Michael’s Story

After 40 years working for the same company, it seemed like early retirement would be a blessing for my dad. The offer seemed to come at just the right time. Dad had worked long and hard and he was anxious to explore life outside the 9 to 5 routine.

But things don’t always work out the way you plan.

After closing the door on his career, Dad took his company’s retirement savings account, and rolled it into an IRA managed by a financial services advisor he knew. Dad conservatively invested his nest egg in bonds and was content with a small but steady return reported on the statements he received each quarter.

One day, he noticed a picture of his financial advisor in the paper. Later that day, he learned that his financial advisor had skipped town—with $26 million of his clients’ money.

Dad reassured us that his money was safe. “It’s all in bonds,” he said. Within hours, he learned the truth. His quarterly statements had been falsified. His retirement fund was gone.

My father was a debt-free 62-year old who had scrimped and saved. This isn’t how things are supposed to turn out for people like him. Faced with no retirement income and a household to support, Dad ended up going back to work at age 62.

Was he angry? Sure. But he rolled with the punches. That’s just how my dad is. But that’s not the end of the story.

Six months later, the IRS called. All the money in the IRA was qualified income, they said, which meant Dad owed back income tax and penalties on his entire retirement nest egg. He was being taxed on money he had never touched. Devastated, he mortgaged his house to pay the tax bill. In the meantime, he joined a class action lawsuit against the investment firm that had held his retirement fund.

Nearly eight years later, the class action reached settlement. Dad received 33 cents on every dollar he had saved. Not much, but better than nothing, right?

Not the end of the story…

The IRS called yet again, this time to inform Dad that he owed tax on the settlement because his accountant had made an incorrect deduction on the loss.

Dad ended up liquidating stock to pay that bill. Thankfully, that’s where the story ends.

My dad’s retirement wasn’t supposed to be this way. It changed his life.

As a result of my father’s experience, it is my goal to protect senior citizens from a similar fate. Let’s work together to build a secure, safe retirement.