Data Breaches, and Catching Up On Retirement Savings

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Welcome to NerdWallet’s Smart Money podcast, where we answer your questions about real money.

This week’s episode begins with information on what to do if your data is breached.

Then we move on to this week’s money issue from Melanie, who sent this message:

“Hi Sean. My name is Melanie. I’m a millennial and I haven’t contributed to my IRA or 401(k) in a long time. So I read a blog article recently about what I’m supposed to be saving. Now, and of course, no I’m not even halfway there and I know there are a lot of people out there in my shoes who are doing even worse.So I was wondering if you knew of any tricks or hacks, things to get around that limit so I can start contributing a lot more.

I heard there is one, but I don’t know the details about it, that if you have a business license like an LLC, you can possibly contribute without limit to a 401(k) or an IRA. Can you tell me a little more about it or if you know any of the details around it or maybe it’s a myth? I do not know. all good I look forward to hearing more. Thanks for the help.”

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Watch this episode on any of these platforms:

Our take on data breaches

When data breaches make national news, as was the case in early 2023 with Experian, Sequoia, and even the password management system LastPass, we are reminded to protect our own accounts. Prevention really is the best strategy, and one of the best tools is a credit freeze. When a freeze is in place, new accounts that require a credit check cannot be opened in your name unless you lift the freeze.

A fraud alert is another defensive measure that asks creditors to contact you whenever someone tries to open an account with your Social Security number. Other best practices include regularly monitoring your credit reports, creating complex passwords, and enabling two-factor authentication. Setting up all these protections takes time, but it’s time well spent if you protect against identity theft that can damage your finances.

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Our vision for catching up with retirement savings

Perhaps nothing is more personal in personal finance than how much you need to save for retirement. However, as a general guideline, many experts recommend saving enough to replace 80% of your pre-retirement income. If you’re behind on saving for retirement, there are ways to get back on track.

Many financial advisors recommend that people take advantage of any 401(k) matching that their employer may offer and max out their IRAs. For 2023, the maximum contribution limit for a 401(k) is $22,500 and $6,500 for an IRA. For those over 50, contribution limits are increased to allow future retirees to cover ground more quickly. Called catch-up contributions, they allow you to save an additional $7,500 in a 401(k) and an additional $1,000 in an IRA.

Delaying when you receive your Social Security payments is another way to boost your nest egg. Each year you claim after your full retirement age, currently between ages 66 and 67, you can add 8% to your check until age 70, when your benefit maxes out.

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Our tips

  1. Remember you are not a number. Saving for retirement can be stressful, but don’t let your retirement account balance define you.

  2. Save where you can: 401(k) plans and IRAs can be easy ways to save. And remember that the contribution limits increase for 2023.

  3. Beware of social media tips: Apps like TikTok and Instagram are full of misinformation — personal finance and otherwise. Check out trusted sources of information (like NerdWallet) for help.

Have a question about money? Text us or call us at 901-730-6373. Or you can email us at [email protected]. To listen to previous episodes, go to podcast home page.

More content from NerdWallet

Jae Bratton writes for NerdWallet. Email: [email protected]

Liz Weston, CFP® writes for NerdWallet. Email: [email protected] Twitter: @lizweston.

Sean Pyles writes for NerdWallet. Email: [email protected] Twitter: @SeanPyles.

The article Smart Money: Data Breaches, and Catching Up On Retirement Savings originally appeared on NerdWallet.


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