Archives for March 11, 2020

3 Reasons You Might Deplete Your Retirement Savings Too Early

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Running out of money during retirement is a major concern. You can do your best to save a bundle in a 401(k) or IRA, only to misjudge your future expenses and wind up cash-strapped down the line. Here are a few reasons why you may be at risk of depleting your nest egg prematurely — and what to do about them.

1. You don’t have enough savings to begin with

It’s easy to look at a retirement account with a $300,000 balance and think “Wow, that’s a lot of money.” But actually, in the grand scheme of retirement, it’s not.

You’ll generally want to withdraw from your savings at a rate of anywhere from 2% to 5% per year (there are, of course, exceptions to this range, but this is a generally acceptable starting point for the typical retiree), which means that if you have $300,000 in your nest egg, you get $6,000 to $15,000 a year to spend. Even the higher end of that range isn’t very much, and while you’ll probably collect Social Security as well, based on what the average recipient gets today, that only brings your annual income up to $24,000 to $33,000.

The result? You could wind up needing more money from savings early on and depleting your nest egg midway through retirement, leaving yourself to struggle later on. That’s why you should really make an effort to save 10 times your ending salary for your senior years, as many financial experts agree that it’s a good way to buy yourself income security for the future. This means that if you’re in your 50s earning $100,000 a year, it pays to try retiring with $1 million. Based on the withdrawal rates used earlier, that gives you $20,000 to $50,000 a year from savings, which certainly seems more reasonable than $6,000 to $15,000.

Of course, ramping up your savings won’t be easy, but you can do so by cutting back on living expenses while you’re working and socking that extra money away. Getting a second job is also a smart move to free up cash for savings.

2. Your savings are invested too conservatively

The 2% to 5% withdrawal rate we just talked about? That assumes your savings continue to generate a reasonable amount of growth during retirement. If you invest too conservatively, that growth will stagnate, thereby increasing your chances of running out of money.

The solution? Don’t dump your stocks in retirement; you’ll need them to continue generating the growth you want your savings to benefit from. In fact, a 50/50 stock-bond split in your portfolio is generally appropriate. If you’re the more conservative type, you can go 60% bonds and 40% stocks, or even 70% bonds and 30% stocks. But don’t make the mistake of unloading stocks completely.

3. You don’t have long-term care insurance

An estimated 70% of seniors wind up needing some type of long-term care in their lifetime, and the costs involved could be astronomical. Genworth reports that the average home health aide costs $52,624 a year. An assisted living facility, meanwhile, costs $48,612 a year on average, while a nursing home costs $90,155 — and that’s for a shared room.

If you’re forced to bear these expenses on your own, you’ll likely wind up raiding your savings and struggling after the fact. But if you secure long-term care insurance, you’ll have a policy in place to substantially defray these costs should the need for them arise.

You’re generally best off applying for long-term care insurance during your 50s. At that stage of life, you’re more likely to not only get approved, but get a health-based discount on your premiums. But don’t write off the idea of applying in your 60s, especially if your health is good.

Running out of retirement money is a scary thing. Now that you understand what makes that more likely, you can take steps to avoid that fate.

Here’s how much of your salary you’d need to save for retirement if you start after age 45

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Deciding how much to save for retirement can be complicated.

One common technique to simplify things is to invest a percentage of your income. Traditionally, financial experts often recommended setting aside 10% of earnings for your later years, but thanks to lengthening life spans and lower projected returns, it’s usually better to aim for about 15% to 20% of income.

Of course, this recommendation is for people who save throughout their careers. But not everyone does that. In fact, many people get a late start on their retirement savings and don’t begin putting aside funds until they’re in their 40s.

If you delay until middle age to start saving, you obviously have far less time for your money to grow. To compensate, you need to invest more in your retirement accounts. But how much more is required to end up a financially secure senior?

You need to save a shocking amount if you don’t start until your 40s

What you need to save if you wait until 45 is going to be shaped by factors including your goals for retirement and whether you’ll have other sources of retirement income, such as a pension fund. In general, however, a survey from Schwab shows that you’d need to save a whopping 35% of your salary if you don’t start putting retirement funds aside until 45. 

To understand why you have to save so much, consider how you’d fare as a retiree. If you’re earning the median salary for workers ages 45 to 54, you’d have $54,028 in household income, according to the Bureau of Labor Statistics. If you get a 2% annual raise, your final salary would be about $81,888 if you retired at 67.

Most experts recommend replacing around 80% of retirement income to maintain your standard of living in retirement. Assuming your Social Security benefits provide you with about 40% of that amount, you’d need an additional $32,755 in income from savings. 

You’d end up with about $993,000 saved assuming you’d kept up your 35% savings rate throughout the rest of your career and earned a 7% rate of return. Assuming you withdraw somewhere around 3.5% of your retirement nest egg annually, you should have the funds you need plus a little bit extra. 

Unfortunately, if your contribution rate fell below 35% of income, you’d end up with far too little. For example, those who start saving when they’re young can often get away with putting aside just 15% of annual income. If you started doing that at 45, you’d end up with just over $425,000. This would provide only $14,875 in annual income, so you’d be far short of what you need. 

How can you increase your savings rate?

If you waited to start investing for retirement until you’re 45, you may have little choice but to get really aggressive about saving.

Start by looking for big expenses to cut from your budget. This could mean switching to a less expensive car or a cheaper apartment or house. Increasing your income could also be necessary if you can’t cut enough from your budget. If you can’t negotiate raises at work, picking up a side job could be your best bet. 

As you free up cash from cutting expenses or you earn more, contribute the money directly to a tax-advantaged retirement account such as a 401(k) or an IRA. Automate your account contributions to ensure you’re saving enough, and increase those contributions every time you get a raise or find new ways to cut your costs until you’ve hit the essential 35% savings rate. 

Don’t jeopardize your retirement by waiting too long to save

Saving 35% of your salary is really difficult. If you’re still young, start saving now so you don’t find yourself forced to sacrifice so much later on. While it may seem hard to find spare cash, it’s a lot easier than if you delay. 

If you’re already in your 40s, try to work up to saving a significant percentage of your income as soon as possible so you’re prepared for your later years. You still have some time and can turn things around if you get serious about saving. 

Microsoft disrupts a botnet that infected 9 million computers

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Microsoft predicted and blocked six million domains that could have been used for cybercrime.

Today, Microsoft and partners from 35 countries took steps to disrupt a botnet behind the world’s largest cybercrime network. The botnet, Necurs, has infected an estimated nine million computers worldwide, and it’s one of the largest spam email networks, generating as many as 3.8 million spam emails in a two-month period.

To disrupt Necurs, Microsoft analyzed a technique the botnet used to generate new domains through an algorithm. It then predicted over six million domains that would be created in the next 25 months and reported these to registries around the world, so that they can be blocked, preventing future attacks.

Today’s action, Microsoft says, is the result of eight years of planning. Microsoft and its cybercrime-fighting cohorts first observed Necurs in 2012 and have seen it distribute malware like GameOver Zeus, which authorities squashed in 2014. It’s likely been involved in stock scams, fake pharmaceutical spam emails and “Russian dating” scams, and authorities believe it’s operated by Russia-based cybercriminals.

Last week, a US District Court issued an order that allowed Microsoft to take control of the US-based Necurs infrastructure. In addition to blocking new domains from being registered, Microsoft is working with internet service providers (ISPs) to help remove Necrus malware from their customers’ computers.

Google’s next Chromecast Ultra may be an Android TV dongle

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It would be closer to Amazon’s Fire TV than the basic stick from before.

Google’s Chromecast has evolved over the years, but the devices you can find in stores are still, at their heart, little more than conduits for whatever comes from your phone or PC. It looks like Google might be planning a more ambitious replacement, though. A source speaking to 9to5Google says that the next Chromecast Ultra will be an honest-to-goodness Android TV dongle. You could run apps like Netflix and Hulu (complete with 4K HDR support )rather than relying on apps with Cast support. The new Ultra reportedly resembles the current-generation standard Chromecast, but with a “softer, rounder” aesthetic — and, as you might guess, a dedicated remote.

The controller is said to look like a cross between the remotes for the defunct Daydream View and the Apple TV, complete with a mic and a Google Assistant button for voice control. It might have already surfaced, in fact — Protocol’s Janko Roettgers noticed an FCC filing for a “Google Remote” whose basic profile matches the description. Google has issued developer devices with similar functionality, so it wouldn’t be a stretch to make a more home-oriented equivalent.

It’s not certain when the new Chromecast Ultra might arrive. It might have launched alongside the Pixel 4a at Google I/O, but that event has been cancelled. This would be a big move for Google if and when the revamped Ultra shipped, however. While Amazon has been delivering full-featured Fire TV dongles for a while, Google hasn’t had an Android media hub since the Nexus Player. This could help it compete more directly with the likes of Amazon, Apple and Roku, not to mention put Google Assistant in more living rooms than it could with Nest speakers.

Twitter’s new rules require labels for ‘high-quality’ bots

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Not all bots are bad, but they all need labels.

Not all bots are bad, but all bots need labels: those are Twitter’s latest rules for bot accounts that don’t want to risk getting booted off the platform. The change was made as part of the company’s updated developer policy, which lays out a new policy for accounts that want to use Twitter’s developer tools to post automatically.

Under the new terms, developers must “clearly indicate,” if an account is a bot account, as well as the identity of the person running the account. The goal, according to Twitter, is to make “easier for everyone on Twitter to know what’s a bot – and what’s not.”

The subject of bots has been particularly thorny for Twitter. The automated accounts are frequently used to spread spam and are favored tools of trolls looking to manipulate conversations or harass other Twitter users. That’s why the company started cracking down on “malicious automation” in 2018.

At the same time, Twitter’s more creative users have also come up with dozens of harmless, often useful, bots. For example, automated accounts that post every time the San Francisco Bay Area experiences an earthquake (@earthquakeSF) or tweet hourly reminders to drink water, walk outside, and perform other small acts of self care (@tinycarebot).

So when Twitter first began its fight to beat back the “bad” bots, some were also concerned that many of the “good” bots could get swept up in the change. Now, the company’s latest policy lays out rules to help all those well-intentioned bots to stay in Twitter’s good graces.

Gmail now supports multiple signatures

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You don’t have to share the same signature with everyone.

Gmail’s support for just one email signature can be a pain if you don’t always want to end your messages the same way — you may not want to respond to a work request the same way you do an invitation to dinner. You won’t have to fret about it much longer, though. Google is introducing support for multiple signatures on the web, with the option to make one of them the default. You just have to go into Settings > Settings > General to create a new signature, and a button in the compose window will let you choose and manage signatures while you’re writing.

The feature is available for both personal and G Suite accounts, and has already started rolling out to Rapid Release domains (you’ll have to wait until March 24th for Scheduled Release). It’s arguably an overdue addition, but it could make all the difference if you’d rather not tweak your signature every time you’re emailing someone outside of your usual circle.