Advantages to Taking Social Security Benefits at Age 62

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“Social Security’s trust funds will become unable to pay full benefits starting in 2034, one year earlier than estimated last year.” Social Security Administration Trustee Report

Social Security has two programs, one for retirees and another that provides disability benefits. The Old-Age and Survivors Insurance Trust Fund will become unable to pay full benefits starting in 2033, a year earlier than projected in 2020, while the Disability Insurance Trust Fund will become depleted in 2057, or 8 years earlier, according to Social Security Administration.

The U.S. economic recession caused by COVID-19 led to a drop in U.S. employment and a resulting decrease in payroll tax revenue, which accelerates the depletion of Social Security’s reserves.

When to claim benefits

You can start receiving your Social Security retirement benefits as early as age 62. And, there are advantages and disadvantages to taking your benefit before your full retirement age.  Matter of fact, 31% of women and 27% of men claim their Social Security benefits as soon as they qualify at age 62 in 2018.

  • The primary advantage is that you collect benefits for a longer period of time.
  • The primary disadvantage is your benefit will be reduced. Each person’s situation is different.

The earliest you can apply for Social Security benefits is four months before the month you want your benefits to start, and the earliest your benefits can start is your first full month as a 62-year-old. For example, if you turn 62 in June, your benefits can begin in July, and you can apply as early as March. And, Social Security Benefits are actually paid one month in arrears in August.

There is an exception: If you were born on the first or second day of a month, you can begin collecting your benefits in that month.

You may need your Social Security Benefits as a source of guaranteed income to help pay bills, or if you anticipate not living long enough to reap the rewards of delaying.

If you start taking Social Security at age 62, rather than waiting until your full retirement age (FRA), you can expect up to a 30% reduction in monthly benefits with lesser reductions as you approach FRA.

Delaying can boost monthly payments compare to claiming early. Colleen, single at age 62 would receive $1,450. At 66 1/2 $2,000. At 70, $2,560. Waiting until age 70 would increase Colleen's montly benefits by more than 765 and her lifetime benefits by at least 24%

Social Security replaces a percentage of your pre-retirement income based on their lifetime earnings. The portion of your pre-retirement wages that Social Security replaces is based on your highest 35 years of earnings and varies depending on how much you earn and when you choose to start benefits.

When you work, you pay taxes into Social Security and the Social Security Administration uses the tax money to pay benefits to:

  • People who have already retired.
  • People who are disabled.
  • Survivors of workers who have died.
  • Dependents of beneficiaries.

The money you pay in taxes isn’t held in a personal account for you to use when you get benefits. We use your taxes to pay people who are getting benefits right now. Any unused money goes to the Social Security trust fund that pays monthly benefits to you and your family when you start receiving retirement benefits.

Living in retirement

You’re officially retired and have worked hard to build up your retirement nest egg. As you transition your mindset from saving to spending, you’ll want to now change your focus: Protect what you have, don’t run out of money, develop a housing strategy for where you’ll live over the next 20–30 years, and hopefully, enjoy life as much as you can with your friends and family.

Claiming Social Security at 62 makes sense in several scenarios. Below are four reasons to consider filing as early as possible.

  1. You’re out of work against non-voluntary – Many people are forced out of a job before they’re ready to retire. If you’ve been downsized and can’t find a new job, Social Security could help replace of your regular paycheck. Furthermore, the coronavirus pandemic has forced a lot of seniors out of the workforce, whether due to layoffs or health concerns. If you’re able to compensate for not working by claiming benefits early, do so since it’s a better bet than racking up debt.
  2. You’re out of work temporarily and need money – Maybe you’re not working right now to address a health issue or lay low until the pandemic is over, but you’re confident you can get back out there in six months. In that case, claiming Social Security at 62 could be a smart move because you can actually use that money as a loan of sorts. One lesser-known Social Security rule is that you’re allowed to undo your filing once in your lifetime. If you claim benefits at 62 but are working again in a few months, you can withdraw your application, repay the SSA the benefits it paid you, and then file again at a later age so you don’t slash your benefits in the process. The only catch is that you must undo your claim and repay your benefits within 12 months. But if you can pull that off, you can collect Social Security on a temporary basis without locking yourself into a lower monthly benefit forever.
  3. You’re tired of working and can get by on your Social Security paycheck – Maybe you have the option to work, but at this point in life, you’re tired of doing it. If your expenses are such that you can get by on your Social Security income, or a combination of Social Security and other income sources, then there comes a point when you should let yourself off the hook after a lifetime of hard work. If you’re going to claim Social Security early for this reason, you should make sure to have a healthy retirement savings balance to compensate for a lower monthly benefit.
  4. You Have Minor or Disabled Children at Home – If you have children, eligible grandchildren, or even a spouse providing care for these children at home, these family members may be eligible for a benefit. There’s a rule that states that before benefits can be paid to anyone off of your work record, you have to be receiving benefits. That means filing early could make more sense than waiting. When combined with your benefits, the benefits to children and your eligible spouse can be up to 180% of your full retirement age benefit. If you have children at home that meet the criteria for eligibility, that’s an obvious reason to consider filing early.

It might seem like it makes sense to wait to file until full retirement age, then, when you’d receive $2,000 (versus filing at 62, when you’d only get $1,500 per month).

If you lived until 90, you’d receive an additional $70,000 in benefits for delaying filing until 66 instead of filing at 62. But this calculation doesn’t take into account the benefits paid to your children. While your children would be eligible for benefits based upon your retirement, the kids cannot get benefits until you file. That means your family would able to collect thousands of dollars more in lifetime benefits if you file early and turn on the benefits for your kids.

For every good reason to claim Social Security at 62, there’s an equally good reason to wait. On average, retirement beneficiaries receive 40% of their pre-retirement income from Social Security.

References:

  1. https://www.marketwatch.com/story/social-security-to-become-unable-to-pay-full-benefits-sooner-than-previously-estimated-11630436444
  2. https://www.ssa.gov/benefits/retirement/learn.html
  3. https://www.aarp.org/retirement/social-security/questions-answers/social-security-start-at-62.html
  4. https://www.fidelity.com/viewpoints/retirement/social-security-at-62
  5. https://www.fool.com/retirement/2021/04/05/3-great-reasons-to-take-social-security-benefits-a/
  6. https://communications.fidelity.com/pi/calculators/social-security/#sectionAge
  7. https://www.ssa.gov/OACT/quickcalc/early_late.html
  8. https://www.socialsecurityintelligence.com/5-smart-reasons-to-consider-filing-for-social-security-at-62/

Lifestyle Creep

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“Lifestyle creep is one of the biggest and often most overlooked barrier for Americans to building long-term wealth.”

Lifestyle creep, sometimes called lifestyle inflation, is when living expenses and non-essential expenditures grow with income. Essentially, it’s your lifestyle and standard of living creeping up to levels you wouldn’t have been able to maintain earlier in your life. This unnecessary spending might mean joining a beach club, installing a backyard swimming pool or eating out more frequently. Or, it could mean buying a second home or a new car.

And, “when your expenses continuously increase in lockstep with your income,” that when lifestyle creep can set in, said Nilay Gandhi, a CFP and senior wealth adviser with Vanguard.

Some examples of lifestyle creep, according to Investopedia, include:

  • Spending several dollars per day on coffee
  • Flying premium economy rather than coach
  • Eating out frequently and more expensively
  • Purchasing expensive clothing and jewelry (and more of it)
  • Paying for housekeeping and lawn care
  • Buying or renting more house than you need (or a second home)
  • A third car, a boat, or replacing a car sooner than you need to

On the one hand, it’s only natural to increase your spending as your income rises. After all, you work hard to buy and do the things you love to do in life. “It’s when that higher spending happens mindlessly, rather than intentionally, that it becomes problematic”, says Mary Lyons, an investment adviser and founder of the Benchmark Income Group in Dallas.

Lifestyle creep can happen to anyone, no matter your income. Even when high salary earners are asked to name their top financial challenge, nearly half stated an inability to save enough.This highlights an important fact: There’s no outearning lifestyle creep.

Lifestyle creep is most visible among high earners. Living within your means can seem straightforward when your means are small. You can tell yourself that, after your next raise or bonus, you’ll simply save more money and keep everything else the same. Yet, “The number one culprit of lifestyle creep is spending on your credit card and paying it off every month,” says Katie Waters, certified financial planner at Stable Waters Financial. “Just as work expands to the time allotted, expenses will expand to the credit limit.

One of the most detrimental side effects of lifestyle creep is that spending more inevitably means saving and investing less. Lifestyle creep can also lead to additional life stresses, says Ami Shah, a certified financial planner in Washington, D.C., and CEO of Steward, a financial planning software tool. For example, if your lifestyle becomes dependent on a certain level of income, what happens if you want to switch jobs or careers?

The best means to manage and prevent lifestyle creep is to create a financial plan and a budget, and stick with both. And many financial experts contend that the first line of defense is not overspending on housing, often someone’s highest expense. Generally, you should keep monthly housing costs below 25% of your net income. And, if the amount you’re saving and investing falls below 20% of your net income, that could be an indication of lifestyle creep.

Financial experts suggests paying yourself a weekly allowance to remain intentional about your spending, no matter how much money you make.

Spend below your means

“People get rich by earning money; they stay rich by spending less than they earn. ”

If you’re able to live on only 70% to 80% of your income, you’ll have enough left over to save and invest. To do that, focus on spending very intentionally and reducing or eliminating high-interest debt.

Spending intentionally doesn’t require pinching every penny, but you should know and track where those pennies are going and ensure that spending is something you value, whether that’s travel or other desirable experiences.

References:

  1. https://www.marketwatch.com/story/this-is-one-of-the-biggest-barriers-to-building-long-term-wealthis-it-happening-to-you-11630079820
  2. https://www.investopedia.com/terms/l/lifestyle-creep.asp
  3. https://www.realsimple.com/work-life/money/money-planning/lifestyle-creep
  4. https://www.nerdwallet.com/article/investing/how-to-get-rich

Staying Invested in the Stock Market

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“The stock market is the only market where the goods go on sale and everyone becomes too afraid to buy.”  Nerd Wallet

When the market dips even a few percent, as it often does, many retail investors become fearful and sell in a panic, according to Nerd Wallet. Yet when stock prices rise, investors beomce greedy and plunge in headlong which is the perfect definition for “buying high and selling low.”

Here are the three popular fairytales investors tell themselves regarding investing:

  1. Wait until the stock market is safe to invest – This excuse is used by investors after stocks have declined, when they’re too afraid to buy into the market. But when investors say they’re waiting for it to be safe, they mean they’re waiting for prices to climb. So waiting for (the perception of) safety is just a way to end up paying higher prices, and indeed it is often merely a perception of safety that investors are paying for. Fear drives the behavior and psychologists call this behavior “myopic loss aversion.” That is, investors would rather avoid a short-term loss at any cost than achieve a longer-term gain.
  2. Buy back in next week when the stock market is lower – This excuse is used by would-be buyers as they wait for the stock to drop. But as the data shows, investors never know which way stocks will move on any given day, especially in the short term. Both fear and greed drive this behavior. The fearful investor may worry the stock is going to fall and waits, while the greedy investor expects a fall but wants to try to get a much better price.
  3. Bored with this stock, so I’m selling – This excuse is used by investors who need excitement from their investments. But smart successful investing is actually boring. The best investors sit on their stocks for years and years, letting them compound gains. All the gains come while you wait, not while you’re trading in and out of the market. Investor’s desire for excitement drives this behavior.

The key to long term investment success is creating a plan, sticking to the plan and remaining in the stock market through “thick and thin”. Your length of “time in the market” is the best predictor of your investing performance. Unfortunately, investors often move in and out of the stock market at the worst possible times, missing out on performance and annual return.

“The secret to making money in stocks? Staying invested long-term, through good times and bad.”  Nerd Wallet

In a nutshell, more time in the stock market equals more opportunity for your investments to increase in value. The best companies tend to increase their revenue and profits over time, and investors reward these greater earnings with a higher stock price. That higher price translates into a higher total return for patient and disciplined investors who own the stock.

References:

  1. https://www.nerdwallet.com/article/investing/make-money-in-stocks

Millions of Americans Fall Victim to Identity Theft

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While online, your personal information is constantly exposed to bad actors. Take actions to protect your identity and prevent the theft of your identity.

A shocking amount of information about you can be found online. From Social Security numbers to bank account numbers to social media profiles, a savvy thief potentially has access to all the data he or she needs to assume and steal your identity.

Identity theft is a serious crime. It happens when someone uses your Social Security number or uses other personal information about you without your permission to open new accounts, make purchases or get tax refunds. They could use your:

  • Name and address
  • Credit card or bank account numbers
  • Social Security number
  • Medical insurance account numbers

Many Americans whose information was compromised did not realize their identity was stolen until years later when they tried to buy a car, file tax returns or purchase a home.

Experts warn that identity thieves can use social engineering to steal your information. Social engineering is the art of manipulating someone to divulge sensitive or confidential information that can be used for fraudulent purposes.

Social engineering can happen everywhere, online and offline. And unlike traditional cyberattacks, whereby cybercriminals are stealthy and want to go unnoticed, social engineers are often communicating with you in plain sight. Consider these common social engineering tactics that one might be right under your nose.

  • Your “friend” sends you a strange message. Social engineers can pose as trusted individuals in your life, including a friend, boss, coworker, even a banking institution, and send you conspicuous messages containing malicious links or downloads. Just remember, you know your friends best — and if they send you something unusual, ask them about it.
  • Your emotions are heightened. The more irritable we are, the more likely we are to put our guard down. Social engineers are great at stirring up our emotions like fear, excitement, curiosity, anger, guilt, or sadness.
  • The request is urgent. Social engineers don’t want you to think twice about their tactics. That’s why many social engineering attacks involve some type of urgency, such as a sweepstake you have to enter now or a cybersecurity software you need to download to wipe a virus off of your computer.
  • The offer feels too good to be true. Ever receive news that you didn’t ask for? Even good news like, say winning the lottery or a free cruise? Chances are that if the offer seems too good to be true, it’s just that — and potentially a social engineering attack.
  • You’re receiving help you didn’t ask for. Social engineers might reach out under the guise of a company providing help for a problem you have, similar to a tech support scam. And considering you might not be an expert in their line of work, you might believe they’re who they say they are and provide them access to your device or accounts.
  • The sender can’t prove their identity. If you raise any suspicions with a potential social engineer and they’re unable to prove their identity — perhaps they won’t do a video call with you, for instance — chances are they’re not to be trusted.

A thief can get your personal information in person or online. Here are some ways thieves might steal someone’s identity. A thief might:

  • Steal your mail or garbage to get your account numbers or your Social Security number
  • Trick you into sending personal information in an email
  • Steal your account numbers from a business or medical office
  • Steal your wallet or purse to get your personal information

Identity experts share five recommendations for how to protect your identity:

  • Once a year, order and closely review a free credit report from each national credit reporting agency: Experian, Equifax and Transunion.
  • Browse and purchase online while only using a secure connection. Never use autofill features when filling out online forms, unless it is on a trusted site.
  • Refrain from giving solicitors personal or financial information over the phone, by email or through pop-up message.
  • Opt out of pre-screened offers of credit and insurance by mail.
  • Avoid oversharing on social networking sites so you’re not sharing a potential scam with others.

If you do think you’re a victim, call the three major credit bureaus and place a credit freeze and file a report with law enforcement.

Even if you don’t believe it’s that big of a deal, reporting these crimes can help law enforcement prevent others. It took identity theft victims an average of 10 hours to resolve the fraud in 2020, according to LifeLock.

Moreover, you may be responsible for what the thief does while using your personal information. You might have to pay for what the thief buys. This is true even if you do not know about the bills.

How can that happen?

  • A thief might get a credit card using your name.
  • He changes the address.
  • The bills go to him, but he never pays them.
  • That means the credit card company thinks you are not paying the bills.
  • That will hurt your credit.

This is the kind of trouble identity theft can cause for you.

Your best defense against identity theft and social engineering attacks is to educate yourself of their risks, red flags, and remedies. To that end, stay alert and avoid becoming a victim.

References:

  1. https://www.consumer.gov/articles/1015-avoiding-identity-theft#!what-it-is
  2. https://us.norton.com/internetsecurity-emerging-threats-what-is-social-engineering.html
  3. https://www.usnews.com/360-reviews/identity-theft-protection

Health is Wealth: Reducing the Risk of Heart Disease

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Heart disease is the leading cause of death in America. Every 34 seconds, someone has a heart attack and every 60 seconds, someone dies from a heart disease-related event.

Heart disease is a serious health problem for all Americans. Although it’s the leading cause of death for Americans (659,041 died in 2020), most people aren’t aware that they’re at risk for heart disease, according to the National Institute of Health. A heart attack or stroke may seem sudden, but the truth is that heart disease happens over many years and it often starts at a very young age.

The term “heart disease” includes a variety of heart problems. The most common is coronary heart disease, which is when a person has “clogged arteries.” This kind of heart disease develops over many years, as the blood vessels going to the heart become narrow and clogged.

As plaque builds up in the arteries of a person with heart disease, the inside of the arteries begins to narrow, which lessens or blocks the flow of blood.

Risk factors for Heart Disease

Risk factors are traits and habits that make you more likely to develop heart disease. Some risk factors you can do something about; others you can’t change. The more risk factors you have, the greater your chances of developing heart disease.

High blood pressure, high blood cholesterol, and smoking are key risk factors for heart disease. Several other medical conditions and lifestyle choices can also put people at a higher risk for heart disease, including:

  • Diabetes
  • Overweight and obesity
  • Unhealthy diet
  • Physical inactivity
  • Excessive alcohol use

Healthy cholesterol levels

Unhealthy levels of cholesterol makes a heart attack or stroke more likely.

Cholesterol is a waxy, fat-like substance in your body. Your body makes all the cholesterol it needs. Cholesterol is carried through your blood in two different “packages.” One of these packages is a low-density lipoprotein (LDL), also called bad cholesterol. The other is a high-density lipoprotein (HDL), called good cholesterol.

  • HDL helps your body get rid of cholesterol, so it doesn’t build up inside your arteries.
  • LDL puts cholesterol inside your arteries. Over time, cholesterol and other substances clog your arteries. That can cause chest pain or even a heart attack.

The buildup of plaque in the arteries of your heart can occur over many years. As plaque builds up in the arteries of a person with heart disease, the inside of the arteries begins to narrow, which lessens or blocks the flow of blood. Plaque can also rupture (break open). When it does, a blood clot can form on the plaque, blocking the flow of blood.

These arteries supply oxygen-rich blood to your heart muscle. Coronary heart disease (CHD) is a disease in which a waxy substance called plaque builds up inside the coronary arteries and it is the most common type of heart disease. When plaque builds up in the heart arteries, the condition is called atherosclerosis.

F.A.S.T

It’s important to spread the word about F.A.S.T., the acronym to help people remember the signs of stroke:

  • Face drooping,
  • Arm weakness or
  • Speech difficulty mean it’s
  • Time to call 911

You can reduce many risks by making lifestyle changes. But you need information and support.

To lower their risk for heart disease:

  • Lose weight – Eat smaller portions and get 21⁄2 hours of physical activity a week
  • Eat less saturated fat and sodium
  • Eat more fruits and vegetables
  • Limit beverages and foods with sugar
  • Quit smoking
  • Have regular checkups
  • Track our weight, waist size, blood pressure, cholesterol, and blood sugar (for diabetes).

Note: You can lower your risk by making some small but important changes to your health, you and your family will have longer, healthier lives.

Physical Activity

Being physically active on a regular basis is one of the best ways to keep your heart, lungs, and whole body healthy. It makes your heart stronger and lowers your risk for heart disease.

Any activity is better than none! But the “intensity,” or how hard your body is working, makes a difference. Increase your intensity gradually. If you have a health problem, check with your health care provider before increasing your physical activity.

  • Light-intensity activity, like cooking or cleaning the house, usually doesn’t require much effort. Start light, if that’s what you’re comfortable doing or your provider recommends.
  • Moderate-intensity activity, like taking a brisk walk, makes you breathe harder and your heart beat faster. You can still talk but singing would be hard. Work up to at least 21⁄2 hours of moderate-intensity activity a week.
  • During vigorous-intensity activity, like playing a game of basketball or jogging, you can’t say more than a few words without stopping for a breath. You need only 75 minutes of vigorous activity a week.

Losing even a small amount of weight can lessen weight-related health problems and reduce the risk of heart disease.

References:

  1. https://www.cdc.gov/nchs/fastats/deaths.htm
  2. https://www.nhlbi.nih.gov/sites/default/files/publications/WEHL-On%20the%20Move%20Booklet_508.pdf
  3. https://www.cdc.gov/heartdisease/facts.htm

Beware of American Depositary Receipts (ADRs)

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ADRs are a form of equity security that was created specifically to simplify foreign investing for American investors.

American Depository Receipts (ADRs) offer US investors a means to gain investment exposure to non-US stocks without the complexities of dealing in foreign stock markets.

ADRs are a form of equity security that was created specifically to simplify foreign investing for American investors. An ADR is issued by an American bank or broker. It represents indirect ownership of one or more shares of foreign-company stock that isn’t directly traded on U.S. exchanges and held by that bank in the home stock market of the foreign company.

The ratio of foreign shares to one ADR will vary from company to company, but each ADR for any one company will represent the same number of shares. ADRs may be listed on a major exchange such as the New York Stock Exchange or may be traded over the counter (OTC). Those that are listed can be traded, settled, and held as if they were ordinary shares of US-based companies.

Because ADRs are issued by non-US companies, they entail special risks and drawbacks inherent to all foreign investments. These include:

  • Exchange rate risk—the risk that the currency in the issuing company’s country will drop relative to the US dollar
  • Political risk—the risk that politics or regime changes in the issuing company’s country will undermine exchange rates or destabilize the company and its earnings
  • Inflation risk—the risk that inflation in the issuing company’s country will erode the value of that currency
  • Liquidity: Plenty of companies have ADR programs available, but some may be very thinly traded.
  • Higer Fees—ADRs can carry higher fees than traditional stocks.
  • Transparency—investors also may not have access to the amount of information available on domestic companies.

ADRs have a number of unique differences relative to foreign stocks or traditional U.S. stocks that are equally important to consider.

For instance, there is a significant difference in the way that taxes are charged on dividends. As with U.S. stocks, dividends are taxable in the U.S. Unlike U.S. stocks, the dividends may also be subject to tax by the company’s home country. However, they’re usually automatically withheld by the sponsor. Investors may choose to apply a credit to their U.S. taxes or apply for a refund abroad to avoid double taxation.

References:

  1. https://www.fidelity.com/learning-center/investment-products/stocks/understanding-american-depositary-receipts
  2. https://www.thebalance.com/about-adrs-understanding-american-depositary-receipts-1979192

The American Wealth Gap

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The wealth gap, measured by net worth, between average Americans and the wealthy is the widest and most extreme in recorded history.

The average American has personal wealth, measured by net worth, consisting of about $393,000 in assets minus liabilities, according to the World Inequality Database. Yet, someone with that kind of net worth is not “wealthy,” relative to the country’s wealthiest elites. 

Below is the chart created using data from the World Inequality Database and Bloomberg’s Billionaires Index. The bubbles represent the relative wealth of the average American — just one pixel wide in the chart below — compared to the average wealth of the top 1% of people in the US. Also, there are bubbles to represent multibillionaires Marc Benioff and Charles Koch, as well as Elon Musk, the richest person in the world.

The chart shows just how far ahead billionaires are from everyone else. The dot representing the average American’s wealth is so small that chart designers had to draw a circle around it. It depicts that Elon Musk’s bubble stands 488,000 times as large as the average American’s comparable infinitesimal bubble.

Even the average wealth in America of the top 1%, approximately $13.7 million, is dwarfed by the billionaires. The top one percent of household net worth threshold starts at $11.1 million in 2019, according to finance and investing website ‘Don’t Quit Your Day Job’.

HENRYs — “high earner, not rich yet”

In the world of finance, HENRY is an acronym that stands for “high earner, not rich yet”. HENRYs make six figure incomes but still live basically paycheck to paycheck. These individuals earn a sizeable disposable income and tend to spend that income to facilitate a standard of living at or beyond their financial means. It’s also important to note that HENRYs typically live above their means, they constantly utilize credit and work to pay off their accumulated debts.

Because of their considerable disposable income and being on the path to establishing future wealth, luxury brands target HENRYs with their marketing. The 3 Key Characteristics of a HENRY, according to Corporate Financial Institute, are:

  1. Feeling of/belief that they have little to no wealth
  2. A substantially greater-than-average yearly income
  3. Limited or non-existent savings

Though HENRY’s are in a much better position financially than many Americans to pay their monthly mortgage, buy a car, or take a vacation, compared to billionaires like Musk or Benioff, they don’t make the cut for the wealthiest.

The US has 650 billionaires according to an analysis by Americans for Tax Fairness and the Institute for Policy Studies Project on Inequality,

References:

  1. http://static5.businessinsider.com/chart-wealth-top-1-percent-billionaires-average-american-family-worth-2021-8
  2. https://wid.world/country/usa/
  3. https://dqydj.com/average-median-top-net-worth-percentiles-by-age/
  4. https://corporatefinanceinstitute.com/resources/careers/compensation/high-earners-not-rich-yet-henrys/
  5. https://dqydj.com/top-one-percent-united-states/

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Individual Investor’s Coinbase Accounts Hacked…Money Gone Forever

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Coinbase has become the world’s most popular exchange for buying and selling digital cryptocurrencies. It has also become the most popular exchange for hackers and scammers to compromse and empty investors digital currency wallets.

If your Coinbase account gets hacked and your cryptocurrency is stolen off Coinbase, it important to understand that it’s gone forever. Coinbase will not give you your money back, specifically if your Coinbase account gets compromised through a SIM swap scam through your cell phone carrier.They say that they are not responsible for a breach caused by a third party such as your cell phone carrier.  Although they have “insurance”, it’s only applicable if Coinbase’s main site gets hacked, not your specific account.

Image

SIM swap scams occur when a scammer pretends to be a legitimate customer of the cell phone service carrier in order to obtain a new SIM card.  The new SIM card is connected to the real customer’s phone number without the real customer’s knowledge.  Once the new SIM card is activated, the scammer uses the new SIM card on a phone under the scammer’s control.  As the scammer now has control of the real customer’s phone number, all of the real customer’s phone calls, text messages, and data are directed to the phone under the scammer’s control.

“It has become harder and harder for people to protect their online accounts, given the amount of personal information that has become available to bad actors,” Coinbase chief information security officer Philip Martin acknowledged.

How to Secure Your Coinbase Accounts

Numerous Coinbase accounts get compromised every day, according to Reddit forum r/CoinBase. However, Coinbase says, unauthorized transactions are rare. In 2020, just 0.004% of customers experienced transactions where their email accounts were taken over, SIM swaps attacks occurred on their cellphones, or other personal information unrelated to Coinbase was breached, according to Coinbase.

To improve the security on your Coinbase accounts, the Reddit forum recommends that you should not use the same email everywhere especially for your bank and crypto accounts, and don’t use SMS 2 factor authenication. Your mobile phone SMS 2 factor authenicadtion is not secure.

Once a scammer discover your phone number, all he or she has to do is call his inside accomplice at your phone carrier and get your number swapped to his sim card. To protect your account, experts recommend:

  • Don’t use phone texting SMS 2 factor authentication, use Authy or get a physical key.
  • Don’t use the same email everywhere. Have a junk email, then a credit card email, then a bank account email. Make them all different.
  • Get a password manager like KeePass, Kaspersky, or 1Password. If you can remember your password then it’s not a good password. However, you can have the strongest password in the world, but if you have SMS 2 factor authentication enabled the scammer can reset your password by receiving your text while he has control of your phone number.

Coinbase does offer physical USB security key capability for added account security, but the measure requires users to acquire additional hardware. Security experts say physical USB security keys would protect users from becoming victims of account hacks that occur through SIM swaps, which are occurring with increasing frequency.

On Coinbase’s website, customers should heed the company’s warning notes, “Please be aware that we currently do not offer any phone support with a live agent. Moreover, Coinbase does not respond timely to emails you send them, if you’re compromised. They don’t have customer support via phone or live chat.

References:

  1. https://www.reddit.com/r/CoinBase/comments/gdcgd9/coinbase_account_hacked/
  2. https://www.consumer.ftc.gov/blog/2019/10/sim-swap-scams-how-protect-yourself
  3. https://finance.yahoo.com/news/coinbase-hacked-accounts-get-no-justice-from-horrible-us-laws-fintech-lawyer-113520348.html

The National Study of Millionaires

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“Anyone in America can build wealth. The only thing holding you back is you. Get out of debt. Save consistently. Keep your spending in check. Let time and compound interest do their magic. If you’re willing to work hard and keep the long-term goal in mind, you’ll reach the million-dollar milestone.” Chris Hogan

Summary

  • “The National Study of Millionaires” is the largest survey of millionaires ever with 10,000 participants.
  • Eight out of ten millionaires invested in their company’s 401(k) plan.
  • The top five careers for millionaires include engineer, accountant, teacher, management and attorney.
  • 79% of millionaires did not receive any inheritance at all from their parents or other family members.

The National Study of Millionaires by Ramsey Solutions concluded that millionaires successfully accumulated wealth through consistent investing, avoiding debt like the plague, and smart spending. No lottery tickets. No inheritances. No six-figure incomes.

Thus, according to the survey, there is positive news for Americans who may have lost hope that they can ever accumulate wealth. “The people in the study became millionaires by consistently saving over time. In fact, they worked, saved and invested for an average of 28 years before hitting the million-dollar mark, and most of them reached that milestone at age 49.”

The study’s results demonstrated a dramatic difference between how Americans think wealthy people get their money and how they actually earn and spend their money.

In a nutshell, regular, consistent investing over a long period of time is the reason most of the people in the survey successfully accumulated wealth. And, even when millionaires don’t have to worry about money anymore, they remain careful about their spending. Ninety-four percent of the people studied said they live on less than they make. By staying out of debt and watching expenses, they’re able to build their bank accounts instead of trying to get out of a financial hole every month.