Key Equifax executives departing after huge data breach
How are you doing on the 2017 RICP
Retirement Income
Literacy Survey? People who've taken the quiz are telling me, somewhat sheepishly, their scores. It's not easy, is it? (http://retirement. theamericancollege.edu/ retirement-101/2017retirement-income-literacy-quiz )
Let's move through the next few questions to see if we can enlighten each other just a bit.
Question 6: A 65-year-old man has an average life expectancy of approximately an additional…10, 15, 20 or 25 years?
Answer: (41% correct responses) According to the Social Security Administration, the answer is 20 years, but that's an average. Studies have shown that men (and women) who are married live longer than people living alone. Why is that? I propose that it's because most people living together are going to care for each other, notice differences in health and behavior, and help to ensure compliance with standards of care. So knowing that we're living longer than ever before, the choices we make with regard to retirement savings and choices like when to draw Social Security benefits are more critical than at any time in our history.
Question 7: Which of the following is true about cash value life insurance? (A) The cash value portion will accumulate tax deferred; (B) the policy will expire after a specified time; (C) you typically cannot borrow from the cash value; or (D) the policy will typically cost less than a term insurance policy?
Answer: (38% correct responses) I'm continually surprised at how little Americans know about life insurance. The correct answer here is A, which adds to my strong belief in the miracle of life insurance. Not only does cash accumulate tax deferred, but if the cash remains and is paid out in a death benefit, it's typically done so tax free. Life insurance is an incredible tool that far too few people use to their advantage, in my opinion. For example, I recently worked with a woman who had 25 thousand dollars in an IRA that she wanted to leave to her son. Assuming a 25-percent tax bracket, he would have actually received only about 18 thousand of those dollars. Instead, she put that IRA money into a permanent life insurance policy, and at her death, her son will receive 100 thousand dollars tax free. If that's not a miracle, then it's at least very smart!
Question 8: The lifetime income payout rate (the annual annuity payment as a percentage of the
Purchase price) for an immediate income annuity for a 65-year-old male today is roughly…
Answer: (17% correct responses) This is a tough question and I find that so very few people understand, or even know about, income annuities. The answer is reported in this survey as 6-7 percent annual payout, meaning that if a 65-yearold man put 100 thousand dollars into an immediate income annuity, he could expect a payout of six to seven thousand dollars per year for life; however, it's important to understand that payout rates do vary greatly between insurance companies. Another important factor is that the payout rate is based on life expectancy, so age and gender play a key role, as well.
So you might be thinking that 6-7 percent isn't much income from 100 thousand dollars. Stop and think, though, about the fact that 4 percent is considered to be the “safe” withdrawal rate from a retirement fund, and suddenly that 6-7 percent seems a bit more attractive.
Question 9: Distributions from an IRA generally must be made every year once an individual has attained what age?
Answer: (84% correct responses) Required minimum distributions (RMDs) from an IRA must begin in the year the IRA owner becomes 70-1/2 years old. (Technically, it can be delayed until April 1 of the following year.) This is important to remember because failure to take this distribution can result in a hefty penalty (50%) of the amount that should have been distributed.
Question 10: Which of the following statements concerning the federal income tax treatment of distributions to a 65-year-old retiree is true? (A) Distributions from a Roth IRA are generally tax-free; (B) distributions from a traditional IRA are generally taxed as long-term capital gains; (C) distributions from a traditional IRA for the 65-year-old are generally subject to an additional 10-percent penalty tax?
Answer: (64% correct responses) The only correct answer here is A. Roth IRAs can be beautiful beasts. All distributions from a Roth are tax free if the account owner is at least 59-1/2 years old and the account has been held at least 5 years. Why is this relevant? Tax rates are lower than at any time in history, which means they may rise in the future, rather than fall. I would rather pay my taxes now, put money into a Roth, then enjoy taxfree distributions in my retirement years.
So how are you doing? These are things I discuss with my clients and prospective clients every day. Give me a call and we'll take a look at your situation to see if you're doing the best you can for your own retirement preparation!.
Barbara Runnels Coats, FICF, Modern Woodmen of America Financial Representative. Securities offered through MWA Financial Services Inc., a wholly owned subsidiary of Modern Woodmen of America. Member: FINRA, SIPC.
NEW YORK — Equifax announced late Friday that its chief information officer and chief security officer would leave the company immediately, following the enormous breach of 143 million Americans' personal information.
The credit data company — under intense pressure since it disclosed last week that hackers accessed the Social Security numbers, birthdates and other information — also released a detailed, if still muddled, timeline of how it discovered and handled the breach.
Equifax said that Susan Mauldin, who had been the top security officer, and David Webb, the chief technology officer, are retiring. Mauldin, a college music major, had come under media scrutiny for her qualifications in security. Equifax did not say in its statement what retirement packages the executives would receive.
Mauldin is being replaced by Russ Ayers, an information technology executive inside Equifax. Webb is being replaced by Mark Rohrwasser, who most recently was in charge of Equifax's international technology operations.
Equifax also provided its most detailed timeline of the breach yet, although it raised as many questions as it answered.
The tale began on July 29, when the company's security team detected suspicious network traffic associated with the software that ran its U.S. online-dispute portal. After blocking that traffic, the company saw additional "suspicious activity" and took the portal's software offline.
At this point, Equifax's retelling grows cloudy. The company said an internal review then "discovered" a flaw in an open-source software package called Apache Struts used in the dispute portal, which it then fixed with a software patch. It subsequently brought the portal back online.
But that vulnerability had been known publicly since early March 2017, and a fix was available shortly thereafter — facts that Equifax acknowledged in its Friday statement. The company did not say why the software used in the online-dispute portal hadn't been patched earlier, although it claimed that its security organization was "aware" of the software flaw in March, and that it "took efforts" to locate and fix "any vulnerable systems in the company's IT infrastructure."
It apparently missed at least one vulnerable system. The closest Equifax gets to explaining that? "While Equifax fully understands the intense focus on patching efforts, the company's review of the facts is still ongoing," according to its statement.
After patching the dispute-portal's software, Equifax hired Mandiant, a computer-security firm, to do a forensic review. That effort determined that hackers had access to Equifax systems from May 13 through July 30.
Equifax has been castigated for how it has handled the breach, which it did not disclose publicly for weeks after discovering it.
Consumers calling the number Equifax set up initially complained of jammed phone lines and uninformed representatives, and initial responses from the website gave inconsistent responses. The company says it has addressed many of those problems. Equifax also said Friday it would continue to allow people to place credit freezes on their reports without a fee through Nov. 21. Originally the company offered feefree credit freezes for 30 days after the incident.
Equifax is also facing several inquiries and class-action lawsuits, including Congressional investigations, queries by the Federal Trade Commission and the Consumer Financial Protection Bureau, as well as several state attorneys general. The company's CEO Richard Smith is scheduled to testify in front of Congress in early October.
Three Equifax executives — not the ones who are departing — sold shares worth a combined $1.8 million just a few days after the company discovered the breach, according to documents filed with securities regulators.
Equifax shares have lost a third of their value since it announced the breach.