Over 50? Supersize Your Retirement Savings

fatPiggyBankIf you’re over age 50 and not sure whether you’re going to be able to retire, it’s time to focus, get advice and build a realistic plan.

You’re not alone. The U.S. Government Accountability Office recently reported that most households approaching retirement have low savings, adding that nearly half of households led by individuals or couples aged 55 and older having no retirement savings accounts at all.

The first step is to define where you really stand financially. Consider speaking with a qualified financial and tax advisor to define your present financial circumstances. Such a conversation should take into account your household income, tax situation, debt and retirement assets in any form. Reviewing these factors can help shape your decisions about supersizing your retirement plan for maximum safe returns. While a customized plan is generally the best way to approach shortfalls, here are some general approaches.

Take time to reevaluate your budget (http://www.practicalmoneyskills.com/budgeting). To accelerate retirement saving and investing, you need to find the money first. Non-mortgage debt is a major retirement savings obstacle. Better budgeting can help you find the money to pay off debt quicker. Adjust your spending across the board so you can accomplish this while adding more money to savings over time.

Know that you’re going to need to accelerate your savings. Estimates vary, but generally, after age 50, it’s best to direct at least 10 percent of your gross income in savings and investments to cover living expenses when you stop working. If you are employed, review your contribution and income limits for the most popular self-directed and tax-advantaged retirement savings vehicles. Those include:

  • 401(k), 403(b) and most 457 plans, which will have a maximum annual contribution limit of $18,000 in 2015
  • Individual Retirement Accounts (IRAs) – both Traditional and Roth – which will have maximum “catch-up” contribution limits of $6,500 (the regular $5,500 limit plus $1,000 for taxpayers aged 50 or over by yearend 2015)

If after all this effort you’re still not able to find enough money to put away, consider making a greater effort on the income side. Many individuals boost their savings through a second job or freelancing from home. Consult qualified financial and tax professionals to make sure you’re handling this extra income correctly from a tax perspective and putting it in investments that make sense for you.

Downsizing to a smaller home or an apartment in a lower cost-of-living destination or deciding to move in with friends or family at minimal costs may also provide additional savings for retirement. But first, consider what you might get for your home. If you are able to sell a primary residence at a significant profit over your purchase price – above $250,000 for a single taxpayer and above $500,000 for married taxpayers filing jointly –speak to a tax professional about ways to avert a significant tax liability.

Finally, put proper financial safety nets in place. Make sure you have an emergency fund (http://www.practicalmoneyskills.com/emergencycalc) set up so you won’t be forced to dip into savings to cover unexpected expenses. And don’t forget insurance – having the right amount of property and casualty, health and disability insurance can protect your retirement nest egg from significant risk.

Bottom line: Building a retirement fund after age 50 is challenging, but not impossible. Get solid tax and financial advice, start downsizing immediately and don’t forget critical financial safety nets.

By Nathaniel Sillin

What To Do With Your Retirement Plan if You Leave Your Job

Leaving-your-jobIf you are leaving your job and have saved for your future by participating in your employer’s retirement plan, you have a major financial decision to make: what should you do with your account? Most people have several options from which to choose. You can either cash it out and walk away with the money, roll it over into an IRA, keep it where it is, or transfer the funds into your new employer’s plan. Each option comes with benefits and drawbacks.

Cash It Out

The opportunity to have a large amount of money handed to you can be very tempting! Common reasons a large number of workers cash out their qualified retirement plans (such as a 401(k), 403(b), and a 457 plan) when they leave their jobs include wanting to repay consumer debt or take a long over due vacation.

Be aware, however, that there are some downsides to cashing out your plan:

• Your former employer will withhold 20 percent of the funds for federal taxes, and then write you a check for the remaining 80 percent.
• If you are under the age of 59.5 you will have to pay a 10 percent tax penalty for the early withdrawal.
• You’ll have to start building your retirement savings again from scratch – which may not be so bad if you are very young and have decades to recoup, but if you are older you don’t have the luxury of time.

If you change your mind about taking the cash, you have 60 days to transfer the entire amount into an IRA (or into your new employer’s plan, if they allow it). This is called an indirect rollover. While you won’t be assessed the 10 percent penalty, you must deposit all of the money that was in the retirement account to avoid a tax consequence. If you only transfer the 80 percent that your employer gave you, the “missing” 20 percent will be considered a distribution and that sum will be taxed as ordinary income. Deposit the entire 100 percent though, and the IRS will credit you with the amount that was held back when you file your income taxes.

The IRS will also waive the penalty if you miss the deadline because of a mistake on your financial institution’s part, or if you were too ill to meet the cut-off date.

Note: the cash in your retirement plan is not lottery winnings! It is money you have set aside for those years when you will either be unwilling or unable to work.

Direct Rollover into an IRA

With an IRA rollover, you transfer your qualified retirement plan funds directly into a Traditional IRA. With these trustee-to-trustee transfers, the money is invested throughout the process, so you don’t have to deal with the tax problems associated with indirect rollovers. The 20 percent mandatory federal income tax withholding does not apply, nor does the 10 percent early withdrawal penalty.

Other benefits include:

• Rather than the limited funds in your old plan, you have a whole world of investment options open to you. IRAs allow you to invest in such vehicles as stocks, bonds, mutual funds, annuities, CDs, investment real estate, and precious metals.
• For estate planning purposes, IRAs give you flexibility in transferring funds to your beneficiaries. Your heirs can stretch withdrawals over a long period of time instead of having to take a lump sum withdrawal.
• If you use some of the money in an IRA to buy a first home or for higher education costs, the IRS will waive the 10 percent penalty (though you’ll still have to pay income tax on the withdrawal).

Keep Your Old Plan

Certainly the easiest way of dealing with the money you have in your retirement plan is to just leave it with your former employer’s plan. Many companies will allow you to remain a participant in their plan as long as you have at least $5,000 in your account.

There are a few advantages to leaving your money in an employer sponsored plan rather than rolling it over into an IRA:

• In many cases you can borrow from the plan – an option that is not available with IRAs.
• You may be happy with the menu of funds that your former company chose.
• If you leave the company when you are at least 55 years old, you can begin to take money out without penalty.

If you keep the money with your former employer’s plan, it is easy to lose touch with what is happening at the company, and they could change investment options without you being immediately aware of the changes. It can also be hard to keep track of many different accounts, particularly if you’ve job-hopped over the years and have left behind accounts with each employer.

Transfer It to Your New Employer’s Plan

In many circumstances you can transfer the proceeds from your former employer’s plan directly into your new employer’s plan. It is important to check with your new company first to make sure that it will accept the transfer before you arrange for the rollover.

There are several upsides to this option:

• Your investments continue to grow income tax deferred.
• You avoid the tax penalty and federal income tax withholding.
• As with your old plan, you will probably be able to borrow against the account.

The downsides? Your investment choices will be limited to your new fund options, there may be new plan restrictions to consider, and you won’t have the investment and access benefits that an IRA offers.
Decisions concerning the money you have invested in your employer sponsored retirement account are indeed big ones. Before you choose, be sure to consider your overall financial circumstances, investment needs, and the tax consequence of each option.

Copyright © 2006 Balance

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Online Banking Credentials are the Top Phishing Target by 300%

phishing credentialsIf you are wondering what types of companies are targeted most by hackers, Websense Security Labs has an answer. According to a report that includes data from January to May of this year, financial services firms top the list. The rate at which these types of businesses are targets is 300% more often than organizations in other verticals. What are the hackers after? Most often it is credentials for online banking.

The most common types of attacks that attempt to get this information are Geodo, Rerdom, and Vawtrack. These are all spread via email messages that go phishing for information. Geodo, which is a newer version of the Cridex malware is used 400% more often than in any other industry. It usually involves a user opening an attachment infected with malware which takes advantage of Microsoft Office macro functionality. Rerdom is a spam generator, which sends massive amounts of email to unsuspecting users with links or attachments that contain malware that harvests credentials. Vawtrak is a Trojan that attempts to steal passwords and uses browser histories and cookie information, as well as digital certificate information to obtain credentials. Always watch out for phishing attempts. This method of stealing information remains the top of the list as a strategy for hackers.

Often malware is embedded in attachments that come in phishing emails. When the attachment or link is clicked, it sets off some type of action allowing the malware to be released to search for information or otherwise wreak havoc. There are typical indicators for recognizing phishing. If it’s email, the messages contain poorly written text, typos, and punctuation mistakes. The sending email address may even be known by the recipient, but it is easy to spoof that information. Make sure to expand the email address to see the complete version of it. Even if the sender truly is someone familiar, always be 100% sure it is OK to open anything inside. Place a quick phone call to the sender if necessary. If there is a link, hover over it with the mouse to see if it directs to where you think it should. If in doubt, just don’t go there.

Make sure anti-malware is installed and updated on all devices. This will help detect much of the malware that does arrive in email messages. Many, if not most browsers also have anti-phishing features. Turn those on as well. Check the settings and options for the browsers you use.


© Copyright 2015 Stickley on Security

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Don’t Take A Vacation From Information Security: A Few Tips Before Your Trip


Off on your summer vacation? It’s likely you can log in from anywhere at any time to keep attached to the grid. Before you hit the road for your summer trip, make sure you and the kids keep basic security practices at the top of your minds.


  • Make sure those phones, tablets, and laptops are locked when not being used. It’s reported that around 100 smart phones are lost or stolen every minute in the United States. With all the information that is stored on those devices, you probably want to keep it secured. It is best to set them to auto-lock after a short time period (such as two minutes) just in case you forget to manually do it. When you do this, make sure it cannot be unlocked without entering a passcode. That may sound very elementary, but some people just lock it to behave as a screen saver; but then anyone can just unlock it and go to town retrieving information.


  • When choosing a passcode, make it as long as possible.  Every extra digit takes 10 times as long for someone to crack the code. Just don’t make it your birthdate or some other code that is easily associated to you.


  • Consider activating the option to wipe the device after so many incorrect passcode guesses. It’s easy to lose things when you’re traveling. You can also enable the “find my phone” feature, if it exists for your device so that if it’s lost, you can locate it.


  • If possible, use the option to encrypt the data when it is locked. This means that if someone tries to retrieve the data off the flash memory to read on another device, he still won’t be able to read it without a key.


  • Don’t assume that all the free WiFi you come across on that trip is secure. Even if a connection requires a password that you get from the cashier, it doesn’t mean it’s safe to use it. It’s better to use your cell phone connection from a security standpoint.


  • Consider turning off the GPS functionality (or geolocation) on all your mobile devices. These track your location, attach that information to your photos and posts, and subsequently may get sent out when you post to social media. If someone figures out you are not home, it makes your empty abode a nice target for a thief. Even if your furnishings are hand-me-downs or in bad shape, the information that can be found in your files or your mail can be valuable to an identity thief.


  • While it might be rare that you need to use a public computer or even an ATM these days (doesn’t every business take credit cards these days), use caution if you do find yourself in this position. Public computers are often loaded with malware that can steal your information, such as your banking login credentials.  Devices can be attached to ATMs and even to cash registers, called skimmers that can read the data off your debit card and steal your PIN and the details on the magnetic strip. Check for this before putting your card into the slot. Give it a jiggle and if it comes off, it’s a skimmer. Go to another machine.


  • If anything seems out of place or uncomfortable about a place where you want to use a credit or debit card, don’t feel bad for leaving and going elsewhere. If that uncomfortable feeling happens after your card has been used, use your smart phone to check your account right away. Report anything suspicious to your card issuer.


  • Just because you’re on vacation from your daily routine, doesn’t mean you should take a vacation from applying patches and updates as they are available. Turn on auto updates if it makes it easier to keep up while away.


  • Secure the devices the kids will be using too. They might be older tablets, but that just means they may be even more vulnerable if they are not up-to-date. Apply the patches and updates before you go.


  • Vacations are intended to alleviate stress. Take a few minutes to secure your devices in advance and you won’t have a digital mess to deal with when you get home. You don’t take vacations from your physical security, so why would you with your information security?  Happy and safe travels!

© Copyright 2015 Stickley on Security