September 17, 2013

My Retirement was Hacked!

What do you do if the NYSE gets hacked?  Nasdaq?  Furthermore, what happens if your retirement
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sponsor (i.e., Vanguard, Principal, Schwab, etc) gets hacked?  Would they refund you your money?  Unlike most checking/savings accounts, your retirement fund is not supported or backed by any Federal bank insuring or guaranteeing that your account will be restored to a certain level.

Bank accounts have certain safe guards on them that limit transaction liabilities to $500, and even credit cards have a $50 liability, if the fraudulent activity is reported within a certain time frame.  So, for instance, if you realize a $3,000 fraudulent activity on your savings account - the bank will replace your $3,000 minus your $500 liability.  Some banks have full recap with no liability due from you.

However, many retirement accounts have little safeguards in place and "no federal consumer regulations specifically protecting consumers in the event of brokerage account hacking" according to an article by MSNBC.

Some accounts have inconsistencies in their statements - for instance, in one paragraph this sponsor states "We will reimburse your account for any losses due to unauthorized activity".   But in the small print you will notice a "loophole" statement stating: “[the customer protection guarantee] also does not cover unauthorized activities resulting from a breach of security in an employer or plan sponsor’s systems.

I don't really have an answer on how to protect your employer or plan sponsor's systems in case of a breach - but I would at least check my plan sponsor's "customer protection guarantee" to be sure of the procedures to restore balance should your account become jeopardized.  And, if my plan sponsor was not completely sufficient for me - I'd move to another sponsor that I was more comfortable with.  There's already enough volatility and uncertainty in the market - the last thing I'd want to question is the safety of my money from potential hacks.

So here's my list of what we can do to cover the basics:

  • Make sure your retirement plan sponsor is up to date with security/privacy safeguards.
  • Be sure that the computer you use to access your funds is secure as well.  
  • Check your balance at least once a year.
  • Change your passwords regularly - and have a strong password not used anywhere else!  
  • Store your passwords on a piece of actual paper - not in a document stored on your computer.
  • Keep the latest statement of your account filed in a secure drawer.

September 10, 2013

Finding Balance and Clarity.....

Everyone knows that nothing is for certain anymore in our global economy.  Long gone are the days when
one could graduate from high school and work at the local manufacturing plant for 50 years and retire with a pension + social security.  Nowadays, it is almost a complete necessity for us to obtain an education beyond a high school diploma if there's to be a better shot at a decent income and lifestyle....well, that is, if you're lucky enough to secure a full-time job or career after college.  If you decide college (or expensive student loans) isn't for you, then you'll have to become a very successful entrepreneur or tradesman and create your own career path (which is very possible given recent advancements in technology).

Furthermore, economic volatility and job uncertainty brings along the cloudiness of whether or not we'll be able to acquire assets and/or stash away enough cash for retirement.  If we take a look at past history, current statistics, and future predictions - it's plain to see that most of us are not on the right track when it comes to savings and investments...and we can use a little information or assistance about our own personal financial situation.

Here are 6 difficult questions to ask yourself:

  • What are you doing to protect your financial well-being?   
  • Do you own any investments besides a 401K? Or are all of your "eggs" in one basket?
  • What would happen if you got severely injured or sick and couldn't work?
  • Do you have an updated will?
  • How long could you or your family survive without a paycheck if you got fired or laid off?
  • Do you know if you're on track to retire comfortably? 

Finally, there is hope for finding balance and clarity through all of this uncertainty.   In addition, I strongly recommend that we utilize someone or something to inform us of our financial outlook.  We can do this ourselves if we're financially savvy enough and willing to spend the time to stay abreast of everything that might affect our financial outlook.  However, we can also decide to ask a financial planner or a professional to do it for us.  Whatever you do - do something!  Get your financial scorecard ASAP - and be one of the few living comfortably in retirement.