Protect Yourself From Identity Theft
With identity theft becoming a growing problem, there are things each of us can do to minimize the possibility of identity theft or effectively deal with it if it happens.
Some of this information was included in a letter from a corporate attorney to his employees, and some information is from the National Consumer Law Center.
Credit and debit cards: Do not sign the back of your credit and debit cards; instead, write “Photo ID Required.” Next, when you are writing checks to pay your credit and debit card bills, do not put the complete account number on the memo. It is better to put only the last four numbers of your account number on this line. The credit and debit card company knows the rest of the number. Doing this will prevent anyone who might be handling your check as it passes through all the check processing channels from having access to your account.
Checks: If you want to put a telephone number on your checks, use your work telephone number instead of your home telephone number. If you have a post office box, use that address on your checks instead of your home address. Never have your Social Security number printed on your checks. You can add it if necessary. (Sometimes military commissaries and base exchanges require this information.) If your Social Security number is printed on your checks, anyone can have access to it.
Wallet: Photocopy the contents of your wallet. Copy both sides of each document in your wallet, including your driver’s license, other identification cards, and credit and debit cards. This will permit you to know what you had in your wallet, including account numbers, so you know what account holders need to be notified in case your wallet is lost or stolen. Keep the photocopy in a safe place. Some credit and debit card companies offer a registry as part of their services. It may be worth the fee to call one number, and then have the registry notify all of your credit and debit card issuers about a loss or a theft. You may also want to carry a photocopy of your passport with you when you travel.
Other tips to avoid identity theft:
– Do not carry your Social Security card with you; keep it in a safe place.
– Do not attach a personal identification number (PIN) or Social Security number (SSN) to any card that you carry with you or on any receipt or paper that you are going to throw away.
– Shred any document that contains a PIN, SSN, or account number before you throw it away.
– Check your receipts to make sure you have received your own and not someone else’s.
– Alert your credit or debit card issuer if you do not receive your statement; someone may be stealing your mail.
– Do not give your personal information to anyone until you have confirmed the identity of the person and verified that you need to provide the information.
– Check your credit reports on a regular basis.
– Put passwords on your accounts, but do not use something easily available, such as your mother’s maiden name or your date of birth.
If your wallet or credit and debit cards are lost or stolen, or if you suspect identity theft, then you should notify the credit or debit card issuers immediately. This is easier to accomplish if you have kept a list of your card numbers and the toll free telephone numbers of the credit and debit card issuers. Keep this list in a place where you can find it or subscribe to a registry. You should also immediately file a police report when your wallet or credit or debit cards are lost or stolen. This will prove to the credit and debit card issuers that you were diligent, and this will be the first step toward an investigation. If you think your mail was stolen, then contact the U.S. Postal Service. You should also phone the Social Security Administration’s (“SSA”) fraud line at 800-269-0271 to notify the SSA that someone may be using your Social Security number.
You should also notify the three major credit reporting agencies to place a fraud or identity theft alert on your accounts. This is important because thieves may apply over the Internet for credit in your name. This alert will tell any company that is checking your credit in order to issue new credit in your name that your information was stolen. The company will have to contact you by telephone to authorize new credit. The names and phone numbers of the three major credit reporting agencies are:
– Equifax: 800-525-6285
– Experian: 888-397-3742
– Trans Union: 800-680-7289
You can order copies of your credit reports from each of these agencies and review the credit reports to see if any new accounts in your name have been opened fraudulently. You can receive a free copy of your credit report once every 12 months from each of the three major credit reporting agencies. There is one central website for this: www.annualcreditreport.com, and one toll-free phone number: 877-322-8228. If you want to mail a request for a free credit report, then you can download the form at www.ftc.gov/credit, complete it, and mail it to P. O. Box 105281, Atlanta, Georgia 30348-5281. Do not contact the credit reporting bureaus individually for your free report. If you receive an e-mail purporting to be from www.annualcreditreport.com asking for personal information, it is probably a scam, and you should not respond to it. You can forward the e-mail to the Federal Trade Commission’s database of deceptive spam at spam@uce.gov.
You may also want to phone your creditors to find out about any accounts that may have been tampered with or opened fraudulently. You will want to close immediately any accounts that have been tampered with and use new personal identification numbers when you open new accounts.
Identity theft is a one of the fastest growing crimes. You can help protect yourself against identity theft by following these tips. For more information, see the National Consumer Law Center’s website at www.nclc.org/special-projects/older-consumers.html.
The financial advisors at Ariba Asset Management and the attorneys at The Estate Planning & Elder Law Firm can assist families with their estate, financial, insurance, long-term care, veterans’ benefits, and special needs planning issues.
Call 1-800-808-7488 to for a no-obligation review of your personal financial situation.
Negative Inheritance
A column on Condé Nast’s Portfolio.com addresses the concept of “negative inheritance.” Economists use this term to describe the situation where any gifts or bequests that children otherwise might receive from their aging parents are outstripped by the costs to the children for caring for their parents.
Negative inheritances can destroy a child’s retirement and financial plans. For example, if a child had planned to withdraw a small percentage from the child’s portfolio each year to support the child’s lifestyle, but now must increase that percentage by fifty percent to take care of aging parents, then the child’s financial plan won’t work. As a result, financial advisors have developed detailed strategies for dealing with these risks. These strategies include family dialogue, long-term care insurance, and active management of the parents’ assets.
The most critical element in avoiding negative inheritances is proactive family discussion. The family dynamics may be difficult, but if the family does not discuss possible scenarios in advance, then the caregiving inevitably falls to one child. This can cause tension and resentment and can damage the family. If the children to whom this responsibility will fall are reluctant to bring up the subject with their siblings, then they may want to start by discussing what will happen when the parents can no longer drive.
Financial advisers and elder law attorneys often ask their clients for permission to talk with their aging parents to review the status of their assets, and to determine what plans the parents may have in place for their long-term care. The financial advisor can then run a series of projections to see if the parents’ assets will be sufficient for their care. If the funds will not be sufficient, then purchasing long-term care insurance might be a solution, even if the children pay the premiums. Purchasing a policy that covers half of the cost of in-home, assisted living, or nursing home care is better than having no insurance at all.
If the parents cannot qualify for long-term care insurance because of their age or medical conditions, then it is essential to actively manage the parents’ assets. This may include dealing with the family home; often people are house-rich and cash-poor. Obviously, selling the family home in order to provide funds for care or to diversify assets can be stressful for all concerned. Sometimes, however, it is the inevitable option.
Studies show that middle-aged caregivers can suffer emotionally and vocationally, as well as financially. Some baby boomers will work at paying jobs in retirement so they can care for their parents. The caregiving workload can increase from an average of five hours per week to forty hours per week when the parent suffers from Alzheimer’s disease or severe dementia. The caregiver has less time to spend with peers and operates on much less sleep. This emotional toll does not appear on a balance sheet, but it is real.
The financial advisers at Ariba Asset Management and the attorneys at The Estate Planning & Elder Law Firm can assist families with their estate, financial, insurance, long-term care, veterans’ benefits, and special needs planning issues.
Contact a financial adviser at Ariba for a review of your financial planning needs. Call 1-800-808-7488 or email info@aribaasset.com
Real Numbers: How Much You Need to Save for Retirement
Description
New analysis gives investors a clearer idea of the rates needed to fund their retirement years.
How much money does a typical worker need to save every month in order to have a reasonable chance of financing a secure retirement? New analysis from the Center for Retirement Research at Boston College (CRR) came up with a broad overview of the rates needed by different age groups and income levels.
To estimate necessary savings rates, the researchers first sought to determine what level of retirement income would provide an equivalent standard of living to a retiree’s final year of preretirement income. After they took account of changes in various tax burdens, commuting expenses, housing costs, and other factors, they estimated that a single worker earning $20,000 prior to retirement (the CRR study’s “low” income) would need about $17,600 afterwards, including Social Security benefits calculated according to the current formula. Someone earning $50,000 (“medium” income) would need about $40,000 after retirement, and someone earning $90,000 (“high” income) would need about $73,000. Both of those estimates also assume the current levels of Social Security benefits.
Here’s how the projected savings rates work out for a consumer at each level, assuming a normal retirement age (67) and an average annual investment return of 4% after inflation is take into account:
- A low income retirement saver would need to set aside 8% of income each year starting at age 25. If the same person were to wait until age 35 to start, the rate would go up to 12% of income per year. If the same person were to wait until age 45, the necessary savings rate would rise to 20% per year.
- A medium income retirement saver starting at age 25 would need to set aside 12% per year. Waiting to start until age 35 to start the savings program boosts the rate to 18%. Waiting until 45 pushes it 31%.
- A high earnings saver would have to set aside 16% per year starting at age 25. If he or she waited to start until age 35, the rate would increase to 25%. Waiting until 45 causes the required savings rate to rise to 42%.
Keep in mind that if Social Security were to be cut back, savings rates would have to be increased proportionately to cover any reductions in anticipated benefits. Also keep in mind that if real investment returns average higher than 4% in the future, the amount of savings can be reduced somewhat. But the researchers noted that “… the effect of the rate of return on required saving rates, for workers at all earnings levels, is smaller than the effect of the age at which saving starts and, especially, the age of retirement.” In other words, starting your savings program earlier and then working longer could have the greatest impacts on your financial readiness for retirement.
Click here to see the CRR analysis and view the recommended savings rates for your situation.
Required Attribution
Because of the possibility of human or mechanical error by McGraw-Hill Financial Communications or its sources, neither McGraw-Hill Financial Communications nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall McGraw-Hill Financial Communications be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.
© 2012 McGraw-Hill Financial Communications. All rights reserved.
March 2012 — This column is provided through the Financial Planning Association, the membership organization for the financial planning community, and is brought to you by Dan Federman, CFP(r), a local member of FPA..
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