Hackers' favorite targets are the hardest to protect: kids-By Mandi Woodruff

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In the “dark web” hideouts where fraudsters buy, sell and trade pieces of stolen consumer data like currency, there is nothing more valuable than the untouched, untarnished Social Security number of an unsuspecting minor.

That’s because kids, who typically have no credit files to speak of, are basically a blank check to enterprising identity thieves.  
“Children have no credit history, which means you could essentially create a credit history from scratch using their information and run up credit card bills, sign up for other services and then eventually stop making payments and they’d never know it,” says John Ulzheimer, consumer credit expert at Credit Sesame.
For the most part, the usual culprits behind child identity theft aren’t faceless hackers from China or Russia – they’re Mom and Dad. In fact, more than half a million U.S. minors have had their identities stolen by a parent, according to the latest data from ID Analytics. It makes sense. Who else would have easier access to a child’s SSN than the cash-strapped parent who checks them in at all their doctor’s appointments?
The gap in the system
But herein lies another problem — the medical providers themselves. Of the 783 data breaches reported by U.S. companies in 2014 (a record), more than 42% were in the medical and health care industry. That’s bad news for minors. If children’s data are what you’re after, there may be no richer source than health care providers. Not many 12-year-olds have Home Depot or Target credit cards. Plenty of them are listed on their parents’ insurance policies.
The risks that data breaches pose for minors became especially apparent last month with news that nearly 80 million consumers were impacted by a data breach at Anthem, the second-largest health insurer in the U.S. The breach exposed just about every piece of data a hacker would need to slap together a new identity — SSNs, addresses, dates of birth, income levels, you name it.
An Anthem spokesperson could not say how many of the impacted consumers were minors, but it’s almost certain that they numbered in the millions. Michael Bruemmer, vice president of consumer protection at Experian, which is currently managing identity protection services for victims of this week’s Premera data breach, puts the estimate at 25% to 30%. That means as many as 24 million kids might be at risk.
The real issue is that there aren’t strict regulations on how companies protect user information — Anthem, for example, revealed it had not encrypted the user data that was stolen in February’s breach, which would have made it much harder for hackers decode. That could change as data breaches continue to dominate news headlines. As it stands, companies smooth things over with customers by tapping a credit-monitoring service to offer up their services for free for a year or two. Anthem chose All Clear ID, the same company that handled Home Depot’s data breach in 2014.
For parents of minors, All Clear ID offers two years of protection under its ChildScan service, which combs “thousands of databases” for instances where your child’s information might be used for fraud, according to the letter Anthem sent to data breach victims earlier this month. An All Clear ID spokesperson was vague on details of what kinds of databases they search (not entirely surprising, since the less hackers know about their monitoring procedures, the better.) Instead, we were pointed their website, which said it searches medical accounts, credit records, employment records and criminal records.
But if we’re talking about a child, they’ll likely need more than a couple of years’ worth of protection. Smart thieves wait at least a year or two before they start trotting out stolen information, Ulzheimer says, in hopes that consumers and law enforcement will have lowered their guard.
All Clear ID doesn’t tip parents off when a new credit file has been created under their child’s Social Security number, either. Since minors rarely have credit files, the creation of a new one — which can be triggered when someone uses that SSN to buy a cellphone or take out a loan, for example — can be proof that a shady player is involved.
“It’s really important to have protection for children that looks for the creation of a credit file and monitors for that creation on an ongoing basis,” Bruemmer says.
How to protect your child’s identity
Identity theft is the fastest growing crime in the U.S. for a reason — it's an incredibly complicated problem to solve.
“There is no panacea, unfortunately,” says Eva Velasquez, President and CEO of The Identity Theft Resource Center, a nonprofit that offers free assistance to victims of fraud. “But thieves tend to go for the low hanging fruit, so you can try to take simple steps that will minimize your risk.”
Here are a few simple steps any parent can take:
Only poke around your child’s credit file if you have good reason to suspect fraud. Did you get a letter from a company alerting you that your child’s information may have been compromised in a data breach? Is your child suddenly getting a bunch of credit card offers in the mail despite the fact that they still have baby teeth? These are two clues there may be something to worry about. Otherwise, it can actually be detrimental to continuously request your child’s credit report from credit bureaus. Experts recommend you start by filling out a child credit inquiry with one of the three major bureaus (TransUnion’s form is simplest). The answer you want to get back is that there is no credit file under your child’s name, which is how it should be. If a credit file turns up, it’s time to start digging to see if it may be the result of fraudulent activity; request credit histories for your child from the other two major bureaus. If fraud is found, the bureaus will work with you to clean things up.
Request a credit freeze. A credit freeze ensures no one can create a new line of credit on an existing credit file, while still allowing you to use existing credit accounts without a problem. For a child who likely doesn’t already have a credit file to freeze, credit bureaus have to first create a credit file for them and then freeze it. Depending on your state, a credit freeze could be free or cost up to $10 (that’s still a lot cheaper than what most credit monitoring services cost). It’s an effective way to ensure no new credit lines are opened under your child’s name. But just remember: it can’t stop a thief from pursuing other popular avenues of ID theft, like using a stolen SSN to apply for a job, obtain medical services or fill out a fraudulent tax return.
Sign up for extended fraud alert. The unsettling thing about data breaches is that you never quite know when hackers will use the information they’ve stolen. Even if your child was a minor when their data was compromised, encourage them to keep a close eye on their credit when they start a credit file as an adult. They can easily request a fraud alert, which requires lenders to verify your identity before extending new credit. An initial fraud alert (which is free) only lasts for 90 days but you can extend it for up to seven years (also for free). An extended fraud alert comes with other perks, too: you can get two free credit reports within 12 months from each of the major credit bureaus, and they have to take your name off marketing lists for pre-screened credit offers for five years, unless you ask them to put your name back on the list.
Use free resources in your state. The ITRC, a nonprofit, publishes an interactive map that tells consumers exactly what types of services are available to them in their state. You can also call their hotline (888-400-553) and speak with a specialist who can help put together an action plan for free.  
Don't make yourself the low-hanging fruit. Parents and kids (when they're old enough) should be extremely cautious about sharing their personal information with a business or through social media. You'd be surprised how many excited 16-year-olds jump on Facebook to post a photo of their new license after passing their driving test — that's a no-no. If a school, a doctor’s office or any other service requests your child’s SSN, don’t give it up without first asking exactly why it’s needed. If they say it’s not entirely necessary, better not to take the risk of having it compromised. "This is something consumers can ask — 'How are you housing my information and how are you protecting it?'," Velasquez says. "Once you find out, then you have some choices to make."
So what about credit-monitoring services anyway?
If you’ve got about $20 a month to spare and think that’s a good price for peace of mind, then sure, some of these services can be valuable, especially in the interest of saving time.
Just be wary of any service that charges you for things you can already do for free without their help — like setting up a credit freeze, adding fraud alerts and getting a free credit report. Also, they may only be monitoring your credit report with one bureau, rather than all three, so be sure to check if you want complete coverage.
Do-it-yourself-ers can track their own credit reports (and scores) for free today using a handful of online tools: Credit Karma (Transunion, Equifax); Credit Sesame (Experian); Quizzle (Equifax); and Credit.com (Experian). Each offers free monthly credit reports and free credit scores. Just keep in mind their reports and scores come from different credit bureaus, so you might have to sign up for more than one to get a full picture of your credit history.

"It's really about being proactive in your detection of fraud and paying attention to red flags," Velasquez says. "Just like we tell [our kids] to look both ways and hold their hand to cross the street, we have to start applying that to heir fiscal health as well."

Culled from Yahoo Finance

Wake up! Your retirement is your problem-By Sheyna Steiner

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There is no magic wand that will instantly create a secure retirement for everyone. The fact of the matter is that Americans are responsible for creating their own financially stable retirement. Though Social Security keeps most seniors out of poverty, it provides a bare minimum of retirement income. And experts expect some changes to the program in the not-too-distant future.

Most Americans have to develop a siege mentality to retire securely. The battle to secure consistent retirement income involves a two-pronged attack: Save a lot and work a long time. Individuals are not entirely cast to the wolves, though: Regulators and lawmakers, with the help of employers, are constantly working to help Americans prepare for retirement.
Everything is in a flux, though. Some sources of retirement income are vanishing while others are gaining strength.

Sacred cows on the altar

The traditional pension plan, also called a defined benefit plan, was the gold standard of retirement benefits. It provided workers with a steady stream of retirement income after putting in a number of years on the job. With promised pension benefits, a retiree could coast on easy street.
To protect retirement benefits, the Employee Retirement Income Security Act of 1974, or ERISA, set some minimum standards for the retirement plans established by employers. It basically forced employers to provide protections for the benefits promised to workers.
ERISA is a big piece of legislation. One provision created the Pension Benefit Guaranty Corp., or PBGC, which insures pension plans. Employers offering defined benefit plans must buy insurance to guarantee that a minimum level of benefits can be paid in case the business goes bust.
Some of the pension plans insured by the PBGC are single employer plans, provided by individual companies, and others are multi-employer plans. The latter are collectively bargained plans that are generally maintained by labor unions or several employers within an industry, such as trucking or coal mining.
Unfortunately, some multi-employer plans have become seriously underfunded in recent years. The problem: Some companies in these plans have gone out of business or their revenues have markedly decreased. In fact, the plans are so underfunded that the multi-employer program would have risked going bankrupt by 2025 if it had to pay out benefits.
To save the plans, changes had to be made, including the unthinkable: the ability to cut back existing pension benefits. In December 2014, Congress approved such a change to ERISA affecting multi-employer pension plans. Many people say it sets a negative precedent.
"The rules changes were in certain respects a concern to some because they allowed suspension of benefits in some circumstances when the plan was very underfunded and risked becoming insolvent," says Diann Howland, vice president of legislative affairs for the American Benefits Council.

"It's easy to agree with those people; it is a terrible precedent. But there's not enough money," says Donald Fuerst, senior pension fellow at the American Academy of Actuaries. "How do you pay the benefits if you don't want to cut them? No one has a real good answer for that."

In any case, the number of workers in private industry who are covered by a defined benefit plan is shrinking all the time. Nearly 1 in 5 workers, 19 percent, had access to a defined benefit plan, according to the March 2014 National Compensation Survey by the Department of Labor.

There were nearly 10.4 million plan participants in multi-employer plans as of 2013, according to the PBGC. The underfunded plans covered nearly 1.5 million participants as of 2011.

It's a relatively small slice of the populace, but if benefits can be cut for these people, even moderately, could they be cut for other defined benefit participants in the future?

Retirement income security for everyone else

Most workers don't have to worry about the funding status of their pension because they simply don't have one. Instead, 60 percent of the employed population has access to a defined contribution plan, typically a 401(k).
Unfortunately, the burden for saving in a 401(k) rests mostly with the employee. That has necessitated a little bit of behavioral finance jiujitsu from employers, enabled by regulatory agencies and lawmakers.

"The law has changed to allow employers to automatically enroll people in their 401(k) plans, if the employer chooses, and to auto-escalate contributions," says Fuerst.

Workers can thank the Pension Protection Act of 2006 for making auto-enrollment and auto-escalation in retirement plans less of a liability for employers.

"People might be enrolled at 3 percent and might have an auto-escalation feature to go up (a percentage point) each year, to 10 percent. Those types of provisions are very effective at increasing the number of people participating in these plans," Fuerst says.

There's just one problem: "There are a lot of plans that don't have those provisions," he says.

Many have added automatic enrollment, though. A recent survey by Aon Hewitt found that 7 in 10 plans polled offered automatic enrollment at the end of 2014.

Guaranteeing income with longevity insurance

Once people retire with their sizable nest egg, decisions must be made about how to extract the money in a tax-smart, sustainable way. One recent rule change by regulators makes it easier for individuals to buy longevity annuities in their 401(k)s and IRAs.
Longevity insurance is a type of financial instrument that insures against running out of money in retirement. Income can be deferred until age 85.
"The reason the guidance was so important was one factor: the (required minimum distribution) rule," says Steve Shepherd, partner and head of Institutional Annuities and Life Insurance Solutions at Aon Hewitt Investment Consulting.
For instance, if you buy a longevity annuity in a retirement plan, how do you get around the fact that you have to start taking distributions at age 70 1/2? You really couldn't, since distributions had to begin at age 70 1/2.
Before the guidance, participants could buy the annuities in their 401(k) plans but could not take full advantage of longevity insurance, Shepherd says.
Regulatory agencies are doing other good things, as well.
"They are talking about rules to help (retirement) plan fiduciaries vet and do due diligence on some of these options from insurance companies and other providers. The government is providing a very easy way for plan sponsors to put these products in plans and to understand how to do it efficiently," says Shepherd.

Projecting income

For those who aren't crazy about annuity products, there's the daunting task of converting a nest egg into a regular income stream. The government is trying to help plan participants predict their future income while they're saving.
In 2013, the Department of Labor issued an advance notice of proposed rulemaking that would have retirement plan sponsors illustrate the amount of lifetime income a participant in a defined contribution plan could expect based on their savings. The lifetime income illustration would appear on 401(k) statements to give savers a clear measurement of how their savings will finance retirement. The estimated date of a proposed rule is July 2015.
In the 2014 retirement confidence survey conducted by the Employee Benefit Research Institute, a few questions were posed to survey respondents asking how they would respond to lifetime income illustrations. The survey found that 17 percent of respondents said that seeing the retirement income projection would cause them to increase the amount they contributed.
"That is so important because if I have my 401(k) plan and see that I have $500,000, I could have my plan sponsor project out for me what that $500,000 may be in terms of periodic income starting at a particular age," Shepherd says.
Basically it would answer the question, "Do I have enough money budgeted so that I can live in retirement?" says Shepherd.
That is the eternal question. If the answer is no, spend less today in order to save for tomorrow.

Culled From Bankrate.com

Retirement Reality: 7 Charts You Need to See -Eric McWhinnie

 

It’s time for Americans to face the reality of retirement planning. Considering that defined benefit plans are moving closer to full extinction each year, it’s now more important than ever for individuals to save for retirement. This is not always an easy process, but you can improve your odds of an ideal retirement by educating yourself and planning for it as soon as possible.

Millions of Americans are worried about their so-called golden years — with good reason. According to Bankrate.com, 28% of Americans say high medical bills are their top financial concern about retirement. Making matters worse, higher income provides little comfort. Households making more than $75,000 are actually more worried about medical expenses than the overall population. Meanwhile, 23% of Americans say running out of savings is their biggest financial concern, followed by 18% who say unaffordable daily expenses. Eleven percent of Americans are most worried about having too much debt in retirement.

With stagnant wages, rising living expenses, and an overall sluggish labor market, numerous obstacles face workers trying to save for retirement, but no one cares about your financial future as much as you. Let’s take a look at seven charts that are crucial to the retirement planning process.

Your Reaction?

Source: JPMorgan

1. Life expectancy

As you near the typical retirement age, the probability of you living for another decade or two is remarkably high. Men age 65 today have a 78% chance of living another 10 years, while women have an 85% chance. The odds of a long life increase dramatically for couples. In fact, couples age 65 today have an astounding 97% chance that at least one of them lives another 10 years and an 89% chance that one experiences their 80-year birthday. It almost comes down to a coin flip that at least one person in the relationship lives to 90.

In short, you should plan on living to at least 90 years old or perhaps even longer, depending on your family history. While more people are working beyond the age of 65, that doesn’t mean you should assume you will be able to do so. JPMorgan finds that almost 70% of actual retirees left the workforce before age 65, primarily due to health problems or disabilities.

Your Reaction?

Source: JPMorgan

2. Saving early

We’ve all heard it before: You need to start saving for retirement as soon as possible. It’s a simple concept, but many people fail to understand the long-term effects of saving and investing early. As the chart above shows, a person who invests $5,000 annually between the ages of 25 and 35 will have an estimated $563,000 at age 65, assuming a 7% annual return. In comparison, a person who invests $5,000 between the ages of 35 and 65 will have about $58,000 less.

Market returns are not guaranteed and are certainly more volatile than 7% each year, but the math shows the benefits of compounding returns. The earlier you start, the better your chances of reaching your financial goals. Your chances also improve if you start early and keep a consistent pace. A person who invests $5,000 annually between the ages of 25 and 65 could accumulate more than $1 million for retirement.

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Source: JPMorgan

3. Spending habits

Predicting your exact income needs for retirement decades in advance is impossible. Nonetheless, you should recognize that you may have more expenses than you think. On average, American household spending peaks at age of 45. However, as the chart above shows, there are still significant costs after the peak and during retirement.

The average spending for 65- to 74-year-olds totals $44,897 per year — not exactly chump change. If you plan on traveling in retirement, your costs could be even higher. Additionally, healthcare is the one category of spending that fails to log a decrease. If you invest in nothing else for retirement, at least invest in your health. Eliminating mortgage debt and making sure your house fits your actual needs is also helpful in reducing retirement expenses, as housing-related costs represented the largest portion of spending among all age groups.

Your Reaction?

Source: JPMorgan

4. Nursing home expenses

One of the most overlooked retirement costs may also be one of the most expensive. JPMorgan finds that the cost of a private room nursing care facility for one year can vary from $80,000 to over $120,000, depending on where you live. However, majority of Americans underestimate the costs of nursing home care and are neglecting the need to save for it.

Nearly 57% of Americans believe a year in a nursing home will cost them less than $75,000, according to a recent survey by MoneyRates.com. A study by MetLife finds that even semi-private rooms cost an average of $81,030 per year. Furthermore, the average cost of a semi-private room in the New York City area is $141,620, which is 75% higher than the national average. In contrast, Louisiana, Alabama, Oklahoma, and Missouri offer some of the cheapest long-term care services in the country.

Your Reaction?

Source: JPMorgan

5. Social Security

If you can, delaying Social Security benefits may help you achieve a more secure retirement. The top graphic illustrates how people born 1943 to 1954 can receive 32% more in a benefit check by waiting until age 70 to claim Social Security, compared to the full retirement age of 66. At age 62, beneficiaries receive only 75% of what they would get if they waited until age 66. The bottom graphic shows the trade-offs for younger individuals, which penalizes early claiming by offering 70% of benefits at age 62. Delaying benefits until age 70 results in 124% more benefits than age 66.

If you have a health problem or family history indicating you will not live for decades beyond age 62, you may want to claim Social Security as soon as possible so that you have time to enjoy the fruits of your labor. On the other hand, if your health and finances are stable, you may want to wait. The Social Security Administration now offers online accounts so that Americans can stay up to date on their financial situations.

Your Reaction?

Source: JPMorgan

6. Investing

Due to inflation eroding the value of money, it’s not enough to simply let your savings sit in cash. One dollar invested in Treasury bills in 1950 would have only grown to $16 in 2013. However, that same dollar invested in large-cap stocks would have grown to $969, while small-cap stocks would have grown that dollar into $4,260. There are certainly other investment choices than stocks, but this illustration reminds investors that cash is a terrible wealth generator over the long term.

Warren Buffett once explained how investors should view cash. He said: “The one thing I will tell you is the worst investment you can have is cash. Everybody is talking about cash being king and all that sort of thing. Cash is going to become worth less over time. But good businesses are going to become worth more over time. And you don’t want to pay too much for them so you have to have some discipline about what you pay.”

“But the thing to do is find a good business and stick with it. We always keep enough cash around so I feel very comfortable and don’t worry about sleeping at night. But it’s not because I like cash as an investment. Cash is a bad investment over time. But you always want to have enough so that nobody else can determine your future essentially.”

Your Reaction?

Source: JPMorgan

7. Market timing

Unless you’re a day trader, you should not be trying to time the market. With the rise of smartphones and tablets, investors are constantly plugged into financial markets, but that doesn’t mean you should always be doing something with your portfolio. The average Joe is typically better off with a diversified portfolio built for the long term. Trying to time the market can be disastrous, especially when it comes to stocks and your retirement.

As the chart above shows, $10,000 invested between January 3, 1995, and December 31, 2014, would have grown to $65,453 if it was constantly invested in the S&P 500. If you missed the 10 best days during that period, the investment would have grown to only $32,665, just less than half of the amount if you simply left the money untouched. Critics rightly point out that missing the worst days in the market is even better for a portfolio, but that is a dangerous strategy for most investors.

Even if you rightly time the market and avoid the worst days, you are then left with the agonizing decision of when to get back into the market. You need to know yourself and your limitations when investing. Six of the 10 best days during the stated time period occurred within two weeks of the 10 worst days.

All charts courtesy of JPMorgan

Culled from wallstreetcheatsheet

Oil prices drop as spare storage capacity runs low-Reuters

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A customer fills his Aston Martin DB9 car at a petrol station, in south London, March 2, 2011. REUTERS/Andrew Winning

By Henning Gloystein

SINGAPORE (Reuters) - Oil prices fell on Monday, with U.S. crude dropping nearly 3 percent to a six-year low as the dollar hit fresh highs and spare oil storage capacity runs low around the world.
U.S. crude fell to $43.57 in early trading, its lowest since March 2009, before rebounding to $44.34 by 3:35 a.m, still down almost half a dollar since its last settlement. Brent was trading at $54.32 a barrel, down 35 cents.
Traders said the price falls were due to diminishing spare capacity to store excess oil as well as the strong U.S. dollar.
China has been taking advantage of low prices to build up its strategic petroleum reserves (SPR), which have pushed its imports to record highs despite slowing economic demand, but analysts say new spare capacity will only become available later this year, denting near-term import needs.
"While the low crude oil prices are expected to incentivize crude stockbuild (in China), stockpiling activities at the SPRs this year will remain constrained by available spare capacity," said Wendy Yong, analyst at energy consultancy FGE.
"However, in anticipation of the start-up of another SPR site this year, crude imports could pick up later this year," she added.
Space capacity is also running low in the United States.
"Bearish comments from the International Energy Agency that the U.S. might soon run out of empty tanks to store crude and a suggestion that global supply was up 1.3 million barrels per day in February year on year at 94 million barrels weighed on sentiment," ANZ said.
More U.S. oil wells are likely to open after closures due to harsh winter conditions, which could put further pressure on prices, Morgan Stanley said.
Goldman Sachs said that a falling U.S. rig count would only translate into slightly lower production in the second quarter of this year.
Oil prices are also under pressure from the strong U.S. dollar, which remained close to multi-year highs.
The Fed's policy-setting committee meets this week with the expectation that it could tighten monetary policy as soon as June.
A stronger greenback makes commodities denominated in the dollar more expensive for holders of other currencies.
The euro slipped as low as $1.0457 (EUR=) early in the Asian session, its lowest since January 2003, and the currency has dropped about 25 percent versus the dollar since mid-2014.

(Additional reporting by Keith Wallis; Editing by Richard Pullin)

A Money To-Do List for People in Their 50s -Brian Wu

Once you get through your 30s and 40s, you might think you will finally be at a point when you can relax and not watch your money closely, and this may be true depending on your financial situation. However, when you reach your 50s, your financial work really isn’t done, and you need to remain vigilant to ensure your money works for you for the rest of your life.

When you reach your 50s, you could start feeling a financial pull from not only your children but your parents, as well. Regardless of the pull from your family, it is perfectly fine to begin focusing on yourself and putting your financial future first. There are several money to-do’s that you must work at to ensure your financial stability when you hit retirement.

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Source: iStock

1. Double down on your retirement savings

Now that you are settled into your career and many of life’s largest expenses are hopefully behind you, it is time to put that money directly into your retirement savings. Increase your contributions to their maximum to really collect money into your retirement 401(k) plans.

If you feel you are behind on your retirement savings, you can take advantage of the catch-up contributions for your 401(k) and IRA that allow you to put back even more money than you normally can. If you want to save even more than you are allowed to with the extra contributions, you can consider opening a second IRA or Roth IRA to stash that extra cash away for retirement.

In addition to adding to your retirement plans, you may want to discuss dialing back the risk on your investments with your financial planner. When you do this and how much you reduce it depends largely on how much longer you plan to work and what your financial situation is at the time.

 2. Pay off debt

Now that you are in your 50s, you are most likely making more money than you ever have, as the prime earning years for most Americans are between ages 50 and 65. Instead of spending that income, consider using that extra money to aggressively pay off your debt. Credit card debt and any other type of loans should be taken care of first.

Once you have paid off this debt, move onto other bills that, while they aren’t actually debt, can easily take a bite out of your retirement savings. You most likely don’t have too many years left on your mortgage if you have lived in your home for quite some time, so why not pay it off? The more debt you get rid of now, the longer your retirement savings will last you.

 3. Grow your emergency fund

The same rules apply for people 50 or older as they do for everyone else. You should still try and save at least six months’ worth of income and store it in an easy-to-access location in case there is an emergency. After you turn 50, however, you may want to consider growing that emergency nest egg a little larger than the accepted six-month figure.

Assuming all of your retirement accounts are fully funded, you should try to stash away additional income to increase your emergency savings to one year’s worth of salary, and if possible, increase it even more, to two year’s worth of salary. Saving up that much for a rainy day should almost guarantee that you are ready for whatever type of financial emergency may arise, and it will keep you from having to dip into retirement savings to take care of expenses. Even if you don’t use that money for an emergency, it will still be there when you retire, giving you an automatic boost to your retirement.

Once you reach your 50s, you should be in one of the best financial positions of your life, and you need to use that position to your advantage to prepare for that day when you do retire. Work hard to eliminate any outstanding debt and get serious about your retirement so that you are adequately prepared for the day when you retired and aren’t earning a steady income.

Culled from wallstreetcheatsheet

The retirement savings gap between haves and have-nots is getting bigger-By Suzanne Woolley

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With the stock market up, the housing market largely recovered, and unemployment down, you'd think Americans would be in better shape to retire than they were in 2007. The opposite is true, according to a study released today by the National Institute on Retirement Security. While the value of 401(k) retirement savings accounts and IRAs hit a record high of $11.3 trillion at the end of 2013, the average American household isn't sharing in that wealth. The following three charts sum up the problem nicely.

Half of households haven't saved anything

While those of us lucky enough to have workplace retirement plans have benefited from the long bull market, a huge swath of America doesn't have retirement accounts such as 401(k)s or IRAs. Nearly 40 million working-age households don't have any retirement accounts, the report says. Whether someone has an account is closely tied to his or her income and wealth. Households with accounts have annual income that's 2.4 times higher than those that don't. The median retirement account balance when you look across all households? $2,500.

Even saver households haven't saved enough

For savers closest to retirement (from age 55 to 64), those with retirement accounts had a median balance of $100,000 in 2010. That's up to $104,000 today. Households that don't have retirement-specific accounts, though, are doing far worse in overall savings: They have about $14,500 today, up from $12,000. 

We're in trouble 

How bad is it? Fidelity Investments recommends that by age 55, a worker needs to have saved five times his current income to be on track for retirement. Others estimate far more, but even by that conservative standard, most people are falling short.  

Lest we all now crawl under a rock, the authors highlight reforms that could brighten the retirement outlook. (Not included in the report: the political feasibility of any of the reforms.) One basic suggestion is to strengthen Social Security, since it and Supplemental Security Income make up more than 90 percent of income for the bottom 25 percent of retirees, according to the report. That number falls to a still-hefty 70 percent for the middle 50 percent. Ways to do that include increasing benefits for low-wage workers, getting rid of the payroll tax cap, and adjusting the benefit formula so it keeps pace with the living costs faced by seniors.

The authors also note that making it easier for private employers to offer defined benefit pensions, as part of a national and state push to ensure that everyone has a retirement plan, would help. The trend toward automatically enrolling employees in 401(k)s has helped broaden the universe of workers who are saving for retirement, but few small employers offer such plans, and that's where you find many low-wage workers. 

Culled  from Bloomberg