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News Release
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Nancy Condon (202) 728-8379
Sarah Bohn (202) 728-8988


NASD Investor Alert Warns Workers About Early Retirement Investment Pitches

Washington, DC — NASD issued an Investor Alert today warning workers about investment pitches that guarantee comfortable early retirements. These pitches—often made at free seminars—promise high annual returns but make little or no mention of the risks associated with the aggressive investment scenarios the early retirement packages involve. A recent NASD enforcement action identified one such scheme.

The Alert, Look Before You Leave: Don't Be Misled By Early Retirement Investment Pitches That Promise Too Much urges investors to think carefully before acting on promises such as, "Everyone can retire early!" or "You can make as much in retirement as you can by continuing to work!" and offers tips for investors on how to avoid being taken in.

"An early retirement is an appealing concept," said NASD Chairman and CEO Mary Schapiro. "But, before workers invest all or part of their hard-earned nest eggs, it is important they fully understand the risks involved and seek a second opinion from a trusted financial professional."

NASD is issuing this Alert because it is aware of instances in which employees who had built up sizeable retirement savings were misled and financially harmed by flawed, even fraudulent, early-retirement investment schemes. Not everyone may have the resources to retire early, the Alert explains - particularly workers with limited opportunities for other employment or who haven't saved enough for an extended retirement.

Before workers invest their retirement savings, the Alert offers the following tips:


  • Be skeptical of "free lunch" training sessions and other seminars that promote early retirement strategies, even if those events take place at the workplace.
  • Be wary of early retirement pitches that invoke exceptions to IRS Section 72(t) as a "little-known loophole" that allows workers to retire early.
  • Think hard before trading a company pension—which may offer steady and predictable payments for as long as a person lives—for the uncertainty of investments such as variable annuities and mutual funds whose values fluctuate, creating an unpredictable income stream. If the strategy does involve mutual fund investing, use NASD's Mutual Fund Expense Analyzer to compare and calculate mutual fund fees and expenses.
  • If the strategy involves variable annuities, be aware that variable annuities are complex investment products, often have sales charges and may impose a variety of fees and expenses.
  • Before quitting and cashing in a 401(k), be sure to calculate any other potential tax consequences or ask a tax professional or attorney.
  • Seek a second opinion before committing to an early retirement strategy.
  • Check out whether the person offering early retirement investments is registered with NASD by using NASD BrokerCheck online or calling its Hotline at (800) 289-9999. If he or she is registered, be sure to check out any red flags raised by employment or disciplinary history.

Additional information is available in a previous NASD Investor Education materials, including NASD Investor Alerts, Variable Annuities: Beyond the Hard Sell; Mutual Fund Breakpoints: A Break Worth Taking and Understanding Mutual Fund Classes; in addition to the Securities and Exchange Commission's Variable Annuities: What You Should Know and IRS's FAQs related to Section 72(t), FAQs regarding Revenue Ruling 2002-62. To receive NASD's latest Investor Alerts and other important investor information via email, sign up for NASD's Investor News.

NASD is the leading private-sector provider of financial regulatory services, dedicated to bringing integrity to the markets and confidence to investors through effective and efficient regulation and complementary compliance and technology-based services. NASD offers a broad range of tools and programs to help people better understand investing and know how to protect themselves along the way — including developing and publishing Investor Alerts, brochures and online resource guides on such critical topics as mutual fund class shares and 401(k) and college savings plans. NASD has distributed this information through its website, printed materials and Investor Forums.

NASD touches virtually every aspect of the securities business — from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and registered firms. For more information, please visit our website at