Get Financially Fit!
Asset Protection
Protect Yourself from Identity Theft
May 1st
by Eric Heckman
Identity theft, including the misuse of Social Security numbers, names, driver’s licenses, bank accounts, PIN numbers and credit/debit card numbers, is one of the fastest-growing crimes for all Americans, young or old. The Federal Trade Commission (FTC) received 246,570 identity theft complaints just last year. According to an FTC survey, an average of one in every 30 Americans became a victim of identity theft in a one year period, beginning in spring 2002.
The total cost of this crime approaches $50 billion per year, with the average loss from the misuse of a victim’s personal information being $4,800, according to the FTC. It can take years of frustrating effort to set the record straight. The potential toll on retirees with vulnerable income sources can be severe.
Arizona, Nevada, California and Texas had the highest rates of identity theft in 2004. Arizona had 142.5 fraud cases per 100,000 people. Regardless of where you live, take precautions. It happens everywhere. With just your name, Social Security number and birthday, identity thieves can clean out your bank accounts, apply for health insurance, get a driver’s license in your name, open credit accounts or go on a shopping spree using your existing credit cards.
So what can you do? Identity theft is still primarily a crime of opportunity, so make yourself a hard target. Protect yourself by taking preventive measures to block the theft of your identity and your financial security. Here are some things you can do:
1. Guard your Social Security number. Don’t give it out, don’t carry it in your wallet or purse and definitely do not have it printed on your checks. If your number is stolen, contact the Social Security Administration fraud line (800-269-0271) immediately to place a fraud alert on your name and Social Security number.
2. Buy a paper shredder. Don’t just throw your personal information into the trash where a thief can retrieve it. Shred all documents that have your name, Social Security number, birthday or other personal information, including bank statements, insurance forms and even those annoying credit card offers that come in the mail.
3. If you carry a wallet or purse, photocopy the contents. Copy both sides of each license, credit card, insurance card, etc. Put the photocopy away in a safe place. If your wallet should be stolen, you will have a record of everything that was in it, including account numbers and the phone numbers needed to call and cancel them.
4. Immediately cancel any credit cards that are lost or stolen. Most importantly, call the three national credit-reporting organizations, Equifax (800-525-6285), Experian (888-397-3742) and TransUnion (800-680-7289), as well as the Social Security fraud line. The alert will indicate to any company that checks your credit that your information was stolen. Also, file a police report immediately in the jurisdiction where the theft or loss occurred. This will prove your diligence to the credit card company.
5. Check your credit report regularly. Review your credit report at least once a year. Be alert for credit activity that you have not authorized. False transactions can be disputed and removed.
According to the FTC, identity theft is significantly smaller if the misuse of personal information is discovered quickly. It will be even less of a hassle if you take the necessary steps to guard your identity from thieves. If you believe your identity has been stolen, report the crime to authorities and the FTC (1-877-IDTHEFT). It can help save what you work your whole life for – your assets.
About Eric Heckman
Eric Heckman is president of Heckman Financial & Ins. Services, Inc. Eric is a CFP®, ChFC, CLU brings a wealth of knowledge and over 13 years of experience to the field of financial planning. Contact him at (408) 297-9800.
10 Ways to Get Off the Investment Roller Coaster
Apr 16th
By Eric Heckman
Remember your first ride on an amusement park roller coaster? I will never forget mine. The painfully slow climb, the anxiety-building wait at the top and the inevitable terrifying plunge into the abyss. The exhilarating speed and the unexpected turns that flung me headlong into that black tunnel of unknown length was the worst part. The rushing highs and lows, the fun, the fear and the panic, all of these emotions are all created by a complex structure under the control of someone else.
Today’s stock market is a lot like that roller coaster ride, the same ups and downs, the same terror. The difference is the stock market ride never ends and the stakes are far greater. Many retirees have lost a portion of their retirement savings in the stock market during the past few years. In the aftermath of Sept. 11, many took a swift ride they’ll never forget and for some, may never recover from. We all remember the Fed’s eleven interest rate cuts in 2002, which reduced some retiree’s incomes by as much as 90 percent. Interest rates on savings and CD accounts have never been lower.
The good news is it’s possible to get off that financial roller coaster and enjoy the confidence that comes from stepping back onto solid financial ground. It’s not difficult and it’s a lot less risky than staying in the “you never know” stock market game. Here are 10 simple steps for getting off that roller coaster quickly and regaining control:
1. Assess your situation. What are your assets? Gather all your financial documents including: your stock certificates, bank statements, brokerage statements, tax returns, social security information and insurance statements and documentation on all other assets you may have. Make a list of each asset.
2. Evaluate your investments. Review and determine the true rate of return on each investment in your portfolio. Rate the return for each asset as high, medium or low.
3. Determine your state of risk. Review how risky your investments are. What percentage of your overall savings is in conservative investments and what percentage is at risk? Rate the risk factor for each asset as high, medium or low.
4. Review your needs. Are you already retired, close to it or far away? Do you have sufficient monthly income? Rate each asset as yes or no.
5. Investigate other investments that would better support your goals and help provide the security you need. If your portfolio over-emphasizes high risk investments, consider balancing it with conservative alternatives.
6. Reallocate. If you find better options, then act. Don’t be afraid to make adjustments.
7. Establish or update your estate plan. If you have a plan, review and update it. If you don’t, then evaluate your need for one. Anyone with any assets should protect them through an estate plan.
8. Activate your estate plan. Ensure you have the proper estate planning tools in place and utilize them. Your assets should be protected from probate taxes, estate taxes and other taxes that can reduce their value.
9. Remain “savvy” and avoid scams. The fact is financial scammers are everywhere. Remember the following points whenever approached: Reputable financial firms don’t solicit you. Companies should always have available references. Banks don’t send representatives door-to-door. Credible financial professionals have no vested interest in a particular product. And if it sounds too good to be true – it is!
10. Check in regularly with a financial advisor you trust.
The worst move you can make is to wait. The stock market rollercoaster is unpredictable. Yes, it will go up and come down, but no one knows when. If you’re like most retirees, you don’t have the time or money to make that gamble. Retirement is about enjoying life. Besides, the only roller coasters you should be on are the ones at Disneyland.
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Bonus: Financial Fitness Pro Readers can now request a free CD ROM on financial planning or a free consultation. In addition, Heckman Financial is also offering 60% off ($600 savings) a year of planning between now and June 30, 2006.
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Eric Heckman is president of Heckman Financial & Ins. Services, Inc. Eric is a CFP®, ChFC, CLU brings a wealth of knowledge and over 13 years of experience to the field of financial planning. You can contact Eric at (408) 297-9800.
Facts Every Couple Should Know
Apr 9th
By Eric Heckman
When couples decide they want to get married, often one topic of discussion is finances. How will the wedding be paid for? How will the honeymoon be paid for? Who will pay for what? After the honeymoon is over, many couples realize that they failed to discuss many other important financial details.
It’s hard to think about what you would do if something happened to you or your spouse, or worse, both. What’s even scarier is what could happen if you don’t discuss your finances while you’re together. The harsh reality is every marriage eventually ends in divorce or death.
You and your spouse should be able to answer these 10 questions about your finances. If there are questions you can’t answer, take the time to sit down as a couple and figure out where you stand.
1. How much do you have coming in and going out? The story for many couples is that more money is going out than coming in, but the first step to overcoming overspending is to recognize it.
2. Do you have a set budget? After you realize exactly how much is coming in and going out, create a budget. Start by listing all the fixed expenses you have, like your mortgage, car payments, credit card bills, utilities, etc. After you deduct all the fixed expenses from your income, take a hard look at what’s left. You should not be spending more than this on unfixed expenses, like entertainment, shopping, vacations, etc.
3. Where do you rank on the credit scale? Your credit history is one of the most important aspects of your finances. There are three primary credit-reporting agencies: Equifax, Experian and TransUnion. You should regularly request a copy of your credit report to see where you stand and make sure you haven’t become a victim of identity fraud.
4. What assets do you own? If your car is only half paid off, you do not fully own it. Don’t forget about long-lost investments you might have made before you were married. Keep all documents together in a file.
5. How much debt do you have? At least once a year you should assess how much you owe to creditors. Are you leaving your loved ones with enough to cover your expenses or a huge financial headache?
6. What future expenses do you face? Make two separate lists of needs and wants with estimated costs. Now look at your budget and this list of possible future expenses and try to determine how much you can afford without going into future debt.
7. Whose name is on what? Review all of the assets you own and do a status check on all that require a beneficiary, such as life insurance policies, pensions and other retirement savings. If an ex-spouse is still listed, they will receive the benefits even if you are remarried.
8. Do you have a will and/or power of attorney documents? If you have small children, you should have a guardian and trustee named for them as well. You should also look into establishing powers of attorney for healthcare and finances. A living will is necessary to ensure that your family and doctors know your wishes should you become incapacitated.
9. Where are all financial documents kept? Being able to find these critical documents quickly can make difficult times a bit easier. Of course your spouse should know where these documents are kept, but it’s also a good idea to let children or other family know as well.
10. Who are your financial advisors? Trusted advisors who are familiar with your finances can steer you through difficult times. Make sure he or she is one that makes an effort to contact you on a regular basis.
These questions cover topics that are not easy to discuss. Making an appointment with a financial advisor might help you and your spouse discuss these topics. The topics that are the least fun to discuss are often the most necessary.
About the Author
Eric Heckman is president of Heckman Financial & Ins. Services, Inc. Eric is a CFP®, ChFC, CLU and brings over 13 years of experience to the field of financial planning. You can contact Eric at (408) 297-9800.