Making money: What the experts say

Surviving on a smaller paycheck

If the end of the payroll tax holiday is putting a dent in your wallet, you have several options, said Amy Feldman in Reuters.com. Consider changing your tax withholdings—doing so won’t alter how much you owe, “but it may help smooth out your tax burden for the year.” If you always get a big refund, filling out a new W-4 “may be a good way to keep money in your pocket now rather than loaning it to the IRS.” One thing you shouldn’t consider is cutting your 401(k) contribution. If you’re really in a pinch, buck up and find ways to reduce spending. Eat out less, drink less coffee, and pay off your credit card each month to avoid interest and fees.

On guard against identity theft

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Watch out if you get a letter warning that your personal data was compromised “in a corporate data breach,” said Ann Carrns in The New York Times. A new study found that nearly a quarter of people who receive such letters end up being victims of identity fraud. If you receive a breach letter, first contact the company to make sure the communication is genuine. Place a security freeze on your credit report to stop identity thieves from opening new accounts in your name, or ask to implement a fraud alert that “lets lenders know to do extra checking before issuing credit in your name.” Make sure in any case to monitor your bank activity regularly, and remember—never give out your full nine-digit Social Security number. Have service providers, like cable companies and utilities, use a code of your choosing rather than the last four digits of your Social Security number to confirm your identity. They should be happy to accommodate you.

Plan a ‘dream retirement’

With a little planning and discipline, you can retire the way you want to, said Beth Braverman, Donna Rosato, and Penelope Wang in CNNMoney.com. Aim to set aside 16.6 percent of your income for retirement—doing so consistently over 30 years will leave you with a solid nest egg in your twilight years. If you’re a high earner who makes too much to invest directly into a Roth IRA, put your money in a nondeductible IRA that you can convert to a Roth. Several years before you’re set to retire, start zeroing in on what you’ll need to cover essential expenses. And keep a year’s worth of expenses in cash or short-term bonds rather than stock. “This cushion will help keep you from selling in a panic.”