Friday 26 February 2016

4 Reasons Why You’re Not Rich -Sheiresa Ngo


Source: iStock
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Source: iStock
The amount of high-net-worth individuals with $1 million in investable assets increased by 1.76 million people in 2013, according to the Capgemini and RBC Wealth Management World Wealth Report. Do you ever wonder what the rich know about money that you don’t? Well, they know a whole lot and they’re working with trusted financial planners and advisers to help them keep tabs on their money.
You may have daydreams of rolling around in a pile of cash, but that dream won’t become a reality if you don’t make smart moves with your finances. A few financial planners agreed to chat with us and spill the beans, so sit back and take notes. Here are four ingredients in the recipe the wealthy use to get rich, stay rich, and build multi-generational wealth.

The wealthy seek alternative money management strategies

Those who are wealthy stay abreast of little-known ways to grow their money. When they invest, they look for alternatives that work best for them. One of these tools is private placement life insurance.
“In today’s rising tax environment, one of the most popular approaches to growing and protecting wealth among the ultra-wealthy is using a combination of private placement life insurance and annuity products. These products are typically designed to meet the unique needs of the ultra-affluent marketplace (more than $50 million in net worth) and they allow them to invest in hedge funds of their choice (as long as they’re on the insurance carrier’s platform) and avoid all income taxes. The savings can result in hundreds of thousands of dollars—sometimes even millions—in tax savings over the years as the assets are distributed and the wealth is transferred to future generations. This level of asset protection is key to protecting wealth among the ultra-wealthy,” says David Buckwald, CEO and senior partner at Atlas Advisory Group.

The wealthy understand the importance of diversification

Wealthy individuals make sure to spread out their investments. They don’t concentrate their wealth-building efforts in one place. This ensures that if one income stream starts to run dry, they’ll have several other sources to serve as a backup.
“The wealthy are aware that their finances and investments can be cyclical in nature.  They most probably have been through a few of those cycles and have learned to weather them or ride them out…wealthy individuals don’t fall in love with one form of investing or investment vehicle. Rather, they make sure they do not keep all their eggs in one basket.  And they constantly make sure that they are rebalancing along the way so they don’t inadvertently get out of balance.  Sometimes the hardest thing is to know when to move on from something that is performing. The wealthy know to take their emotions out of investing,” says certified financial planner and attorney Joseph W. Malka.

The wealthy know how to preserve their cash

You might be surprised to learn that wealthy people who are smart with their money look for ways to save instead of spending cash recklessly. That is one of the ways they secure their wealth.  While it’s true there are those who spend money like they’re going to die tomorrow, those who truly understand how money works know it’s about how much you can actually keep. There are plenty of stories of wealthy people living out of their vans (Toronto Blue Jays’ pitcher Daniel Norris) or buying a home way below their means (Warren Buffett).
“Living below your means is the best advice ever. If you need to finance your lifestyle through credit cards, you’ll always be in debt if you pay 15% in interest and only earn 8% on your investments,” says  Laurie Itkin, financial adviser with Coastwise Capital Group and author of Every Woman Should Know Her Options: Invest Your Way to Financial Empowerment.

The wealthy have a plan for their money

It’s important to remember that you can’t just wish you were wealthy; wishing will get you nowhere. You need to have a plan so that you can move toward your financial goals. What do you want your money to do for you?
“The first thing I do with high-net-worth individuals is discover what they want their money to do for them and their family. Whether we are looking at $1 million or $100 million, it all starts that basic question. What we always discover is that it’s not about the money but rather what kind of impact the money will have on the people and causes they care about most… The most advanced wealth preservation strategies in the world are of little value if they don’t help a client reach their personal goals,” says Martin Hurlburt, registered investment adviser and founder of T.M. Wealth Management.
You don’t have to wait until tomorrow or next month to get on the road to wealth. One small step you can take today is saving your money. Even if it’s just $5 a day, every little bit counts.
Says Certified Financial Planner and Attorney Rebecca Walser, “…start early, pay yourself first in terms of investing in your future self instead of spending every cent you have on your present self, be diligent, and stay that course even through the rough times. One day you will wake up and realize that every seed you planted has bloomed into a very reapable harvest!”

Source: cheatsheet

Thursday 25 February 2016

4 of the World’s Biggest and Most Successful Scams Sam Becker


Pyramid of pink champagne
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Source: iStock
We’ve covered America’s most notorious con men, discussed massive pyramid schemes, and even a few Ponzi schemes — but there’s a whole slew of smaller scams that you’re more vulnerable to. In fact, you’re more likely to fall victim to these smaller shakedowns than to any of the bigger ones, despite the prevalence of multi-level marketing pitches clogging up your news feed.
These scams exist for a reason: they work. At least some of the time. While it’s hard to believe that anyone is actually sending money to those faux Nigerian princes, evidently people are. Otherwise, the scammers would try something else. Clearly, many of these low-level deceits are successful.
What does “success” mean, in this circumstance? Well, we can measure it in terms of monetary damage, but that’s not the only type of damage inflicted by these schemes. There is a certain level of psychological damage done as well, an uneasiness that comes about after being victimized — or even seeing it happen to other people. You become more wary, less trusting, and overall, a bit more curmudgeonly (think about how some people react to homeless people, or panhandlers). This is especially true when it comes to money. And nobody can really hold that against anyone else; after all, we’re all just trying to protect what’s ours.
With that said, we’ve all become keenly aware of many scams, as they have been ingrained into our culture. Plus, we know what to look for. In the next few pages, we’ve listed four of the most famous and successful schemes devised to separate us from our money or belongings. Read on to see them.
Source: iStock
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Source: iStock

1. Phone scams

While these seem to be less common today, phone scams have been very successful over the years. You occasionally still hear about them on the news — typically preying on the elderly. And they take many different forms: some involve tricking unsuspecting people into calling 900-numbers, others prey upon people’s gullibility or curiosity, and trick them into parlaying over personal information, or even bank account or credit card information. Again, this all seems like pretty tame stuff, but for a few decades, these kinds of scams were rampant.
A popular way scammers still use the phone to get people to fork over money is by posing as utility workers, or something similar. Basically, they will call you up, say you owe money on a bill, and threaten to shut off power or water service unless you pay right now. It sounds ridiculous, but a lot of people fall for it.
Source: iStock
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Source: iStock

2. Ponzi schemes

Ponzi schemes may seem like a modern invention, but they go back nearly a century by now — to when Charles Ponzi devised the very first one. A lot of Americans are wary of them these days as well, as names like Bernie Madoff have made the news for pillaging tens of billions from investors. Ponzi schemes basically work by taking in investments, promising big returns, and then keeping the money. Investors do see some return, as new money comes in from new investors and gets shuffled around.
The scams have also become connected with pyramid schemes and multi-level marketing companies, which insist that you recruit “employees” under you who owe you dues. Many big businesses take this form as well, including Amway and Herbalife, but people still get involved with them in large numbers.
Source: Thinkstock
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Source: Thinkstock

3. Email scams

You probably see these so often that you don’t even think about it anymore. The most famous, perhaps, is the ‘Nigerian prince‘ scam that we mentioned previously. You may find yourself on the receiving end of an email from someone who apparently needs your bank account to store some funds — and they’re willing to give you a cut. Obviously, it’s nonsense. But people fall for it. And that’s why you keep seeing those emails come in.
There are a ton of other ways that email fraudsters can get your information, or exploit your email security. Phishing scams are quite common, and you can unwittingly download and install viruses or malware through emails as well.
Source: Thinkstock
<a href="http://us-ads.openx.net/w/1.0/rc?cs=07f189b5e0&cb=1456390353503&url=http%3A%2F%2Fwww.cheatsheet.com%2Fpersonal-finance%2F4-of-the-worlds-biggest-and-most-successful-scams.html%2F%3Fa%3Dviewall%26nspid%3D1567446488&c.width=749&c.height=109&c.tag_id=21781&c.taglink_id=33490&c.scale=0.97196263&c.url=http%3A%2F%2Fwww.cheatsheet.com%2Fpersonal-finance%2F4-of-the-worlds-biggest-and-most-successful-scams.html%2F%3Fa%3Dviewall%26nspid%3D1567446488&c.params=&c.impression_type=26&c.placement_id=ad0.35383692724633975" ><img src="http://us-ads.openx.net/w/1.0/ai?auid=538013270&cs=07f189b5e0&cb=1456390353503&url=http%3A%2F%2Fwww.cheatsheet.com%2Fpersonal-finance%2F4-of-the-worlds-biggest-and-most-successful-scams.html%2F%3Fa%3Dviewall%26nspid%3D1567446488&c.width=749&c.height=109&c.tag_id=21781&c.taglink_id=33490&c.scale=0.97196263&c.url=http%3A%2F%2Fwww.cheatsheet.com%2Fpersonal-finance%2F4-of-the-worlds-biggest-and-most-successful-scams.html%2F%3Fa%3Dviewall%26nspid%3D1567446488&c.params=&c.impression_type=26&c.placement_id=ad0.35383692724633975" border="0" alt=""></a>
Source: Thinkstock

4. Fraudulent online transactions

There’s a reason people get sketched out by sites like Craigslist and Ebay — they’re rife with scam artists and con men. Have you ever won an item in an Ebay auction, then instructed by the seller to send a money order to Romania? That’s the kind of thing you need to look out for.
Like email and phone scams, fraudulent online transactions that are facilitated through sites like Ebay or Amazon can take many different forms. Even if you’re just agreeing to meet someone over Craigslist to engage in a transaction, things can go wrong. But making a purchase over the Internet, without seeing the actual item, can come back to bite you in the ass. Some people are willing to take the risk — and that’s why this kind of activity will continue to perpetuate.

Culled from Cheatsheet

Wednesday 24 February 2016

Why Dressing for Success Leads to Success-By Ray A. Smith

New research shows that when workers wear nicer clothes, they achieve more

Dress better, work better?
A number of recent studies suggest that dressing up for work in a suit or blazer could do wonders for an employee’s productivity, whether going into a negotiation, making a sales call or even participating in a videoconference with business associates.
Using a number of measures, including simulated business meetings at which subjects wore formal and more casual clothing, the studies offer indications that wearing nicer clothes may raise one’s confidence level, affect how others perceive the wearer, and in some cases even boost the level of one’s abstract thinking, the type in which leaders and executives engage.
Michael W. Kraus, an assistant professor of organizational behavior at the Yale School of Management, co-wrote a study for the Journal of Experimental Psychology in 2014 which showed that clothes with high social status can increase dominance and job performance in “high-stakes” competitive tasks.
The study put 128 men ages 18 to 32 with diverse backgrounds and income levels through role-playing exercises—mock negotiations over the sale of a hypothetical factory—to see whether wearing specific kinds of clothing had an effect on the outcomes. The “buyer” in each case came from one of three groups. One group wore business suits and dress shoes. One group wore sweatpants, white T-shirts and plastic sandals. A third group, referred to as “neutrals,” kept wearing the clothing they arrived in. A neutral played the role of “seller” in each negotiation, but no seller also played a role as a buyer.
The negotiators were each given a fair-market value for the hypothetical factory, along with other information that would influence their decisions about opening bids and asking prices. In the end, the suits proved much less willing to concede ground during the negotiations, moving off their initial offer by an average of only $830,000, compared with $2.81 million for those in sweatpants and $1.58 million for the neutrals.
What these results show, Prof. Kraus says, is that in competitive, winner-take-all situations, wearing more formal attire can send others a signal “about you being successful and real confident in whatever you’re doing.” Those more casually dressed, on the other side of the table, tend to back down more easily, he says. The ones in formal attire become aware of the respect they are receiving and become more forceful as well, he says.
Other research suggests that the effects of wearing nice clothes can be as much internal as external.
In a study published last year in the journal Social Psychological and Personality Science, results suggested that people engage in higher levels of abstract thinking when they dress up, compared with when they dress casually. When some 361 participants were asked to complete tasks, the ones dressed more formally engaged in the kinds of abstract thinking that someone in a position of power, like a senior executive, would deploy. After being tested in both formal and casual dress, another 88 subjects were quicker to see the big picture when they dressed more formally. The casual dressers tended to sweat the small stuff.
“When you need to think creatively, about the bigger picture, that’s when dressing formally will increase your productivity,” says co-author Michael L. Slepian, a postdoctoral research scholar and adjunct assistant professor at Columbia Business School. “People who wear that kind of clothing feel more powerful,” he says. “When you feel more powerful, you don’t have to focus on the details.”
In an office with a relaxed or business-casual dress code, “when you don’t need to wear formal clothing, that’s where wearing formal clothing can have a bigger effect,” he says.
What kinds of clothes qualify as formal or higher-status dress, of course, can depend on the industry or whom you talk to. Fashion consultants offer some insights that could be useful in any number of businesses.
“Put it up a notch, but not such a big notch that you’re going to make everyone else in the office uncomfortable,” says Annie Brumbaugh, founder of AB Wardrobe Works, a personal-wardrobe consulting firm. For women, that could mean a tailored jacket, especially for an important meeting.
“Say you’re wearing pants and a top or a skirt and a top, [the jacket] is what gives you some finish and authority,” she says. Also, “Wear heels when it’s important,” like when going into a meeting. One option: Those who don’t want to walk in heels all day can keep a pair at the office.
For men, a full suit, sport coat, or even a tie can put you in a more professional mind-set, says Julie Rath, a men’s style consultant and founder of NextLevelStyle.com, an online style course for men. If wearing a suit will come off too strong, Ms. Rath recommends focusing on fit (sleek and close but not tight) and quality (good cashmere, fine wools or 100% cotton). Wearing a high-quality dress shoe or nice watch can do the trick as well, she says.
Sometimes a small fashion adjustment can have big results. Don’t go looking too far afield if searching for a model of success to imitate. While Mark Zuckerberg seems to have done pretty well in business wearing hoodies and jeans, experts say he’s an outlier.
“Mark Zuckerberg is in a creative enterprise,” Yale’s Prof. Kraus says. “People like that are playing around with their status symbols. For most of us, high status means suit and tie.”
Mr. Smith is a reporter for The Wall Street Journal in New York. He can be reached at ray.smith@wsj.com.
Culled from  Wall Street Journal

Monday 22 February 2016

4 Ways to Protect Your Money During a Divorce-Sheiresa Ngo


Relationship breakdown, couple fighting
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Source: iStock
Divorce can be expensive and stressful. One way to make things even more expensive and stressful is to be messy with your finances.
“Money problems can cause terrible stress in the best of times. When divorce is added to those problems, the mix is often personally and emotionally devastating,” said Attorney and Certified Financial Planner Violet Woodhouse.
An important step to take during divorce is to keep a close eye on your financial health so you can enjoy a stable financial future once you are out on your own. Failure to tie up loose ends could lead to a world of trouble down the road. Here are four financial moves that may help make the transition from divorced to single a little smoother.

1. Change all of your passwords

If you and your partner shared everything, including passwords, you’ll want to make sure you change the password for each account. This is especially important when it comes to financial accounts. Don’t forget to also change your ATM personal identification number if you have ever given this information to your spouse so that he or she could withdraw money on your behalf. Although it’s not advised to share your PIN, some couples do exchange this information. So act quickly and change all of this information as soon as possible.

2. Close joint accounts

Don’t forget to close joint financial accounts, like credit cards and bank accounts. If you were an authorized user on your spouse’s credit card, call the issuer and ask to be removed. If you and your spouse were joint account holders, you’ll need to close the card and figure out a plan for the two of you to pay off the debt. Staying on top of joint accounts may help you avoid nasty financial surprises, said Bankrate credit expert Janna Herron:
It’s a good rule of thumb to decouple any credit card accounts during divorce to protect the credit of both parties. It’s easy for authorized user credit card accounts. The account holder simply calls the issuer and asks to remove the authorized user from the card. If the account holder forgets to call, typically the authorized user can request to be taken off the account. At the very least, the authorized user can contact the credit reporting bureaus to dispute the account on his or her credit report.

3. Revise your budget

Source: Thinkstock
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Source: Thinkstock
Now that you will be living on one income, your financial picture will look a lot different. There will be less money to spend since your household income has been reduced by half, so adjustments will be necessary. You can get a handle on your finances by developing a budget. Meeting with a financial planner can help you set realistic financial goals and follow through on them. Just make sure to meet on a regular basis (for example, quarterly) so you can see if you’re still on track with your money. You can find a financial professional when you visit the Certified Financial Planner Board of Standards website and search their online directory.

4. Tame your spending

You may be tempted to stray from your usual financial habits after going through an emotional divorce. However, resist the urge to engage in retail therapy. You’ll only dig yourself into debt and cause more stress. This is why it is so important to develop—and stick to—a budget.
“Divorce is an emotional rollercoaster…people tend to make absolutely terrible financial decisions when they’re on that rollercoaster, feeling ‘up’ one minute and then ‘down’ the next…It’s no real surprise that you may not be able to think clearly about financial matters, such as how your assets might get divided, tax liabilities, and what your living expenses might be 10 years from now,” said Certified Divorce Financial Analyst Jeffrey A. Landers.

Culled from cheatsheet

Friday 19 February 2016

Retiring Rich Is Looking Less Likely for These Americans - By Dan Kadlec



Retiring Rich Is Looking Less Likely for These Americans
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Debt is one big problem.
For every age group under 65, the prospects for a financially sound retirement have diminished over the past 15 years, new research shows.
Soaring student debt and falling access to employer-sponsored savings plans are two of the troubling trends putting a squeeze on younger groups' financial security, according to a study from the Stanford Center on Longevity.
The hardest hit age brackets have been millennials, in this case defined as those aged 25-34. The study said that group's financial security dropped 8%, on average, since 2000. Security for those aged 35-54 fell 7% over the same period, and was down 4% for those aged 55-64.
Only those age 65 or older have seen their financial security hold steady or rise modestly, on average, since 2000. Greater prevalence of traditional pensions in that group may help explain the stability.
The study looked at nine aspects of financial health, clustered in three groups: cash flow determinants (income, debt, emergency savings), assets (investments, retirement accounts, homeownership), and insurance (health, disability, life). Researchers compared data for each age group in 2000 and again in 2014. They found security had fallen in every category other than health insurance—and credited the Affordable Care Act for this one bright spot.
Overwhelming Debt
Debt was a key factor undercutting financial security for young Americans, the researchers found. About a quarter of Americans under 35 have debts in excess of 30% of their household income -- a share that's risen 136% in two decades, the study found. Among college graduates aged 25-34, student debt has risen five-fold since 1995 to about $24,000.
Many college graduates can handle the payments, and their degree puts them in a better position to earn more in the long term. But this debt forces them to delay savings and homeownership, in turn diminishing their long-term financial security.
The study also found that in every group under age 65, more Americans are living near or below the poverty line than in 2000.
And fewer Americans have an IRA or workplace savings plan. That last point is critical because 70% of folks who aren't eligible for a workplace plan have no retirement plan of any kind. Even among those approaching retirement age and participating in a work-based plan, savings rates are slipping: Just 58% are contributing 10% of their pay, compared to 69% doing so in 2001.
Crisis Ahead?
Taken as a whole the study illustrates woeful retirement readiness, especially among the younger generation. And it emerges as Americans are giving scant attention to other retirement issues -- including health and diet -- even though they expect to live to 90 or longer.
Remarkably, the vital issue of financial security is getting almost no airtime in the presidential debates. Democratic hopeful Bernie Sanders has said he wants to make college free, and a number of candidates have plans to help students with their debts -- which, ultimately, will improve the financial security of younger generations.
But there has been little discussion of Social Security, nor of how to get Americans to save more and secure enough lifetime income to sustain them through two or more decades after work.
Evidently, that’s much tougher than rhetorical bombast and empty promises.

Culled from Money

Thursday 18 February 2016

Enforcing Remittances of Workers' Pension Contributions



Following the failure by some Nigerian  employers to remit their employees' contributions to their Retirement  Savings Accounts, the   National Pension Commission is considering measures to compel  defaulting employers to do so through audits, writes Ebere Nwoji

Recent reports in the media that the National Pension Commission, ( PenCom) would soon commence auditing books of over 200,000 employers in the country to fish out those who fail  to remit the mandatory 18 percent pension contributions of workers to their Retirement Savings Account( RSA)  is a cheering news to Nigerian workers and retirees.
Also, similar reports that the Commission has recovered over N10 billion unremitted pension contributions in principal and interest penalty has rekindled workers hope in the scheme.
Indeed, the development is an inspiring one to the workers and a boost to public confidence in the Contributory Pension Scheme (CPS) considering the fact that many employers, who keyed into the scheme especially private sector employers  are often reluctant to remit  not only their own part  of contribution to their workers' RSA Account as stipulated by law but also fail to remit the eight percent part of their  workers' salary, which they deduct every month.
Currently, there are indications that most employers are owing arrears of un remitted contributions of their workers to their RSA account as a result, many workers are expressing fears that the CPS may after all not solve problem of unpaid pension arrears.
This category of workers have been expecting PenCom and Pension Fund Managers to compel their employers to remit their money to their RSA.
This cuts across public and private sector employers as there are indications that federal government is currently owing pension sub sector over N100 billion  being its liability to the sub-sector for past service  under the old pension scheme and non remittances into its workers' retirement savings accounts under the on going CPS. 
Both the immediate past president of the Pension Fund Operators Association of Nigeria (PenOp), Misbahu Yola, and Chairman, Premium Pensions Limited , Aliyu Dikko , who confirmed this to journalists said unless the new administration settles down and offsets the above liability, it is  capable  of eroding the confidence built by the government in the scheme.

Yola, said the above figure, if settled, would boost the performance of the CPS and grow the economy in general especially for investment purposes.
Section 3, sub section (1) of the Pension Reform Act (PRA) 2014 states that Nigerian employers with up to three employees in their business  should arrange for pension  package for the employees  under the CPS for payment of retirement benefits to the employees. The law requires that employees should choose a pension fund manager of their choice and open a Retirement Savings Account (RSA)  where his  or her employer should on monthly basis pay in 18 percent of his salary contributed by the employer and the worker at the rate of 10 percent for  the employer  and eight percent for the worker.
Section 4 subsection (1) of the Act states that the contribution for any employee shall be a minimum of 10 per cent by the employer and a minimum of eight per cent by the employee.
Section 11 subsection (1) states that every employee shall maintain a Retirement Savings Account (RSA) in his name with any PFA of his choice.
Subsection (3) states that the employer shall deduct at source the monthly contribution of the employee; and not later than seven working days from the day the employee is paid his salary; remit an amount comprising the employee’s contribution and the employer’s contribution to the Pension Fund Custodian specified by the PFA of the employee.
Despite these laws, Nigerian employers deduct their employees' part of the contribution and fail to remit it.
Cases of workers who retire under the CPS and fail to access their retirement benefits abound. This is because for such workers, their employers have not been remitting their contributions and they failed to monitor the status of their contributions.
Few years back, PenCom tried to compel such employers to do the needful by setting up recovery Agents (RAs) that will ensure  that such companies comply in remitting  their employees' contributions to their RSA .
PenCom had engaged 173 Accounting and Legal practitioners as recovery agents (RAs) for the exercise.
From their findings three years back, about 15,427 employers  as at that time failed to remit pension contributions to their employees’ Retirement  Savings Account(RSAs)for various periods between January 2010 and December 2011. Subsequently, the defaulting employers were distributed among the RAs to recover the outstanding contributions.
By September 2013, RAs established outstanding pension contributions and interest penalties, which amounted to N13.33 billion against 335 private sector employers then.
  PenCom granted approval for the RAs to serve demand notices to the affected employers, which resulted in the recovery of N335.84 million and an interest penalty of N31.04 million as at end of September 2013.
Sources close to the commission, said that the commission, had planned to issue  notice of intention to prosecute the employers that failed to remit the outstanding pension contributions and interest penalty.
Since then, nothing much was heard about the RAs and their activities while workers have continued to complain about non remittance of their contributions and those of their employers to their RSA.
For now, it is not certain whether the commission has issued the letter before its present bid to audit books of employers.
Speaking on the commission's audit exercise, PenCom's Head, Compliance and Enforcement, Alhaji Umar said the commission decided to set up the pension audit system to complement its ongoing processes of ensuring compliance by employers in the country.
According to him, the processes include engaging employers through warning letters, imposing two per cent monetary penalty on unremitted contributions, naming and shaming of erring employers and seeking litigation against them.

Meanwhile, some workers from both public and private sectors who spoke to THISDAY on the proposed audit said if effectively carried out would better the lot of the workers.

One of the workers, who did not want his name in print said his employer whom he described as worst culprit in the offence of non-remittance  of employees' contributions often threaten the workers with termination of their appointment whenever the mount pressure on him for  remittance of their contributions.

He said in most cases, those in charge of workers' pensions in various organisations, for the same fear of sack fail to do their work.

He said this category of employers have been having their way in their wicked act because both PenCom and the PFAs allow them to do that.

He said if the commission would be serious in the proposed Audi exercise, employers of labour will sit up and follow the due process of law in handling their workers' pensions.

Culled from Thisday

The ATMs of the Future: No Debit Card Required-By Bob Sullivan



Now that credit cards have been chipped, the banking industry has set its sights on modernizing another essential financial tool that's stuck in the 1980s — ATMs.
You might have noticed that the fancy chip-enabled debit card you received does you no good at the ATM. That means counterfeit debit cards can still be used to steal cash. Chip-enabled point-of-sale card readers were expensive for merchants, but nothing like the expense of replacing cash machines. So old-fashioned card skimming – in which a criminal electronically copies debit card data and PIN codes entered by consumers, then copies the data on to a counterfeit card – is still possible, despite the transition to chip cards.
Banks looking to tackle this problem aren't just adding chip readers to ATMs; they are rolling out a variety of new technologies to bring cash machines out of the 20th Century. The key will probably be in your pocket instead of your wallet. Your smartphones might soon be your cash card.
What's an eATM?
So-called contactless ATMs don't need a debit card at all. Account holders pull out their phone and either use a radio chip inside it to tell the ATM to hand over some cash — sometimes called "tap and PIN" — or they receive a one-time code text from their bank that's entered into the machine to unlock cash.
Phone-as-bank-card technology has been used in Europe for a few years, but it's about to arrive for mainstream use in the U.S. this year. Chase announced a big rollout within a few months, promising smartphone-enabled cash upgrades at a majority of its 18,000 machines by the end of the year. Chase's version will be the type-a-code-the-bank-has-texted version. Wells Fargo and Bank of America have made similar announcements. All promise to eventually support some version of tap and PIN.
Why would you bother using your smartphone instead of pulling out plastic? The new ATMs — called eATMs — have other convenience advantages, too. During an experiment in California, users seemed most interested in selecting the denominations they get during a withdrawal.
But smartphone ATMs are much more than a gimmick, says Avivah Litan, an analyst with consultancy Gartner. Phones can do a much better job of authenticating users, Litan said.
Your Phone vs. Your Debit Card 
"Smartphones provide a much more secure form factor than chip cards do, as there are many sensors on smartphones to help with authentication and fraud detection," Litan said. "Fingerprint readers, cameras, the phone chip itself, the phone's movements, its location."
Consumers who use two-factor authentication at their bank website already know that involving their phone in an authentication process generally makes it safer. One-time passcodes or virtual tokens create a "something you know and something you have" two-step process for logging in. Adding smartphones into the mix will do for ATMs what two-factor authentication did for websites.
Using phones also pushes some expense onto consumers — no need for banks to mail replacement chip debit cards. Not to mention that consumers might start using that digital "debit" card to make payments, netting the bank a new source of transaction fees.
Meanwhile, cellphone firms think the system will help with consumer loyalty.
"(There's) more consumer stickiness," Litan said. "It will be harder to switch manufacturers … (such as) from ioS to Android … if all your payment and banking information is in an IoS wallet."
And consumers, in this case, really will benefit from stronger security and more convenience.
"It's a 'win win win' proposition for both banks and consumers, and helps the smartphone manufacturers (too)," Litan said.
Protecting Your Debit Cards
In the meantime, debit cardholders can minimize the odds of fraud by frequenting ATMs inside of buildings, regularly changing their PINs and not storing those numbers alongside their plastic.
You should also check your statements regularly for unauthorized charges. If you find any, call your issuer immediately to dispute the fraud and have the card replaced. And, if you ever have reason to believe your personal information was compromised alongside your payment information, keep an eye on your credit. A sudden drop in credit scores, for instance, can be a sign your identity has been stolen. You can monitor your credit by pulling your credit reports for free each year at AnnualCreditReport.com and viewing your credit scores for free each month on Credit.com.
Culled from Credit.com

Wednesday 17 February 2016

How Trump and Clinton plan to fix Social Security - By Robert Powell


Republican presidential candidates, from left, Ohio Gov. John Kasich, former Florida Gov. Jeb Bush, Sen. Ted Cruz, R-Texas, businessman Donald Trump, Sen. Marco Rubio, R-Fla., retired neurosurgeon Ben Carson participate during the CBS News Republican presidential debate at the Peace Center, Saturday, Feb. 13, 2016, in Greenville, S.C. (AP Photo/John Bazemore)
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Republican presidential candidates, from left, Ohio Gov. John Kasich, former Florida Gov. Jeb Bush, Sen. Ted Cruz, R-Texas, businessman Donald Trump, Sen. Marco Rubio, R-Fla., retired neurosurgeon Ben Carson participate during the CBS News Republican presidential debate at the Peace Center, Saturday, Feb. 13, 2016, in Greenville, S.C. (AP Photo/John Bazemore)
Social Security represents about one-third of the average retiree’s income. But without any changes to the program, that percent might fall. Without a fix, Social Security might only be able to pay full benefits until 2034 — that’s just 18 years away. After that, Social Security could be able to pay only 75% of the scheduled benefits.
Who’s going to fix that?
As we get closer to the presidential election, we’re reviewing how the some of the current White House hopefuls plan to fix Social Security. Here’s what we found according to data from AARP’s Social Security 2016 Election Candidate website and a review of the presidential candidates’ websites.
In general, Republican candidates — though there are exceptions and differences we’ll highlight below — want to raise to raise the full retirement age; eliminate the payroll tax for working seniors 65 and older; adopt inflation measures that would ultimately lower cost-of-living-adjustments (COLA); establish private accounts for Social Security; and abolish limits on retirement earnings.
By contrast, Democratic candidates — though there are differences we’ll highlight below — generally want to increase the payroll tax cap of $118,500 and improve benefits for low-income seniors.
By way of background, you might also want to read this Congressional Budget Office (CBO) report, Social Security Policy Options, 2015, which detailed how various policy options would improve or not improve Social Security’s finances.
Also, most policy wonks suggest that Social Security could gain long-term financial stability if the gap between the system’s revenues and its outlays could be reduced through an increase in tax revenues, a reduction in benefits, or some combination of those two approaches, according to the CBO report.
The CBO report also noted that although “most of the options in this report would improve Social Security’s long-term finances, only a few would significantly postpone the combined trust funds’ exhaustion date because most would be phased in slowly.”
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That said, here’s a recap of how the current batch of presidential candidates plan to solve Social Security’s problems.
Bernie Sanders: Sanders wants to increase Social Security benefits by about $65 a month for most recipients. Plus, he wants to boost the minimum benefit to $14,363 a year for someone who has worked for 30 years and he wants to use the consumer-price index for elderly (CPI-E) to calculate cost-of-living adjustment (COLA) instead of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
By doing this, an average senior at the age of 80 will see a $43 a month increase, while the average senior at age 90 will see a $73 a month increase in benefits, according to Sanders’ proposed legislation, the Social Security Expansion Act.
Of note, Sanders is the only presidential candidate who wants to use the CPI-E to calculate COLAs. Learn more about CPI-E.
According to SocialSecurityWorks.org, Sanders would fund improved benefits for low-income seniors and improved benefits for all seniors by including earnings over $250,000 a year in the payroll tax (currently those making over $118,000 do not pay in on their income about that amount). Sanders would also apply a 6.2% Social Security tax on investment income for high-income households.
Hillary Clinton: Clinton wants to “expand Social Security for those who need it most and who are treated unfairly by the current system — including women who are widows and those who took significant time out of the paid workforce to take care of their children, aging parents, or ailing family members.”
Of note, Clinton is the only candidate who wants to improve benefits for caregivers, according to AARP. “She supports targeted benefit expansions, including a caregiver credit so that people (mostly women) who take time out of the workforce to care for loved ones aren’t penalized when calculating their Social Security benefits,” according to SocialSecurityWorks.org.
And like Sanders, Clinton wants to “preserve Social Security for decades to come by asking the wealthiest to contribute more.” Options include: taxing some of their income above the current Social Security cap and taxing some of their income not currently taken into account by the Social Security system. Read Clinton’s proposal.
SocialSecurityWorks.org praised Sanders and Clinton for opposing all types of Social Security benefits cuts, including efforts to raise the retirement age. Of note, Clinton recently tweeted “I won’t cut Social Security. As always, I’ll defend it, and I’ll expand it.”
Donald Trump: There’s nothing on the candidate’s website about Social Security, but this week Trump was quoted as saying: “We’re going to save Social Security, too, by the way. I mean you’ve been paying in for years, and now they want to start chopping away.”
Trump previously proposed raising the Social Security retirement age to 70 from 67. But he backed away from that stance last year and has since called for infusing Social Security with cash by canceling foreign aid to anti-American countries. Read Is Donald Trump’s new plan for Social Security crazy?
According to SocialSecurityWorks.org, Trump has criticized Republicans for supporting cuts to Social Security and Medicare, and has said he won’t cut benefits, but will instead strengthen them by growing the economy. This is a departure from his position in a book he wrote in 2000, where he called Social Security a Ponzi scheme and said it should be privatized, according to Lacy Crawford, a communications director for SocialSecurityWorks.org .
Jeb Bush: Of all the candidates, former Florida Gov. Jeb Bush plans to make the most changes to Social Security. According to his campaign’s website, his plan would:
  • Adjust benefits for seniors who choose to retire early (even smaller checks than given now) or work past the retirement age (even bigger checks than given now)
  • Eliminate the retirement earnings test: Under current law, the government reduces the amount of Social Security benefits for seniors who choose to continue working and make more than $15,720 a year. Bush will eliminate that provision.
  • Eliminate the payroll tax for seniors at age 67: This will eliminate a 6.2% tax on work for seniors who choose to work well past the retirement age.
  • Increase the Social Security retirement age: Workers are now eligible for full Social Security benefits at age 66 (gradually increasing under current law to 67). Workers can choose to retire as early as age 62, if they agree to a lower Social Security check each month. This proposal, similar to one in the bipartisan National Commission on Fiscal Responsibility and Reform (Simpson-Bowles), will very gradually change these eligibility ages by a month every year starting in 2022. (Of note, Bush is the only candidate who wants to raise the early retirement age, according to AARP.)
  • Provide a minimum retirement benefit for low-income workers: Seniors who have worked for 30 years will be guaranteed a minimum benefit that is approximately $15,000 a year (125% of the federal poverty level for an individual). This will guarantee that seniors do not live in poverty.
  • Slow the growth of costs over time by adjusting benefits for wealthier seniors: Under current law, the government determines the amount of a worker’s Social Security check through a complicated formula based on the worker’s average earnings. This proposal will change that formula so that wealthier workers, who can afford to save for retirement on their own during their careers, get smaller checks from Social Security during retirement.
  • Change how Social Security checks are updated each year: Each year, the government updates the amounts of the Social Security checks they send to each senior. The annual update is based on growth in the overall American economy, but the government currently uses inaccurate data to calculate the changes. This proposal will use a more accurate measure of inflation called the chained consumer-price index.

Bush is the only presidential candidate to propose decreasing benefits for early retirees and increasing benefits for later retirees.
John Kasich: There’s nothing on Kasich’s website about retirement security, but he has been quoted as saying that he’ll have legislation to fix Social Security within the first 100 days of his administration, according to AARP.
But even though there’s not much meat on the bones on Kasich’s website, AARP suggests that Kasich would increase the retirement age; means-test high income, and index benefits to prices.
Kasich is the only candidate to propose indexing benefits to prices, according to AARP. According to a transcript of Kasich’s remarks on C-Span, he said this in October about Social Security: “…We need to look at the issue of raising the retirement age. We do need to have a indices of prices and not both prices and wages. Those things will get us in a pretty good place, and we have to think about a disconnect of what we pay in and what we get out. But Social Security is so sensitive it has to be stabilized, and I’ve got to let you in on something. We’re going to have to include some Democrats in this who understand this program needs to be fixed.”
We received no response to email requests to Kasich’s press office asking for more information.
SocialSecurityWorks.org notes the following about Kasich’s stance on Social Security: “In 1999 when he was House Budget Committee Chairman, he had a plan to deeply cut and partially privatize Social Security. During the current campaign, he has said he would cut Social Security for future beneficiaries and was quoted as telling an individual who objected, ‘you’d get over it.’ He has expressed interest in raising both the retirement age and the early retirement age, as well as means-testing benefits. He’s also implied that he still supports some form of privatization.”
Ted Cruz: According to AARP, Cruz, like Bush, Kasich, and Sen. Marco Rubio, would increase the retirement age for future beneficiaries. And like Bush, Cruz wants to implement a chained CPI for all urban consumers (C-CPI-U) to reduce COLAs. He, as well as Ben Carson, also wants to create private accounts for Social Security.
In the past, Cruz has called Social Security a Ponzi scheme. Watch Cruz on Social Security: “Ponzi scheme.”
Marco Rubio: Rubio has, like Bush, outlined his plans to fix Social Security. According to his website, Sen. Rubio would make no changes to Social Security and Medicare for those in or near retirement. For future retirees, he would:
  • gradually increase the retirement age for future retirees, to keep up with changes in life expectancy;
  • reduce the growth in benefits for upper-income seniors while strengthening the program for low-income seniors;
  • exempt Americans over 65 who wish to keep working from the payroll tax, strengthening the economy and seniors’ savings;
  • abolish the Retirement Earnings Test, which discourages work and does nothing to help Social Security’s long-term solvency.



Culled from MarketWatch