How Much 20-Somethings Should Save

Your 20s may seem like an odd time to think of retirement, but it’s actually the perfect moment to start planning for your later years. That’s because the earlier you start saving, the more time your money has to grow.

Savers who begin setting aside 10% of their earnings at 25, for example, could amass significantly more by retirement age than those who wait just five years to start saving. You can use online calculators to see how much starting saving now can produce once you reach retirement.

Building a nest egg on a starter salary and a shoestring budget can seem daunting, though. Focusing on the incremental savings, rather than the goal, can help your savings objectives feel more manageable.

How Much to Save for Retirement

For those earning around $25,000 a year, the median income for 20 to 24 year olds in 2015, saving the recommended sum of 10% amounts to a little more than $200 a month.

It may seem like a reach, but consider this: If you start saving $100 a month at age 25 and invest it to return 7.7% a year — the average total return of the Standard & Poor’s 500 Index of U.S. stocks over the past decade — you’ll have more than $378,000 available at retirement age. And it could be tax-free.

If you wait until you’re 30 to start and save the same monthly amount at the same rate of return, you’ll wind up with less than $253,000.

Several vehicles can help you build a retirement fund. A 401(k) contributory plan, typically offered by your employer, is often the most convenient and easily accessible of these. Contributions you make usually aren’t taxed, which helps reduce your income tax liability.

  • Pre-tax 401(k) accounts make up around 80% of retirement plans offered by employers, according to the American Benefits Council. Roth 401(k) accounts are another option, though these are less widely available, and money contributed to a Roth 401(k) account goes in after it’s taxed. Money withdrawn from this type of account — including earnings — is usually tax-free.
  • Companies that offer a 401(k) plan often match employee contributions, up to a certain percentage. This is essentially free money toward your retirement.
  • If your employer will match your contributions, try to take full advantage and commit a large enough percentage to get the full benefit.
  • Beyond a 401(k), individual retirement accounts, commonly referred to as IRAs, offer another solid option. There are two types: traditional and Roth.
  • Money put into a traditional account is tax-deferred, similar to funds put in a traditional 401(k) plan. That means those funds aren’t taxed until they’re taken out. But typically any earnings you make with the money are also subject to income taxes on withdrawal.
  • Money put into a Roth IRA has already been taxed when you earn it, so there’s no immediate tax benefit. When it’s time to withdraw the cash, however, you usually don’t pay taxes on it. And anything the money earns also can be taken out tax-free.
  • Contributions to both types of IRAs are currently capped at $5,500 a year for those under age 50, and $6,500 for older workers.

How Much to Save for Emergencies

In addition to retirement, it’s also wise to save for a rainy day. Ideally, your emergency fund should be enough to cover three to six months of living expenses.

Some experts suggest setting aside even more for savings and investments: 20%. That’s roughly $415 a month on an annual income of $25,000.

That’s not always feasible, especially if a big chunk of your monthly income goes to student loan and credit card payments. Consider saving what you can, even if it’s just $10 a month.

Making a habit of saving now could serve you well down the road. And, as your income increases, the percentage you save can as well.

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Year-End Retirement Savings Strategies

Whether your retirement unfolds as a beautiful dream or a scary nightmare depends largely on the financial decisions you make today. But if retirement planning is brand-new to you, you’re not alone.

The average working household has very little cash saved for retirement and about 45% of working-age households have no retirement savings at all, according to the National Institute on Retirement Security.

However, you still have time this year to start building a retirement fund and gain a tax advantage in the process.

Calculate your target

How much will you actually need for retirement? Chances are, quite a lot. Retirement may last anywhere from 15 to 20 years or more, and you’ll need somewhere between 70% and 90% of your pre-retirement income annually to live comfortably.

Don’t count on Social Security to cover this; many people experience some shortfall. To determine yours, contact the Social Security Administration online or call 1-800-772-1213 for a benefit estimate. Factor in retirement accounts you already have, as well as how expenses might change after retirement. To close your gap, you’ll need to save $15 to $20 for each annual shortfall dollar. So an annual shortfall of $25,000 means you’ll need to save between $375,000 and $500,000 before retirement.

Tax-advantaged retirement strategies

There are various types of savings plans that let you save on your taxes while you get ready for retirement.

IRAs: Individual retirement accounts come in many forms, including CDs and mutual funds. In any case, two basic structures apply:

Traditional IRAs: Contributions aren’t taxable until you withdraw funds during retirement, which can dramatically reduce what you owe the IRS this year. By the time you withdraw cash, you’ll likely be in a lower tax bracket.
Roth IRAs: If you won’t owe much to Uncle Sam this year, consider a Roth IRA. The money invested remains taxable as income this year, but then grows tax-free.

Both IRA types have a basic contribution limit of $5,500 annually (with the exception of qualified reservist repayments and rollover contributions). If you’re 50 or older, however, you’re allowed to make additional catch-up contributions of $1,000 each year.

401(k) plans: These employer-managed plans often match employee contributions up to a set limit, which translates to free retirement money for you. Unless your plan is specifically a Roth 401(k), your contributions are deducted from your federal income, resulting in a nice immediate tax break. Like traditional IRAs, when you make retirement withdrawals, the money is taxed as income. When planning your retirement savings, make sure to take full advantage of any employer 401(k) match that’s available before putting money into other types of plans.

Health savings accounts: HSAs don’t generally come to mind during retirement planning, which is a shame because if you’re enrolled in a high-deductible health insurance plan, they can provide a tax break today and help to make retirement more comfortable down the road. Payroll deductions for HSAs are pretax, and individual contributions are tax-deductible, up to the annual limits of $3,350 for individuals and $6,750 for families. Then, to sweeten the deal, any interest earned on these accounts is tax-free, and you can make tax-free withdrawals anytime for qualified medical expenses.

If you’re wondering what this all has to do with retirement, there’s no limit on carry-overs or when you have to withdraw funds. This means you can invest annually in an HSA, receive a tax break right away, and reserve the funds to use tax-free for medical expenses during retirement.

Once you’ve reached the contribution limits for tax-advantaged retirement investment options, you can explore alternative retirement savings options, including money market accounts, CDs and cash-value life insurance, to make sure your shortfall is covered. With the right planning and discipline on your part, you can achieve your best possible tax outcome this year while ensuring a comfortable tomorrow.

 

© Copyright 2016 NerdWallet, Inc. All Rights Reserved

 

Best Ways to Start Saving for the Holidays

“Christmas in July” is the name of a movie in which a man called Jimmy is tricked into believing he's won $25,000 in a national radio contest. (It's from 1940, but the point remains.) He promptly goes out and blows his winnings on a shopping spree. When the truth comes out that Jimmy didn't win, the department store owner tries to repossess all the presents Jimmy bought for his girlfriend, his mother and everyone on the block.

The movie has a happy ending — Jimmy is officially named the contest winner after all — but real life is seldom so benevolent when we overspend. Here are some steps to avoid such a predicament this holiday season:

Examine your finances

Unless you know a windfall is coming your way, setting up a savings account dedicated to holiday spending is an excellent way to avoid running up debt.

Craft a budget to approximate what you can afford to salt away by subtracting expenses from income. It may be useful to differentiate between fixed expenses such as your mortgage or rent, utilities and car payments, and variable ones such as food, entertainment and vacations.

It also may help to review how much you spent on gifts last year. Whatever savings goal you come up with, divide it by the number of weeks left before the holidays to calculate how much to set aside each week.

Setting up the account

Once you have your target, the next step is to set up the account with your bank or credit union and decide how to fund it. If you already have direct deposit set up with your employer, it may be possible to divert a specified sum from each paycheck — $25, $50 or whatever you decide to contribute — to this account.

Automating the process makes it easier to meet a savings target while also “masking” the loss. You don't miss what you don't see.

You might also consider padding the account to go beyond gifts and cover holiday-related outlays for decorations, dining out and traveling.

Staying on track

The earlier you know what you're buying for whom, the sooner you can start monitoring prices and timing your purchases to take advantage of promotions and sales. And if you have a credit card with cash-back rewards, consider using it on holiday gifts to earn a bit on your spending.

As the holidays near, you may also wish to freeze extra spending. This could increase the likelihood you'll reach your goal and avoid excessive debt on other fronts.

If you see your budget is going to fall short of projected costs and want to avoid incurring debt, you may wish to consider paring down your list or the specific gifts you had planned on.

Now, this might sound contradictory, but if you have your plan and are sticking to it, consider using a credit card to actually make your purchases. Why? Because using a credit card can mean better fraud protection, price protection and the ability to earn rewards. When the bill comes in January, you pay it out of the dedicated savings account you'd set up.

Whatever you do, be smart and be responsible with your holiday spending, because most of us can't count on a Hollywood-type happy ending.

© Copyright 2016 NerdWallet, Inc. All Rights Reserved

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Protecting Your Mobile Device

Your mobile device provides convenient access to your email, bank and social media accounts. Unfortunately, it can potentially provide the same convenient access for criminals. The American Bankers Association recommends following these tips to keep your information – and your money – safe.

Use the passcode lock on your smartphone and other devices. This will make it more difficult for thieves to access your information if your device is lost or stolen.

• Log out completely when you finish a mobile banking session.

• Protect your phone from viruses and malicious software, or malware, just like you do for your computer by installing mobile security software.

• Use caution when downloading apps. Apps can contain malicious software, worms, and viruses. Beware of apps that ask for unnecessary “permissions.”

• Download the updates for your phone and mobile apps.

• Avoid storing sensitive information like passwords or a social security number on your mobile device.

• Tell your financial institution immediately if you change your phone number or lose your mobile device.

• Be aware of shoulder surfers. The most basic form of information theft is observation. Be aware of your surroundings especially when you’re punching in sensitive information.

• Wipe your mobile device before you donate, sell or trade it using specialized software or using the manufacturer’s recommended technique. Some software allows you to wipe your device remotely if it is lost or stolen.

• Beware of mobile phishing. Avoid opening links and attachments in emails and texts, especially from senders you don’t know. And be wary of ads (not from your security provider) claiming that your device is infected.

• Watch out for public Wi-Fi. Public connections aren't very secure, so don’t perform banking transactions on a public network. If you need to access your account, try disabling the Wi-Fi and switching to your mobile network.

• Report any suspected fraud to your bank immediately.

Protecting Yourself Online

Though the internet has many advantages, it can also make users vulnerable to fraud, identity theft and other scams. According to a Norton Cybercrime Report, 378 million adults worldwide were victims of cybercrime in 2013. The American Bankers Association recommends the following tips to keep you safe online:

Keep your computers and mobile devices up to date.  Having the latest security software, web browser, and operating system are the best defenses against viruses, malware, and other online threats. Turn on automatic updates so you receive the newest fixes as they become available.

Set strong passwords. A strong password is at least eight characters in length and includes a mix of upper and lowercase letters, numbers, and special characters.

Watch out for phishing scams. Phishing scams use fraudulent emails and websites to trick users into disclosing private account or login information. Do not click on links or open any attachments or pop-up screens from sources you are not familiar with.

Forward phishing emails to the Federal Trade Commission (FTC) at spam@uce.gov – and to the company, bank, or organization impersonated in the email.

Keep personal information personal. Hackers can use social media profiles to figure out your passwords and answer those security questions in the password reset tools. Lock down your privacy settings and avoid posting things like birthdays, addresses, mother’s maiden name, etc.  Be wary of requests to connect from people you do not know.

Secure your internet connection. Always protect your home wireless network with a password. When connecting to public Wi-Fi networks, be cautious about what information you are sending over it.

Shop safely. Before shopping online, make sure the website uses secure technology. When you are at the checkout screen, verify that the web address begins with https. Also, check to see if a tiny locked padlock symbol appears on the page.

Read the site’s privacy policies. Though long and complex, privacy policies tell you how the site protects the personal information it collects. If you don’t see or understand a site’s privacy policy, consider doing business elsewhere.

 

Check Washing: How to Protect Yourself

Check Washing
What is It?

According to the National Check Fraud Center, check washing takes place to the tune of $815 million every year in the U.S., and it is increasing at an alarming rate.

Using a process known as check washing, mail snatchers erase the ink on a check with chemicals found in common household cleaning products or on the shelves of your local Walmart and then rewrite the checks to themselves, increasing the amount payable by hundreds and even thousands of dollars.

Problem at hand:

One woman became so adept at the technique she prowled the streets with a portable computer, printer and laminating machine in her car, cranking out new identification each time she swiped a batch of bills. Of course she had to take the time to wash the ink from the two vital areas of the check, making sure she didn't tamper with the written signature.

The problem has grown so severe that many local and federal authorities have formed task forces around the country, with agents from the Postal Inspection Service, U.S. attorney's office, local police forgery units, FBI and Secret Service.

They offer the following advice to people with old-fashioned mailboxes:

Don't leave outgoing mail in an unlocked box. Take it to work, drop it in a collection box, hand it to a letter carrier or take it directly to the post office.
If you have to leave outgoing mail in your box, do it immediately before the letter carrier comes, and don't raise the mailbox flag.
Avoid leaving mail in a box on Sundays and holidays, when letter carriers don't work.
Install a lock on your box. This can be done by placing the lock on your mailbox and then cutting a small slit in the mailbox that is large enough to slide mail through, but which is not big enough for a hand to fit in. Residents also can purchase a mailbox with a lock already on it for roughly $20 at a hardware store. In both cases, you will not be able to have outgoing mail picked up.

Content retrieved from National Check Fraud Center: http://www.ckfraud.org/washing.html

8 Tips to Protect Your Identity

Protect Your Identity
Identity theft continues to be one of the fastest growing crimes in the United States. In 2014, there were 12.7 million victims of identity fraud in the U.S., according to Javelin Strategy and Research. F&M Bank recommends following these tips to keep your information – and your money – safe.

Identity theft continues to be one of the fastest growing crimes in the United States. In 2014, there were 12.7 million victims of identity fraud in the U.S., according to Javelin Strategy and Research. F&M Bank recommends following these tips to keep your information – and your money – safe.

1. Don’t share your secrets.

Don’t provide your Social Security number or account information to anyone who contacts you online or over the phone. Protect your PINs and passwords and do not share them with anyone. Use a combination of letters and numbers for your passwords and change them periodically. Do not reveal sensitive or personal information on social networking sites.

2. Shred sensitive papers.

Shred receipts, banks statements and unused credit card offers before throwing them away.

3. Keep an eye out for missing mail.

Fraudsters look for monthly bank or credit card statements or other mail containing your financial information. Consider enrolling in online banking to reduce the likelihood of paper statements being stolen. Also, don’t mail bills from your own mailbox with the flag up.

4. Use online banking to protect yourself.

Monitor your financial accounts regularly for fraudulent transactions. Sign up for text or email alerts from your bank for certain types of transactions, such as online purchases or transactions of more than $500.

5. Monitor your credit report.

Order a free copy of your credit report every four months from one of the three credit reporting agencies at annualcreditreport.com.

6. Protect your computer.

Make sure the virus protection software on your computer is active and up to date. When conducting business online, make sure your browser’s padlock or key icon is active. Also look for an “s” after the “http” to be sure the website is secure.

7. Protect your mobile device.

Use the passcode lock on your smartphone and other devices. This will make it more difficult for thieves to access your information if your device is lost or stolen. Before you donate, sell or trade your mobile device, be sure to wipe it using specialized software or using the manufacturer’s recommended technique. Some software allows you to wipe your device remotely if it is lost or stolen. Use caution when downloading apps, as they may contain malware and avoid opening links and attachments – especially for senders you don’t know.

8. Report any suspected fraud to your bank immediately.

 

5 Ways to Protect Your Small Business from Account Fraud

Protect Your Small Business from Account Fraud
Corporate account takeover is a type of fraud where thieves gain access to a business’ finances to make unauthorized transactions, including transferring funds from the company, creating and adding new fake employees to payroll, and stealing sensitive customer information that may not be recoverable. F&M Bank recommends following these tips to keep your small business safe.

Corporate account takeover is a type of fraud where thieves gain access to a business’ finances to make unauthorized transactions, including transferring funds from the company, creating and adding new fake employees to payroll, and stealing sensitive customer information that may not be recoverable. F&M Bank recommends following these tips to keep your small business safe.

1.    Educate your employees. You and your employees are the first line of defense against corporate account takeover. A strong security program paired with employee education about the warning signs, safe practices, and responses to a suspected takeover are essential to protecting your company and customers.

2.    Protect your online environment. It is important to protect your cyber environment just as you would your cash and physical location. Do not use unprotected internet connections. Encrypt sensitive data and keep updated virus protections on your computer. Use complex passwords and change them periodically.

3.    Partner with your bank to prevent unauthorized transactions. Talk to your banker about programs that safeguard you from unauthorized transactions. Positive Pay and other services offer call backs, device authentication, multi-person approval processes and batch limits help protect you from fraud.

4.    Pay attention to suspicious activity and react quickly. Look out for unexplained account or network activity, pop ups, and suspicious emails. If detected, immediately contact your financial institution, stop all online activity and remove any systems that may have been compromised. Keep records of what happened.

5.    Understand your responsibilities and liabilities. The account agreement with your bank will detail what commercially reasonable security measures are required in your business. It is critical that you understand and implement the security safeguards in the agreement. If you don’t, you could be liable for losses resulting from a takeover. Talk to your banker if you have any questions about your responsibilities.

For additional information, give us a call or email us; we will be happy to help. You can also visit the following websites to learn more about how to protect your small business:

•    U.S. Chamber of Commerce: Internet Security Essentials for Business
•    Federal Communications Commission: 10 Cybersecurity Strategies for Small Business
•    Better Business Bureau: Data Security Made Simpler 
•    NACHA – The Electronic Payments Association Corporate Account Takeover Resource Center

Identity Theft Protection|fa-lock|159|ID SafeChoice|1

Card Cracking: Responding to an online solicitation for “easy money”

Card Cracking
The American Bankers’ Association recently released an infographic containing tips to help bank customers avoid becoming accomplices in a growing “card cracking” scam. Card cracking happens when a fraudster reaches out to a bank customer promising quick cash. The customer provides account credentials to the scammer, who then deposits a fake check in the customer’s account. The fraudster then makes an immediate ATM withdrawal, sharing some of the funds with the customer. Meanwhile, the customer is instructed to report the card or credentials lost or stolen so that the bank will reimburse the stolen money — making the customer a criminal accomplice.

May 19, 2015

The American Bankers’ Association recently released an infographic containing tips to help bank customers avoid becoming accomplices in a growing “card cracking” scam.  Card cracking, which originates online on social media platforms and targets young consumers, is estimated to have cost banks $11.6 million in stolen funds.

Card cracking happens when a fraudster reaches out to a bank customer promising quick cash. The customer provides account credentials to the scammer, who then deposits a fake check in the customer’s account. The fraudster then makes an immediate ATM withdrawal, sharing some of the funds with the customer. Meanwhile, the customer is instructed to report the card or credentials lost or stolen so that the bank will reimburse the stolen money — making the customer a criminal accomplice.

To help customers avoid card cracking scams, bankers can advise customers to avoid online solicitations for easy money, never to share an account number or PIN, never to file a false fraud claim with a bank and to report suspicious social media posts connected to scams.

To help consumers avoid involvement in this scam, ABA is offering the following tips:

* Do not respond to online solicitations for “easy money.” Card cracking advertisements will suggest that this is a quick, safe way to earn extra cash. Keep in mind that easy money is rarely legal money.

* Never share your account and PIN number. Keep this information private at all times. By sharing it with others, you expose yourself to potential fraud.

* Do not file false fraud claims with your bank. By filing a false claim, you are a co-conspirator to fraud. Banks’ detection techniques for card cracking are constantly improving and suspicious claims will be investigated.

* Report suspicious posts linked with scams. If you notice postings that appear to be linked with a possible scam, report them to the social media site. There is usually a drop down menu near the post to allow for easy reporting.

Read more at aba.com