Friday, August 10, 2012

what's your exposure?

One of the "best practices" of retirees is the protection of their identity for financial security, and many have turned to Lifelock or similar companies to provide that protection.  However, there may be a better alternative so long as you won't be applying for credit anytime soon.

The purpose of identity protection is to avoid someone else opening up credit accounts using your personal information, because you are liable for what they do, and extracting yourself from that mess is time-consuming and costly.  Nor do you want someone accessing your bank or credit card accounts without your knowledge, because they can literally steal you blind.

So the solution is to a) prevent anyone, including yourself, from opening any credit account and b) monitor those bank/credit card accounts regularly.  You can accomplish the former by contacting each of three consumer credit companies to freeze your account.  The cost is $20/person (depending on your state of residence), and continues in place until you have it removed.  It will cost a similar amount to have it removed, again depending on your state of residence, since your state will regulate the amount that can be charged.

The three companies are Equifax, Experian, and Transunion.  Just google "how to freeze your credit" and you will be directed to those sites.  You can also get more background information on the rationale and downside by clicking here.

For you and a spouse the cost will be around $40 for each company, or a total of $120.  The cost of Lifelock or similar protection is $120/year/person, and though though that protection is effective, it's an annual fee.  You just need to be sure you won't be applying for credit anytime soon because then you have to go through the rewind process.

The second half of your protection comes from the regular monitoring of your accounts, which is extraordinarily easy anymore with online banking.  If you check your account every week or two you can see if anything is fishy, and downloading regularly could be a part of that checking process.  Quicken is an excellent program for that purpose.

You may already know that a thief can use a computer to generate random numbers with extraordinary speed, connecting simultaneously with retailers and credit card companies until they have a "match" and then are able to charge on your account like they've found gold at the end of a rainbow.  Fortunately, if you catch it quickly because you watch the charges, you likely won't be held responsible, or if you have a card from a bank with outstanding monitoring systems, they will call you before you're even aware.

Lifelock, and to my knowledge any identity theft program, does not/cannot monitor your banking/credit accounts for you.  Their function is to guard against new credit accounts being set up, not to monitor the existing accounts, so even with a Lifelock program in place, you are still susceptible to having someone dip into your checking account.  And if you never balance your checkbook, well . . .

This may be a bit outside the norm of the blog, but it's an extension of the post a few days ago about the habits of retirees.  As a retiree you have presumably done all you can to collect your nest egg - and now you need to know how to retain it.  Do you?

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.