5 Ways to Protect your Retirement Account from Fraud and Identity Theft
According to research conducted by the American Bankers Association in 2019, there were 374 million open credit card accounts in the U.S. That’s about 70% of the population. If you’ve had credit cards for a while, you’ve probably also been a victim of credit card fraud or identity theft.
This might be the only time I say this, but take it from Dwight – identity theft is no joke. The upside for that credit card charge is that Federal law limits your liability for unauthorized charges to $50 and a majority of credit card companies will waive that meaning you’re pretty much covered.
What About My Retirement Savings?
Oh yeah, those accounts that will allow you to retire from work and live off of them comfortably for upwards of 30 or more years? I get queasy just thinking about someone stealing from my retirement funds.
Unfortunately, there isn’t a similar law that outlines if you’re protected from theft liability when it comes to your retirement accounts. Another downside is that, for most, the value of your bank account or credit card limit pales in comparison to your retirement account. There’s an article in the Wall Street Journal that talks more on these issues.
The most common individuals to steal from your retirement account are family members. And, if you think about it, that makes sense as they’re most likely to know the answers to your password reset questions.
5 Ways to Protect your Retirement Savings
So, what can you do? Here are 5 steps you should take to protect your investments:
- Adopt a 2-Factor authentication. While it may add 15-30 seconds per login, this will provide an additional level of security to your accounts.
- Update your password reset questions. There’s no law that says your answers have to be honest. They only need to be answers that you know or can remember. As an example, you can give the same answer (e.g., Smith) to every question such as mother’s maiden name, street you grew up on, best friend, etc. This makes it harder for someone to guess your answers.
- Check your account on a regular basis. I’m not suggesting you become a day trader. Just make sure your money is still there and ensure that your contact information is up-to-date. Also, don’t check your accounts on a public computer or at work. You’re more susceptible to hackers if you’re using a public wireless network.
- Use unique passwords. Don’t use the same password for every site. In other words, using the same password for your 401(k), Netflix, wifi, AT&T, Facebook, etc. is an invitation for disaster.
- Consider consolidating your accounts. When you leave an employer, consider moving that account to your new employer’s plan or rolling it over to an existing IRA provider. The fewer the accounts, the fewer opportunities to become a target.
I hope this didn’t scare you into withdrawing your savings to hoard under the mattress and in tin cans. I just don’t want you to fall victim to internet fraud or identity theft. Adopting these precautions will take some time, but they’ll also give you peace of mind. Some basic common sense and good internet “hygiene” will go a long way when it comes to protecting you and your retirement accounts.
Odyssey Advisors seeks to stay up-to-date with current & future plan design options as well as the relevant IRS, DOL, and ERISA regulations to keep our clients and partners informed. If you have questions, please reach out an Odyssey consultant for more information.