Enjoying a Richer Retirement, and an IRA Scam
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How does spending change over the course of your life and why it might mean you could spend more in retirement? That and much more on this Saturday personal finance edition of Motley Fool Money. I'm Robert Brokamp, and this week I speak with financial planning expert David Blanchett about his research into how to turn a portfolio into a retirement paycheck and why many retirees could spend more than they do. But first, let's dig into what happened last week in money, starting with the ongoing federal government shutdown. One consequence is that many economic numbers won't be released, including the previous week's jobs report and, if the shutdown continues, the inflation figures for September, the cost of living adjusted for Social Security, the retirement account contribution limits for 2026, and the new rate for Series I savings bonds, also known as I-bonds.
Another consequence is that many federal employees are furloughed, including nearly half of the workforce at the IRS. But no, that doesn't mean you could ignore the October 15th deadline to get your 2024 tax return in if you filed for an extension. And also, several government websites are down. So, for example, if you're the victim of identity theft, you'll have to wait until the shutdown is over to report the crime and get helpful resources at identitytheft.gov. While the past is no guarantee of future results, Jeff Bookbinder of LPL did publish some stats about what happened during the past shutdowns. So since 1976, there have been 21 shutdowns, and they last on average eight days. But the longest was the last one, which was during the first Trump presidency and lasted 34 days.
On average, the stock market is essentially flat. during a shutdown with a little bit of variability, the biggest decline being more than 4% in 1979, and the biggest gain being around 10%, again during the last shutdown, which began in 2018. The treasury market still operates since it's considered an essential service, so interest will be paid and auctions will continue, which is good because our government pretty much runs on debt. And speaking of identity theft, for our next item, we turn to a recent article from New York Times columnist Tara Siegel Bernard, who wrote about a reader who logged into his wife's IRA at Vanguard and found that $120,000 worth of investments was missing. It turns out that scammers opened up an IRA in his wife's name at Merrill Lynch, then requested that the investments be rolled over via the Automated Customer Account Transfer Service, otherwise known as ACATS, which is the system that firms use to move money and investments among one another.
Fortunately, this reader discovered the crime soon enough and the investments were returned in a week. Unfortunately, this type of ACATS fraud is on the rise. The truth is, it often doesn't take very much to open a new account online. It doesn't require a credit check, and freezing your credit won't prevent it. To request a transfer from another account, the scammer has to know enough information about the person and the account that holds the investments, which can be done, you know, maybe during a security breach or grabbing a statement out of the mailbox or the garbage. The transferring firm may or may not send a notification that there's been a request for a transfer. And even if they do, account holders don't always read it, given how much email and snail mail we all get.
So what should you do? According to Siegel Bernard, "...ask your financial provider what sort of notifications they send if money was transferred out. Make sure the alerts are turned on and ask the firm if they have a locking feature to prevent this type of activity. If they don't, demand one." Also, always use two-factor authentication. Guard your brokerage account numbers and shred paper statements if you absolutely insist on receiving them that way. Practice good email hygiene, too. And if you receive paper mail from a financial institution that you suspect is just a solicitation, open it anyway.
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