Expert Advice from Kiplinger

By Kiplinger's Personal Finance | April 8th, 2015

Ways to keep those much-deserved dollar bills in your account


WHEN TO WORRY ABOUT A DATA BREACH

By Anne Kates Smith

If you shopped at Home Depot or Neiman Marcus, ate at P.F. Chang’s or Jimmy John’s, banked at JPMorgan Chase, or used an American Express card in 2014, chances are good that some of your personal information was exposed in a data breach. Likewise, if you held health insurance through Anthem Inc. or affiliated systems.

The Identity Theft Resource Center counted 783 breaches in 2014, an all-time record, surpassing the 662 tracked in 2010. Since 2005, there have been 5,029 reported breaches, involving 675 million individual records.

A data breach, however, does not mean you’re a victim – or will be a victim – of identity theft. The key is to distinguish the truly dangerous invasions from the merely annoying ones.

You should take a breach seriously if your Social Security number is compromised, but you’re actually more likely to become a victim if your credit or debit card info is exposed. That’s because thieves can start racking up charges immediately.

But the consequences of a stolen Social Security number can be enormous, as happened with a massive Anthem breach in December. Your liability is limited for unauthorized charges on your debit or credit card. But with a Social Security number, a thief can get into existing accounts, open new ones, take out a loan, get a job, file a fake tax return or gain access to health care. Getting a new Social Security number is cumbersome and impractical. “I don’t even recommend you try,” says Al Pascual, director of fraud and security for Javelin Strategy & Research.

Passwords, usernames and e-mail addresses are frequently compromised. But unless the exposure includes personally identifying information in combination with other info (think name and account number, or log-in plus password), you may not even be notified. Still, theft of such data puts you at risk for so-called phishing scams, in which ID thieves try to gain additional info via e-mail or phone. You also might be vulnerable if you’ve used the same usernames and passwords on multiple sites.

Resist the tendency to ignore a data- breach notification.

If you are offered free credit monitoring, as happened with the Anthem breach, take it. (For details on the two-year monitoring, visit anthemfacts.com.) And, especially if your Social Security number was exposed, consider stepping up the protection to include alerts when new accounts are established using your info. Place a 90-day fraud alert on your credit report by notifying one of the three major credit bureaus: Experian, Equifax or TransUnion. Change account numbers on affected financial accounts, monitor statements closely and report any fraudulent activity immediately. Limit damage from stolen e-mail or log-in information by using unique passwords and changing them regularly. You can keep on top of data breaches at idtheftcenter.org.

PRACTICING RETIREMENT BEFORE YOU GET THERE

By Jane Bennett Clark

Demographic changes have turned the standard definition of retirement upside down. Life expectancy has increased steadily. Now, a man who reaches 65 can expect to live another 18 years; a 65-year-old woman can expect to live 20 years.

Plus, people work longer than in past decades, thanks to better health and a higher level of education, which generally leads to more gratifying, less-strenuous work.

With more time and opportunities, many retirees are phasing in and out of work, taking part-time, seasonal or consulting jobs, or acting as entrepreneurs.

Some post-66-ers work because they need the money, but the majority are taking advantage of the resources they have (including Social Security, savings and maybe a pension) to seek work that’s more enjoyable and less stressful than their career was, says Nicole Maestas, a senior economist at the Rand Corp. For many, “retirement connotes a broader set of options,” she says. “It’s a new phase of life.”

Having more time to work and play may sound delightful, but figuring how to do it over 20 or 30 years is no last-minute exercise.

Experiment by pursuing hobbies, volunteering at places where you might want to work and thinking carefully about whether you want to downsize or move to another city altogether, says Larry Rosenthal, a certified financial planner in Manassas, Va. “People retire to a place and then think, ‘The grandkids are back where we were,’ and they want to move back.”

One way to get a sense of what you want to do a few years hence is through a “practice retirement.” That idea, proposed by investment firm T. Rowe Price, has you continue to work at your career job but back off on saving for retirement – say, by contributing only enough to your 401(k) to get the company match. Then you can use the money you’ve freed up (plus vacation time) to try out your ideas, such as traveling cross-country or turning your hobby into a side business.

Cutting back on contributions to savings in your early 60s may sound like heresy, but the key is staying on the job and waiting to take Social Security until full retirement age (66 until 2021) or later. For each year you delay taking Social Security after 66 until age 70, you get an 8-percent bump in benefits. And while you’re still pulling in a paycheck, you can let your retirement savings grow, even if you’re not contributing to your accounts.

“It’s a way to stay in the workforce and have a little fun while doing it,” says Judith Ward, a senior financial planner at T. Rowe Price.

QUICK TIPS: WHAT JUST $1,000 CAN DO FOR YOUR HOME

Power up during an outage. Keep the lights – and fridge, TV and sump pump – on with a portable generator. Buy a unit with an electric starter, such as a 6,500-watt model from Generac (about $899) or a 7,500-watt model from Westinghouse (about $979). They’ll provide enough juice to power most of a 2,000-square-foot house (not including central air conditioning).

Belly up to a home bar. A bar will create a focal point for entertaining and a place to stash your stash. Pottery Barn has several options: for a traditional but simple style, the “Metropolitan Buffet” ($699); for a contemporary look, the “Hillary Mirrored Bar” ($999). If you want to get behind the bar to serve guests, the “Inwood Contemporary Bar” by Coaster Home Furnishings ($699 at Amazon.com).

Let there be natural light. Tubular skylights, such as the Sun Tunnels by Velux, will brighten a dark space, such as a windowless bathroom or walk-in closet. A tubular skylight is simpler and less expensive than a traditional skylight: A tube with a mirrorlike interior delivers light from a clear dome (usually acrylic) mounted on the roof to an opaque diffuser set in the ceiling. Installed cost runs from $500 to $1,000, according to costhelper.com.

Hire organizing help. Organizers can help you set up a filing system, sort and catalog family photos, decide which possessions to keep or discard, or prepare you to move or sell your home. To find one, visit the website of the National Association of Professional Organizers (napo.net/publicdirectory). Many organizers charge by the hour (typically $30 to $80 per hour, according to costhelper.com), but some charge by the day or project.

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