The Fifth Milestone of Life: Retirement

By Sandy Botkin

For those who feel that they are a long way away from retirement, take a tip from me: retirement comes at you very fast. Time really does pass quickly. Every Boy Scout learns to "be prepared."  Unfortunately, procrastination can be VERY costly. For example, if you put in $5,500 a year, which is the current maximum contribution to an IRA, for thirty years, you will have, depending on earnings assumptions, about $1,000,000 in your retirement fund. However, if you do this for an extra ten years, this $1,000,000 at retirement rises to almost $3,000,000. Ten more years of contributions triples your retirement nest egg. Also, if you invest in a ROTH IRA, you don't pay tax on the fund at retirement, which in my opinion is the better choice.

Now I can just hear some young people complain that with new families, student loan debt, etc., it is hard to put away $5,500. The answer then is to put away something, even if it is only $2,000.

Here is another tip that points out a VERY widespread mistake. If you contribute the same $5,500 for forty years at the beginning of each year vs. the same $5,500 at the end of each year for forty years, you will have an extra $60,000-$90,000 MORE at retirement. It is the same yearly contribution and the same amount of years. Thus, always contribute to your retirement plan as early in the year as possible.

The final tip for this installment involves 401K. Many companies now provide 401Ks for the employees instead of pension plans. As a result, many companies match the employee contributions to some extent. Sadly, I was reading that 50% of people who are in this situation do NOT contribute enough to max out or even get any of the employer contribution. This is INSANE. It is free money that they are turning away. If you work for a company that provides a matching contribution, you NEED to max out whatever contribution that you need to make in order to max out the employer's contribution. Don't be a fool by walking away from free money!

Derived in part from my latest book: Achieve Financial Freedom – Big Time!

Visa and MasterCard Fraud

By Sandy Botkin

SCAM ALERT: This one is pretty slick and is the latest scam dealing primarily with Visa and MasterCard fraud. It is slick because they provide you with all the information except the one piece that they really want. It is worth reading, and YOU SHOULD SHARE THIS WITH ALL OF YOUR FRIENDS, FAMILY MEMBERS AND FACEBOOK FRIENDS.

The scam works like this: Person calling says, "This is (name) and I'm calling from the Security and Fraud Department at Visa. My badge number is 12460.  Your card has been flagged for an unusual purchase pattern and I'm calling to verify. This would be on your Visa card which was issued by (name of bank). Did you purchase an Anti-Telemarketing Device for $497.99 from a marketing company based in Arizona?" When you say "no," the caller continues with: "Then we will be issuing a credit to your account. This is a company we have been watching, and the charges range from $297 to $497 - just under the $500 purchase pattern that flags most cards. Before your next statement, the credit will be sent to (gives you your address). Is that correct?" You answer "yes."

The caller continues: "I will be starting a fraud investigation. If you have any questions, you should call the 1-800 number listed on the back of your card (1-800-VISA) and ask for Security. You will need to refer to this control number." The caller then gives you a 6-digit number and asks: "Do you need me to read it again?"

Here's the IMPORTANT part of how the scam works: The caller then says, "I need to verify you are in possession of your card."  He'll ask you to "turn your card over and look for some numbers." There are 7 numbers: the first 4 are part of your card number, the last 3 are the security numbers that verify you are the possessor of the card. These are the numbers you sometimes use to make Internet purchases to prove you have the card. The caller will ask you to read the last 3 numbers to him. After you tell the caller the 3 numbers, he'll say, "That is correct.  I just needed to verify that the card has not been lost or stolen and that you still have your card. Do you have any other questions?"

After you say "no," the caller then thanks you and states, "Don't hesitate to call back if you do," and hangs up. You actually say very little, and they never ask for or tell you the card number. But after we were called on Wednesday, we called back within 20 minutes to ask a question. We were glad we did! The REAL Visa Security Department told us it was a scam and in the last 15 minutes a new purchase of $497.99 was charged to our card. We made a real fraud report and closed the Visa account. Visa is reissuing us a new number. What the scammer wants is the 3-digit PIN number on the back of the card. Don't give it to them. Instead, tell them you'll call Visa or MasterCard directly for verification of their conversation.

NOTE: The real Visa and MasterCard security will NEVER ask for anything on the card as they already know the information since they issued the card. What is remarkable about this is that I just got a call where they used a word-for-word repeat of this scam. In my case, they told me that someone charged $3,097 for a plane ticket to Spain.  Pass this information on and share it with everyone.

Derived in part from my latest book: Achieve Financial Freedom – Big Time! based on the chapter entitled, "Scams, Slams and Shams."

The Impersonation of Charitable Organizations

By Sandy Botkin

A long-standing dirty tax scam is the impersonation of charitable organizations. Following major disasters, it is very common for scam artists to impersonate charities to get money or private information from well-intentioned people. Usually they contact you by telephone or e-mail to solicit money or financial information. They might even contact disaster victims directly and claim to be working for the charity in order to "help" them file a casualty loss and get a tax refund. They will also use bogus Web sites. Be wary of charities that are similar or familiar to known organizations. 

What should you do in order to avoid being scammed?

1. IRS.gov Web site has a search function for valid charities for which donations may be tax deductible.
2. NEVER give out personal information, such as Social Security numbers or even credit card and bank numbers to anyone who solicits a contribution from you. Scam artists may use this information to steal your identity.
3. Don't send or give cash... period. For security and tax records, using a check or credit card provides documentation of the gift, which you will need in order to take a deduction.

Derived from IRS notice 2014-16, Achieve Financial Freedom – Big Time! and Lower Your Taxes: Big Time.