Retirement http://www.wisebread.com/taxonomy/term/417/all en-US 7 Ways Retirement Planning Changes When You're Single http://www.wisebread.com/7-ways-retirement-planning-changes-when-youre-single <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-ways-retirement-planning-changes-when-youre-single" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/senior_woman_relaxing.jpg" alt="Senior woman relaxing" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It can sometimes feel like everything is created with couples in mind &mdash; including retirement planning. When every article, tip, and suggestion for retirement starts with the assumption that you are married, you might be forgiven for assuming that retiring solo is just a matter of cutting retirement planning advice in half.</p> <p>But there are specific challenges and concerns (not to mention benefits!) that single retirees need to prepare for before they hang up their careers. Here are seven ways that preparing for retirement is different for singles.</p> <h2>1. You need to have adequate disability insurance</h2> <p>Relying on no one but yourself can feel pretty liberating. Not only do you answer to no one but yourself, but you also get to enjoy the fruits of your own labor without having to compromise.</p> <p>The downside to this, however, is figuring how you will protect yourself in case your income runs dry. While anyone who relies on income from their job should carry adequate disability insurance, this is even more important for single workers who may not have another safety net to catch them if a disability makes it impossible to work. You need to protect yourself, your income, and your assets from the possibility you may be unable to work, even before you start the nitty-gritty of retirement planning.</p> <p>Even if you have disability insurance through work, that may not be adequate to protect you from a loss of income. Make sure you know exactly how much your work insurance covers and for how long, so that you are not left without an income if it's not enough. Also, don't assume that you are immune to potential disabilities just because the most strenuous thing you do at work is operate the copy machine. Illness is behind the majority of long-term absences from work &mdash; and anyone can get sick at any time.</p> <h2>2. Prepare for your health care needs</h2> <p>Health care costs are a major concern for all retirees, since this is one aspect of your retirement budget that you may not have control over. According to a 2016 Fidelity study, a 65-year-old couple retiring in 2016 would need $260,000 for health care to cover their medical and health care needs for the rest of their lives.</p> <p>That dollar figure is frightening no matter your marital status, and it's important that single people recognize that their costs may be higher than just half of a couple's health care costs. That's because many married couples can help each other to remain independent in ways that single retirees would need to pay for. For instance, you may need to pay for someone to help you at home or for entry into a retirement community sooner than a married couple would need those things.</p> <p>While <a href="http://www.wisebread.com/is-long-term-care-insurance-worth-it" target="_blank">long-term care insurance</a> has often been touted as a method of mitigating these expenses for both married and single retirees, the cost of this kind of insurance has become prohibitive. To prepare for the possibility of bad health in retirement, singles should also explore creative solutions to long-term health issues. For instance, taking in a rent-free roommate who helps with daily tasks is not only money-saving, but also offers social support. Planning ahead for potential solutions to health and mobility issues can provide you with some imaginative solutions that money can't buy.</p> <h2>3. Assign a power of attorney</h2> <p>It's easy to assume that you can skip the whole issue of legal planning if you are single and childless, but that's not necessarily true. For instance, do you know who will take care of your health care or financial decisions if you should become incapacitated? You need to assign a power of attorney to make sure that your wishes are followed if you cannot make your own decisions.</p> <p>Your power of attorney also needs to know where to find your important papers and should be kept apprised of any changes in your life or directives. This is the person who will pay your bills and handle your advanced directive if you fall ill. You can either pick someone in your life whom you trust, or hire a professional whom you trust to fill that role.</p> <h2>4. Invest in tax-deferred retirement vehicles during your career</h2> <p>Single workers miss out on a number of tax breaks that are offered to married couples. According to Jane Hodges writing for <em>The Wall Street Journal</em>, &quot;Without child tax credits, a spouse exemption, and no one with whom to realize the benefits of filing jointly, singles can take a pretty big tax punch during peak earning years.&quot;</p> <p>For this reason, single workers have a particular need to invest in tax-advantaged retirement vehicles, such as 401(k) and traditional IRA accounts. These vehicles allow you to make pretax contributions, which lowers your taxable income while also helping you prepare financially for retirement.</p> <h2>5. Consider rolling over into a Roth IRA before age 70&frac12;</h2> <p>Of course, Uncle Sam will still want his cut of the income you put in tax-deferred retirement accounts, which can cause a nasty tax surprise for singles post-retirement. That's because withdrawals from tax-deferred retirement accounts are taxed as ordinary income, and single retirees still do not have access to the tax breaks offered to married couples.</p> <p>This can become a serious problem for some single retirees as of age 70&frac12; because of the required minimum distributions on tax-deferred accounts. Traditional IRAs and 401(k)s require that retirees begin withdrawing a minimum distribution (based on a percentage of total assets) at age 70&frac12;, which means you might be facing a surprisingly high tax bracket upon reaching age 70&frac12;. You may also be forced to take more money from your accounts than you want or need because of the required minimum distribution.</p> <p>To protect yourself from this potentially painful tax bite, consider rolling over a portion of your assets from tax-deferred funds to a Roth IRA account before age 70&frac12;. Since Roth accounts are funded with after-tax dollars, you will have to pay ordinary income tax on your rollover. However, this will allow you to decide when you will pay those taxes and give you more freedom to keep your money invested if you don't need it.</p> <h2>6. Hold off on Social Security for as long as you can</h2> <p>Options for optimizing Social Security benefits are much simpler for singles. Basically, the only way to get a higher monthly benefit if you are single is to wait. The longer you can wait to receive your benefits between age 62 (the earliest you can take benefits) and 70 (when the benefits stop growing), the more money you will see with every monthly check. Even if you cannot wait until age 70, or your full retirement age (currently age 66), know that each month you delay taking your Social Security retirement benefits means a little more money in your checks.</p> <p>It's also important to remember that the federal government does not necessarily define single the same way you do. If you are divorced but were married for at least 10 years, then you are eligible for spousal benefits based on your ex's income record. However, you will collect your spousal benefits concurrently with your retirement benefits, so you will only see an increased benefit if your ex-spouse made a lot more money than you did.</p> <h2>7. Embrace the opportunities</h2> <p>While the IRS and Social Security Administration may both make marriage look like the better option &mdash; at least financially &mdash; it's important for singles to remember how many more opportunities they have available to them than do married couples. That's because a footloose and fancy-free retiree has far fewer obstacles to retirement than does a married couple.</p> <p>For instance, retiring abroad can be a very economical (not to mention fun) choice, and it is much easier for a single retiree to pull up roots than it is for a couple. Similarly, traveling in retirement can be much cheaper for one, since you do not have to compromise on where you are willing to save money.</p> <p>Single retirees can also explore alternative living options, like living with several friends &mdash; there's an excellent reason why all the Golden Girls were single, after all &mdash; or taking in a younger boarder or roommate, or even moving to a cheaper state. Making these decisions solo means you can find the living situation or opportunity that best fits your needs, wants, and temperament.</p> <!--<h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><script async defer src="//assets.pinterest.com/js/pinit.js"></script> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/7%20Ways%20Retirement%20Planning%20Changes%20When%20Youre%20Single.jpg" alt="7 Ways Retirement Planning Changes When You're Single" width="250" height="374" /></p> </div>--><!--<h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><script async defer src="//assets.pinterest.com/js/pinit.js"></script> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/7%20Ways%20Retirement%20Planning%20Changes%20When%20Youre%20Single.jpg" alt="7 Ways Retirement Planning Changes When You're Single" width="250" height="374" /></p> </div>--><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/7-ways-retirement-planning-changes-when-youre-single">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-for-retirement-when-you-are-unemployed">How to Save for Retirement When You Are Unemployed</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make">7 Retirement Planning Steps Late Starters Must Make</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-biggest-ways-millennials-risk-their-retirements">5 Biggest Ways Millennials Risk Their Retirements</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/choosing-a-retirement-account-whats-available-and-what-s-best-for-you">Choosing a Retirement Account: What&#039;s Available, and What’s Best for You?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/half-of-americans-are-wrong-about-their-retirement-savings">Half of Americans Are Wrong About Their Retirement Savings</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) advice disability insurance health care IRA loss of income not married power of attorney retirement planning singles Fri, 14 Jul 2017 09:01:05 +0000 Emily Guy Birken 1982441 at http://www.wisebread.com How to Save for Retirement When You Are Unemployed http://www.wisebread.com/how-to-save-for-retirement-when-you-are-unemployed <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-save-for-retirement-when-you-are-unemployed" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/latin_american_woman_saving_in_a_piggybank.jpg" alt="Latin American woman saving in a piggy bank" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When you're unemployed, saving for retirement may be the last thing on your mind. It may seem impossible to save for the future when you have no steady income to even pay basic bills.</p> <p>But depending on your situation, it may still be possible to build your nest egg even if you're not working full-time. Here are some tools and suggestions for keeping an eye on the future during a period of joblessness.</p> <h2>Familiarize yourself with IRAs</h2> <p>Individual retirement accounts (IRAs) are great for people who don't have access to employer-sponsored retirement plans like 401(k) accounts. A traditional IRA is similar to a 401(k), in that any contributions are deducted from whatever taxable income you have. With a Roth IRA, on the other hand, earnings are taxed up front, but any gains you have won't be taxed when you withdraw money at retirement age.</p> <p>IRAs are useful for people who are self-employed, or who earn money inconsistently through part-time or freelance work. So if you're not employed full-time but still have some earned income, these accounts can help you save.</p> <h2>Think of retirement savings as a necessary expense</h2> <p>When you're unemployed, it's important to get a handle on all of your expenses so that you know where you need to cut. You may find that there are a lot of costs (luxury purchases, eating out, cable TV) that can be taken out of your household budget, while other expenses (food, electricity, debt payments) are more necessary. If you think of retirement savings as a necessity, you will be forced to cut spending elsewhere.</p> <h2>Roll over your old 401(k)</h2> <p>If you've been laid off from a job, you will no longer be able to contribute to the 401(k) you may have had from your employer. But the account will still exist and the money is still yours. You can let the old 401(k) account sit, but it's better to roll it into a traditional individual retirement account (IRA). The IRA will give you more flexibility and investment options, and may also have lower fees. And you can begin contributing to it once you have any earned income at all.</p> <h2>Focus on rebalancing</h2> <p>You may not be able to add much to your retirement accounts, but you can work to make sure they are optimized. This means making sure you have the right mix of investments based on your retirement date, and getting the optimal blend of stocks in various industries and asset classes. It's always smart to examine your portfolio to ensure you are not over- or underinvested in any one area.</p> <h2>Look for higher bank interest rates</h2> <p>If you're not taking in much income for the time being, you need to have your cash savings working for you. That means any cash savings you have should generate as much income as possible. Interest rates are still quite low, but many online banks offer interest rates on CDs and savings accounts that are higher than average.</p> <h2>Avoid the temptation to cash out</h2> <p>It may be tempting to take money out of your retirement funds, but you should avoid it if at all possible. One of the best ways to see your retirement savings grow is to let your investments do their thing. You can see a meaningful increase in your retirement savings just from market gains, even if you're not contributing for the time being.</p> <p>Withdrawing from retirement accounts, however, has consequences. First, any money you take out has no chance to grow and help you expand your overall retirement savings. Second, there are penalties and taxes associated with taking money out of retirement accounts early. (See also: <a href="http://www.wisebread.com/5-questions-to-ask-before-you-borrow-from-your-retirement-account?ref=seealso" target="_blank">5 Questions to Ask Before You Borrow From Your Retirement Account</a>)</p> <h2>Continue to focus on growth, if you can</h2> <p>If you are unemployed and have some investments in a taxable brokerage account, you may be tempted to shift them to dividend stocks or other income-producing investments. This can give you extra income at a time when you may need it. But making this kind of adjustment could have a long-term negative impact on the overall growth of your portfolio. If dividends, bonds, or other income-focused investments will help you keep the lights on, fine. But it's best to focus on finding other sources of income, or reduce your spending first before going this route.</p> <h2>Reinvest dividends, if you can</h2> <p>If you do have dividend stocks already, you can still contribute to your retirement portfolio by reinvesting any dividend income you get from stocks. You may be tempted to use that investment income to pay bills and help get through your unemployed period, but if you can get by without it, direct the dividends to buy more stocks and other investments instead. Even small contributions added to your retirement accounts can add up to considerable savings over time.</p> <h2>Get your spouse involved</h2> <p>Perhaps you never thought to include your spouse in retirement planning because you felt it wasn't necessary while you were working. Now his or her income can be directed to help you save. This may be a challenge, since they are now also working to help pay more of the bills. But there are some ways to use your spouse's income for your own retirement accounts. If you have a traditional or Roth IRA, your spouse's earned income can go toward your account. (Note: This is only allowed if you file your taxes jointly.)</p> <h2>Plan to pay into accounts later</h2> <p>If you are unemployed but expect to be working in short order, you can postpone contributions to your IRA and add money later, even if it's after the end of the year. In fact, you can contribute to an IRA all the way up until April 15 of the following year. So for example, let's say you planned to max out your IRA by making monthly payments. (This would be about $458 monthly for a total of $5,500 for the year &mdash; the maximum amount allowed by the IRS for people under 50.) But let's say you are out of work from August through October of that year. You can hold off on contributing during that time and make up the difference in later months, even the first few months of the following year, if necessary.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-save-for-retirement-when-you-are-unemployed&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Save%2520for%2520Retirement%2520When%2520You%2520Are%2520Unemployed.jpg&amp;description=How%20to%20Save%20for%20Retirement%20When%20You%20Are%20Unemployed"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Save%20for%20Retirement%20When%20You%20Are%20Unemployed.jpg" alt="How to Save for Retirement When You Are Unemployed" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/how-to-save-for-retirement-when-you-are-unemployed">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-reasons-every-millennial-needs-a-roth-ira">6 Reasons Every Millennial Needs a Roth IRA</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-make-sure-you-dont-run-out-of-money-in-retirement">How to Make Sure You Don&#039;t Run Out of Money in Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-traps-to-avoid-with-your-401k">7 Traps to Avoid With Your 401(k)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/which-retirement-account-is-right-for-you">Which Retirement Account Is Right for You?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-you-need-to-know-about-the-easiest-way-to-save-for-retirement">What You Need to Know About the Easiest Way to Save for Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement 401(k) contributions dividends interest rates job loss loss of income rebalancing Roth IRA saving money stocks traditional ira unemployment Wed, 12 Jul 2017 09:00:14 +0000 Tim Lemke 1979037 at http://www.wisebread.com 5 Countries Where You Can Retire for $1,000 a Month http://www.wisebread.com/5-countries-where-you-can-retire-for-1000-a-month <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-countries-where-you-can-retire-for-1000-a-month" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/happy_senior_couple_talking_a_walk_in_park.jpg" alt="Happy senior couple talking a walk in park" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Most of us have dreams of retiring to a life of leisure, with a nest egg that will enable us to live comfortably. But according to the Government Accountability Office, up to <a href="http://www.gao.gov/products/GAO-15-419" target="_blank">two-thirds of workers</a> are potentially at risk of not maintaining the same standard of living they enjoyed pre-retirement.</p> <p>Moving to a new country to live out your retirement could provide the perfect solution. <a href="https://www.numbeo.com/cost-of-living/rankings_by_country.jsp" target="_blank">Numbeo's Cost of Living Index</a> has the U.S. listed as the 18th most expensive country to live in, meaning retirees have a huge number of cheaper countries to select from. Here are five countries where you can retire on $1,000 per month. (See also: <a href="http://www.wisebread.com/5-countries-that-welcome-american-retirees?ref=seealso" target="_blank">5 Countries That Welcome American Retirees</a>)</p> <h2>1. Thailand</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5197/sukhothai_temple_lake_panorama.jpg" width="605" height="340" alt="" /></p> <p>Thailand is best known for its tropical islands and exciting big cities, but it's also a destination where an increasing number of overseas retirees are settling down. It's got the magic combination of being well-developed while maintaining very low living costs.</p> <p>Grocery costs are well-priced and good quality, and fresh produce is widely available. According to Numbeo, the average price of a loaf of bread is $1, a dozen eggs is $1.80, and a pound of rice costs just 60 cents. A three-course meal for two at a mid-range restaurant costs $20.60, so you'll also be able to enjoy regular evenings out.</p> <p>The transport infrastructure in Thailand is also good, with tuk tuks, taxis, and public transport providing easy ways to get around. Costs are also low, with Numbeo suggesting the flag fare for an average one-way taxi ride is about $1 plus 28 cents per mile after that.</p> <p><strong>Typical fixed costs per month:</strong></p> <ul> <li> <p>Rent for one-bed apartment city center: $615</p> </li> <li> <p>Utilities: $84</p> </li> <li> <p>Internet: $18</p> </li> </ul> <h2>2. Bolivia</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5197/copacabana.jpg" width="605" height="340" alt="" /></p> <p>Although not the most fashionable country in South America, Bolivia is a great retirement option for outdoor lovers. From the Amazon rain forest to the Andes Mountains, there's an abundance of beautiful landscapes to explore. It's also one of the most affordable countries in South America.</p> <p>The cheapest place to buy fresh produce is from the local markets throughout the country, but there are also many supermarkets with wider selections of international goods. Numbeo lists the average price of a loaf of bread as 92 cents, a dozen eggs for $1.40, and a pound of rice at 60 cents. Splashing out on a three-course meal for two at a mid-range restaurant will cost $25.</p> <p>Transport systems in Bolivia are not the most advanced, but there are good public bus networks and inexpensive taxi services in most areas. According to Numbeo, the average cost of a one way bus fare is 32 cents, and the starting fare for a taxi is $1.45 with $2.33 added for each mile.</p> <p><strong>Typical fixed costs per month:</strong></p> <ul> <li> <p>Rent for one-bed apartment city center: $290</p> </li> <li> <p>Utilities: $43</p> </li> <li> <p>Internet: $70</p> </li> </ul> <h2>3. Nicaragua</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5197/cathedral_of_granada_nicaragua.jpg" width="605" height="340" alt="" /></p> <p>Central America's largest country has become a popular destination for retirees in recent years. The scenery is dramatic and lush, with numerous volcanoes peppering the countryside, verdant rain forest covering large portions, and coastal areas lined with white sand beaches.</p> <p>Between the markets and the major supermarkets, one of which is owned by Walmart, it's possible to get virtually everything you're used to in the U.S. The average price, according to Numbeo, for a loaf of bread is $1.50, a dozen eggs runs $1.63, and a pound of rice 43 cents. A three-course meal for two at a mid-range restaurant will run you $30.</p> <p>Buses, taxis, and mototaxis are the most popular and inexpensive forms of transportation, with many of the buses being the familiar old yellow school buses imported from the U.S. Numbeo lists the average fare as just 35 cents, while the starting tariff for taxis is $1 and an extra $1.64 per mile after that.</p> <p><strong>Typical fixed costs per month:</strong></p> <ul> <li> <p>Rent for one-bed apartment city center: $273</p> </li> <li> <p>Utilities: $119</p> </li> <li> <p>Internet: $70</p> </li> </ul> <h2>4. Malaysia</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5197/sunset_over_tea_plantation_in_malaysia.jpg" width="605" height="340" alt="" /></p> <p>Year-round warm temperatures, stunning beaches, and diverse, bustling cities make this a great choice for people on the lookout for top spots to retire. Thanks to English being spoken by virtually everyone, it's an easy place to get by without learning a new language.</p> <p>Though it's easy to get your hands on international branded goods, local produce is far cheaper and of good quality. The average price for a loaf of bread is 70 cents, a dozen eggs will cost you $1.24, and a pound of rice is available for 56 cents, according to Numbeo. Eating out is a particular pleasure is Malaysia, thanks to the unique fusion of cuisines found here. It's also cheap at just $16 for a three-course meal for two at a mid-range restaurant.</p> <p>Kuala Lumpur, the capital, is well connected by trains and buses, while the rest of the country is serviced by good bus networks. The average price of a one way train fare is 70 cents, and taxis are also a price-effective option, with starting tariffs of 70 cents and a per-mile cost of just 56 cents.</p> <p><strong>Typical fixed costs per month:</strong></p> <ul> <li> <p>Rent for one-bed apartment city center: $557</p> </li> <li> <p>Utilities: $50</p> </li> <li> <p>Internet: $38</p> </li> </ul> <h2>5. Georgia</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5197/view_over_the_city_of_tbilisi_georgia.jpg" width="605" height="340" alt="" /></p> <p>No, we're not talking about the state tucked down in the southeast of the U.S., but a tiny nation that lies on the edges of both Europe and Asia. Though it's little known, it's growing in popularity, especially among retirees, thanks to its beautiful countryside and extremely low cost of living.</p> <p>Georgia is known for its abundance of fresh produce, as well as reputedly being the birthplace of wine. Both are extremely cheap in this country, as are most groceries on offer. A loaf of bread is just 31 cents, a dozen eggs come in at $1.47, and a pound of rice at 36 cents. Eating out is also reasonable at $21 for a three-course meal for two at a mid-range restaurant.</p> <p>Transport in the capital Tbilisi is excellent, with a metro system as well as good bus links and cost-effective taxis. Elsewhere in the country buses and trains are easy to use. The average fare is just 20 cents, and taxis start at $1.25 with 33 cents per mile after that.</p> <p><strong>Typical fixed costs per month:</strong></p> <ul> <li> <p>Rent for one-bed apartment city center: $310</p> </li> <li> <p>Utilities: $60</p> </li> <li> <p>Internet: $11.20</p> </li> </ul> <p>(See also: <a href="http://www.wisebread.com/retire-for-half-the-cost-in-these-5-countries?ref=seealso" target="_blank">Retire for Half the Cost in These 5 Countries</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-countries-where-you-can-retire-for-1000-a-month&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Countries%2520Where%2520You%2520Can%2520Retire%2520for%25201%252C000%2520dollars%2520a%2520Month.jpg&amp;description=5%20Countries%20Where%20You%20Can%20Retire%20for%201%2C000%20Dollars%20a%20Month"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Countries%20Where%20You%20Can%20Retire%20for%201%2C000%20dollars%20a%20Month.jpg" alt="5 Countries Where You Can Retire for $1,000 a Month" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/nick-wharton">Nick Wharton</a> of <a href="http://www.wisebread.com/5-countries-where-you-can-retire-for-1000-a-month">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-almost-anyone-can-afford-to-retire-in-mexico">How Almost Anyone Can Afford to Retire in Mexico</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-countries-where-you-can-travel-on-30-a-day-or-less">7 Countries Where You Can Travel on $30 a Day or Less</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/retire-for-half-the-cost-in-these-5-countries">Retire for Half the Cost in These 5 Countries</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-let-these-expenses-spoil-your-retirement-abroad">Don&#039;t Let These Expenses Spoil Your Retirement Abroad</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-i-saved-enough-for-a-down-payment-while-working-in-china">How I Saved Enough for a Down Payment While Working in China</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Travel abroad affordable Asia cost of living countries Europe expats expenses food costs international transportation Tue, 11 Jul 2017 08:30:11 +0000 Nick Wharton 1978059 at http://www.wisebread.com Best Credit Cards for Seniors and Retirees http://www.wisebread.com/best-credit-cards-for-seniors-and-retirees <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-credit-cards-for-seniors-and-retirees" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-615485120.jpg" alt="senior shopping" title="senior shopping" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>After spending decades hard at work in your career, it's now time for you to relax and enjoy your retirement. But as you leave the workforce, you may need to save as much money as possible in order to get by on a fixed income. One of the tools that seniors and retirees can use to save money is a credit card that offers good rewards.</p> <p>Cash-back credit cards tend to offer the best rewards for most people, especially if you don&rsquo;t travel a lot. The idea is pretty simple: For every dollar you spend on the card, you get a certain percentage back in statement credits or cash. It&rsquo;s hard to argue about the value of real money.</p> <p>Still, in our list of the best credit cards for seniors, we&rsquo;ve also included a premium travel rewards credit card. For retirees intent on hitting the road, it offers valuable benefits and services that make traveling more comfortable and convenient.</p> <p>Here are the best credit cards for seniors and retirees.</p> <h2>Blue Cash Preferred&reg; Card from American Express</h2> <p><img style="float:right;margin:0 5px 5px 10px;" class="img-exempt" alt="" src="http://usweb.dotomi.com/cj/feeds/4019917/images/bcpcardart_300x200.jpg" border="0" height="97" width="154" /><a style="border:none;float:right;clear:right;margin: 0 5px 5px 10px;" target="_blank" alt="Blue Cash Preferred&reg; Card from American Express" title="Blue Cash Preferred&reg; Card from American Express" rel="nofollow" href="http://ct.wisebread.com/click.php?pg=262&amp;pid=6&amp;pp=1&amp;uv=xcardbutton"><img alt="" class="img-exempt img-button" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/apply-now.png" /></a>For those who spend a lot on groceries, there&rsquo;s no better card than the <a href="http://ct.wisebread.com/click.php?pg=262&amp;pid=6&amp;pp=1&amp;uv=xname" target="_blank">Blue Cash Preferred&reg; Card from American Express</a>, which offers 6% cash back at U.S. supermarkets (up to $6,000 per year in purchases, 1% after that), 3% at U.S. gas stations and select U.S. department stores, and 1% on other purchases. As a bonus, you can earn $150 back in the form of statement credit after spending $1,000 in purchases in your first three months. Apply by 5/3/17 to earn 10% cash back on purchases at U.S. restaurants in the first 6 months, up to $200 back. Terms apply. There is a $95 annual fee for this card. <a href="https://www.americanexpress.com/us/credit-cards/personal-card-application/terms/blue-cash-preferred-credit-card/26129-10-0/?print&amp;noBox=y#terms-details">See rates and fees.</a></p> <p><b><a href="http://ct.wisebread.com/click.php?pg=262&amp;pid=6&amp;pp=1&amp;uv=xend" target="_blank">Click here to learn more and apply for the&nbsp;Blue Cash Preferred&reg; Card from American Express today!</a></b></p> <h2>Citi&reg; Double Cash Card - 18 month BT offer</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u784/CitiDoubleCash.jpg" alt="" class="img-exempt" style="float:right;margin:0 5px 5px 10px;" border="0" height="97" width="154" /><a href="http://ct.wisebread.com/click.php?pg=262&amp;pid=47&amp;pp=2&amp;uv=xcardbutton" target=" rel=" style="border:none;float:right;clear:right;margin: 0 5px 5px 10px;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/apply-now.png" class="img-exempt img-button" alt="" /></a>Another way for seniors and retirees to stretch their dollars the furthest is to use a simple credit card that offers the most cash back on every purchase. The <a rel="nofollow" target="_blank" href="http://ct.wisebread.com/click.php?pg=262&amp;pid=47&amp;pp=2&amp;uv=xname">Citi&reg; Double Cash Card - 18 month BT offer</a>&nbsp;from our partner Citi rewards 1% cash back on all charges at the time of purchase, and another 1% cash back when the purchases are paid for. There is no annual fee.</p> <p>The great thing about this system is you don&rsquo;t have to remember to sign up for quarterly bonus programs, or keep in mind categories and their bonus limits. You just get a good, steady rate on all types of spending. You can redeem points for checks, statement credits, or gift cards.</p> <p><a rel="nofollow" target="_blank" href="http://ct.wisebread.com/click.php?pg=262&amp;pid=47&amp;pp=2&amp;uv=xend"><strong>Click here to learn more and apply for the Citi&reg; Double Cash Card - 18 month BT offer today!</strong></a></p> <h2>BankAmericard Cash Rewards&trade; Credit Card</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/BoA_Cash_Rewards-154.jpg" alt="" class="img-exempt" style="float:right;margin:0 5px 5px 10px;" border="0" height="97" width="154" /><a href="http://ct.wisebread.com/click.php?pg=262&amp;pid=106&amp;pp=3&amp;uv=xcardbutton" target=" rel=" style="border:none;float:right;clear:right;margin: 0 5px 5px 10px;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/apply-now.png" class="img-exempt img-button" alt="" /></a>The <a rel="nofollow" target="_blank" href="http://ct.wisebread.com/click.php?pg=262&amp;pid=106&amp;pp=3&amp;uv=xname">BankAmericard Cash Rewards&trade; credit card</a> offers 3% cash back on gas and 2% cash back at grocery stores and wholesale clubs (on combined $2,500 in gas, grocery, and wholesale club spending each quarter), rewarding you for most of your everyday purchases. Plus, new cardholders receive $150 cash back after making $500 in purchases within the first 90 days of account opening. If you're a Bank of America customer, you earn a 10% bonus when redeeming cash back into a Bank of America&reg; checking or savings account. There is no annual fee.</p> <p><a rel="nofollow" target="_blank" href="http://ct.wisebread.com/click.php?pg=262&amp;pid=106&amp;pp=3&amp;uv=xend"><strong>Click here to learn more and apply for the BankAmericard Cash Rewards&trade; Credit Card today!</strong></a></p> <h2>Costco Anywhere Visa&reg; Card by Citi</h2> <p><img style="float:right;margin:0 5px 5px 10px;" class="img-exempt" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u784/Citi-Costco-Anywhere.jpg" border="0" height="97" width="154" /><a style="border:none;float:right;clear:right;margin: 0 5px 5px 10px;" target="_blank" alt="Costco Anywhere Visa&reg; Card by Citi" title="Costco Anywhere Visa&reg; Card by Citi" rel="nofollow" href="http://ct.wisebread.com/click.php?pg=262&amp;pid=128&amp;pp=4&amp;uv=xcardbutton"><img alt="" class="img-exempt img-button" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/apply-now.png" /></a>Seniors often love shopping at Costco's warehouse stores for their low prices and great service. The <a rel="nofollow" target="_blank" href="http://ct.wisebread.com/click.php?pg=262&amp;pid=128&amp;pp=4&amp;uv=xname">Costco Anywhere Visa&reg; Card by Citi</a>&nbsp;offers great rates of cash back for purchases made not only at Costco, but at other merchants, too.</p> <p>The card features an impressive 4% cash back on the first $7,000 you spend each year at gas stations, including at Costco. After you hit the $7,000 limit, you&rsquo;ll earn 1% back on fuel purchases for the rest of the year. You also receive 3% cash back on eligible travel and restaurant purchases, 2% cash back at Costco, and 1% cash back on all other purchases.</p> <p>One potential drawback: You have to wait until February of every year to get your credit card reward certificate. You can then redeem the certificate for cash or merchandise at Costco.</p> <p>There's no annual fee for this card with your paid Costco membership.</p> <p><a rel="nofollow" target="_blank" href="http://ct.wisebread.com/click.php?pg=262&amp;pid=128&amp;pp=4&amp;uv=xend"><strong>Click here to learn more and apply for the Costco Anywhere Visa&reg; Card by Citi today!</strong></a></p> <h2>The Platinum Card&reg; from American Express</h2> <p><img style="float:right;margin:0 5px 5px 10px;" class="img-exempt" src="http://imgsynergy.com/product_creatives/d7a443fe113188ab241309d0eb0c2e33.png" alt="" border="0" height="97" width="154" /><a style="border:none;float:right;clear:right;margin: 0 5px 5px 10px;" target="_blank" alt="The Platinum Card&reg; from American Express" title="The Platinum Card&reg; from American Express" rel="nofollow" href="http://ct.wisebread.com/click.php?pg=262&amp;pid=11&amp;pp=5&amp;uv=xcardbutton"><img alt="" class="img-exempt img-button" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/apply-now.png" /></a>As we get older, we tend to value comfort and convenience more. That&rsquo;s where the <a href="http://ct.wisebread.com/click.php?pg=262&amp;pid=11&amp;pp=5&amp;uv=xname" target="_blank">Platinum Card&reg; from American Express</a> comes in. For those who want to travel during their retirement years, benefits and services offered by this charge card can be the difference between a relaxing getaway and a stressful trip. Cardholders get to enjoy access to more than 1,000 airport lounges, a fee credit for Global Entry or TSA Precheck every five years for the application fee, up to $200 a year in statement credits on a qualifying airline for incidentals, and complimentary concierge service. These perks are well worth the $550 annual fee. Terms apply. <a href="https://www.americanexpress.com/us/credit-cards/personal-card-application/terms/platinum-charge-card/26129-10-0/?print#terms-details">See rates and fees.</a></p> <p><strong><a href="http://ct.wisebread.com/click.php?pg=262&amp;pid=11&amp;pp=5&amp;uv=xend" target="_blank">Click here to learn more and apply for the&nbsp;The Platinum Card&reg; from American Express today!</a></strong></p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fbest-credit-cards-for-seniors-and-retirees&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FBest%2520Credit%2520Cards%2520for%2520Seniors%2520and%2520Retirees.jpg&amp;description=Best%20Credit%20Cards%20for%20Seniors%20and%20Retirees"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Best%20Credit%20Cards%20for%20Seniors%20and%20Retirees.jpg" alt="Best Credit Cards for Seniors and Retirees" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/jason-steele">Jason Steele</a> of <a href="http://www.wisebread.com/best-credit-cards-for-seniors-and-retirees">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/top-5-travel-reward-credit-cards">The Best Travel Reward Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-best-cash-back-credit-cards">The Best Cash Back Credit Cards</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-secured-credit-cards">The Best Secured Credit Cards</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-best-sign-up-bonuses-for-airline-miles-credit-cards">The Best Sign-up Bonuses for Airline Miles Credit Cards</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards Retirement best credit cards Fri, 07 Jul 2017 00:54:16 +0000 Jason Steele 1922318 at http://www.wisebread.com 6 Ways You Can Cut Costs Right Before You Retire http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-you-can-cut-costs-right-before-you-retire-0" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_discussing_home_economics_0.jpg" alt="Couple discussing home economics" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Worried about covering your daily living expenses in retirement? You're far from alone. A study released late last year by the Transamerica Center for Retirement Studies found that only a small percentage of U.S. workers are &quot;very confident&quot; about being able to fully retire with a comfortable lifestyle.</p> <p>If you have some doubts about how you're going to fund your retirement years, there are some steps you can take now, in the years leading up to your retirement, to prepare yourself financially for the day in which you leave the workforce. By reducing these expenses before you retire, you'll give yourself the chance to boost your retirement savings in the last few years before you leave the working world.</p> <p>You'll also take an important first step toward setting up a post-retirement lifestyle that might, depending upon how much you've saved, require you to cut back on many of the expenses you take for granted today.</p> <h2>1. Housing</h2> <p>The cost of housing, of course, is the biggest financial burden that most people face. Bringing a mortgage with you into retirement can cause plenty of financial stress each month. But even if you are no longer paying off a mortgage, the cost of maintaining a large single-family home can be high.</p> <p>If you still have a mortgage, it might make sense to pay it off before you leave the working world. If you can't afford to do that, you might consider selling your home. If you have enough equity in your residence, you might be able to use the profits to buy a downsized residence &mdash; maybe a condo unit &mdash; in cash.</p> <p>If you've already paid off your mortgage, you'll have more flexibility. If your home requires too much maintenance, or if your property taxes and homeowners insurance are too high, you can sell and move into a smaller residence that requires less maintenance or a condo building that comes with far lower property taxes.</p> <p>You'll no longer need to worry about living in a higher-taxed area with better public schools, so finding a residence with lower annual property taxes shouldn't be too much of a struggle. And if you purchase a smaller home or condo, your annual homeowners insurance bill won't be as high.</p> <h2>2. Insurance</h2> <p>Now might be a good time to review how much you are spending each year on your insurance.</p> <p>First, if you no longer have any dependents who'd need financial help after you die, you can drop any life insurance coverage you might still have. That can immediately save you a significant sum of money each year.</p> <p>You'll no longer need disability insurance, either, after you leave the workforce. Don't drop disability before you retire, but do figure that the cost of this insurance will disappear once you stop working.</p> <p>You might also look at the deductibles you've set up for your auto and homeowners insurance policies. It makes sense to set your deductibles low when you are working. If you have a deductible of $250 for your auto insurance policy, for instance, you'll have to pay for the first $250 in costs after an accident while your auto insurer will cover anything after that.</p> <p>But lower deductibles increase the amount you pay in insurance premiums. When you raise your deductibles, you'll pay less for your auto and homeowners' insurance policies. By the time you reach your retirement age, you might have enough saved to cover these higher deductibles, and moving to lower payments for your insurance policies might help you cover your daily living expenses.</p> <h2>3. Credit card debt</h2> <p>One of the biggest burdens on your retirement could be credit card debt. This debt comes with high interest rates &mdash; as high as 20 percent or more in some cases &mdash; and can grow quickly. If you carry a balance on your cards from month to month, you'll be stuck paying that minimum required monthly payment every time your credit card bills come due.</p> <p>If you have a lot of credit card debt, it's important to <a href="http://www.wisebread.com/the-fastest-method-to-eliminate-credit-card-debt?ref=internal" target="_blank">pay off as much as possible</a> as you approach retirement. You can do this using one of three tested approaches: the debt snowball, debt avalanche, or debt snowflake method.</p> <p>In the <a href="http://www.wisebread.com/6-secrets-to-mastering-the-debt-snowball?ref=internal" target="_blank">snowball method</a>, you list your credit card debts from smallest to largest. You then take any extra money you have and focus on paying off the smallest bill first. Once you've paid off that bill, you'll move on to your next smallest credit card bill and pay that one off.</p> <p>In the avalanche method, you organize your credit card bills by interest rate, from high to low. You then use any extra money to pay off the card with the highest interest rate as quickly as possible. Once you pay off that card, you then move to the card with the next highest rate.</p> <p>If if you find yourself struggling to come up with large debt payments, the <a href="http://www.wisebread.com/get-out-of-debt-faster-with-the-debt-snowflake?ref=internal" target="_blank">snowflake method</a> may work well for you. In this strategy, you'll look for ways to shave dollars off of everyday expenses, such as groceries or gas. You'll then use those savings to make small but frequent payments on your credit card debt. Every little bit helps.</p> <h2>4. Your cars</h2> <p>Cars are expensive. Not only do you have to pay for their upkeep and gas, but you also need to insure them. Going from two cars to one or downgrading to a less expensive car can help you dramatically reduce your daily living expenses.</p> <p>If you can swing it, going from two cars to one will reduce the amount you pay each year in auto insurance. But maybe you can't do this while you are still working. If not, you can still downgrade from a more expensive car to one with lower monthly payments and lower insurance costs.</p> <p>Consider this carefully, though. If you've paid off your car, it probably makes more sense to live with it for as long as you can. That way, you won't have to worry about monthly car payments. If you are still making payments on it, though, downgrading to a nice but less costly vehicle might be a good way to reduce your daily living expenses even while you're still working.</p> <h2>5. Dining out</h2> <p>The Bureau of Labor Statistics reported that in 2015, the average U.S. household spent $3,008 on restaurant meals and take-out food. This should inspire you to look at how much money you spend each month on eating out.</p> <p>It's not that you should never eat out. But if you are worried about covering your daily living expenses once you retire, reducing the number of times you dine out at a restaurant is one monthly expense that you can easily control.</p> <p>Instead of eating out whenever you'd like, try budgeting each month for a certain number of restaurant meals. Then don't break that budget. Doing this before you retire will help build your discipline for the days in which you are no longer working.</p> <h2>6. Entertainment</h2> <p>Going to the movies instead of streaming one at home. Taking several vacations a year. The most expensive cable subscription with the most channels. All that entertainment adds up. You can significantly reduce your expenses before retirement by spending less on entertaining yourself.</p> <p>You might think you're depriving yourself, but streaming a movie can be just as much fun as going to the theater, and it can save you plenty of dollars. You can even rent movies for free from your local library or through the online rental services that many public libraries now feature. Why not take a break from that big expensive trip for the next few years and take smaller weekend jaunts instead? You can then save the money you would have spent so that you have more to spend in your retirement years.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-ways-you-can-cut-costs-right-before-you-retire-0&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Ways%2520You%2520Can%2520Cut%2520Costs%2520Right%2520Before%2520You%2520Retire.jpg&amp;description=6%20Ways%20You%20Can%20Cut%20Costs%20Right%20Before%20You%20Retire"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/6%20Ways%20You%20Can%20Cut%20Costs%20Right%20Before%20You%20Retire.jpg" alt="6 Ways You Can Cut Costs Right Before You Retire" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-come-up-with-1000-in-the-next-30-days">How to Come Up With $1,000 in the Next 30 Days</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-are-people-retiring-in-their-30s">How Are People Retiring in Their 30s?!</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/youve-been-saving-money-all-wrong-heres-why">You&#039;ve Been Saving Money All Wrong. Here&#039;s Why</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/these-5-expenses-will-probably-cost-you-a-lot-less-in-retirement">These 5 Expenses Will Probably Cost You a Lot Less in Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-financial-basics-every-new-grad-should-know">The Financial Basics Every New Grad Should Know</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Retirement Cars cutting costs debt entertainment expenses food costs housing saving money Tue, 04 Jul 2017 08:00:10 +0000 Dan Rafter 1974324 at http://www.wisebread.com 4 Questions You Need To Answer Before Relocating in Retirement http://www.wisebread.com/4-questions-you-need-to-answer-before-relocating-in-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-questions-you-need-to-answer-before-relocating-in-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/senior_couple_hugging_over_living_house_background.jpg" alt="Senior couple hugging over living house background" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Do your post-career plans include a change of address? If so, you're not alone. A 2015 Bankrate survey found that one in five Americans age 65 or older would consider moving to a different city or state for retirement.</p> <p>If a change of scenery in your later years sounds appealing, the most important question to consider is, &quot;Why?&quot; It's easy to romanticize the benefits of living in a different city. So, before you start packing boxes, here are four key questions that'll help make sure you're relocating for all the right reasons. (See also: <a href="http://www.wisebread.com/4-exciting-affordable-american-cities-to-retire-in?ref=seealso" target="_blank">4 Exciting, Affordable American Cities to Retire In</a>)</p> <h2>How would a move impact your finances?</h2> <p>Many people who move in retirement do so for financial reasons. In fact, nearly 75 percent of people age 65 or older said finding a lower cost of living was &quot;extremely important&quot; when thinking about where to retire, according to Bankrate.</p> <p>Moving for monetary reasons can make sense as long as you look at all sides of the equation. If your retirement account isn't as fully stocked as you'd like it to be, selling a home that you own outright or have a lot of equity in and buying one that costs less may be wise. Just be sure to factor in other ongoing costs in the town you're thinking of moving to, such as property taxes, insurance, sales taxes, and more.</p> <p>You can get a feel for how your cost-of-living may change by using an online calculator, and the <a href="https://taxfoundation.org/state-and-local-sales-tax-rates-2016/" target="_blank">Tax Foundation</a> has information about state and local taxes. But do some additional checking. Talk with a realtor to ask about property taxes, and call an insurance agent to see how your homeowners and vehicle insurance costs may change.</p> <h2>How would a move impact your extended family?</h2> <p>A couple of years ago, an older couple I know sold the home they've owned for many years and moved closer to two of their adult children and their families. They're enjoying spending more time with their grandchildren, attending various school and sports events. And, when the woman in the couple had to be hospitalized recently, their adult children didn't have to fly across the country to be there for her.</p> <p>On the other hand, my in-laws live about five hours away. When my father-in-law recently became ill and eventually passed away, it was very challenging for my wife and our whole family to be there as much as we would have liked.</p> <p>Relocating to be closer to family is generally a good idea. However, there are also some risks. For example, the adult children you move to be closer to could end up moving because of career or other reasons.</p> <p>Be sure to manage everyone's expectations as well by having a conversation with your adult children before you move. How often will you get together? How available will you be to baby-sit your grandkids? And how much help might your adult children provide if and when your health declines?</p> <h2>How would a move impact your friendships?</h2> <p>When considering a move, it's easy to make the mistake of overstating the importance of some factors while underestimating others. For example, Midwesterners are especially open to the idea of relocating for retirement, according to Bankrate, mostly because of their desire for better weather. However, weather is something people tend to get acclimated to fairly quickly, whereas it takes time to develop true friendships. Don't be too quick to move away from close friends.</p> <h2>How would a move impact your future medical care?</h2> <p>Our quality of life is largely dictated by the quality of our health, and as we age, our health is likely to become more fragile. That makes easy access to high quality health care an especially important factor in where we live during our later years. How is the health care in the town you're thinking of moving to? Here are some resources that can help answer that question.</p> <p>Medicare's <a href="https://www.medicare.gov/hospitalcompare/search.html" target="_blank">Hospital Compare</a> database keeps tabs on hospitals throughout the country, monitoring their 30-day readmissions and deaths by surgical procedure, patient ratings, and more.</p> <p>The <a href="https://nhqrnet.ahrq.gov/inhqrdr/state/select" target="_blank">Agency for Healthcare Research and Quality</a> provides state health score cards that look at how the health care in each state compares to national benchmarks.</p> <p>The <a href="http://www.rwjf.org/en/library/research/2013/09/national-directory.html" target="_blank">Robert Wood Johnson Foundation</a> maintains a database of health care reports, rating hospitals in each state on a wide variety of measures.</p> <h2>Take your move for a test drive</h2> <p>One final idea: If you're thinking about relocating in retirement, before you pull up stakes and hire movers, consider taking an extended vacation to the area you're considering. That'll help you figure out if it's just a nice place to visit, or you would actually want to live there.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F4-questions-you-need-to-answer-before-relocating-in-retirement&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F4%2520Questions%2520You%2520Need%2520To%2520Answer%2520Before%2520Relocating%2520in%2520Retirement.jpg&amp;description=4%20Questions%20You%20Need%20To%20Answer%20Before%20Relocating%20in%20Retirement"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/4%20Questions%20You%20Need%20To%20Answer%20Before%20Relocating%20in%20Retirement.jpg" alt="4 Questions You Need To Answer Before Relocating in Retirement" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/4-questions-you-need-to-answer-before-relocating-in-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-questions-couples-must-ask-before-retirement">5 Questions Couples Must Ask Before Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-questions-financial-advisers-hear-most-often">8 Questions Financial Advisers Hear Most Often</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/these-5-expenses-will-probably-cost-you-a-lot-less-in-retirement">These 5 Expenses Will Probably Cost You a Lot Less in Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-things-your-financial-planner-isnt-telling-you-about-retirement">5 Things Your Financial Planner Isn&#039;t Telling You About Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/leave-town-fast-essentials-for-making-a-last-minute-move">Leave Town Fast: Essentials for Making a Last-Minute Move</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement considerations family friendships health care hospitals moving pros and cons relocation Mon, 26 Jun 2017 08:30:12 +0000 Matt Bell 1970115 at http://www.wisebread.com Here's Why a Late Retirement May Be a Bad Idea http://www.wisebread.com/heres-why-a-late-retirement-may-be-a-bad-idea <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/heres-why-a-late-retirement-may-be-a-bad-idea" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/gold_and_golden_nest_egg_with_time_clock_on_background.jpg" alt="Gold and Golden Nest Egg with time clock on background" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When it comes to managing finances, many people struggle to keep up with expenses like rent, utilities, credit cards, and student loans. With so many obligations, saving for retirement becomes less of a priority. In fact, according to a 2016 GoBankingRates survey, one in three Americans have no retirement savings at all. (See also: <a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make?ref=seealso" target="_blank">7 Retirement Planning Steps Late Starters Must Make</a>)</p> <p>If you haven't started saving yet, or your retirement account isn't enough to provide for you, you may be thinking of an alternative strategy. Many people plan on working well into their 60s or 70s rather than depending on their retirement accounts for income.</p> <p>However, while many people expect to work at least part-time through their retirement, it doesn't always go according to plan.</p> <h2>Health issues</h2> <p>While you may expect to be strong and healthy well into your 70s, the reality can be quite different. Your health may deteriorate suddenly, requiring medical attention and rest. Or, you may experience an accident which limits your mobility. You may be physically unable to work, even on a part-time basis. If you relied on working into your retirement to fund your lifestyle, a health emergency can leave you destitute.</p> <p>When it comes to retirement, you should save with the idea that you may not be able to work at all later in life. If you are healthy in your golden years and <em>are</em> able to work, that can be an added bonus which can help you pursue your passions. But it shouldn't be the focal point of your retirement strategy.</p> <h2>Difficulty finding work</h2> <p>Even if you're capable of working, finding a job when you're older isn't always easy. Unemployed workers over the age of 55 can have a difficult time finding a new job.</p> <p>In addition, the modern workforce is changing dramatically and rapidly. There's new technology, and some roles are becoming outdated. Work that you may have done for years may no longer be needed, and you may be untrained to handle new ways of doing business.</p> <p>You may have to go back to school or take on new training, which can be an added expense. And you might be competing against people half your age with the same skills, which can make for a challenging job search.</p> <h2>You become a caregiver</h2> <p>Even if you're healthy and your skills are in demand, you still may not be able to work. If your partner or loved one becomes ill, you may have to dedicate yourself full-time to becoming a caregiver. Your relative's needs may prevent you from going to work.</p> <p>That means both of you may be unable to work, which will be a huge drain on your finances. If you did not save appropriately for the worst case scenario, you both could be in a dire situation.</p> <h2>Your interests may change</h2> <p>When you're in the early stages of your career, you may not be able to fathom the idea of not working. You may think you'd be bored. However, that can change after 30 or 40 years in the workforce. When you reach retirement age, you may realize that you just want to enjoy your golden years without the stress of going into the office. If you do not have your finances in order, that can make your retirement very difficult.</p> <p>While planning to work later can be beneficial for your savings, it's not a reliable retirement strategy. Many things can change before you retire, so it's important to prioritize saving <em>now </em>and prepare for the different possibilities.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/kat-tretina">Kat Tretina</a> of <a href="http://www.wisebread.com/heres-why-a-late-retirement-may-be-a-bad-idea">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-questions-financial-advisers-hear-most-often">8 Questions Financial Advisers Hear Most Often</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-travel-in-retirement-keeps-you-young">6 Ways Travel in Retirement Keeps You Young</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-retirement-planning-changes-when-youre-single">7 Ways Retirement Planning Changes When You&#039;re Single</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-reasons-an-hsa-is-actually-worth-having">10 Reasons an HSA Is Actually Worth Having</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-for-retirement-when-you-are-unemployed">How to Save for Retirement When You Are Unemployed</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement health care interests job hunting late retirement long term care saving money working late Thu, 22 Jun 2017 08:00:10 +0000 Kat Tretina 1966195 at http://www.wisebread.com How an HSA Could Help Your Retirement http://www.wisebread.com/how-an-hsa-could-help-your-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-an-hsa-could-help-your-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/hsa_theme_with_stethoscope_and_a_piggy_bank.jpg" alt="HSA theme with stethoscope and a piggy bank" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you're worried about medical expenses during your retirement, you're not alone. According to the latest Retirement Confidence Survey from the Employee Benefit Research Institute, 45 percent of American workers don't feel confident that they will have enough money to take care of their medical expenses when they retire.</p> <p>The good news is that you may be able to do something on top of socking away money into your 401(k) or IRA to plan ahead for your medical bills during retirement. Let's review what a health savings account (HSA) is and how it can help your retirement planning. (See also: <a href="http://www.wisebread.com/how-an-hsa-saves-you-money?ref=seealso" target="_blank">How an HSA Saves You Money</a>)</p> <h2>What is an HSA?</h2> <p>An HSA is a tax-advantaged medical savings account available only to people who are enrolled in high-deductible health plans (HDHPs). An HDHP is health insurance that has a lower monthly premium, but a high deductible. A deductible is the amount you must pay out of pocket for medical expenses before your health insurance kicks in.</p> <p>An HSA helps you pay for qualified medical expenses such as doctors' visits and prescriptions that are not reimbursed by your HDHP. The beauty of an HSA is that you can contribute to it with pretax dollars by setting aside a portion of every paycheck, allowing you to reduce your taxable income. Depending on where you set up your HSA, you may be able to invest the money in mutual funds or other investments to help the funds grow faster. Whatever money you don't use during the year rolls over into the following year, meaning you could have a nice amount built up by the time you retire.</p> <p>For your insurance plan to qualify as an HDHP &mdash; one that allows you to use an HSA &mdash; the HDHP must have a deductible of at least $1,300 for self-coverage or $2,600 for family coverage (as of May 2017). You can only use the money in the account for qualified medical expenses, and if you withdraw money from your HSA to use for other purposes before you reach age 65, you'll have to pay a 20 percent tax penalty.</p> <p>To qualify for an employer-sponsored HSA, you can't be listed as a dependent on somebody else's tax return or enrolled in Medicare.</p> <h2>How an HSA can help your retirement</h2> <p>Here's how an HSA can give your nest egg a boost during your retirement years.</p> <h3>1. Avoid taxes on approved medical expenses</h3> <p>Without an HSA, if you took out $1,000 from your 401(k) to cover a medical bill during retirement, you'd pay applicable income taxes on the money you withdrew. And if you were to retire before age 59 &frac12;, you would pay an additional 10 percent penalty tax for that 401(k) withdrawal. With an HSA, however, you never pay taxes when using funds for approved medical expenses.</p> <h3>2. Avoid some taxes on nonmedical distributions after age 65</h3> <p>The longer you hold an HSA, the more flexibility you'll gain to use your funds. Once you reach age 65, you can withdraw money from the account for <em>nonmedical</em> expenses without triggering that 20 percent tax penalty. However, while the contribution portion of your nonmedical distributions won't be subject to regular incomes taxes, the portion made of earnings and interest is subject to applicable income taxes.</p> <h3>3. Gain access to more investment options</h3> <p>If your employer-sponsored retirement account gives you access to only a few investment options, an HSA may be a way to broaden your options for retirement investments. While some HSA providers limit investment options to an FDIC-insured savings account, many others offer the option to put money in a separate HSA investment account with several fund options, including mutual funds and low-cost index funds. (See also: <a href="http://www.wisebread.com/why-warren-buffett-says-you-should-invest-in-index-funds?ref=seealso" target="_blank">Why Warren Buffett Says You Should Invest in Index Funds</a>)</p> <h3>4. Increase annual contribution limits for your retirement savings</h3> <p>In 2017, a single tax filer can save up to $18,000 in a 401(k) and up to $5,500 in a Roth IRA (with catch-up contributions for those 50 and older of $6,000 and $1,000, respectively). With an HSA, that same tax filer can save up to an additional $3,400 to cover medical expenses during retirement, with a $1,000 per year catch-up contribution allowed for those aged 55 and over.</p> <h2>Take a look at HSAs</h2> <p>If you don't have a good employer-sponsored health plan, you could give your retirement plan a much-needed boost with an HSA, assuming you're eligible for one. The premiums on an HDHP can be higher than those of other health plans, so it's important to take a look at all of your alternatives. Since there are many considerations to keep track of, including taxes, medical expenses, and investment decisions, consider seeking the advice of a professional. (See also: <a href="http://www.wisebread.com/who-to-hire-a-financial-planner-or-a-financial-adviser?ref=seealso" target="_blank">Who to Hire: A Financial Planner or a Financial Adviser?</a>)</p> <p>The health insurance decisions you make now could help you have a more comfortable retirement.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/how-an-hsa-could-help-your-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-couples-are-shortchanging-their-retirement-savings">4 Ways Couples Are Shortchanging Their Retirement Savings</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-surprising-things-your-hsa-will-cover">11 Surprising Things Your HSA Will Cover</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-almost-anyone-can-afford-to-retire-in-mexico">How Almost Anyone Can Afford to Retire in Mexico</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-an-hsa-saves-you-money">How an HSA Saves You Money</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-retirement-planning-changes-when-youre-single">7 Ways Retirement Planning Changes When You&#039;re Single</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement distributions expenses health care health savings account HSA investments medical costs pretax dollars Wed, 21 Jun 2017 09:01:05 +0000 Damian Davila 1969193 at http://www.wisebread.com 5 Biggest Ways Millennials Risk Their Retirements http://www.wisebread.com/5-biggest-ways-millennials-risk-their-retirements <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-biggest-ways-millennials-risk-their-retirements" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/sad_man_has_spent_all_his_money.jpg" alt="Sad man has spent all his money" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you're stressing out about whether or not you're saving enough for retirement, you're not alone. Millennials are among those struggling the most with this dilemma. According to a 2016 study, 64 percent of working millennials believe they'll never save a $1 million nest egg.</p> <p>Why are millennials so worried? Sadly, this age group is prone to making less-than-ideal money moves that could hurt them later in life. Let's review the five biggest ways in which millennials are risking their retirement. (See also: <a href="http://www.wisebread.com/4-things-millennials-should-do-today-to-prepare-for-retirement?ref=seealso" target="_blank">4 Things Millennials Should Do Today to Prepare for Retirement</a>)</p> <h2>1. Delaying the start of retirement savings</h2> <p>Nearly four in 10 millennials haven't started saving for retirement. The same 2016 survey found that 61 percent of females and 50 percent of males belonging to the millennial generation have their finances stretched &quot;too thin&quot; to save for retirement. Even worse, 54 percent of women and 43 percent of men of this generation are living paycheck to paycheck.</p> <p>However, delaying retirement contributions has a serious impact. If a worker were to deposit just $50 per month into a 401(k) with an 8 percent annual rate of return for 10 years, they would end up with around $9,200 at the end of the 10-year period. The IRS sets a cap on how much you can contribute to a retirement account per year, which for 2017, is $18,000 to a 401(k) and $5,500 to an IRA. If you keep delaying your contributions to your retirement accounts, you'll never be able to fully make up that gap.</p> <h2>2. Taking out high student loans</h2> <p>Student Loan Hero estimated the average student loan balance for a member of the Class of 2016 at $37,172, up 6 percent from the year before. With so many Americans still believing in the importance of postsecondary education, it's easy to see how the average student loan continues to climb. Studies have shown that higher education still leads to better earnings potential, after all.</p> <p>Still, loans are rising too fast. Back in 1993, only 45 percent of college graduates had a student loan and their average balance was $15,000 in inflation-adjusted dollars. By having to pay down a high student loan, millennials are foregoing sizable contributions to their retirement accounts.</p> <p>Assuming a $30,000 balance on a federal direct loan with a 4 percent interest rate, you would pay about $304 per month. That's $3,648 in missed retirement contributions every year. By the time that a millennial pays back that standard loan (10 years), they would have missed out on $54,259 in retirement savings, assuming an 8 percent annual return.</p> <h2>3. Putting their kids' college fund before their own retirement fund</h2> <p>Given the tough time that they're having paying back their own student loans, 19 percent of millennial parents say education for their children is their top financial priority, according to TD Ameritrade. Those millennial parents are socking away an average $310 every month for their children's college fund.</p> <p>Every month, these millennial parents are hit with the double whammy of paying down their own student loans and then putting money away for their children's education. No wonder millennial parents ranked saving for retirement third on their list of financial priorities. (See also: <a href="http://www.wisebread.com/why-saving-too-much-money-for-a-college-fund-is-a-bad-idea?ref=seealso" target="_blank">Why Saving Too Much Money for a College Fund Is a Bad Idea</a>)</p> <h2>4. Not setting a retirement savings goal</h2> <p>If you don't know where you're going, you'll never know when you get there. According to the Employment Benefit Research Institute, across all generations, workers age 25&ndash;34 are the smallest percentage of individuals who have tried to calculate how much money they'll need to live comfortably in retirement.</p> <p>By not setting a retirement savings goal, millennials may be misjudging how much to contribute from every paycheck toward their retirement accounts. This explains the low average contribution levels per paycheck from millennial men and women &mdash; 7.3 and 5.7 percent, respectively. In 2016, 75 percent of workers age 25&ndash;34 said their total savings and investments were under $25,000.</p> <h2>5. Accepting a first-job salary offer without negotiation</h2> <p>Faced with a countdown to start paying back student loans, many millennials are so eager to start generating income they skip salary negotiations. According to a survey from NerdWallet and Looksharp, of 8,000 recent grads that entered the job market between 2012 and 2015, only 38 percent negotiated their salary offer from a new employer. The same survey revealed that 74.4 percent of employers had room for a 5 to 10 percent salary bump, 8.6 percent of them had room for a 11 to 20 percent salary bump, and 1.3 percent of them were willing or able to go above 20 percent.</p> <p>Do millennials skip negotiations over fear of having their job offer retracted? Not really: Close to nine out of 10 employers in the survey had never done such a thing.</p> <p>Failing to negotiate a starting salary is one of the biggest ways in which millennials are shortchanging their retirement. Let's crunch some numbers to see why. In 2016, The Collegiate Employment Research Institute found that the average starting salary for holders of a bachelor's degree was $41,880. Negotiating a 5 to 10 percent raise on your first-job salary offer would have yielded a starting salary ranging from $43,974 to $46,068. That would have been an extra $2,094 to $4,188 per year, enough to cover six to 13 $304 monthly payments on a $30,000 federal direct loan with a 4 percent interest rate.</p> <p>Saving for retirement may seem like a big hairy monster, but it doesn't need to be that way. By understanding what's keeping you from starting or saving enough for your retirement, you'll have a better chance of meeting your retirement saving goals. (See also: <a href="http://www.wisebread.com/how-to-face-4-ugly-truths-about-retirement-planning?ref=seealso" target="_blank">How to Face 4 Ugly Truths About Retirement Planning</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-biggest-ways-millennials-risk-their-retirements&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Biggest%2520Ways%2520Millennials%2520Risk%2520Their%2520Retirements_0.jpg&amp;description=5%20Biggest%20Ways%20Millennials%20Risk%20Their%20Retirements"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Biggest%20Ways%20Millennials%20Risk%20Their%20Retirements_0.jpg" alt="5 Biggest Ways Millennials Risk Their Retirements" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/5-biggest-ways-millennials-risk-their-retirements">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-early-retirement-might-be-financially-risky">4 Reasons Early Retirement Might Be Financially Risky</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-retirement-planning-changes-when-youre-single">7 Ways Retirement Planning Changes When You&#039;re Single</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-reasons-every-millennial-needs-a-roth-ira">6 Reasons Every Millennial Needs a Roth IRA</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/left-a-job-do-a-rollover">Left a job? Do a rollover.</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-step-by-step-guide-to-rolling-over-your-401k">The Step-by-Step Guide to Rolling Over Your 401(k)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) college funds IRA millennials not saving enough paycheck to paycheck salary negotiation savings goals student loans young adults Tue, 20 Jun 2017 08:00:11 +0000 Damian Davila 1961116 at http://www.wisebread.com How to Live a Retired Life Before Retirement http://www.wisebread.com/how-to-live-a-retired-life-before-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-live-a-retired-life-before-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/falling_in_love_is_so_much_fun.jpg" alt="Falling in love is so much fun" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Many of us dream about being able give up the day job and settle into a life of freedom, flexibility, and financial security in retirement. But unfortunately for many Americans, this dream is getting further and further out of reach. The reality is that the average age at which U.S. citizens are able to retire is on the increase.</p> <p>Being financially prepared is rightly a large concern, particularly because people tend to make big plans for when they do finally retire. It also means that some people put off following their dreams with hopes that they will be better able to afford them later in life.</p> <p>But if you're sensible with your savings and clever with your planning, it's possible to find a balance between securing a comfortable retirement and still living life to its fullest.</p> <h2>Take more time off</h2> <p>Taking vacation is something that shoots fear into the hearts of millions of people. Reasons for this vary from being worried about the amount of work that we'll face when returning to the job, to fears of losing our job altogether as a result of taking too much time off. It's a sad fact that the majority of Americans don't take their full vacation allowance each year, with 55 percent reporting leaving days unused, according to Project: Time Off.</p> <p>If you're among the large number of Americans who don't use their vacation days, then the first step to getting more holidays is simply to take them. Booking your vacations far in advance will allow your employer to plan effectively for the time that you're not there. It also gives you time to help ensure that whoever is covering you knows what they are doing and is properly prepared.</p> <p>If you're already using your allotted time off, consider asking for more. Requesting extra vacation is understandably daunting for many people, but as the old saying goes, if you don't ask, you don't get. It helps if you can provide justification for your extra holiday time, like a dream trip to Europe, and it's even better if you can demonstrate it will have a positive effect on your productivity. In fact, a study by the Harvard Business Review directly linked having more vacation days to an ability to get work done quicker.</p> <p>Another option that many don't even consider is to take unpaid time off. Though this may seem counterproductive, it's basically like buying extra vacation days. If you value your time off then it can work out to be very cost effective.</p> <p>Ask your employer about &quot;banking time,&quot; which basically allows you to work overtime shifts for regular pay (instead of the regular time-and-a-half), and then use those banked days to extend your holidays or take a few extra days off throughout the year when you need a break from the grind.</p> <h2>Focus on discounted, cheap, and free experiences</h2> <p>A great way to enjoy the quality of life that you crave without breaking the bank is to take advantage of discounted and cheap experiences. You might have a list of things that you want to do, see, or accomplish in your lifetime that you're putting off because you think it's too expensive. Instead, try looking out for when it's possible to do these things on the cheap.</p> <p>Always wanted to visit a certain country? Research when high season is and make a plan that allows you to go in low season instead. This will save you money on flights, accommodations, and many activities to do while you're there.</p> <p>Create a bucket list with a twist. Rather than containing activities that cost money, focus on experiences which cost little but provide you with a high sense of personal achievement. Physical activities are good for this, like hiking a certain mountain route or running a marathon, as well as things that will tax your brain like writing a book or learning an instrument.</p> <h2>Move somewhere cheaper</h2> <p>Lots of people envision moving away to a rural area or a tropical place when they retire, but why put it off until then? Moving to a cheaper city, state, or even country could allow you to live out your dreams, save more, and work less all at the same time. If you're not tied to your home by your job, then it doesn't necessarily even have to be a permanent move. You could spend half your time in the cheaper place having fun while still saving money.</p> <p>Numbeo ranks the U.S. as one of the most expensive places to live in the world. This means there's a lot of choice if you are looking for somewhere cheaper to settle down abroad. With 8.7 million Americans living overseas, you won't be alone. There are many <a href="http://www.wisebread.com/x-exciting-world-cities-you-can-afford-to-retire-in" target="_blank">attractive, cheap locations</a> that could be the perfect place to call your new home.</p> <p>If you don't know where to start, write a list of what's important to you in your everyday life and research which places can accommodate those aspects of your life. Lots of countries in South America, Asia, and Europe are <a href="http://www.wisebread.com/retire-for-half-the-cost-in-these-5-countries" target="_blank">significantly less expensive</a> than the U.S. but still offer a great standard of living.</p> <p>Moving to a new country isn't a decision to be taken lightly, and definitely not one that should be made based purely on cost. You need to be sure that the move is right for you and is one that will have a positive impact on your life. But there's no need to hold off until you're 65 to move to an amazing location.</p> <h2>Work from home</h2> <p>If your career is getting in the way of living the life you want right now, then perhaps it's time to start thinking about changing to something that will allow you to do this. The office environment is rapidly transforming, and working from home is no longer a rare and prized entitlement for the lucky few. If you don't have to spend time commuting or dressing for an office environment, you can free up time to do more of what you want to do.</p> <p>Lots of employers are becoming more flexible when it comes to this idea and there is a wide range of opportunities that are well suited for remote work. Advancements in technology have made remote working progressively easier, with a Gallup survey showing that 43 percent of employed Americans spend some portion of time working from home.</p> <p>Some industries that have embraced remote working include finance, insurance, and information technology, so it's a bonus if you already have a background in one of these fields. But even if you don't, the trend of working from home is growing, and may hit your industry soon.</p> <p>Don't confuse working from home with doing less. It's not a way to ease into the retired life in that sense. What it does bring is flexibility around when you work, as well as potentially huge savings in the time wasted getting to and from the office. It's also common for it to lead to increased productivity thanks to having fewer distractions at home than in a typical office environment.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/nick-wharton">Nick Wharton</a> of <a href="http://www.wisebread.com/how-to-live-a-retired-life-before-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-you-shouldnt-vacation-shame-your-coworkers">7 Reasons You Shouldn&#039;t &quot;Vacation Shame&quot; Your Coworkers</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-10-worst-states-for-retirees">The 10 Worst States for Retirees</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-questions-couples-must-ask-before-retirement">5 Questions Couples Must Ask Before Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/i-am-doing-well-financially-now-what">I Am Doing Well Financially. Now What?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-ways-to-get-free-or-almost-free-airline-tickets">10 Ways to Get Free (or Almost Free) Airline Tickets</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Lifestyle Retirement discounts experiences moving relocating remote retired life telecommuting time off travel vacation time work from home working Fri, 02 Jun 2017 08:30:07 +0000 Nick Wharton 1958436 at http://www.wisebread.com 8 Questions Financial Advisers Hear Most Often http://www.wisebread.com/8-questions-financial-advisers-hear-most-often <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-questions-financial-advisers-hear-most-often" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/business_communication_connection_people_concept.jpg" alt="Business Communication Connection People Concept" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>No one goes to a financial adviser if they already know everything there is to know about retirement planning and investing. So most people will, logically, come armed with a variety of questions when they meet with an adviser, especially if it is for the first time.</p> <p>Financial advisers say they hear many of the same questions repeatedly from clients looking to build their retirement savings or live large in retirement. Most of the questions center around the ability of clients to retire, or the information needed to build wealth in the hopes of retiring comfortably.</p> <p>This list of common questions for financial advisers was compiled with the help of Greg Hammer of Hammer Financial Group in Northwest Indiana, and Willie Schuette, financial coach with JL Smith Group in Ohio.</p> <h2>1. &quot;Can I retire?&quot;</h2> <p>This is really the ultimate question posed to most financial advisers. Clients want to know if they can afford to stop working. And if not now, when?</p> <p>A financial adviser will help you determine how much money you have and how much more you'll need, based on your life expectancy and retirement plans. Both Hammer and Schuette said they often have to break the news to clients that they need to keep working, but that's better than telling them after they&rsquo;ve retired that their money is likely to run out.</p> <h2>2. &quot;Can you help me avoid paying taxes?&quot;</h2> <p>The Internal Revenue Service can take a chunk out of your earnings, and often leave you with less cash than you originally planned. Financial advisers say they get a lot of questions about how to avoid a big tax hit, especially from retirees looking to preserve every dollar they have.</p> <p>Advisers field many questions about Roth IRAs, which allow investors to invest money and withdraw it tax-free upon retirement. Many investors turn to financial advisers for advice on the tax implications of converting traditional IRAs into Roth IRAs. There are also a multitude of other tax questions relating to municipal bonds, inheritance taxes, and tax deductions.</p> <h2>3. &quot;How can I preserve my money?&quot;</h2> <p>Financial advisers say clients are generally aware that they need to invest more conservatively as they get older to protect against market downturns, but aren't quite sure how. What's the right investment mix based on their age, their money saved, and retirement date? What's the best way to go about shifting away from stocks to cash and bonds?</p> <p>Hammer and Schuette say they get questions like this all the time, and are happy to walk clients through the best approach to keeping their retirement nest eggs secure.</p> <h2>4. &quot;When should I collect Social Security?&quot;</h2> <p>Retirees can begin collecting Social Security benefits as early as age 62, but will get larger monthly payments the longer they wait. Financial advisers will usually work with retirees to develop income sources that will allow them to delay collecting Social Security. But both Hammer and Schuette said their recommendations depend on the individual client's circumstances and financial needs. (See also: <a href="http://www.wisebread.com/5-sobering-facts-about-social-security-you-shouldnt-panic-over?ref=seealso" target="_blank">5 Sobering Facts About Social Security You Shouldn't Panic Over</a>)</p> <h2>5. &quot;What's the deal with health care?&quot;</h2> <p>With Congress working to repeal and replace the Affordable Care Act, many clients are wondering how their health care may be affected. Financial advisers have received this question from retirees who are not old enough to collect Medicare, as well as younger clients who don't get insurance through an employer. Advisers say they will walk clients through the cost of health care and the proper plans, as well as assist with setting up things like <a href="http://www.wisebread.com/how-an-hsa-saves-you-money" target="_blank">health savings accounts</a> and emergency funds.</p> <h2>6. &quot;I know I need life insurance, but what kind? And how much?&quot;</h2> <p>Financial advisers say clients usually know they need some sort of life insurance to protect their families, but are often bewildered by the offerings. There's whole and term life insurance, and policies with varying sizes, lengths, and premiums. An adviser can help find the right kind of insurance for each person and their unique situation. (See also: <a href="http://www.wisebread.com/why-your-group-life-insurance-is-not-enough?ref=seealso" target="_blank">Why Your Group Life Insurance Is Not Enough</a>)</p> <h2>7. &quot;My spouse just died. What do I do?&quot;</h2> <p>Many people feel confident in their financial planning, until something changes in their life that throws things out of whack. A loss of a spouse or other major change cannot only be challenging emotionally, but it can drastically change a person's financial needs. There may be a sudden loss of income when a spouse dies, and there are endless concerns about taxes, life insurance, and even real estate.</p> <h2>8. &quot;How do I take care of my heirs?&quot;</h2> <p>For most people, the main financial goal is amassing enough wealth to last their full retirement, and there's not much consideration for the next generation. After all, saving for your own several decades of life after retirement is hard enough.</p> <p>But Hammer and Schuette say there is a segment of clients seeking the best approach to passing wealth onto to their children and other relatives. Financial advisers say that in these cases, the conversation centers not only on amassing wealth, but taking into account things like inheritance taxes, and performing full, in-depth estate planning.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/8-questions-financial-advisers-hear-most-often">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/if-youre-lucky-enough-to-receive-a-pension-here-are-6-things-you-need-to-do">If You&#039;re Lucky Enough to Receive a Pension, Here Are 6 Things You Need to Do</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-things-your-financial-planner-isnt-telling-you-about-retirement">5 Things Your Financial Planner Isn&#039;t Telling You About Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-costly-mistakes-diy-investors-make">9 Costly Mistakes DIY Investors Make</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-for-retirement-when-you-are-unemployed">How to Save for Retirement When You Are Unemployed</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-occasions-when-you-should-definitely-hire-a-financial-advisor">7 Occasions When You Should Definitely Hire a Financial Advisor</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement estate planning financial advisers financial planning health care life insurance questions saving money social security taxes Fri, 02 Jun 2017 08:00:10 +0000 Tim Lemke 1957430 at http://www.wisebread.com 6 Reasons Every Millennial Needs a Roth IRA http://www.wisebread.com/6-reasons-every-millennial-needs-a-roth-ira <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-reasons-every-millennial-needs-a-roth-ira" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/her_company_and_savings_are_growing.jpg" alt="Her company and savings are growing" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You're young. You're earning a bit of money. You know you need to start saving for retirement. So what's the easiest way to get started?</p> <p>One of the best vehicles for retirement savings for millennials is a Roth IRA, which is a type of account that offers a great selection of investment options and tax advantages. You contribute to a Roth with money that's <em>already </em>been subject to income tax, but when you withdraw it in retirement, everything you've earned in the fund is tax-free. In comparison, you don't pay tax on 401(k) or traditional IRA contributions until you take out the money in your later years. Both have benefits, but there are reasons you might particularly want to consider a Roth while you're young.</p> <p>It's easy to open a Roth IRA through most popular online brokerage firms, and you don't need a lot of money to get started. (See also: <a href="http://www.wisebread.com/5-retirement-accounts-you-dont-need-a-ton-of-money-to-open?ref=seealso" target="_blank">5 Retirement Accounts You Don't Need a Ton of Money to Open</a>)</p> <p>Here are some reasons why a Roth IRA is an essential part of any millennial's investment plan.</p> <h2>1. You may not have a 401(k)</h2> <p>If you work for a company, you may be offered a 401(k) plan, which allows you to invest in a variety of mutual funds and deduct any contributions from your taxable income. In many cases, your company will match a portion of any contributions you make.</p> <p>But these days, an increasing number of millennials are performing a variety of contract or &quot;gig&quot; jobs, rather than working full-time with a single company. A Roth IRA is not tied to an employer, so anyone can invest as long as they have earned income. If you are earning income but don't have access to a 401(k) plan, a Roth IRA may be your next best option.</p> <h2>2. You have a 401(k), but it's lousy</h2> <p>If you have a 401(k), it's wise to take advantage of it, especially if your company offers a match. But be aware that your 401(k) plan may not offer a wide range of things to invest in, and there may be high fees. This is why many financial planners suggest contributing to a 401(k) up to the company match, and then placing any additional savings in a Roth IRA, which may offer lower costs and more investment choices.</p> <h2>3. There are some tax advantages over a 401(k)</h2> <p>The key feature of a Roth IRA is that any investment gains can be withdrawn tax-free anytime after age 59&frac12;. If you are a millennial, this is a big deal &mdash; because unless you're making big bucks already, there's a good chance you will be in a higher tax bracket when you are older. This tax advantage is in contrast to a traditional IRA or a 401(k) plan, in which the tax advantages come upfront.</p> <h2>4. You can use it to pay for education</h2> <p>Typically, if you withdraw from an IRA before age 59 &frac12;, you must pay a 10 percent penalty on the withdrawal, plus any income tax. But the one big exception involves qualified higher education expenses.</p> <p>If you use a Roth IRA to pay for education, and limit your withdrawal to your contributions but not your earnings, there are no penalties or taxes. If you do decide to include Roth earnings in your withdrawal, those funds will be subject to income tax. This is a helpful feature for millennials, who may consider going back to school. Parents can also use a Roth IRA to pay for educational expenses for their children. Keep in mind that money from a Roth IRA could impact financial aid calculations. And of course, any money taken out for college means less money in the account for retirement.</p> <h2>5. You can get cash quickly in an emergency</h2> <p>It's not the best idea to withdraw money from a retirement account, because you'll lose out on the potential investment gains from the cash you take out. But, you are permitted to take out <em>your contributions</em> from a Roth IRA without penalty at any time. This makes them potentially useful as emergency savings accounts.</p> <p>Just remember it's only the money you put into the account, not the gains, that can be taken out penalty-free. When you're young and not earning much, it helps to have funds that you can tap whenever a crisis arises. Just don't get in the habit of using a Roth IRA this way too often; the account is meant for long-term investment gains and will benefit you the most if you leave your money alone to grow. (See also: <a href="http://www.wisebread.com/using-your-roth-ira-as-an-emergency-fund-ever-a-good-idea?ref=seealso" target="_blank">Using Your Roth IRA as an Emergency Fund &mdash; Ever a Good Idea?</a>)</p> <h2>6. You can keep contributing for as long as you want</h2> <p>If you are a millennial, it's impossible to know when you will retire. You may choose to retire at age 60, or keep working until you're 100. Thus, it makes sense to have an investment account that will let you contribute for as long as you want.</p> <p>One of the nice things about a Roth IRA is that you will not be forced to make withdrawals at any time. This is in contrast to traditional IRAs, which require you to begin pulling out money by age 70&frac12;. (This assumes, of course, that rules don't change between now and then.)</p> <p><em>(Editor's note: An eagle-eyed reader pointed out that any Roth earnings used to pay for education would be subject to income taxes. We've corrected the text to reflect that.)</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/6-reasons-every-millennial-needs-a-roth-ira">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/using-your-roth-ira-as-an-emergency-fund-ever-a-good-idea">Using Your Roth IRA as an Emergency Fund — Ever a Good Idea?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-for-retirement-when-you-are-unemployed">How to Save for Retirement When You Are Unemployed</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-your-retirement-is-on-track">8 Signs Your Retirement Is on Track</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-one-thing-will-get-you-to-1-million-tax-free">This One Thing Will Get You to $1 Million (Tax-Free!)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-traps-to-avoid-with-your-401k">7 Traps to Avoid With Your 401(k)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) contributions emergency funds investing millennials Roth IRA self employed tax advantaged withdrawals Thu, 01 Jun 2017 09:00:11 +0000 Tim Lemke 1957901 at http://www.wisebread.com How to Make Sure You Don't Run Out of Money in Retirement http://www.wisebread.com/how-to-make-sure-you-dont-run-out-of-money-in-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-make-sure-you-dont-run-out-of-money-in-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/nest_made_of_american_currency_horizontal.jpg" alt="Nest Made of American Currency Horizontal" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>An annuity is a stream of fixed payments that's guaranteed, often for as long as you live. Having an annuity can make retirement more secure, but it's hard to recommend them as investment vehicles, because almost every annuity on the market is a terrible investment. They tend to be sold by salesmen, so they're often loaded with fees. And, because being upfront about the fees would make them hard to sell, these fees are obscure (often outright hidden) and are typically different for every product, making it especially hard to comparison shop. (See also: <a href="http://www.wisebread.com/dont-know-what-annuities-are-you-might-be-missing-out?ref=seealso" target="_blank">Should You Get an Annuity?</a>)</p> <p>But my experience these past few years &mdash; helping older relatives with their finances, and starting to take the little pension I earned as a software engineer &mdash; has given me a new perspective on annuities. Having an annuity is more than just nice: It's wonderful! It's just <em>buying</em> them that's usually terrible.</p> <p>Fortunately, there are a few that are worth buying. You don't hear about them often, because they don't siphon off a big chunk of your investment to pay a salesman, so salesmen don't push them.</p> <h2>Why annuities are great</h2> <p>It used to be that anyone with a good job retired with an annuity in the form of a pension. This is how I've gotten my recent experience with just how great it is to have an annuity: All my older relatives are now receiving pensions.</p> <h3>You never outlive your income</h3> <p>The main thing that's great about an annuity is that having one means you're never going to be broke. Even if you overspend and run down your savings, even if the stock market crashes or you make terrible investment decisions and your investment portfolio takes huge losses, you'll still get that monthly check for as long as you live.</p> <p>You don't <em>need</em> to have an annuity to arrange that &mdash; you can live off capital in a way that makes it last the rest of your life &mdash; but an annuity makes it much easier.</p> <h3>They can raise your income</h3> <p>The other thing that's great about an annuity is that it can, at least potentially, be more money to live on. See, the only safe way to live off capital is to just spend the income from your investments. But that's not much money (especially these days).</p> <p>If you knew how long you were going to live, you could spend down your capital so that you'd die with just enough money to pay off your last month's bills. But since you don't know how long you're going to live, you have to make a conservative estimate, holding back enough capital so that you won't go broke even if you live to 100. (Of course even that might not be enough. What if you live to 114?)</p> <p>The company that provides your annuity has a much easier job. They don't need to know whether you'll live to 97 or kick the bucket at 67. They count on the fact that the average person will live an average life span. They can arrange the terms of the annuities so that the payouts don't exhaust the total pool until the last person dies. The fact that some people die the month after their pension starts means that there's enough money to pay for the people who go on to live for decades.</p> <p>Offset against that is the fact that the company that's providing your annuity needs to make a profit, and it also needs to hold back a reserve against the possibility that it'll get unlucky and a bunch of their customers will live longer than average &mdash; but both of those factors are relatively small.</p> <h2>Annuitize, but how much?</h2> <p>If you accept the idea that you probably ought to have an annuity of some size, the next question is: How big should the annuity be?</p> <p>At one extreme, you could just annuitize all your money &mdash; take all your savings and investments (except your checking account and your emergency fund) and buy an annuity. Then you'd know what your income would be for the rest of your life and you could budget for it.</p> <p>I recommend against that. There are many reasons why it's <a href="http://www.wisebread.com/on-the-importance-of-having-capital" target="_blank">worth having some capital</a>. Your capital earns an investment return and it also provides a measure of safety as a backup to your emergency fund. It makes it possible to fund expenses beyond your bare-bones budget. Perhaps most important, having some capital saves you money in all kinds of different ways &mdash; because you have funds on hand, you can take advantage of deals, you can avoid high-interest borrowing, and you have money to put down a large security deposit in cases where that will save you money.</p> <p>At the other extreme, you could annuitize none of your money and just live off your capital. I've just explained the downsides to that.</p> <p>You want to be somewhere in the middle. With a modest annuity, you're protected from running your income down to zero, and yet you can preserve some amount of capital.</p> <p>My advice is this: You should annuitize <em>enough to cover your rock-bottom expenses</em>, the lowest amount you could live on indefinitely. That way, you're putting yourself in a position where you can be sure you can get by no matter what happens to your investments, while preserving enough of an investment portfolio to fund your other life goals &mdash; travel, making a major purchase, leaving an estate to your heirs, etc.</p> <p>Before you start shopping for annuities, be sure to take into account any annuities you already have. But unless you're old, and even then only if you had a pretty good job at a pretty big company for many years, you probably aren't going to have a great pension. (If you're only kind of old, and worked at a pretty big company for a few years before they all phased out their traditional pensions in the early 2000s, maybe there's a small pension waiting for you. If so, that's great. Even if it's not enough to live on, it's a very positive contribution to your retirement income.)</p> <p>However, most people reading this probably won't get a good pension.</p> <p>Fortunately, there is an annuity you very likely do have.</p> <h2>The annuity you already have</h2> <p>You almost certainly already have an annuity in the form of a national pension scheme, such as Social Security. The amount of Social Security you will get depends on your own employment history. For most people, it will provide a large fraction of the &quot;rock-bottom expenses&quot; I recommend you cover with an annuity, but you can generally expect there to be some gap.</p> <p>If you have an employer-sponsored pension, even a small one, it may well cover the gap. If you don't, I recommend that you cover it with an annuity that you buy.</p> <h2>How to buy an annuity</h2> <p>As I said at the beginning, most of the annuities you can buy are terrible investments, but there are good ones. It is possible to buy an individual annuity and get an OK deal. It's just hard because the companies that sell them make it virtually impossible to compare one annuity to another.</p> <p>This is especially true for the sorts of annuities that are most like a pension: The ones set up so you make a payment every month starting in your 30s or 40s, then get a check every month starting when you're 65.</p> <p>Those are called deferred annuities (because you defer getting your money until age 65), and they're always terrible. They always have what are called &quot;back-end&quot; fees &mdash; money that the salesman gets to keep when you figure out that you've made a terrible deal and want to get (some of) your money back. The rules on back-end fees are always different.</p> <p>To make it even harder, these sorts of annuities are usually bundled with some sort of life insurance (supposedly so that if you die before you retire your estate won't &quot;lose&quot; all the money paid into the annuity) &mdash; and of course the details of those insurance policies are always different as well.</p> <h3>Comparison shopping</h3> <p>It is possible to buy an annuity in a way that does allow you to compare them. Don't buy one with monthly payments. Instead, save and invest the money in the stock market yourself during your working years. Then, when you're ready to retire, buy what's called a &quot;single premium immediate annuity&quot; &mdash; you put up a big chunk of money today, and then start receiving monthly payments immediately that last for the rest of your life. (The monthly payments, of course, should equal the gap you identified between your Social Security and your rock-bottom budget.)</p> <p>That is something that's easy to compare: How much do you have to pay today for a stream of income that starts next month and lasts the rest of your life? You can get a few quotes and pick the best deal.</p> <p>These sorts of annuities usually don't have the life insurance policy that supposedly protects against your dying before you start taking payments, because the payments start immediately. That's good. Bundling in life insurance just makes it harder to compare prices. If you need life insurance, buy a life insurance policy separately.</p> <p>Be very careful of letting them include any sort of survivor benefit, because that can also make the annuities harder to compare (although as long as the rules are exactly the same, it is at least possible). One alternative, if you need a survivor benefit, is to buy a life insurance policy that will pay off enough for your spouse to buy his or her own annuity.</p> <p>As an aside, let me mention that the annuity salesmen among you are going to jump in and point out that you're giving up an important tax advantage if you only consider an immediate annuity. This is technically true, but in fact is pretty unimportant. Let me just say this: If you are maxing out your 401(k), <em>and</em> your IRA, <em>and</em> your Roth IRA, there is an opportunity to tax shelter a bit more money through an annuity contract. In practice, I'm willing to bet that the tax advantage will never equal the fees you're going to end up paying.</p> <p>If you do save your money in a 401(k) or IRA, there are tax rules for using that money to buy your annuity. Follow the rules and you won't owe any taxes when the money is used to buy the annuity. You will, however, pay taxes on the annuity payments when you receive them (just like you would if you'd taken distributions from the tax-deferred plan directly).</p> <h3>Where to buy</h3> <p>Pretty much any life insurance company will sell you an annuity, but I only know of two places to get a good one: Vanguard and TIAA-CREF. (There used to be a third, but Berkshire Hathaway got out of the business a few years ago.)</p> <p>The main problem with buying directly from an insurance company is just that their annuity sales operations are organized around their annuity salesmen, who will immediately start trying to sell you something that's more profitable (to them) than a single premium immediate annuity &mdash; that's the step you avoid by going through Vanguard or TIAA-CREF. (They also have enough buying power to get especially good rates, because they bring in large numbers of customers.)</p> <p>If you're sure you can bear up under the sales pressure, there's no reason not to get quotes directly from the insurance companies. (Just because I don't know of any other good places to buy one doesn't mean there aren't any.) Insurance companies that sell annuities will be very easy to find &mdash; just do an internet search for information about annuities and you'll get a dozen ads for them and for online tools to compare their offerings.</p> <p>You're handing over a large fraction of your wealth and counting on the insurance company to be around for the rest of your life, so you want to have considerable confidence in the financial soundness of the company you pick. I would not consider any company rated less than A by the insurance grading firm A.M. Best, and I'd be happier with one rated A+.</p> <h3>Buy when rates are high</h3> <p>To buy an annuity, you have to put up a pretty sizable chunk of cash. (Vanguard quotes the cost today to a 65-year-old male buying a single premium immediate annuity of $1,000 a month for the rest of his life as being $180,052.)</p> <p>Unless you're rich, the cost of an annuity that covers your rock-bottom expenses is going to be a large fraction of your entire retirement savings &mdash; which is OK, because it's going to be a large chunk of your entire retirement income.</p> <p>The insurance company that sells you your annuity is going to invest that sizable chunk of cash in a portfolio of stocks and (mostly) bonds, and then use the dividends from those stocks and (mostly) the interest payments from those bonds to pay your annuity. Because of this, an annuity is much cheaper when interest rates are high.</p> <p>If you bought an annuity right before the financial crisis, you made out very well. If you wanted to buy one in the past eight or nine years, you probably found that they were incredibly expensive. But in the current era of rising interest rates, annuities are becoming more affordable again.</p> <p>Still, if you're approaching retirement age, understand that there is no rush. Figure out your rock-bottom expenses &mdash; and then live with that budget as an experiment. Maybe you'll find that you'll need more than that in retirement. Maybe you'll actually need less. Do some comparison shopping. Take your time. Then, when you've got a pretty good handle on the expense of your retirement lifestyle, at a time when interest rates are up a bit and you're ready to quit working, go ahead and buy that annuity.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/how-to-make-sure-you-dont-run-out-of-money-in-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-for-retirement-when-you-are-unemployed">How to Save for Retirement When You Are Unemployed</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-you-need-to-know-about-the-easiest-way-to-save-for-retirement">What You Need to Know About the Easiest Way to Save for Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-stocks-and-bonds-that-will-profit-from-the-fed-rate-hike">10 Stocks and Bonds That Will Profit From the Fed Rate Hike</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-safe-investments-that-arent-bonds">9 Safe Investments That Aren&#039;t Bonds</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-3-rules-every-mediocre-investor-must-know">The 3 Rules Every Mediocre Investor Must Know</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement annuities benefits bonds fees interest rates investment vehicles life insurance pensions stocks Fri, 26 May 2017 08:30:09 +0000 Philip Brewer 1953940 at http://www.wisebread.com We Do the Math: Save for Retirement or Pay Off Credit Card Debt? http://www.wisebread.com/we-do-the-math-save-for-retirement-or-pay-off-credit-card-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/we-do-the-math-save-for-retirement-or-pay-off-credit-card-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-514332608.jpg" alt="Couple wondering if they should save for retirement or pay off debt" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Should you save for retirement or pay off credit card debt? If you're carrying a card balance, you may be wrestling with whether to put all your resources into attacking the debt, or start building your retirement nest egg while you slowly pay off debt.</p> <p>Which one will give you a better net worth? There's no simple answer. For some people the situation may warrant clearing credit card debt first; for others, it's better to start investing right away. To figure out which scenario is better in a given situation, we'll need to do some math. Don't worry, we'll show you how to do it in a few easy steps.</p> <h2>Step 1: Gather important numbers about your debt and your retirement plan</h2> <p>First, look through your credit card statements and accompanying information to pull up the following numbers:</p> <ul> <li>Credit card debt. You'll find this on the front of your credit card statement.<br /> &nbsp;</li> <li>Credit card interest rate, or APR (Annual Percentage Rate). You'll find this further down on your statement, in a section labeled &quot;Interest Charged&quot; or something similar.<br /> &nbsp;</li> <li>Minimum payment. You'll find this in your card's terms and conditions, under a discussion about how minimum payments are calculated. It will probably be a percentage, but there may also be a flat sum.</li> </ul> <p>Next, consider any retirement plan you are enrolled in or have available. What is the average annual return? You can identify past returns by reviewing your retirement account statements. For example, your 401(k) plan account may list your annual return. Note that past returns don't guarantee or predict future returns, but we'll use the average annual return as a proxy for future returns in this case, knowing that if our portfolio takes a long-term downward turn, our calculations will change.</p> <p>Finally, how much extra do you have in your monthly budget that you could put toward credit card payments, retirement investments, or both?</p> <p>Follow along as we consider a hypothetical debt situation and retirement opportunity. Let's say there's $500 in our monthly budget, which equals $6,000 annually ($500 x 12 months = $6,000) to put toward debt or retirement.</p> <p>Currently, the balance on our credit card is $5,000. Our APR is 22%. Our minimum monthly payment is 3% of our outstanding balance or $25, whichever is greater.</p> <p>Our employer offers a 401(k) plan. For the sake of keeping this illustration simple, we'll say our employer doesn't match employee contributions and we choose to make taxable contributions with a Roth designated account within the 401(k).</p> <p>In reality, you might choose instead to make tax-deductible contributions to a&nbsp;<a href="http://www.wisebread.com/how-to-set-up-an-ira-to-build-wealth?ref=internal" target="_blank">traditional retirement account</a>. With a Roth 401(k) there are no immediate tax benefits, which makes our calculations simpler and therefore better suited for this purpose.</p> <p>We'll say the default investment in our 401(k) is a&nbsp;<a href="http://www.wisebread.com/the-4-best-investments-for-lazy-investors?ref=internal" target="_blank">target-date mutual fund</a> with an average annual return of 6.3% since its inception. We know that future performance is unpredictable. But to run the numbers for the retirement vs. debt decision, we'll apply an annual return of 6% to our retirement account.</p> <p>We'll look at the retirement account and credit card balance after five years to compare the two choices: 1) making minimum payments on our card balance so we can start investing right away, or 2) putting all our extra money toward our credit card debt before we consider retirement investing.</p> <p>In both scenarios, we'll assume that we won't make additional charges on our credit card. In addition, we'll contribute to our retirement account when we have money available to invest.</p> <h2>Step 2: Calculate net worth if you prioritize retirement savings over paying off credit card debt quickly</h2> <p>In this scenario, we'll see what happens if we only make minimum payments on our credit card so that we can get started investing for retirement right away. Your credit card statement should state very clearly how long it will take to pay off your balance if you make minimum payments.</p> <p>You can also find an&nbsp;<a href="http://www.calcxml.com/calculators/how-long-will-it-take-to-pay-off-my-credit-card" target="_blank">online calculator</a> to help you with these calculations. Here's the information we'll enter for our example (you can put in your own numbers from your real-life situation):</p> <ul> <li>Current credit card balance: $5,000<br /> &nbsp;</li> <li>Annual percentage rate: 22%<br /> &nbsp;</li> <li>Proposed additional monthly payment: $0<br /> &nbsp;</li> <li>Minimum payment percentage: 3%<br /> &nbsp;</li> <li>Minimum payment amount: $25<br /> &nbsp;</li> <li>Skip December payment when offered? No</li> </ul> <p>Results indicate that we'll carry this debt for more than 17 years (205 months) and pay more than $7,000 in interest during this time. Click the button that says &quot;Detailed Results&quot; to see a breakdown of the payments. Make sure that under the Assumptions tab, you've asked for a monthly table display.</p> <p>In the first month, our payment is $150 and this amount slowly diminishes until we're paying the minimum amount of $25 for the last several years.</p> <p>Since we're making minimum payments on the credit card, we'll be able to put $350 of our total available $500 toward retirement in the first month ($500 - $150 = $350). The second month and subsequent months, we'll be able to increase the amount we invest, as our credit card balance dwindles. Every month we also earn some interest (6%/12 months), so our retirement account balance grows in that way, too.</p> <p>After five years (60 months), our credit card balance will be trimmed to less than $2,500.</p> <p>At the end of five years, our retirement account grows to just over $27,300. Considering our debt and retirement balances, our net worth is $24,800 ($27,300 in assets and $2,500 in liabilities). Note that investment returns are not guaranteed; the 6% rate is for illustration purposes only.</p> <p>You can&nbsp;<a href="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/Rains_We Do The Math Spreadsheet - Sheet1.pdf" target="_blank">download the spreadsheet</a> with these calculations.</p> <h2>Step 3: Calculate net worth if you pay off credit card debt completely before investing for retirement</h2> <p>In this scenario, we'll apply all of our extra income to credit card debt first. When the debt is paid in full, we'll begin to contribute to the retirement account.</p> <p>We enter this information to learn how quickly we'll pay off the debt with $500 per month (again, enter your own information to get personalized results):</p> <ul> <li>Current credit card balance: $5,000<br /> &nbsp;</li> <li>Annual percentage rate: 22%<br /> &nbsp;</li> <li>Minimum payment percentage: 0%<br /> &nbsp;</li> <li>Minimum payment amount: $0<br /> &nbsp;</li> <li>Proposed additional monthly payment: $500<br /> &nbsp;</li> <li>Skip December payment when offered? No</li> </ul> <p>To keep the credit card payment at $500 per month (and pay off credit card debt first), we'll enter the minimum payment percentage as 0% and the minimum payment amount as $0 &mdash; even though the actual terms of the credit card agreement will most likely specify a percentage of 2% or more and a minimum payment of $10 or more. When we view the results, we find that the payoff happens in 12 months. We'll make 11 payments of $500 and one payment of $74.</p> <p>After we finish paying off the credit card debt, we can begin investing. We'll invest $426 in the twelfth month ($500&ndash;$74) and $500 in subsequent months. Consider using a&nbsp;<a href="http://www.calculator.net/future-value-calculator.html" target="_blank">Future Value calculator</a>, to determine how much your retirement account will be worth at the end of five years.</p> <p>Here's the information we entered into the Future Value calculator:</p> <ul> <li>Number of periods: 48. (We'll invest for four years, or 48 months.)<br /> &nbsp;</li> <li>Start amount: $426. (We'll start with the first month's contribution as the balance in our account.)<br /> &nbsp;</li> <li>Interest rate: 0.5% (6% annual rate divided by 12 months).<br /> &nbsp;</li> <li>Periodic deposit: $500.<br /> &nbsp;</li> <li>Deposit made at the beginning or end of the period: End.</li> </ul> <p>If we earn 6% annually on our investments, our retirement account grows to $27,590 in five years. In addition, our credit card debt is paid off. Our net worth is $27,590 &mdash; that's $2,790 <em>more </em>than if we had prioritized retirement savings first and stuck with only paying the minimum on our credit card debt each month.</p> <h2>What else to consider</h2> <p>These calculations are a starting place. Your situation may be similar to this scenario, but it might not be. For instance, if your APR is considerably lower and your retirement returns higher than in the scenarios above, you may very well find that you're better off investing in the market while reducing your credit card debt slowly. Changes in one or several of these factors could alter results:</p> <ul> <li>Larger or smaller credit card balances;<br /> &nbsp;</li> <li>Higher or lower credit card APRs;<br /> &nbsp;</li> <li>Better or worse investment performance;<br /> &nbsp;</li> <li>Availability of a company match on your 401(k);<br /> &nbsp;</li> <li>Administrative fees associated with your 401(k);<br /> &nbsp;</li> <li>Choosing to invest in a traditional 401(k).</li> </ul> <p>If you opt for a traditional 401(k), your contributions come out of your pretax income, thereby reducing your taxable income, which could result in a lower tax liability and a higher tax refund. A tax refund could be applied to your credit card balance, allowing you to more easily pay off debt while also saving for retirement.</p> <p>To calculate the immediate tax benefit of saving within a traditional 401(k) account, multiply the contribution amount by your marginal tax rate. In addition, you could be eligible for a&nbsp;<a href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit" target="_blank">saver's credit</a>, which further increases the benefit of retirement savings.</p> <h2>How to get started with either scenario</h2> <p>Whatever path you choose, you may need help taking first steps. Consider these ways to get started:</p> <h3>Debt payoff</h3> <ul> <li>Consider transferring or consolidating your balances on a&nbsp;<a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=internal" target="_blank">0% balance transfer card</a>.<br /> &nbsp;</li> <li>Consider a&nbsp;<a href="http://www.wisebread.com/how-to-do-a-one-month-spending-freeze?ref=internal" target="_blank">no-spend week or month</a> in which you don't spend on anything except essentials.<br /> &nbsp;</li> <li>Apply cash gifts from family to credit card balances.<br /> &nbsp;</li> <li>Work a part-time job to pay down balances.<br /> &nbsp;</li> <li>Find ways to spend less on everyday expenditures and apply savings to debt payoff.</li> </ul> <h3>Retirement saving</h3> <ul> <li>Consider enrolling in your employer's retirement plan, if offered. You may have the opportunity to contribute to a&nbsp;<a href="http://www.wisebread.com/403b-vs-401k-how-are-they-different?ref=internal" target="_blank">401(k) or 403(b) account</a>, for example.<br /> &nbsp;</li> <li>Set up an&nbsp;<a href="http://www.wisebread.com/choosing-a-retirement-account-whats-available-and-what-s-best-for-you?ref=internal" target="_blank">IRA</a> with a brokerage account or&nbsp;<a href="http://www.wisebread.com/should-you-trust-your-money-with-these-4-popular-financial-robo-advisers?ref=internal" target="_blank">robo-adviser</a>.<br /> &nbsp;</li> <li>Start an&nbsp;<a href="http://www.wisebread.com/the-sep-ira-is-how-the-self-employed-do-retirement-like-a-boss?ref=internal" target="_blank">SEP-IRA</a> if you have self-employment income.</li> </ul> <p>When considering your choices, keep in mind that credit card interest rates are relatively fixed, whereas investment returns tend to be much more variable. The main instances in which credit card rates fluctuate these days are when the Federal Reserve raises the federal funds rate, or when you make late payments and are charged a penalty interest rate.</p> <p>The point is, if your card's APR is 22%, you could be certain to save at least 22% of your balance by paying off credit card interest early. In contrast, the precise benefit of early investing is less certain.</p> <p>Should you save for retirement or pay off credit card debt? Doing the math can help you make a decision.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fwe-do-the-math-save-for-retirement-or-pay-off-credit-card-debt&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWe%2520Do%2520the%2520Math-%2520Save%2520for%2520Retirement%2520or%2520Pay%2520Off%2520Credit%2520Card%2520Debt-.jpg&amp;description=We%20Do%20the%20Math%3A%20Save%20for%20Retirement%20or%20Pay%20Off%20Credit%20Card%20Debt%3F"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/We%20Do%20the%20Math-%20Save%20for%20Retirement%20or%20Pay%20Off%20Credit%20Card%20Debt-.jpg" alt="We Do the Math: Save for Retirement or Pay Off Credit Card Debt?" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/julie-rains">Julie Rains</a> of <a href="http://www.wisebread.com/we-do-the-math-save-for-retirement-or-pay-off-credit-card-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-for-retirement-when-you-are-unemployed">How to Save for Retirement When You Are Unemployed</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/half-of-americans-are-wrong-about-their-retirement-savings">Half of Americans Are Wrong About Their Retirement Savings</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-dirty-secrets-of-credit-cards">The Dirty Secrets of Credit Cards</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/all-the-ways-minimum-payments-are-evil">All the Ways Minimum Payments Are Evil</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-one-third-of-americans-havent-saved-for-retirement">Why One-Third of Americans Haven&#039;t Saved for Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management Retirement 401(k) APR bills calculating comparisons interest rates nest egg Paying Off Debt Thu, 18 May 2017 08:30:15 +0000 Julie Rains 1949201 at http://www.wisebread.com Start Planning Now for When Your Target-Date Fund Ends http://www.wisebread.com/start-planning-now-for-when-your-target-date-fund-ends <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/start-planning-now-for-when-your-target-date-fund-ends" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-174631043.jpg" alt="Start planning now for when your target date fund ends" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There's a reason why so many people invest their retirement savings in target-date mutual funds offered within their 401(k). These funds are designed to be simple: Your money is automatically invested in a mix of stocks, bonds, and other asset types based on your age and the year you plan to retire.</p> <p>As you get closer to your target date (the year you expect to hit retirement), the managers of your target-date fund gradually ramp down your risk &mdash; moving more of your dollars away from high-risk, growth-oriented investments like stocks, and focusing instead on safer, more conservative investments like bonds or cash. This &quot;set it and forget it&quot; approach allows you to easily stash money away for retirement without constantly rebalancing the fund yourself.</p> <p>The goal is to have the right asset mix when your target-date fund hits its target. But this leads to the big question: What do you do when your target-date fund finally does reach this endpoint?</p> <h2>Reaching the target date</h2> <p>According to the Investment Company Institute, the target date isn't a date when investors should automatically cash out their entire target-date fund. It's simply an estimate of when investors will retire, and therefore stop making new investments in the fund. Most target-date funds can be kept open beyond the target date.</p> <p>What happens when the fund reaches that target date depends on whether the fund is guided by one of two basic investing approaches.</p> <p>If a target-date fund has what is known as a &quot;to&quot; glide path, the fund manager will stop adjusting the fund's asset mix once it hits the target date. In this scenario, your investment mix will remain in place until you cash out the fund.</p> <p>There's also the &quot;through&quot; glide path. In this approach, the fund manager will continue to adjust the fund's mix of investments even as the target date comes and goes.</p> <p>It's important to remember that target-date funds offer no guarantees. Your fund manager will rework your asset mix as your target date approaches to minimize your investment risk. But no manager can guarantee any set amount of dollars by this date.</p> <h2>What can you do when your target date arrives?</h2> <p>When your target-date fund hits its target date, you have three basic choices of what to do with your money.</p> <h3>1. Do nothing</h3> <p>First, you can essentially choose to do nothing. You can instead leave your money in your target-date fund after you retire. You won't be able to make new contributions to the fund, of course, but as with all 401(k) investments, your target-date fund will continue to grow on a tax-deferred basis. This will remain the case until you begin making withdrawals from the fund. You are required to begin taking your minimum withdrawals from your 401(k) by age 70 &frac12; at the latest.</p> <h3>2. Roll over funds into an IRA</h3> <p>If you want to be more hands-on with your investments, you can instead roll over the target-date fund, and any other investments in your 401(k), into an IRA. If you roll the money into a traditional IRA, you can continue to make contributions until you hit the year in which you turn 70 &frac12;. If you roll your 401(k) funds into a Roth IRA, you can continue making contributions as long as you are earning income. If you are not working, though, and not earning income, you can't contribute to a Roth no matter your age.</p> <h3>3. Cash out your fund</h3> <p>Finally, you can cash out your 401(k) (and the target-date fund within it) once you stop working for the employer who offered it to you. If you rollover your 401(k) into an IRA, you won't have to pay taxes. But if you cash out, you will owe income tax on the amount you withdraw from the plan. If you cash out before you turn 59 &frac12;, you'll have to pay income taxes and a 10 percent penalty.</p> <p>The best option of the three depends on how much time you want to spend focusing on your investments. If you prefer to let others manage your investment, the &quot;do-nothing&quot; approach might be your best move. If you'd rather have more control, on the other hand, rolling over your target-date fund into an IRA is probably the better choice.</p> <p>If you need liquid cash immediately, cashing out your fund might be necessary &mdash; but the tax hit you'll take often makes this the least attractive option.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/start-planning-now-for-when-your-target-date-fund-ends">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-you-need-to-know-about-the-easiest-way-to-save-for-retirement">What You Need to Know About the Easiest Way to Save for Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-easy-ways-to-start-green-investing">5 Easy Ways to Start Green Investing</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-3-rules-every-mediocre-investor-must-know">The 3 Rules Every Mediocre Investor Must Know</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-ways-to-invest-50-500-or-5000">The Best Ways to Invest $50, $500, or $5000</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-build-an-investment-portfolio-for-under-5000">How to Build an Investment Portfolio for Under $5000</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement assets bonds investments mutual funds rebalancing rollover stocks target date funds Fri, 12 May 2017 08:30:12 +0000 Dan Rafter 1942910 at http://www.wisebread.com