Using SMS Two-Factor Authentication (2FA) to Protect Your Financesby@ShannonFlynn
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Using SMS Two-Factor Authentication (2FA) to Protect Your Finances

by ShannonJanuary 18th, 2023
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Building substantial retirement savings to fall back on takes time. That time leaves cybercriminals with ample opportunity to try and break into people’s accounts, so cybersecurity is essential. Two-factor authentication (2FA) in banking is integral to that security.

People can sabotage their retirement savings in many ways, and a lack of proper security is an easy one to overlook. Securing an account won’t necessarily grow the funds within it, but it ensures that hard-earned money doesn’t fall into someone else’s hands. That doesn’t mean everybody needs to be a cybersecurity expert, but it does mean employing some extra security steps is a good idea. 2FA is one such step.

The Need for Better Security in Retirement Savings

To understand the importance of 2FA in security, users first need to grasp the need for cybersecurity itself. FDIC insurance covers up to $250,000 for many retirement accounts, which may make many people think their money is safe even in a breach. However, FDIC coverage doesn’t protect against losses stemming from fraud or theft.

All fraud is concerning, but cybercrime is the most prominent kind of this threat to watch out for today. It’s fast, often hard to catch, and skyrocketing as the world relies on digital data and systems, giving cybercriminals more to take. In today’s digital age, most people saving for retirement likely use digital platforms to manage those savings, making that money vulnerable to cybercrime.

In 2021, the Department of Labor released 401(k) plan cybersecurity guidance to help plan sponsors improve their security. That’s a step in the right direction, but this publication is a list of guidelines, not binding requirements. They may serve as a baseline to see if a sponsor upheld their responsibilities in a data breach litigation, but they don’t necessarily require retirement accounts to have better security.

Regulations are changing, but they still have room to grow before they catch up to the size and speed of cyber threats. In light of that danger, people need to take retirement security into their own hands. 2FA security is a critical part of that process.

What Is 2FA?

Retirement plan participants must understand 2FA security’s meaning to understand how it can benefit them. Two-factor authentication is a type of multi-factor authentication that requires multiple pieces of information to gain access to an account. In a traditional setup, users may only need a password to get in, but with 2FA cybersecurity, they need a password and an additional verification method.

This second verification method can vary. In some cases, it’s something users know, like a PIN, while in others, it uses something they have, like a smartphone. Some 2FA methods require something they are, which refers to using biometrics like fingerprint or face scanning.

Whatever form it takes, the idea behind 2FA is even if a cybercriminal has one piece of login information, they still can’t get into someone else’s account. It’s relatively easy to steal or guess a password in many cases. It’s much harder to steal a password and something like an authorized phone.

2FA security isn’t a new phenomenon and is relatively simple, but it’s effective. However, just 67% of U.S. adults use it, and less than a third use it on all their accounts. That underuse means many people saving for retirement may overlook some critical yet easy-to-implement security steps.

Advantages of Two-Factor Authentication for Banking

Many users may not implement 2FA cybersecurity simply because they don’t realize how much it can help them. Once people acknowledge the need for better security for their retirement accounts, they need to know how specific steps address it. With that in mind, here are some of the most significant advantages of using two-factor authentication in banking.

More Secure Than Passwords Alone

The most crucial benefit of 2FA is it’s far more secure than a simple username and password combination. Passwords are important, but strong ones are difficult to remember, which leads many people to poor password management. Nearly five million people globally use “password” as their password, and criminals can guess 18 of the top 20 most common passwords in just one second.

Even if retirement plan participants use a long, complex password, it may still be vulnerable. That same report finds more than eight in 10 Americans reuse passwords across different websites. This reuse means that a breach in one area can jeopardize the security of another account.

Imagine someone using a relatively strong password across three accounts — their retirement, a social media page, and a streaming account. Then, because businesses are often more popular targets for data breaches, a cybercriminal gang hacks into the streaming network and steals many users’ login information. They could then sell those passwords on the dark web, and whoever buys them could use them to log into the user’s retirement account.

This kind of scenario is more common than many people realize today, and these data breaches are out of users’ hands. However, if they use 2FA, that breached password won’t be enough to grant the attacker access. Consequently, a security flaw in one company won’t affect the user’s account with another.

More Secure Than Biometrics Alone

As technology has improved, many services — especially those with mobile apps — let users use biometric authentication instead of passwords. These login methods are far more secure than passwords, but 2FA security is still stronger.

One of the biggest flaws with biometric authentication is users can’t change it. People can change a stolen password to render it useless, but they can’t do the same with their fingerprints or face. While criminals can’t technically steal these things either, they can force people to open things with biometrics unwillingly. Researchers have also achieved an 80% success rate using fake fingerprints to get past biometric security.

Biometric security also has some reliability concerns. Facial and fingerprint recognition rely on artificial intelligence, which can be inaccurate at times, either producing false positives or false rejections. That can grant access to the wrong people or lock the right people out, making it inconvenient.

2FA can help fill in the gaps where biometrics fall short. With a second authorization method, even fake fingerprints, false positives, or otherwise spoofed biometrics won’t grant an unauthorized person access.

More Secure Than Security Questions

Some plan participants may feel safe because they use a similar authorization approach — security questions. These are common in financial accounts and use a second method on top of a password to grant users access, like 2FA. However, they’re different because they use the same type of authentication for both factors, which hinders their security.

The answer to a security question is like a password itself, and because of the nature of a question, they’re relatively easy to guess and weak. Security question answers can leak in a data breach, like passwords. Cybercriminals may also be able to dig into people’s social media accounts to learn more about them and guess the answers correctly.

Many security questions ask about users’ mothers’ maiden names, hometowns, or pets’ names. A criminal can figure these things out fairly quickly through social media, internet searches, or even by looking through people’s mail. Alternatively, they can trick users into revealing this information through phishing, which affects more people in the U.S. than any other type of cybercrime.

2FA cybersecurity is safer because it involves two distinct kinds of factors. That way, even if one is vulnerable in one way, the other doesn’t share those vulnerabilities, so they counteract each other’s weaknesses.


A more easily overlookable advantage of two-factor authentication in banking is its convenience. That may seem unrelated to security at first, but if securing something is inconvenient, people are unlikely to do it. That barrier is a key reason why human error is such a prevalent cause of data breaches, even if prevention methods are well-known.

2FA methods take minimal time. Users often just have to enter their password, then enter a one-time code they receive on their phone. Many phones today will even recognize when users are using these systems and automatically pull the security code from their messages, so they don’t need to switch between apps. This convenience means people don’t need to sacrifice ease of use for security.

Some other security measures are technically complex or involve a lot of manual work. By contrast, 2FA doesn’t require users to be security experts or to keep several best practices in mind. It’s often an easy, one-time setup followed by a quick, two-step entry process. Users don’t need to keep up with multiple passwords or remember answers to security questions.

Types of 2FA Security

It’s essential to recognize there are many kinds of 2FA security. Each type has unique advantages and disadvantages, so understanding them can help people saving for retirement find the optimal solution.


One of the most common types of 2FA cybersecurity is SMS 2FA. This method texts users a one-time passcode after they’ve entered their password. While the code itself may only be four digits long, it only works for a few minutes and only goes to a pre-authorized phone, making this second factor highly secure.

SMS 2FA is more secure than email — a similar verification method — because it relies on a specific device. Users’ email accounts can be signed in on multiple devices simultaneously and are accessible from anywhere, making them prone to hacking. Sending a code to a phone removes the risk of remote unauthorized access.

This option is also easily accessible, as most people have a phone, and texting doesn’t require additional apps or special hardware. However, it does have some shortcomings. Enabling password resets via SMS codes lets someone change someone else’s password if they have their phone. Some people may also not want to give out their phone numbers, worrying banks may use them for marketing purposes.

Email 2FA

A similar alternative is email verification. This method uses a one-time code like SMS 2FA but emails it to the user instead of texting it to them. It’s similarly fast, convenient, and more secure than using a password alone, as users need both a password and access to a specific email account to log in.

As mentioned earlier, the big flaw with email 2FA is email accounts are remotely accessible. If users don’t have strong passwords or 2FA enabled for these accounts, a hacker could gain access to it and work around the retirement 2FA system.

Users can make email 2FA more secure by using a dedicated email address for this verification. The more things someone uses their email for, the more susceptible it becomes to hacking or data breaches. If they only use one address for these one-time codes, it lessens the risk of someone gaining access to it. However, other methods are still more secure, so it’s often best to use something else if available.

Push-Based 2FA

A less common type of 2FA is a push system. As the name suggests, this technique uses push notifications. When someone tries to log in to the retirement account, the push service will send a report to their phone, asking them to approve or deny the login attempt.

One of the critical benefits of push-based 2FA is it lets users deny attempts. These systems typically show the location of a user trying to log in, helping separate false positives from genuine hacking attempts. Users can immediately take action when they see someone else trying to access their account, like alerting their financial institution and changing their password.

Push-based 2FA is also faster than typing in a one-time verification code. However, unlike SMS, it requires cellular data or an internet connection, and 11% of cellphone users don’t have a smartphone. Even smartphone owners may not always have a reliable data connection. There are also fewer services offering push authentication, making it less accessible.

Biometric 2FA

Some 2FA cybersecurity solutions combine two-factor authentication with biometrics. Instead of using either a face or fingerprint scan or a password, it uses both. This combination lets users experience biometrics’ security benefits over passwords while still using a password to minimize the risks of biometric spoofing or false positives.

Biometric 2FA is often the most convenient option, as scanning a face is far faster and less involved than entering a code or authorizing an attempt. There’s also no risk of someone getting in by stealing users’ phones or hacking into their email accounts. The chances of someone fooling a biometric authentication system and breaking a solid password in one instance are slim.

Accessibility may still be a concern for some users with biometric 2FA. Experts forecast 66% of smartphone users will use biometrics by 2024, so they’re relatively popular, but that still leaves a third of users without them. These systems — especially facial recognition — are also less reliable with some people groups, which can hinder their usefulness.

How to Set Up 2FA Security for a Retirement Account

People who want to protect their hard-earned retirement savings should implement 2FA security. Passwords alone are not secure enough. Thankfully, the process of setting these systems up is reasonably straightforward.

The first step is logging into the retirement account in question. Specific names and actions will vary by service, but users should be able to find 2FA options under their security settings. Their platform may label it “multi-factor authentication” or “two-step verification.” From there, enabling it is typically as simple as pressing a button to use 2FA and entering the necessary information.

Most accounts will likely default to SMS 2FA, the most popular option. Sometimes, users will have a choice to get security codes via call rather than text, but both are similarly secure.

If the platform gives users options, they should consider which 2FA method works best for them. Biometric 2FA is generally the most secure, but SMS services may be more convenient for some people. If email is the only option available, set up a unique email account exclusively for verification. Don’t give out this address to anything else to minimize the risks of hacking and remote access.

Other Steps to Take for Retirement Savings Security

Security researchers say multi-factor authentication stops 99.9% of attacks, but users can go further to secure their retirement savings, too. One of the most important steps is to use stronger, unique passwords to make 2FA as secure as possible. Passwords should be at least 14 characters long, contain numbers, symbols, and capitals, and users should never reuse them.

It’s also vital to watch out for phishing scams, which may try to steal information to get past 2FA or security questions. If a message seems unusually urgent, contains spelling errors, comes from a source that usually doesn’t reach out via email, or comes from a sender with a strange-looking email domain, it’s likely phishing. It’s safest to avoid giving out any information over email and never click unsolicited links.

Finally, users should be careful about where they check their accounts. Avoid using public Wi-Fi to access retirement accounts, as these may be unencrypted. Even on a private network, ensure passers-by can’t see the screen, as some criminals watch people enter passwords in person to steal their information.

Two-Factor Authentication Is Crucial for Banking Security

Two-factor authentication for banking is a critical part of securing retirement savings. It’s effective, easy to implement, and increasingly crucial as cybercrime grows.

Many people still don’t use 2FA, and that’s often because they don’t realize it’s an option or may not understand how risky it is to overlook. Once plan participants know the need for better security and what 2FA can offer, they can secure their accounts and protect their savings from growing threats.