

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

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This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Sources:

1 & 2: Pew Research Center, Online Scams and Attacks in America Today, https://www.pewresearch.org/internet/2025/07/31/online-scams-and-attacks-in-america-today/

3: Crowdstrike: 10 Types of Social Engineering Attacks and How To Prevent Them, https://www.crowdstrike.com/en-us/cybersecurity-101/social-engineering/types-of-social-engineering-attacks/