The Equifax data breach, reported last month, was yet one more reminder of the financial risks we all face. Short of going completely off-grid, none of us truly can opt out of the wider banking and credit system.
Fortunately, we can take steps to protect ourselves financially, whether monitoring credit reports and banking data, or simply being aware of today’s financial complexities and pitfalls.
As you know by now, Equifax, one of the world’s largest credit bureaus, said hackers accessed data including Social Security numbers, driver’s license numbers, home addresses and birthdates for 143 million people. Equifax learned of the breach, which occurred between mid-May and July, on July 29.
However, it made no announcement until Sept. 7, despite the breach affecting nearly 60 percent of all Americans over the age of 18. Equifax also neglected to say that it wasn’t the first time this happened this year.
The company became transparent about an earlier attack, which took place this past March, only after reporters from Bloomberg Media began prodding them about it in September. The U.S. Department of Justice is now investigating a number of Equifax’s executives for stock sales they made after the March intrusion.
If you’re getting the impression that Equifax isn’t going to mount a white horse and come to the rescue, you’re spot on. So what should you do?
One often-cited recommendation has been to put a freeze on your credit file. This tells each of the three major credit bureaus (Equifax, Experian and TransUnion) to keep your credit information blocked from companies requesting to view the data. This effectively prevents you from having any new credit accounts opened in your name.
That’s great if a bad guy tries to use your information fraudulently. It’s not so great if you’re in the market for a new car, a new house or any other major purchase requiring credit.
The credit bureaus charge a fee to place a freeze on a credit file and an additional fee to take the freeze off, but those don’t apply to New Mexico residents 65 or older.
For others in New Mexico, the fee imposed by Experian and TransUnion is $30.50. Equifax has offered a discount to consumers and will charge $20.50 to people who freeze their account by Nov. 21. All three companies charge $10.25 to unfreeze a credit file.
Bear in mind: Freezing your credit file only protects you against someone opening a new account in your name. It doesn’t prevent a cyber-criminal from charging purchases on one of your existing credit cards or withdrawing money using your ATM card. According to Consumer Reports, “Neither of those actions requires accessing your credit file, which a security freeze is designed to prevent.”
Here are some other steps to protect yourself:
- Monitor your credit card statement regularly. Check it daily on your bank’s online portal.
- Do the same with your bank and brokerage accounts.
- Consider subscribing to a credit monitoring and identity theft protection service.
- Implement text or email alerts on your accounts.
The state of New Mexico offers residents an Identity Theft Passport, which is a New Mexico identity card. If someone does steal your identity, the passport has “Victim of Identity Theft” printed on its back and you can use the card to help prevent identity confusion if a crime has been committed in your name.
We’re at the point in history where the expectation of complete privacy and security of our personal information is no longer realistic. That’s a sad thought. But a data breach is just one more financial risk that could derail retirement or significantly impact your life as you grow older.
- Inflation Risk. Rising costs that undermine purchasing power of retirement assets.
- Medical expense risk. Paying for the growing costs of health care-related services in retirement.
- Tax risk. Rising or unforeseen taxes can erode purchasing power.
- Market risk. Losing retirement assets temporarily or permanently because of market downturn or poor investment performance.
- Longevity risk. Outliving sustainable income.
- Excess withdrawal risk. Drawing down assets too quickly.
- Sequence of returns risk. Receiving low or negative returns in early years and diminishing retirement portfolio.
- Personal or event risk. An unexpected change in family circumstances, including death of a spouse, may undermine anticipated retirement plans.
- Incapacity risk. Deteriorating health, resulting in a retiree being unable to execute sound judgment in managing financial affairs.