The best place to retire in the United States is in dispute. There’s no formal debate, but a review of reliable publications showed surveys have named different states and cities as the “best” place to retire. For instance:

• Iowa was #1 in a best places to retire survey cited by Yahoo! Money.¹
• Fort Myers, Florida was #1 in the ranking from S. News & World Report.²
• Athens, Georgia was the first name on a list of 25 places that are all the best, according to Forbes.³
• Catalina Foothills, Arizona topped com’s list of eight equally best places to retire.⁴

In 2019, Kiplinger offered a list of the 50 best places to retire. There was one in each state.⁵

It begs the question, doesn’t it? How can there be so many ‘best’ places to retire? The answer is it all depends on the criteria used to make the determination. If you plan to move and start life in a new place during retirement, there are a variety of factors to consider. Some are general, like cost of living, state tax rates, and healthcare services. Others are personal, like livability or proximity to children and grandchildren.

Here are a few of the issues to consider when deciding where you’ll spend retirement:

Cost of living.
Affordability is an important consideration. The cost of living – the amount needed to pay for basic expenses like housing, transportation, groceries, and healthcare, varies significantly from state to state and city to city. According to a study by GoBankingRates.com, those four items cost retirees in Hawaii about $118,000 a year, on average. In Mississippi, they cost about $53,000 a year, on average.⁶

Home prices.
While cost-of-living calculations often include housing costs, some focus on renting rather than buying. If you plan to buy a home, then it will be important to learn about the average housing costs in the regions you’re considering. In September 2019, the U.S. Census Bureau reported the median home price in the United States was $299,400.⁷

Taxes.
There is a lot to think about when it comes to taxes. Kiplinger determines the most and least tax-friendly states for “a hypothetical retired couple with a mixture of income from Social Security, an IRA, a private pension, interest and dividends, and capital gains. We also gave them a $400,000 home (with a small mortgage) and $10,000 in deductible medical expenses.”⁸

The publication evaluates state income tax, taxation of Social Security benefits, retirement income tax-exemptions, property taxes, and sales taxes. You may want to consider these as well.⁸

Fiscal soundness.
Fiscal policy is the way a government balances taxes and spending, which can affect economic conditions in a city or state. A government that spends profligately will need to raise revenue and that could lead to higher taxes. Similarly, a government that restricts taxation may have little room to innovate and govern. A 2018 Pew Research report described the types of steps some states are taking to evaluate and adjust fiscal policies.⁹

Livability.
It’s a catch-all category that speaks to quality of life. For instance, how does the crime rate compare to other places? Can you get around without a car? Is it easy to walk or bike around town? Are there opportunities to take advantage of continuing education? What types of cultural events and entertainment are available?

If your list of potential retirement spots includes places you have not visited before, make sure you travel to them more than once. If possible, live in the community for a few weeks or months.

Availability of healthcare.
If your list of possible retirement locales is comprised primarily of cities, healthcare services may be readily available to you. If your preference is for more remote locations, it will be important to investigate the availability of healthcare services.

One of the criteria that informed Kiplinger’s ‘10 Great Places to Retire for Your Health,’ was the availability of a hospital with a five-star rating from the Centers for Medicare and Medicaid Services. In rural areas, you may need to consider physicians per capita.^{10, 11}

Work prospects.
A lot of people would like to continue working in retirement. They may begin a new career, start a business, offer mentoring, or take on a part-time job. If a working retirement is a priority, you may want to research which cities have the highest percentage of workers age 65 and older, and where the growth of 65 and older workers is fastest. A 2019 CNBC article ‘Here are the cities with the biggest share of 65-and-older workers,’ offered some insights such as the top 10 cities, where these workers have a significant share of the workforce, five Texas cities are listed.¹²

Weather.
If you hate the cold, South Dakota will never be the best place for you to retire. Similarly, if you hate heat, Arizona may not be the most desirable choice.

The bottom line is the best place for you to retire is the place that meets your criteria. Money.com explained it pretty well:⁵

“What makes a great place to retire? It’s a trick question, of course – there are as many answers as there are retirees. Some love to golf in the sun, while others feel most invigorated by winter sports. For every history buff, there’s a modern art enthusiast, an adventurer for every homebody.”

The first step in finding your ‘best’ place to retire is to know yourself and your spouse and what will be important to you in retirement. If you would like to discuss the financial aspects of retirement, give us a call. We’d be happy to talk with you.

Sources:
¹ https://money.yahoo.com/best-states-retirement-211142233.html
² https://realestate.usnews.com/places/rankings/best-places-to-retire
³ https://www.forbes.com/best-places-to-retire/#486930521af5
⁴ https://money.com/best-places-retire-now/
⁵ https://www.kiplinger.com/slideshow/retirement/T047-S001-50-best-places-to-retire-in-the-u-s-2019/index.html
⁶ https://www.gobankingrates.com/retirement/planning/comfortable-retirement-cost-state/
⁷ https://www.census.gov/construction/nrs/pdf/uspricemon.pdf
⁸ https://www.kiplinger.com/slideshow/retirement/T037-S001-10-most-tax-friendly-states-for-retirees-2019/index.html
⁹ https://www.pewtrusts.org/en/research-and-analysis/articles/2018/12/17/states-strengthened-fiscal-policies-in-2018
¹⁰ https://www.kiplinger.com/slideshow/retirement/T006-S002-great-places-to-retire-for-your-health/index.html
¹¹ https://www.aamc.org/news-insights/press-releases/new-findings-confirm-predictions-physician-shortage
¹² https://www.cnbc.com/2019/06/27/here-are-the-cities-with-the-biggest-share-of-65-and-older-workers.html

Recently, we decided to share some non-financial lessons we’ve learned in a series of letters called, “Things Most Advisors Don’t Tell You.” You see, there are certain habits and behaviors that, while not directly related to finance, can spell the difference between reaching your goals or not. But in our experience, people rarely hear about these things from their financial advisor.

That’s unfortunate, because applying these lessons makes working towards your goals both easier and more rewarding. So, without further ado, here is:

Things Most Advisors Don’t Tell You #3: The importance of prioritization

Once there was a farmer who woke up early to milk his cows. On the way to the barn, he noticed his fence was broken. So, he went to his shed to get his tools, only to find he was out of nails. On the way to town to buy more, the fuel light in his truck came on. As he filled up at the gas station, he noticed a shoe store across the street advertising a special on men’s work boots. As his own were starting to wear down, he went to buy a pair. Then, he went to the hardware store. Once inside, he remembered his tractor needed a tune-up, so he bought the equipment he needed and drove home. Upon arriving, the sound of clucking hens reminded him to collect their eggs. After finishing that, he turned his attention to his tractor. By the time he finished, the afternoon was making way for the evening. “Still time to fix the fence,” he thought, when he realized he’d never actually bought the nails. So, back to town he went to get more.

The stars were out by the time he finally fixed the fence. Exhausted, the farmer went inside and kicked off his boots. But just as he sat down, his wife asked him why they had no fresh milk.

Groaning, the farmer rubbed his eyes and wondered why there was never enough time in the day to do what needed doing.

***

This is an extreme example – and obviously no self-respecting farmer would work like this – but it illustrates an important point. Too often, many people start the day – or the month, the year, or even an entire phase of their life – with a goal in mind, only to be distracted and side-tracked.

The result? We fail to achieve what we originally set out to do. We fail to realize our most cherished dreams.

There are two main culprits behind this.
1. We don’t plan ahead.
In the story above, the farmer probably would have felt a lot better about his day if he’d laid out a plan. But instead, he started going around in circles, always making decisions based on what he saw right in front of him. Many people to do this with their finances, too. For instance, maybe you decide it’s time to pay off your debt. But then you notice the roof needs repaired, so you pay for that. Then you get frustrated because your personal computer is old and slow, so you buy a new one. By that time, your money is running low, so you decide to just wait until your tax refund comes. But when the refund comes, you’re burned out from work, so you go on vacation instead. Meanwhile, your debt just grows and grows. When we plan ahead, we can determine what we want to accomplish, what steps it will take to get there, and when and in what order we execute those steps. Done correctly, this ensures we do more of what we actually want to do.

2. We don’t prioritize.
This is the culprit many advisors don’t talk about.
Let’s take the farmer again. Obviously, everything he did needed to get done – but some things were probably more important than others. The fence, maybe, could have waited. Buying new boots could have waited. Or perhaps he could have made a list of everything he could do without going into town, and a list of everything that required going into town. Then, he could have prioritized which tasks to do first, and in doing so, gotten a lot more done with a lot less effort.

Taking time to prioritize our goals, needs, and short-term wants has a similar effect. It ensures that we allocate our time and our money as effectively as possible. For instance, some people may find that investing their money for retirement is a lower priority than starting a rainy-day fund. Others, meanwhile, may get the most bang for their buck if they prioritize minimizing their taxes over, say, earning more money.

Life is hectic, and it seems like we always have a million-and-one things to do. Thankfully, the solution doesn’t always require beating our heads against the wall because we’re trying to “work harder.” Sometimes, the solution is to work smarter – by planning and prioritizing how we spend our time and money.

Next time, we’ll move on to a topic you’ll rarely hear a financial advisor talk about: Achieving financial harmony in the home. In the meantime, have a great month!

2010-2019: The Decade in Review

Every January, we send our clients a letter titled The Year in Review, where together we look back at the year that was. What were the highlights? What were the “lowlights”? What did we learn?

But this January doesn’t just mark a new year. It marks the beginning of a new decade. (Unless you are a strict observer of the Gregorian calendar system, in which case the next decade begins in 2021. But we digress.) So, for this letter, we’re going to look back at what shaped the markets in the 2010s – and what lessons we should take with us into the ‘20s.

2010-11: Aftershocks of the Great Recession

The best way to see how much can change in a decade is to remember how things were at the end of the last one. In 2010, we were coming off the worst decade for stocks since the 1930s. The Great Recession had devastated the retirement savings of millions of people. Many of the world’s most famous financial institutions had collapsed. And the national unemployment rate was near 10%.¹

It was a scary and uncertain time. Many investors had fled the markets entirely by 2010, some for good. As a result, they missed a remarkable recovery that was just around the corner. Not only that, they missed the longest bull market in history.

In hindsight, it might seem obvious that there was nowhere to go but up. But just as the start of a recession is very hard to see coming, the ending can be equally hard to wait for. People can be forgiven for thinking the worst was still to come, because in 2010 and 2011, there were still a lot of ominous headlines to deal with. Remember any of these terms?

Sequestration ● U.S. Debt Ceiling ● European Debt Crisis
● Bailouts ● Austerity ● The Fiscal Cliff

For the first few years, fear abounded as to whether the global economy would be able to recover at all. Nation after nation dealt with spiraling debt that couldn’t be paid off. Remember how often Greece used to be in the news? Some analysts speculated about the possibility of a second recession. 2011 was an especially tenuous year for the stock market, especially when the United States’ credit rating was downgraded for the first time in history.

2012-14: The Federal Reserve intervenes

 During this time, however, the world’s largest central banks were working behind the scenes to keep the recovery going. In the United States, for example, the Federal Reserve embarked upon a massive bond-buying program, to the tune of $85 billion per month. This accomplished two things. First, it flooded the money supply and kept interest rates historically low. Lower interest rates made borrowing less costly, which meant businesses and individuals could borrow and spend more, thereby pumping more money into the economy as a whole. This, of course, equaled growth. Slow growth, but growth nonetheless.

The second thing the Fed’s bond-buying did was drive more investors into stocks. Low interest rates often lead to lower returns for fixed income investments, so it was into the higher risk, higher reward stock market that investors went. All this had been going on for years, but the results were only then becoming apparent. So, it came almost as a surprise when the markets reached new highs, even though the economy still seemed to be licking its wounds. It was in mid-2013 that the Dow hit 15,000 for the first time, rising to 16,000 by the end of the year, and then 17,000 the year after.

2015-16: Waiting for the other shoe to fall

But that didn’t mean the markets were immune to volatility. Despite the economic recovery, many experts spent the decade in near-constant fear of another bear market. Every wobble, every market correction, was watched with fearful anticipation. It was like standing next to someone’s hospital bed, thinking every next breath will be their last. Some of this was probably a form of post-traumatic stress caused by the Great Recession. The rest came from the spasms of an ever-changing world.

Oil prices plunged dramatically around this time, hurting both oil-producing nations as well as the energy industry. China’s stock market crashed. The Greek debt crisis reared its ugly head again, prompting fears that “financial contagion” would spread and create another global recession. And then came Brexit. The news that the United Kingdom would leave the European Union sent shockwaves around the world. And here at home, one of the most bitterly contested presidential elections in U.S. history had both sides of the political aisle forecasting economic ruin if the other side won.

But despite the dire predictions, these developments only slowed the recovery’s march rather than derailing it completely. In fact, by July of 2016, the Dow once again hit new heights.

2017-19: The longest bull market

While most of the decade had seen slow-but-steady growth, the horse started picking up speed as it neared the finish line, buoyed by tax cuts, increased government spending, and corporate earnings. Nowhere was this truer than with the Dow. Comprised of thirty of the largest publicly-traded companies, the Dow hit 20,000 for the first time early in 2017 – and closed well above 28,000 on December 31, 2019.²

Exactly ten years before, the number was only 10,428. That’s an increase of over 170% – the culmination of the longest bull market in history.

Of course, it wasn’t all smooth sailing. The trade war with China is an ever-present concern, with rising tariffs often leading to brief, but dramatic downswings in the market. 2018 was actually a down year for the S&P 500, the only one of the decade. And as the 2010s drew to a close, many economists warned of a slowing economy – with maybe even a mild recession in store.

Despite these warnings, investors did what they had done for most of the decade: Act startled, and then head right back into the markets. Some pundits call it a market “melt-up” instead of the usual meltdown.

What have we learned?

So. A remarkable decade filled with twists and turns. But what did we learn?

When we looked back at the last ten years, one thing that struck us was how interconnected the world has become. So many of the storylines that drove the markets originated far beyond our shores. We truly live in a global economy. We invest in other countries, buy products in other countries, loan money to other countries (or apply for loans, as the case may be) and trade with other countries. We might be separated by the world’s biggest ponds, but the ripples near one shore are always felt near the other.

That means two things. One, for advisors like us, it means there’s more than ever to keep track of. But two, it means we should react less and less to the headlines of the day – or to each individual ripple. A butterfly might flap its wings in Beijing and cause a hurricane in Topeka, as the saying goes, but there are butterflies flapping their wings everywhere. That’s one reason why we saw many storms but fewer hurricanes in the 2010s.

Another thing we learned?  Sometimes, most times, slow and steady really does win the race. We were all taught the truth of this as children when we learned the story of the tortoise and the hare. The past decade proved it. Everyone loves growth that comes fast and hot. But when something burns fast and hot, it tends to burn out faster, too. One reason we never saw the recession so many people feared is because the economy recovered as slowly as it did. It’s a lesson we can apply to our own financial decisions. While it’s always tempting to chase after windfalls and jackpots, it’s so much smarter to prioritize steady progress over short-term whims. The race to your goals is a marathon, not a sprint.

A third thing we learned is how often things don’t go as predicted. In 2010 and 2011, many experts predicted a gloomy decade for the stock markets – and they had good reason to think so! But it didn’t happen. When, say, Obamacare became the law of the land, many experts predicted economic disaster. As of this writing, it hasn’t happened. When Brexit became a reality, many experts predicted a global catastrophe. As of this writing, it hasn’t happened. When President Trump was elected, many experts predicted a market meltdown. As of this writing, it hasn’t happened. We all have our opinions on whether events like these were good or bad, of course. But it’s a good thing we didn’t base our investment decisions on any expert’s predictions!

Because if there’s one thing we learned this decade, is that a prediction is like a person’s appendix – pretty much useless.

 2020 and beyond

With that in mind, we won’t make any predictions for the coming decade. If history is correct – and it always is – another market correction, another bear market, another recession will come eventually. Whether it’s this year, or next, or the one after that, we can’t say. What’s more important is that we remember this:  It’s when we fly that we should have the healthiest respect for gravity. But it’s when we’re on the ground that we should raise our eyes to the skies.

Investing is like trying to find our way in the dark – and our strategy is our North Star. It’s so much more valuable than any prediction! We may bump into the occasional obstacle. Sometimes, we may even trip. But if we hold to that star, we will keep moving forward in the direction we want to go.

We will make this decade whatever we want it to be.

Happy New Year!  Our team can’t wait to spend the next decade with you.

1 “State Unemployment rates in 2010,” U.S. Bureau of Labor Statistics, https://www.bls.gov/opub/ted/2011/ted_20110301.htm
2 “Stocks close out at highest end-of-year gains since 2013,” Chicago Sun Times, https://chicago.suntimes.com/business/2019/12/31/21045017/us-stock-market-year-end-close-out-2019

In December, Congress passed a new bill called the Setting Every Community Up for Retirement Enhancement Act, aka the SECURE Act. Besides proving that Congress can make an acronym out of almost anything, the bill – which goes into effect on January 1, 2020¹ – makes some important changes to various rules on saving for retirement. Many of these changes are positive, in the sense that they should make it easier for people to save more for longer. However, the SECURE Act also eliminates a popular estate planning tactic that many Americans have used to help their family after they pass away.

To help you understand the SECURE Act and how it may affect your finances, I’ve written this special letter. There’s a lot to unpack here, so please take a few minutes to read about these changes. Most are fairly simple, actually, but if you have any questions or concerns, please let me know. Remember that my team and I are always available to help provide financial clarity. In my opinion, that’s one of the most important things any person can have.

In the meantime, I wish you and yours a Happy New Year! I hope the year 2020 is a great one!

Important Provisions of the SECURE Act

Before we dive in, understand, that the SECURE Act is over 20,000 words long. (And in fact, the Senate had to tuck it away in a much, much larger appropriations bill to pass it.) That means there isn’t room to cover every provision of the new law, and many won’t apply to you anyway. So, what follows is a brief overview of the major changes that could affect your finances.

Are you ready? Then take a deep breath as we go over…

CHANGES TO THE IRA “STRETCH” PROVISIONS²
For years, one of the most popular estate planning strategies was the use of Stretch IRAs. When a parent or grandparent dies, they can leave their IRA to their children, grandchildren, or other heirs. Under the old rules, these beneficiaries could take distributions from their inherited IRA based on their official life expectancy. This allowed them to “stretch out” the value of the IRA – and the tax advantages that come with it – for a longer period. For example, if a 50-year old with a life expectancy of 85 inherited her mother’s IRA, she could stretch out her distributions over the next 35 years.

Now, non-spousal beneficiaries who inherit an IRA in 2020 or beyond can no longer do this. Instead, inherited IRAs fall under the new “10-Year Rule”. This means that all the money in the IRA must be withdrawn by the end of the 10th year following the year of inheritance. At that point, the beneficiary must pay taxes on that money.

Note that the rule does not require the beneficiary to take withdrawals during the 10-year period if he or she doesn’t want to. That’s important! Deciding when to take withdrawals should be based on several factors, including the beneficiary’s current financial situation, how close they are to retirement, and when they plan on taking Social Security benefits.

Something else to note: The new 10-Year Rule does not apply to spouses, disabled and chronically ill beneficiaries, and minors. For the last group, the exception lasts until the child reaches the “age of majority”, which is 18 to 21 depending on the state. Once they reach that age, the 10-Year Rule kicks in.

Make no mistake: This new rule will have a profound impact on beneficiaries, especially those who are younger and could otherwise have waited decades before making withdrawals (and paying taxes on those withdrawals). For this reason, if you are either planning to bequeath an IRA to your beneficiaries, or are expecting to inherit one yourself, consider scheduling a consultation with me about your options. I want to do everything I can to help you and your heirs maximize your retirement savings while minimizing your tax burden.

CHANGES TO REQUIRED MINIMUM DISTRIBUTIONS FOR IRAS²
Speaking of maximizing your retirement savings…
Another change the bill makes is to lengthen the time people can contribute to their IRAs. Currently, retirees can only contribute to an IRA up to age 70½. Once they hit this milestone, they are required to begin making withdrawals. (These are called required minimum distributions, or RMDs.) Under the SECURE Act, that age would increase to 72. That means retirees have an additional 18 months to benefit from the tax advantages that come with IRAs. 

Note: This change only applies to those who turn 70½ in 2020 or later. Even people who turned 70½ in December of 2019 would still have to take an RMD for 2020.

That’s it for this provision. See? I told you some of the changes were simple.

OTHER IRA CHANGES²
Here’s another simple change. Under the old rules, contributions to a traditional IRA were prohibited once a person reached the year they turned 70½. No longer. Now, anyone, even those older than 70½, can keep contributing to their IRA so long as they continue to work.

Here’s an example. Jane turns 70½ in 2020 but decides she wants to continue working. So rather than withdraw money from her IRA, she decides to make a tax-deductible contribution to it instead. While Jane must still take RMDs once she turns 72, she decides to keep making contributions every year until she actually retires, as the math still works in her favor.

Obviously, this change only benefits those who continue working into their seventies. And even then, it may not always make sense to keep contributing to your IRA. But it’s always nice to have options!

Another change is for new parents. Under current law, a person must be 59½ years old to make withdrawals from a traditional IRA. If they withdraw money earlier than that, they must pay a penalty of 10% on the amount you took out. There are a few exceptions, such as if they need the money to pay large medical bills, buy a home, or manage a disability. But, generally speaking, the government wants the money inside a retirement account to be saved for retirement.

Under the SECURE Act, new parents can now withdraw funds penalty-free to help cover birth and adoption expenses. This is especially helpful for younger parents who have high deductible insurance plans. There is a $5,000 cap on withdrawals, though, and they need to be made within one year of the birth or adoption.

CHANGES TO 401(k)s²
The SECURE Act brings many changes to 401(k)s, but most are for businesses to worry about. There is one change you should know about, though, and it involves annuities.

A type of insurance product, many annuities offer a monthly stream of income, sometimes for life. This can make them attractive for retirees. Historically, few 401(k)s contained annuities. The SECURE Act makes it easier for employers to offer this as an option.

The reason I mention this is because you should get a second opinion before putting your money in an annuity. Choosing the right annuity can be difficult, as there are many types and features, and some annuities come with high costs. So, while an annuity may be right for some people, that doesn’t necessarily mean it’s right for you.

If you have questions about this, let’s chat! I’d be happy to provide you with a second opinion.

CHANGES 529 PLANS²
For many Americans, paying off student loans is a difficult financial burden. To help pay for their loved ones’ higher education, some parents and grandparents use 529 plans. Any funds invested in a 529 plan can be used to help pay for college expenses, like room and board or tuition. The best part is that the funds are exempt from federal taxes, and often state taxes, too, so long as they’re used solely for education expenses.

Under the SECURE Act, parents with 529 plans can make a tax-free withdrawal of up to $10,000 to help pay off their child’s student loans. This $10,000 limit is per person, not per plan, which means another $10,000 can be withdrawn to help pay the student debt for each of a 529 plan beneficiary’s siblings.

If you have invested in a 529 plan for a child or grandchild with lots of student debt to pay off, let’s talk to see if it makes sense to take advantage of this.

CONCLUSION
As you can see, the SECURE Act is loaded with changes and provisions for those saving for retirement. So, again, if you have any questions or concerns, please don’t hesitate to contact me for a free consultation!

In the meantime, remember that I’m here to help you work toward your financial goals. Please let me know if there’s ever anything I can do – in 2020 and beyond.

Happy New Year!

Sources
1 Anne Tergesen, “Congress Passes Sweeping Overhaul of Retirement System,” The Wall Street Journal, December 19, 2019. https://www.wsj.com/articles/senate-spending-bill-includes-significant-changes-to-u-s-retirement-system-11576780736
2 Text of “SETTING EVERY COMMUNITY UP FOR RETIREMENT ENHANCEMENT” (page 1532), Senate Appropriations Committee, December 16, 2019. https://www.appropriations.senate.gov/imo/media/doc/H1865PLT_44.PDF

You’ve probably never asked your adult children and younger relatives whether they have security software on their computers and devices. Why would you? They’re digital natives, born with keyboards under their fingertips.

It may be time to ask.

In an unexpected twist, the best gift for some younger Americans this holiday season may be data protection software or services. A 2019 You.gov poll reported 35 percent of Americans, ages 18 to 34, think their data and personal information is ‘not very or not at all vulnerable’ to hackers.¹

Those feelings of invulnerability aren’t the result of scrupulous digital security strategies. One-third of younger Americans polled indicated they didn’t pay for or use free programs to protect computers and personal data (or they did not know if data protection was in place).¹

It’s remarkable the most digitally savvy among us aren’t the most concerned about data safety when a hacker attacks every 39 seconds, according to Security Magazine. Within just a few years, Cyber Security Ventures expects cybercrime to become “more profitable than the global trade of all major illegal drugs combined.”^{2, 3}

Curiously, older Americans – the same group that provides ample fuel for social media groups where younger generations entertain themselves by ‘talking like boomers’ – appear to take cyber threats more seriously than younger ones do.^{1, 4}

The You.gov poll found 80 percent of Americans over age 55 have digital security measures in place. If you’re not one of them, it’s time for you to protect yourself. Hackers and cybercriminals prefer easy marks, and you don’t want to be one.¹

Digital security basics
Protecting personal and financial data means forming good digital habits, as well as using reputable security software. Here are a few digital do’s and don’ts. (You may want to share them in the holiday card you send to younger relatives.)

• Do stay up-to-date. Periodically, you receive notices indicating your computer’s operating system or an application should be updated. When they arrive, take a few minutes to install the update. Out-of-date systems and software make you vulnerable to attacks.⁵
• Do think carefully about privacy. In an unwelcome development, some third-party apps may have been reading your email. A large mail provider gave the apps access, and the people using the mail service agreed to it in the privacy policy they may not have read. After The Wall Street Journal reported the practice, the U.S. Senate sent a letter to the mail provider asking it to reconsider its practices.⁶
• Don’t skimp on passwords. Sure, it’s easier to remember your password when it’s the same for everything. Using the same password also makes it easier for cybercriminals to access every account you have when a data breach occurs. Create a different password for every account and consider using an encrypted password manager to keep track of them.⁵

When it comes to passwords, the Federal Trade Commission recommends, “Be creative: think of a special phrase and use the first letter of each word as your password. Substitute numbers for some words or letters. For example, “I want to see the Pacific Ocean” could become “1W2CtPo.”⁷

• Do use multifactor authentication. Usernames and passwords don’t provide enough protection anymore. The National Institute for Standards and Technology recommends multifactor authentication (MFA). It offers an additional layer of security.⁸

For instance, imagine a hacker logs into your bank account using your username and password (possibly obtained from a data breach). If you have MFA, instead of providing immediate access to your account, the bank will send an authentication code to your cell phone or email. The code must be entered before account access is granted. With the code, the crime is thwarted.⁸

• Don’t send personal information via public Wi-Fi. When you have limited Internet access, you may only have access to the Internet via public Wi-Fi. If possible, avoid logging into password-protected accounts. Public Wi-Fi is not secure, reported CSO Online. A better option may be to use your smartphone as a hot spot, as long as you have protected it with a strong password.^{9, 10}

The do’s and don’ts of digital security are important because your data is vulnerable and you cannot always protect it. The companies you work for, and do business with, are vulnerable to cyberattack even when they have strong protections in place. Forbes reported cybersecurity experts no longer believe it’s possible to prevent intrusions. Instead, they advise companies to build systems to limit the data that can be accessed during a breach.¹¹

Educating yourself and your loved ones about digital security and adopting security practices that layer protections is critical. During the holiday season, try talking about digital security. It could be the best gift you give.

Sources:
¹ https://today.yougov.com/topics/technology/articles-reports/2018/03/12/majority-americans-feel-their-personal-information
² https://www.securitymagazine.com/articles/87787-hackers-attack-every-39-seconds
³ https://cybersecurityventures.com/hackerpocalypse-cybercrime-report-2016/
⁴ https://cheezburger.com/8705541/millennials-flawlessly-mock-baby-boomer-speak-in-this-hilarious-facebook-group
⁵ https://www.morganstanley.com/articles/protecting-your-security-online-banking
⁶ https://www.commerce.senate.gov/services/files/01e9888e-b6f8-498c-93b7-6057f04d9af5
⁷ https://www.consumer.ftc.gov/articles/0272-how-keep-your-personal-information-secure
⁸ https://www.nist.gov/itl/tig/back-basics-multi-factor-authentication
⁹ https://www.csoonline.com/article/3246984/why-you-should-never-ever-connect-to-public-wifi.html
¹⁰ https://www.lifewire.com/secure-your-portable-wi-fi-hotspot-2487656
¹¹ https://www.forbes.com/sites/stevebanker/2015/03/03/if-preventing-cybersecurity-attacks-is-impossible/#3e286f92345a