Is Financial Security the New Retirement?

What is financial security?

It’s not quite retirement. The assumption of financial security is that you’re still making money somehow, whether in residual income from work you’ve already done or from small business opportunities you work to maintain. It does look very similar to traditional retirement, though.

According to Investopedia, financial security is having enough passive income to cover your expenses for the rest of your life. For example, if you have rental property, dividend income, savings account interest and a turnkey business that provide enough money to live on, you’ve achieved financial security. As you age, more of your income is provided by these opportunities, leaving you with more time to pursue your passions.

How do I get there?

Most of the advice that applies to retirement savings also applies to saving for financial security. Putting away 50% or more of your income into savings and investments is a good place to start. Avoiding debt for consumer purchases or lifestyle maintenance is another sound move.

The real difference comes in timing. With traditional retirement planning, you invest more as you get closer to retirement. The goal is to accumulate enough savings to live on for a decade or two when your expenses are at their highest, so you need to contribute more during your peak earning years. Typically, these come just before you retire. You’re an experienced veteran in your field and your salary is usually at its highest just before retirement.

When your goal is financial security, the timetable reverses. In the beginning, more of your wages need to go toward investments. As they start to bring in returns, more of your income becomes disposable. Because your savings aren’t locked up in a designated retirement account, you’re free to use them to pursue non-work money-making strategies.

What tools can I use?

There’s still space in a financial independence plan for traditional investment vehicles like IRAs and employer-matching 401(k) programs. These investments offer preferential tax treatment, which can be a valuable complement to other savings.

Rather than using these as principal retirement savings vehicles, more flexible options, like savings accounts, money markets, and certificates/CD’s allow for short-term savings. Money goes into these accounts until enough capital is accumulated to invest in another money-making project. Think of saving as a prerequisite for investment, not as a synonym.

Investing in stocks and mutual funds is also an important part of financial independence. Focus on trusts and companies that provide consistent dividends and steady growth. Avoid trying to “hit home runs” with stock picks that triple or quadruple in value overnight, and instead look for slow, steady growth. These investments are more about keeping your money safe from inflation than they are about making it grow in value.

Another resource you will need in the journey is knowledge. Much of financial security involves navigating a lot of unknown waters. That’s where Pen Air can help. Our Asset Management staff can walk you through the steps to being master of your own financial destiny.

If you’re interested in financial independence or just in improving your financial future, call, click, or stop by Pen Air FCU today.

www.penair.org/Investments

My Mail was Stolen...Now What?

It’s easy to dismiss a missing piece of mail as just having gotten lost somewhere along the way. But if there is a pattern of lost mail or particularly sensitive correspondence has mysteriously gone missing, it makes sense to err on the side of caution and take protective actions.

Let the authorities know
Visit postalinspectors.uspis.gov and click on “File a Complaint” to alert the Postal Inspectors office. You should also file a police report at the nearest police station. Lastly, the Federal Trade Commission won’t necessarily help with your individual case, but you can fill out a complaint form at www.ftccomplaintassistant.gov to help guide their national investigations.

Check your credit reports
If you believe you may have been the victim of identity theft – and if you have had your mail stolen it is certainly possible – you are entitled to additional free copies of your credit reports on top of the ones you get for free once a year by federal law. Contact each of the three bureaus individually at their fraud number or website to get your reports:

Equifax: 800.525.6285 – www.equifax.com
Experian: 888.397.3742 – www.experian.com
TransUnion: 800.680.7289 – www.transunion.com

Once you have the reports, check for signs of accounts that aren’t yours. If you see any, you need to contact the police to let them know and start the process of disputing the fraudulent items with the credit bureaus and contacting the creditors to resolve the matter with them. It’s also a good idea to place a fraud alert on your credit reports and consider using a security freeze also. Information on doing this can be found at the credit bureau contact information above.

Talk with your postal carrier
Your mail deliverer may not have any idea about the theft, but it can’t hurt to see what they know or have seen. Ask the neighbors too if they have seen or heard anything suspicious.

Make your mail safer
Talk to your postmaster about the possibility of using a lock on your mailbox if there wasn’t one before. For an extra level of security, you can consider switching your mail deliver to a post office box.

Monitor your correspondence
If you start getting phone calls about debts that aren’t yours, or you receive bills for accounts you didn’t open, your information may have been stolen to open accounts in your name. If this happens to you, it is wise to go through the entire identity theft recovery process.

Having your personal mail stolen can leave you feeling extremely vulnerable and unnerved. However, by remaining calm and taking steps to recover and prevent, you can overcome mail theft and prevent it in the future.

Courtesy of BALANCE Financial Fitness Program

The 12 Scams of Christmas: Financial Self Defense

The holidays are a time of family togetherness and celebration. Scammers know you're distracted, busy, and emotional. That's why their schemes are so devilish around Christmas time.

 In the interest of keeping things in the holiday spirit, let's look at 12 scams of Christmas. Don't get taken in by these or similar schemes. Otherwise, you might be footing the bill for twelve drummers drumming and all the rest!

1.) Mobile malice

 Be wary of "season-themed" apps that perform frivolous functions, yet demand top-level security access. An app that makes it look like there's snow on your background image doesn't need to send or receive texts. Such an app might send premium text messages and leave you holding the bill.

2.) E-card danger
 

Everyone with an email address will send these little flash programs. Scammers have designed some with malicious code. They can install data leaching programs on your computer and do untold damage. Don't click links in emails unless you know the sender. Even then, if it looks a little out of the ordinary, it probably is. They may have already fallen victim and it would be good to let them know.

3.) Fake packages

You'll be receiving unexpected packages this season. Scammers know this and will send realistic-looking delivery failure notifications. They expect you to follow up with them and reveal personal identification information! Head to your local post office or call the parcel delivery service to check with a clerk before you hand over information on the Internet.

4.) Hotel "Lie"-Fi

The FBI issued a warning to this season's travelers about a malicious pop-up at hotel chains around the country. This scam requests people install a foreign program before connecting to a hotel Wi-Fi network. This foreign program turns out to be data-stealing malware. Remember, Internet connections you don't own or control can easily be used against you. Before you use the Internet at a hotel, ask yourself if it's worth the risk. If you do need access, be wary of what you're installing--there shouldn't be a need to install anything.

5.) Festive spam

 We've all gotten used to filtering out spam in our email. Now prepare yourself for it to take on a more holiday-oriented theme. Messages will suggest that off-brand Rolex watches and cheap pharmaceuticals would make excellent gifts. Be careful, though, because these companies might just be in the market for your personal information.

6.) Bogus gift cards

There's a bonanza of savings to be had buying gift cards through second-hand retailers. Be careful, though, because many of these retailers might be a front for scammers. Gift cards may be invalid, used, or forgeries, and you'll be left holding the bill.

7.) Fake charities

 These crop up every time there's a major disaster, but they also show up at the holidays. Leaflets and phone calls from organizations with familiar-sounding names will soon appear. To be safe, don't give to any charity with whom you didn't start the contact. Do your research and give to charities whose values align with your own.

 8.) Must-have gift scams

 There will soon be an "it" gift. You'll know it by the high demand, low supply, and hugely inflated prices. Almost on cue, websites will pop up offering the rare widget at unbelievably low prices. This is a scam - the advertiser doesn't have the product and is only using the offer to harvest personal information or bilk you of your hard-earned money through sites like Craigslist or eBay, where they will seek payment through PayPal and never send the item you purchased.

9.) Christmas catfishing

"Catfishing" means pretending to be seeking a romantic partner on the Internet to dupe people. Scammers take advantage of the loneliness the holidays can evoke to trick people out of gifts or worse. As tempting as it is to believe in love stories at Christmas, keep your feet on the ground and practice safe Internet dating.

 10.) Holiday vacation scams

 If it's cold and miserable where you are, it's always tempting to go someplace tropical for a few weeks. If you're thinking about getting away, be careful of unrealistic prices or "too-good-to-be-true" travel offers. Scammers have been setting up phony travel sites to harvest personal information. Only book through reputable websites.

11.) Devious Christmas games

If you're facing a 5-hour flight and a 3-hour layover, it's fantastic to have a distracting mobile game to pass the time. Be careful, however, not to download the wrong one. Mobile games can harvest data from your phone or steal password information. Always do a quick search to check the validity of the app you're downloading and read the permissions carefully. A fun game should never ask for permission to send texts or send information to third parties.

12.) Free USB Tricks

Be careful with unsolicited gifts of "free" USB thumb drives. Security firm McAfee warns that many of these devices come pre-loaded with malware. Such scams often target company computers, so ensure you only use approved hardware on your work network. USB storage is cheap enough that you can pass on the freebies.

Card Security Breaches: Why They Occur And Who's To Blame

It seems like there's another financial disaster at every turn lately. Target's card databases get hacked. Heartbleed puts your passwords at risk. Home Depot's credit card numbers are compromised. JP Morgan Chase's credit information is breached. Shellshock threatens the integrity of the Internet. It's enough to make you long for the days of the corner store keeping credit on a sheet of graph paper.

 To better understand how these things happen, let's first take a look at the steps involved in a financial transaction. Then, we'll see where vulnerabilities exist. Finally, we'll check out a few strategies you can use to keep yourself safe.

 When you swipe your debit or credit card at a terminal, the only thing you see is an approval screen. Behind the scenes, the process from the moment you swipe a card to leaving the store with your purchases is complicated. And you want it to be that way. A less complicated process would remove many layers of security.

 First, there's an "authentication" process. The POS terminal in which you swipe your card reads the card's information from the magnetic strip, encrypts it, and sends it to a payment processing center. This facility streamlines the data into a format your issuing company can understand and sends it along. Your card network company - Visa, Mastercard, Discover, etc. - validates the legitimacy of the information. You may be prompted for some information, most commonly your billing ZIP code. This is done to help authenticate the card.

 Second, there's the reconciliation process. This is usually done at the end of the day for most retailers. The retailer sends all the day's receipts to a payment processor, which then sends them to the issuing institution - the credit union, bank, or credit card company. That institution debits its member or customer accounts for the amount of the transaction, then sends that money to the payment processor, which sends it to the retailer.

 This is an explanation of how things work in a very simplified example, but it gives you an idea of the complexity that's involved in the process of paying with a card. While it's a lot of steps, it's the best system that the brightest minds in the financial industry could develop. Unfortunately, each step also introduces a layer of vulnerability.

 The encryption protocol for card authentication can be busted (that was, in part, what Heartbleed was about). The retailer's receipt records they use for reconciliation can be hacked (like what happened to Target and Home Depot). The credit union or bank can have their register of accounts hacked (like JP Morgan did). So many layers of complexity create more possibilities for hackers to compromise sensitive information.

 You might notice that there's only one step in the process that involves Pen Air FCU or our computer systems. That comes at the very end of the process, when member records are debited for purchases. In the latter example, the only victim of that theft was a big Wall Street bank. In such cases, the kind of hacking hardware and know-how that is required to orchestrate such an attack are expensive. Because credit unions are smaller and less centralized, they're much less likely to be targeted by this kind of attack.

 
That's not to say Pen Air FCU doesn't take cyber security seriously. We keep up-to-date with the latest in computer hardware and software to make sure our members are secure against illegal access. We also have to adapt to a world where everyone else doesn't follow those same values. That means we have to adjust our security protocols to cover for the failings of other parts of that big, messy system.

We're all in this together. The convenience of the modern economy makes things better for everybody. If you go on vacation, you don't have to fuss with traveler's checks or currency exchange troubles. You can take your debit card or credit card and spend just the same. Electronic record keeping helps financial institutions keep costs down and we all benefit from a growing economy. If we want to keep getting these benefits, we all need to put the work in to make sure our networks are secure. Here are five small tips to make your little corner of the Internet more secure.                                        

1. Install updates for your computer, tablet, and mobile phone regularly.
2. Don't open suspicious e-mails or questionable links.
3. Don't install software you don't recognize.
4. Monitor your financial statements closely to check for unauthorized activities.
5. Get an anti-virus program and run it regularly.                      

If you follow these five steps, you can help make the Internet a safer place for people to share things they love and buy things they need. You can help make sure the big system of merchants, processors, and institutions keeps chugging along while providing benefits to everyone.