income http://www.wisebread.com/taxonomy/term/8754/all en-US 7 Reasons to Invest in Stocks Past Age 50 http://www.wisebread.com/7-reasons-to-invest-in-stocks-past-age-50 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-reasons-to-invest-in-stocks-past-age-50" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_sitting_on_floor_with_piggy_bank_under_money_rain.jpg" alt="Man sitting on floor with piggy bank under money rain" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Conventional investing wisdom says that as people age, they should put less of their money in stocks and more into stable investments such as bonds and cash. This is sound advice based on the idea that in retirement you want to protect your assets in case there is a major market downturn.</p> <p>But there are still strong arguments to continue investing in stocks even as you get older. Few people recommend an all-stock portfolio, but reducing stock ownership down to zero doesn't make sense, either.</p> <p>Consider that many mutual funds geared toward older investors still comprise hefty doses of stocks. The 2020 Retirement Fund from T. Rowe Price, for example, is made up of 70 percent stocks for retirees at age 65, and is still made up of 25 percent stocks when that same retiree is past 90 years of age.</p> <p>Why does owning stocks make sense even for older investors? Let's examine these possible motivations.</p> <h2>1. You're going to live a lot longer</h2> <p>If you are thinking about retirement as you approach age 60, it's important to recognize that you still may have several decades of life remaining. People are routinely living into their 90s or even past 100 these days. Do you have enough savings to last 40 years or more? While it's important to protect the assets you have, you may find that higher returns from stocks will be needed in order to accrue the money you need.</p> <h2>2. You got a late start</h2> <p>If you started investing early and contributed regularly to your retirement accounts over the course of several decades, you may be able to take a conservative investing approach in retirement. But if you began investing late, your portfolio may not have had time to grow enough to fund a comfortable retirement. Continuing to invest in stocks will allow you to expand your savings and reach your target figure. It still makes sense to balance your stocks with more conservative investments, but taking on a little bit more risk in exchange for potentially higher returns may be worth it. (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> <h2>3. Other investments don't yield as much as they used to</h2> <p>Moving away from stocks was good advice for older people back when you could get better returns on bonds and bank interest. The 30-year treasury yield right now is about 2.75 percent. That's about half what it was a decade ago and a third of the rate from 1990. Interest from cash in the bank or certificates of deposit will generate a measly 1.5 percent or less. The bottom line is that these returns will barely outpace the rate of inflation and won't bring you much in the way of useful income.</p> <h2>4. Some stocks are safer than others</h2> <p>Not all stocks move up and down in the same way. While stocks are generally more volatile than bonds and cash, there are many that have a strong track record of steady returns and relative immunity from market crashes. Take a look at mutual funds comprised of large-cap companies with diversified revenue streams. Consider dividend-producing stocks that don't move much in terms of share price, but can generate income. To find these investments, search for those that lost less than average during the Great Recession and have a history of low volatility.</p> <h2>5. Dividend stocks can bring you income</h2> <p>Dividend stocks are not only more stable than many other stock investments, but also they can generate cash flow at a time when you're not bringing in other income. A good dividend stock can produce a yield of more than 4 percent, which is more than what you'll get from many other non-stock investments right now. This will help ensure the growth of your portfolio is at least outpacing inflation.</p> <p>If you are unsure about which dividend stocks to buy, take a look at a well-rated dividend mutual fund. The T. Rowe Price Dividend Growth Fund [NYSE: PRDGX], for example, has a three-year total return of more than 10 percent, outpacing the S&amp;P 500. Its overall returns also dropped less than the S&amp;P 500 during the Great Recession.</p> <h2>6. Busts are often followed by bigger booms</h2> <p>A person who retired 10 years ago would have stopped working right when the market crashed, and there's a good chance they may have lost a significant chunk of their savings. That's bad. But it's important to note that in the decade since, the S&amp;P 500 has gone up every year at an average of more than 8.5 percent annually. In other words, someone who lost a lot from the crash of 2007&ndash;2008 will have gotten all of their money back and much more if they stayed invested in stocks.</p> <p>This is not to suggest that older investors should be unreasonably aggressive, but they should be aware that a single bad year or two probably won't completely wipe you out financially. If your retirement is long, you may see some market busts, but you'll also see some long stretches of good returns.</p> <h2>7. You may still be helping out your kids</h2> <p>When you're retired, you're supposed to be done with child rearing and helping out your kids financially, right? Unfortunately, it seems that older Americans are continuing to lend a hand to their children even as they grow into adulthood and have children of their own.</p> <p>A recent survey from TD Ameritrade said that millennial parents between the ages of 19 and 37 receive an average of more than $11,000 annually in the form of money or unpaid child care from their parents. With these additional costs on the horizon, those approaching retirement age may still want to invest in stocks to build their nest egg further. (See also: <a href="http://www.wisebread.com/are-you-ruining-your-retirement-by-spoiling-your-kids?ref=seealso" target="_blank">Are You Ruining Your Retirement by Spoiling Your Kids?</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" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F7-reasons-to-invest-in-stocks-past-age-50&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F7%2520Reasons%2520to%2520Invest%2520in%2520Stocks%2520Past%2520Age%252050.jpg&amp;description=7%20Reasons%20to%20Invest%20in%20Stocks%20Past%20Age%2050"></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/u5180/7%20Reasons%20to%20Invest%20in%20Stocks%20Past%20Age%2050.jpg" alt="7 Reasons to Invest in Stocks Past Age 50" 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/7-reasons-to-invest-in-stocks-past-age-50">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/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/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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-there-such-a-thing-as-a-safe-investment">Is There Such a Thing as a &quot;Safe&quot; Investment?</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/9-threats-to-a-secure-retirement">9 Threats to a Secure Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement adult children bonds cash dividend stocks giving money to kids income late starters life span living longer risk saving money stocks yields Thu, 05 Oct 2017 09:00:06 +0000 Tim Lemke 2031342 at http://www.wisebread.com How Your New Job Might Affect Your Mortgage Application http://www.wisebread.com/how-your-new-job-might-affect-your-mortgage-application <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-your-new-job-might-affect-your-mortgage-application" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_stylish_paperwork_635876724.jpg" alt="Woman learning how new job might affect mortgage application" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You just got a new job. Congratulations! New beginnings are an exciting part of life. If you're in the market to qualify for a new mortgage, your new beginning could have an impact on your mortgage application. Here's what you need to know. (See also: <a href="http://www.wisebread.com/5-money-moves-that-will-ruin-your-mortgage-application?ref=seealso" target="_blank">5 Money Moves That Will Ruin Your Mortgage Application</a>)</p> <h2>Continuity of some kind is key</h2> <p>Lenders like to see financial and career stability. If you've recently changed jobs, that's OK, provided that lenders see some kind of continuity.</p> <p>For example, if your new job is in the same field that you've been in for the past two years, the lender would probably be comfortable with that. This is especially true if your new job is a promotion in title, responsibility, or salary. If you took a pay cut, but stayed in the same field, the lender would also likely find that acceptable, as long as your new income is at a level that is appropriate for the size of mortgage you want.</p> <h2>Stability and history in your field matters</h2> <p>Lenders start to get uncomfortable when you move into a brand-new field because they view that as a less stable work situation. That said, this is not an insurmountable problem. Be honest and upfront with your lender. Explain how your previous experience is applicable to your new field. This could take the form of your responsibilities, or similarity in the fields themselves.</p> <p>It is also helpful if you can show that your education and any other training you've received aligns with your new role. You could secure a reference letter from your new employer, too.</p> <p>Remember, getting a mortgage with a lender is a conversation. You aren't putting in an application as a faceless entity. The lender wants to know who you are, what you do, and, most importantly, how you will repay the mortgage. You need to paint a picture of yourself as a responsible professional on a stable career path.</p> <h2>The paperwork you need</h2> <p>In addition to a letter or contract, the lender will also need other paperwork to verify your income. If you have all of this paperwork together before going to the lender, your sense of organization and preparedness will work in your favor. You will need:</p> <ul> <li>Your job offer letter with the details of your start date, title, and compensation. This letter should be on official company letterhead.<br /> &nbsp;</li> <li>At least two pay stubs, though I have recently heard of lenders asking for three or four pay stubs.<br /> &nbsp;</li> <li>The contact information for your human resources department. The lender will eventually need to talk to someone at your company to confirm the information you've provided is legitimate.</li> </ul> <p>A new job and a new home are exciting prospects. Though continuity of employment eases the path to a new mortgage, many people buy a new home in conjunction with a new job. Be prepared with a solid, concise explanation of your decision to change jobs and have your paperwork in order. Also remember to shop around for a mortgage with a few different lenders to secure the best terms and rates. Happy house hunting!</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" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-your-new-job-might-affect-your-mortgage-application&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520Your%2520New%2520Job%2520Might%2520Affect%2520Your%2520Mortgage%2520Application.jpg&amp;description=How%20Your%20New%20Job%20Might%20Affect%20Your%20Mortgage%20Application"></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%20Your%20New%20Job%20Might%20Affect%20Your%20Mortgage%20Application.jpg" alt="How Your New Job Might Affect Your Mortgage Application" 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/christa-avampato">Christa Avampato</a> of <a href="http://www.wisebread.com/how-your-new-job-might-affect-your-mortgage-application">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/everything-you-need-to-know-about-freddie-mac-and-fannie-mae">Everything You Need to Know About Freddie Mac and Fannie Mae</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-mortgage-details-you-should-know-before-you-sign">5 Mortgage Details You Should Know Before You Sign</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/4-ways-to-buy-a-house-without-a-mortgage">4 Ways to Buy a House Without a Mortgage</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/weak-credit-you-can-still-get-a-mortgage-despite-tough-lending-standards">Weak Credit? You Can Still Get a Mortgage Despite Tough Lending Standards</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/is-a-15-year-mortgage-a-good-idea">Is a 15-Year Mortgage a Good Idea?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Career and Income Real Estate and Housing approval home loans income lenders mortgages new jobs paychecks stability Mon, 02 Oct 2017 08:30:16 +0000 Christa Avampato 2029141 at http://www.wisebread.com 7 Things Your Credit Report Does NOT Include http://www.wisebread.com/7-things-your-credit-report-does-not-include <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-things-your-credit-report-does-not-include" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-629305628_0.jpg" alt="these things don&#039;t show up in your credit reports" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Ordering your credit reports every year and studying them carefully is a smart way to get a window into your financial well-being. But while credit reports contain a wealth of information about your history with money, they don't tell you <em>everything </em>about your financial health.</p> <p>In fact, there is plenty of financial information you won't find in any of your credit reports.</p> <h2>1. Your credit score</h2> <p>Your credit score is a key financial number. It gives lenders a snapshot of how responsible you've been with your finances. If you have thousands of dollars of credit card debt and you routinely pay bills late, your credit score will be low. If you pay your bills on time and you are using a smaller percentage of your available credit, your score will be high.</p> <p>Unfortunately, your credit report does not contain your credit score. To obtain your score, you'll have to pay one of the three national credit bureaus for it. Your credit card provider might also list a credit score on your monthly statements. This score might not be your official FICO credit score &mdash; the one most lenders rely on when deciding whether to lend you money. It can still give you a general idea of where you stand, though, and is worth keeping track of. (See also: <a href="http://www.wisebread.com/fico-or-fako-are-free-credit-scores-from-credit-cards-the-real-thing?ref=seealso" target="_blank">FICO or FAKO: Are Free Credit Scores From Credit Cards the Real Thing?</a>)</p> <h2>2. Your payments to utility companies</h2> <p>You pay your gas and electric bills on time every month. You might think that this key indicator of your financial responsibility would be listed on your credit report. Unfortunately, it's not. Utilities don't report payments to the credit bureaus.</p> <p>This means that your on-time payments to utility providers don't help your credit score. Late payments aren't reported, either. But be careful: If you're far enough behind on your payments that a utility sends your account to collections, that will show up on your credit report. And that black mark will give lenders reason to hesitate when deciding whether you qualify for a loan. An account in collections can also send your credit score plummeting by 100 points or more. (See also: <a href="http://www.wisebread.com/account-in-collections-heres-how-to-fix-it" target="_blank">Account in Collections? Here's How to Fix It</a>)</p> <h2>3. Your rent payments</h2> <p>Paying your rent on time probably won't help your credit score, either. That's because most landlords still don't report rent payments to the credit bureaus, meaning that these payments don't show up on your credit report.</p> <p>There are services today, though, that landlords can use to report rent payments to the bureaus. Most landlords don't use these services yet, but the fact that they are available could be a sign that rent information will become more common on credit reports in the future.</p> <h2>4. Medical bills</h2> <p>The payments you make to doctors, dentists, and other medical professionals don't show up on your credit reports, either. Again, this is because doctors don't report payment information to the credit bureaus.</p> <p>Paying these bills late, though, could show up on your credit report if your medical providers send your account to a collections agency.</p> <h2>5. Your salary</h2> <p>You'd think the money you earn would be a key indicator of your financial health, and it is. But it's not an indicator of how likely you are to pay your bills on time and manage your credit. Because of this, it doesn't show up on your credit reports.</p> <h2>6. A job loss</h2> <p>Your credit reports do provide some basic employment information, with some listing your past and most recent employers. But if you've just lost your job, that information won't be included in your report. Your reports never mention whether you are still employed, and they don't list how long you've worked with any one company.</p> <h2>7. Your spouse's credit history</h2> <p>Your credit reports list financial information about you and you alone. If you're married, your spouse's history of paying bills and running up debt won't show up.</p> <p>However, if you and your spouse both have your names on a loan or credit card, that debt will show up on both of your credit reports. So will late payments you made on these accounts, even if paying the bills was your spouse's responsibility and not yours.</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%2F7-things-your-credit-report-does-not-include&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F7%2520Things%2520Your%2520Credit%2520Report%2520Does%2520NOT%2520Include.jpg&amp;description=7%20Things%20Your%20Credit%20Report%20Does%20NOT%20Include"></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/u5180/7%20Things%20Your%20Credit%20Report%20Does%20NOT%20Include.jpg" alt="7 Things Your Credit Report Does NOT Include" 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/7-things-your-credit-report-does-not-include">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/heres-how-often-your-credit-score-gets-calculated">Here&#039;s How Often Your Credit Score Gets Calculated</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-apps-that-monitor-your-credit-for-you">7 Apps That Monitor Your Credit for You</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-to-protect-your-credit-after-the-equifax-breach">How to Protect Your Credit After the Equifax Breach</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/your-bad-credit-isnt-the-end-of-the-world">Your Bad Credit Isn&#039;t the End of the World</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/pay-these-6-bills-first-when-money-is-tight">Pay These 6 Bills First When Money Is Tight</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance bills collections credit history credit reports credit score Equifax Experian income payments rent TransUnion utilities Fri, 22 Sep 2017 08:30:11 +0000 Dan Rafter 2024892 at http://www.wisebread.com 5 Money Conversations Couples Should Have Before Retirement http://www.wisebread.com/5-money-conversations-couples-should-have-before-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-money-conversations-couples-should-have-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/budgeting_works_better_when_we_do_it_together.jpg" alt="Budgeting works better when we do it together" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Retirement for you and your spouse is just a few years away. Maybe you're both eagerly awaiting the days when you no longer must commute to work, sit in long meetings, and turn in reports.</p> <p>But retirement does come with its own challenges, many of them financial. It's important for spouses to have the same expectations of what their retirement years will look like. And it's equally important for each spouse to understand where their income will be coming from and how much money there will be.</p> <p>Here are five key conversations that couples must have before retirement arrives.</p> <h2>1. What kind of retirement do you both want, and how expensive will it be?</h2> <p>There are many different ways to spend your retirement years. Maybe you want to travel the world. Maybe you'd prefer spending more time with your grandchildren. Your version of a dream retirement might consist of days on the golf course or fishing on the lake.</p> <p>But what if you have the travel bug, and your spouse would prefer to sit home and catch up on some reading? These are two radically different versions of retirement. And, when it comes to your retirement finances, one is far more expensive than the other.</p> <p>It's important for you to share your retirement expectations with your spouse before you actually leave the working world. If you both agree that plenty of travel is in your future, you'll need to work hard to make sure you'll have enough retirement dollars to fund these trips. If only one of you wants to spend time traveling or pursuing a more expensive hobby, you'll have to craft a compromise.</p> <h2>2. Where will the money come from, and how much will you have?</h2> <p>As retirement nears, couples must work together on a new household budget tailored to their new life after work. You won't be able to rely on that steady work income after retirement, and Social Security payments probably won't cover all your daily living needs. This makes writing a household budget &mdash; and agreeing to stick to it &mdash; more important.</p> <p>Your new budget should list all of your sources of monthly income and all of your expected monthly expenses, including mortgage payments if you still have them, car payments, utility bills, groceries, and entertainment. Once you've listed your income and expenses, including how much of your retirement savings you'll need to dip into each month to cover these expenses, you'll have a clearer picture of how much you can spend each month after leaving the working world. (See also: <a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0?ref=seealso" target="_blank">6 Ways You Can Cut Costs Right Before You Retire</a>)</p> <h2>3. Where will you live?</h2> <p>Housing expenses can be a challenge after retirement. It's important for couples to discuss where they'll live after leaving the working life behind. Do you want to stay in your current home for as long as possible? The financial ramifications of this will vary depending on whether you've paid off your mortgage or not. It might make more sense to sell your home and move into a smaller condo or apartment. Or maybe you're ready to move into a senior housing facility.</p> <p>Don't put off conversations about housing. This is one of the most important issues couples face after retirement. (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>4. Will one of you take on a new job or career?</h2> <p>Retirement doesn't always mean that you or your spouse won't continue to work in some way. Some people take on part-time jobs to occupy their time and earn a bit of extra spending money. Others start the new careers that they've always desired. (See also: <a href="http://www.wisebread.com/6-great-retirement-jobs?ref=seealso" target="_blank">6 Great Retirement Jobs</a>)</p> <p>It's important for couples to discuss their plans for working after retirement. One spouse &mdash; or both &mdash; holding down a part-time job can make a significant difference in your income and budget after retirement, even if this income isn't essential to covering your daily living needs.</p> <h2>5. How will you handle unplanned expenses?</h2> <p>Unexpected expenses aren't unusual while you're working, with everything from burst water heaters to serious medical problems eating away at your savings. The same unexpected expenses can pop up when you're retired, too. When they do, how will you pay for them?</p> <p>Talk with your spouse about maintaining an emergency fund that can cover at least six months' worth of your daily living expenses after retirement. If you don't maintain this fund &mdash; which you should have had while you were working &mdash; one big unexpected expense could wreak havoc on your budget. (See also: <a href="http://www.wisebread.com/9-unexpected-expenses-for-retirees-and-how-to-manage-them?ref=seealso" target="_blank">9 Unexpected Expenses for Retirees &mdash; And How to Manage Them</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-money-conversations-couples-should-have-before-retirement&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Money%2520Conversations%2520Couples%2520Should%2520Have%2520Before%2520Retirement.jpg&amp;description=5%20Money%20Conversations%20Couples%20Should%20Have%20Before%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/u5180/5%20Money%20Conversations%20Couples%20Should%20Have%20Before%20Retirement.jpg" alt="5 Money Conversations Couples Should Have Before 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/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-money-conversations-couples-should-have-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/heres-how-you-should-budget-your-social-security-checks">Here&#039;s How You Should Budget Your Social Security Checks</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/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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-start-a-family-before-reaching-these-5-money-goals">Don&#039;t Start a Family Before Reaching These 5 Money Goals</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/6-ways-you-can-cut-costs-right-before-you-retire-0">6 Ways You Can Cut Costs Right Before You Retire</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-retiring-with-debt-isnt-the-end-of-the-world">Why Retiring With Debt Isn&#039;t the End of the World</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement career conversations couples emergency funds expenses housing income jobs marriage spouse Tue, 05 Sep 2017 09:00:06 +0000 Dan Rafter 2013258 at http://www.wisebread.com Why Retiring With Debt Isn't the End of the World http://www.wisebread.com/why-retiring-with-debt-isnt-the-end-of-the-world <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-retiring-with-debt-isnt-the-end-of-the-world" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/calculating_our_day_to_day_living_cost.jpg" alt="Calculating our day-to-day living cost" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>In a perfect world, you'll retire with no debt at all. But that might not be realistic. Most U.S. adults carry at least <em>some </em>debt with them into retirement. A majority even die owing money. (See also: <a href="http://www.wisebread.com/who-pays-when-loved-ones-leave-debt-behind?ref=seealso" target="_blank">Who Pays When Loved Ones Leave Debt Behind?</a>)</p> <p>The good news is while retiring with debt might not be uncommon today, it's also not a financial disaster. It mostly depends on the type of debt you bring with you into retirement.</p> <h2>The numbers</h2> <p>In a 2016 study, credit bureau Experian found that 73 percent of consumers died with debt. And these consumers didn't die with just a little debt: Experian reported that these individuals had an average debt of $61,554 when they died. Without counting mortgage debt, that figure fell to a still high $12,875.</p> <p>As you near retirement, you might worry that you'll be saddled with too much debt after you leave the workforce. It's important to realize, though, that there are different types of debt, some better than others. Your monthly income in retirement matters, too: If you can easily cover your debts, and still cover your other expenses, your debt won't be as much of a financial burden.</p> <h2>Start with a budget</h2> <p>You won't know how bad your retirement debt might be until you first draft a household budget for your after-work years. This budget should include all of the money you expect to flow into your hands after you retire, including Social Security payments, pensions, and the income you'll be drawing each month from your retirement savings vehicles.</p> <p>You should then list your monthly expenses, both fixed and estimated. This should include your housing costs, food, utilities, entertainment expenses, medical costs, and, of course, the money you'll have to spend each month to pay off your debts.</p> <p>Once you have your expenses and your income listed, compare the figures. Will you have enough money to cover everything each month? Or will you be short?</p> <p>If you have enough, that's good, though you'll still want to reduce your debt as much as you can before you leave the workforce. The less debt you enter your retirement years with, the better.</p> <p>If you'll be short, it's time to make changes. Figure out ways to reduce your expenses, such as trading in a costly car or maybe selling your expensive home and making the move to a less costly condo or smaller residence. You might also have to scale back your plans for retirement; instead of traveling the world, you might have to be content with catching up on your golf game in your own community.</p> <h2>Good vs. bad debt</h2> <p>Once you've determined your budget, it's time to look at your debt.</p> <p>You might think that all debt is the same. That's not true. Some debt is considered &quot;good debt,&quot; while <a href="http://www.wisebread.com/8-signs-youve-crossed-from-healthy-debt-to-problem-debt" target="_blank">other debt is considered bad</a>.</p> <p>Good debt is debt you owe for something that can grow in value and provide you with financial benefits in the future. A mortgage is the most common form of good debt. If you're fortunate, the house that your mortgage is financing will grow in value while you own it. When you sell it, you might make a profit. Mortgage debt has the added benefit of coming with low interest rates and some tax benefits.</p> <p>The most common form of bad debt is credit card debt. This debt grows over time and doesn't provide you with any possible financial benefits. It also often comes with sky-high interest rates. (See also: <a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt?ref=seealso" target="_blank">5 Ways to Pay Off High Interest Credit Card Debt</a>)</p> <p>If you're nearing retirement and you have both mortgage and credit card debt, it makes financial sense to spend any extra dollars you have to reduce your credit card debt. Your mortgage debt, as long as you can afford the monthly payment in retirement, should not be a priority.</p> <h2>Attack your bad debt</h2> <p>If you want to eliminate your credit card debt &mdash; or at least a chunk of it &mdash; before retirement, you'll have to send extra money each month to your credit card providers.</p> <p>Generally, financial experts recommend two main approaches here. You can follow the debt snowball strategy, in which you pay extra each month on the credit card that has the lowest balance. Once you pay off that card, you pay more each month on the card with the next lowest amount of debt, working your way through all your cards.</p> <p>You can also go with the debt avalanche approach. This method works the same way, only you pay extra on your card with the highest interest rate first instead of the lowest balance. This method will save you the most money because you'll be eliminating your highest-interest debt first. (See also: <a href="http://www.wisebread.com/snowballs-or-avalanches-which-debt-reduction-strategy-is-best-for-you?ref=seealso" target="_blank">Snowballs or Avalanches: Which Debt Reduction Strategy Is Best for You?</a>)</p> <p>Again, to free up enough money to pay down your debts &mdash; no matter which debts you choose to tackle &mdash; you might have to make lifestyle changes, such as cutting down on your meals out or your entertainment and travel expenses.</p> <p>You'll have to determine how much of a financial burden your debt will be after you retire. The debt you bring into retirement might not scuttle your after-work plans. But if it might, that's why a bit of sacrifice now can really pay off later. (See also: <a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0?Ref=seealso" target="_blank">6 Ways You Can Cut Costs Right Before You Retire</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%2Fwhy-retiring-with-debt-isnt-the-end-of-the-world&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhy%2520Retiring%2520With%2520Debt%2520Isnt%2520the%2520End%2520of%2520the%2520World.jpg&amp;description=Why%20Retiring%20With%20Debt%20Isnt%20the%20End%20of%20the%20World"></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/Why%20Retiring%20With%20Debt%20Isnt%20the%20End%20of%20the%20World.jpg" alt="Why Retiring With Debt Isn't the End of the World" 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/why-retiring-with-debt-isnt-the-end-of-the-world">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-to-do-if-youre-retiring-with-debt">What to Do If You&#039;re Retiring With Debt</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/10-things-people-without-debt-do">10 Things People Without Debt Do</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/4-red-flags-that-your-retirement-plan-may-be-off-track">4 Red Flags That Your Retirement Plan May Be Off 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/heres-how-you-should-budget-your-social-security-checks">Here&#039;s How You Should Budget Your Social Security Checks</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-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management Retirement bills budgeting expenses income mortgages owing money social security Wed, 30 Aug 2017 09:00:06 +0000 Dan Rafter 2011955 at http://www.wisebread.com Here's How You Should Budget Your Social Security Checks http://www.wisebread.com/heres-how-you-should-budget-your-social-security-checks <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/heres-how-you-should-budget-your-social-security-checks" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/united_states_treasury_government_check.jpg" alt="United States Treasury government check" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The average retired worker earns a monthly Social Security check of $1,360, according to the U.S. Social Security Administration. And for most retirees, Social Security benefits are just one source of income, with many supplementing their checks with money that they've saved in 401(k) plans, IRAs, and other savings vehicles.</p> <p>This doesn't mean, though, that these Social Security dollars aren't important. The administration says that Social Security benefits represent about 34 percent of the income of the elderly. That's why it's so important for retirees to create a budget for their Social Security benefits and determine the best way to spend such a significant portion of their monthly earnings. (See also: <a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement?ref=seealso" target="_blank">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a>)</p> <h2>There's always a need for a budget</h2> <p>The first step in determining how to best spend Social Security benefits is to calculate your monthly income from all sources. Then, determine how much of this income comes from Social Security benefits alone. If Social Security accounts for 70 percent of your monthly income, you'll have to be especially careful how you spend it. If it accounts for just 20 percent, you'll have a bit more leeway.</p> <p>Once you determine how important your benefits are to your monthly income stream, it's time to calculate how much of your Social Security check you should devote to each of your main expenses. (See also: <a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0?ref=seealso" target="_blank">6 Ways You Can Cut Costs Right Before You Retire</a>)</p> <h2>Housing</h2> <p>Ideally, you'll enter retirement without a mortgage payment. But that doesn't always happen. You might choose to rent during your retirement years. Or, maybe you'll spend your retirement years in assisted living.</p> <p>Housing often remains a significant expense for retirees, with the Bureau of Labor Statistics reporting in March 2016 that seniors age 55 and older spend an average $16,219 a year on housing. Seniors from the ages of 65 to 74 spend an average $15,838.</p> <p>If you receive the average Social Security check of $1,360 a month, you'll receive $16,320 a year. This means that the average amount that retirees spend on housing would consume most of your Social Security income each year.</p> <p>It might make sense to devote a set percentage of every Social Security check to help cover your housing expenses. How much that percentage is will depend on how much you are spending on housing. If you live in a home with a mortgage that's been paid off, you obviously won't need to spend as much of your checks on housing as you would if you were still paying a mortgage. If housing is a significant expense, though, you might consider devoting 60 percent or more of your Social Security check to covering it. (See also: <a href="http://www.wisebread.com/5-countries-where-you-can-retire-for-1000-a-month?ref=seealso" target="_blank">5 Countries Where You Can Retire for $1,000 a Month</a>)</p> <h2>Food</h2> <p>The Bureau of Labor Statistics reported that seniors from the ages of 65 to 74 spend an average $6,303 a year on food. This makes sense: You have to eat, whether you're working or not. Make sure, then, to reserve part of your Social Security check for groceries and meals out.</p> <p>You do have control over this expense, of course. You can eat out less often and cook at home more, which would reduce your food expenses. But setting aside 20 percent or so of your monthly Social Security check for food should suffice.</p> <h2>Medical expenses</h2> <p>Depending on your health, medical costs could be a significant expense as you age. The numbers from the Bureau of Labor Statistics bear this out. According to the Bureau, adults from the ages of 65 to 74 spend an average $5,956 a year for medical care. The Bureau says that adults 74 and older spend an average $5,708 a year on health care. (See also: <a href="http://www.wisebread.com/how-an-hsa-could-help-your-retirement?ref=seealso" target="_blank">How an HSA Could Help Your Retirement</a>)</p> <p>Health expenses are one cost you have little control over. Sure, you can exercise and eat well. But you might still suffer health setbacks. It's important to reserve at least some of your Social Security check to cover these sometimes unexpected costs.</p> <p>Consider saving an additional 20 percent of your Social Security benefits for medical spending.</p> <h2>Other costs</h2> <p>If you've been keeping track, those three expenses might eat up your entire Social Security check. Again, this depends on how much Social Security income you receive each month and how much you actually spend on housing, health care, and food. (See also: <a href="http://www.wisebread.com/how-much-can-you-afford-to-spend-in-retirement?ref=seealso" target="_blank">How Much Can You Afford to Spend in Retirement?</a>)</p> <p>If you find that these three big expenses do swallow most or all of your expenses, you'll have to dip into your retirement savings and other income vehicles to cover costs such as travel, transportation, entertainment, and any other monthly bills.</p> <p>Budgeting your Social Security check highlights just how important it is to have multiple income sources at your disposal after retirement. As you can see, Social Security doesn't go that far when it comes to covering the basic living expenses of many seniors.</p> <p>You do have options, of course. You can scale back your retirement plans, perhaps choosing to travel less and eat in more often. You can also take on a part-time job. That extra income could come in handy to cover the smaller, unexpected expenses that tend to come up. (See also: <a href="http://www.wisebread.com/9-easy-ways-retirees-can-earn-extra-income?ref=seealso" target="_blank">9 Easy Ways Retirees Can Earn Extra Income</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%2Fheres-how-you-should-budget-your-social-security-checks&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHeres%2520How%2520You%2520Should%2520Budget%2520Your%2520Social%2520Security%2520Checks.jpg&amp;description=Here's%20How%20You%20Should%20Budget%20Your%20Social%20Security%20Checks"></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/Heres%20How%20You%20Should%20Budget%20Your%20Social%20Security%20Checks.jpg" alt="Here's How You Should Budget Your Social Security Checks" 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/heres-how-you-should-budget-your-social-security-checks">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/how-to-face-these-7-scary-facts-about-retirement-saving">How to Face These 7 Scary Facts About Retirement Saving</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-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</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/why-retiring-with-debt-isnt-the-end-of-the-world">Why Retiring With Debt Isn&#039;t the End of the World</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/6-ways-you-can-cut-costs-right-before-you-retire-0">6 Ways You Can Cut Costs Right Before You Retire</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Retirement beneficiaries benefits expenses food costs health care housing income medical costs social security Wed, 23 Aug 2017 08:30:05 +0000 Dan Rafter 2007581 at http://www.wisebread.com 5 Things to Consider Before Buying a Home When You're Single http://www.wisebread.com/5-things-to-consider-before-buying-a-home-when-youre-single <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-things-to-consider-before-buying-a-home-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/woman_with_keys_standing_outside_new_home.jpg" alt="Woman With Keys Standing Outside New Home" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's become increasingly common for people to buy a home by themselves instead of as a couple. According to the National Association of Realtors' <em>Profile of Homebuyers and Sellers</em>, new homeowners in 2016 were comprised of 17 percent single females and 7 percent single males.</p> <p>Buying a home is a big undertaking, whether or not you're doing it as a single person. I spoke to Markus Brown, a realtor in Orange County, California, about some things to consider before buying a home by yourself.</p> <h2>1. Understand the risks</h2> <p>As a single person, is it better to pay rent or to own a home? The monthly costs of owning a home may be higher than what you pay in monthly rent when you consider costs like insurance, property tax, maintenance, and higher utility bills. You're also taking on greater risk by taking on a loan. (See also: <a href="http://www.wisebread.com/why-i-choose-to-rent-instead-of-buy?ref=seealso" target="_blank">Why I Choose to Rent Instead of Buy</a>)</p> <p>However, according to Brown, there can be significant advantages to owning a home, the biggest of which is the ability to fix your housing costs in the future. When you own your home on a fixed-rate, 30-year mortgage, you remove unknowns such as your rent going up, being asked to move because the landlord wants to renovate or sell, and more. This allows you to make concrete plans for the future without worrying about housing.</p> <p>If you're planning to stay in the area for several years, you should consider buying a home. &quot;Historically, you need to own for at least five to 10 years before market appreciation helps you to make a profit,&quot; Brown says, &quot;[but] if you're going to be relocated in a year or two, don't buy.&quot;</p> <h2>2. Review your finances</h2> <p>Having only one income to rely on in purchasing a home can stretch you financially, so it's a good idea to go over your finances before considering a home purchase. You'll also want to take steps to <a href="http://www.wisebread.com/5-ways-to-improve-your-credit-score-fast" target="_blank">improve your credit score</a> before buying a home. Consider the stability of your income and whether you have enough savings to see you through if something happens to that source of income.</p> <p>As a single person, you will want to have a large savings buffer, because you won't be able to fall back on another person's income if yours is disrupted. The rule of thumb is that your emergency fund should have at least six months of income &mdash; nine if your income is unpredictable.</p> <h2>3. Calculate the hidden costs</h2> <p>Don't be surprised by the &quot;hidden&quot; costs of owning a home, including the closing costs, property taxes, insurance, possible homeowners association fees, utilities, maintenance, and potential renovations. Factor all these extra costs into your budget before deciding on a home that you can afford. According to Brown, many people think they can buy more than they actually can when all these costs are factored in. (See also: <a href="http://www.wisebread.com/10-hidden-housing-costs-new-homeowners-dont-expect?ref=seealso" target="_blank">10 Hidden Housing Costs New Homeowners Don't Expect</a>)</p> <h2>4. Talk to a mortgage broker</h2> <p>As a single person, it can be more difficult to quality for a loan because you can only count on one income. If it's your first time buying, you may be able to qualify for an FHA loan, which allows you to purchase with a lower down payment (only 3.5 percent down) and lower interest rates, and doesn't require as high of a high credit score.</p> <p>Another option is the HomeReady Mortgage Program through Fannie Mae, which only requires as little as 3 percent down, and allows greater flexibility in qualifying for a loan, including income from co-borrowers, family members who are not on the loan, gifts from family members, and even &quot;boarder&quot; income from a roommate.</p> <p>Talk to a mortgage broker or financial adviser about whether it makes sense for you to pay a lower down payment. You may have to purchase mortgage insurance if you don't put enough money down, so factor those costs into your decision.</p> <p>&quot;Low down-payment loans make sense for people who have a solid job and stable income, but don't have a lot of savings because they've just started out, such as new grads or young couples,&quot; Brown recommends.</p> <h2>5. Choose the right home</h2> <p>In his experience, Brown sees single people going for condos, because the maintenance and chores are simpler and easier to deal with. Brown suggests buying only what you need at the moment and getting a foot in the market, instead of trying to buy a family home when you don't know what you'll need later. Look for a condo in a community that has other working professionals, and allows you to enjoy your single life.</p> <p>However, it's better to buy a two-bedroom rather than a one-bedroom if you can afford it, according to Brown, because it gives you what he calls &quot;future-proofing.&quot; If you lose your job or the economy tanks, you can take on a roommate to help you share the costs. On the other hand, if you get married or have your partner move in, you have enough space for the next step in building your family. Either way, you won't have to sell immediately if something changes in the future.</p> <p>In addition to potential financial benefits, there are a lot of intangible benefits to owning your own home. Pride in your own home, the ability to control things about your living situation that you couldn't control as a renter (such as decorations and renovations), and the feeling of being more settled, are all attractive reasons to buy a home as a single person.</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-things-to-consider-before-buying-a-home-when-youre-single&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Things%2520to%2520Consider%2520Before%2520Buying%2520a%2520Home%2520When%2520Youre%2520Single.jpg&amp;description=5%20Things%20to%20Consider%20Before%20Buying%20a%20Home%20When%20Youre%20Single"></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%20Things%20to%20Consider%20Before%20Buying%20a%20Home%20When%20Youre%20Single.jpg" alt="5 Things to Consider Before Buying a Home When You're Single" 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/camilla-cheung">Camilla Cheung</a> of <a href="http://www.wisebread.com/5-things-to-consider-before-buying-a-home-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-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/weak-credit-you-can-still-get-a-mortgage-despite-tough-lending-standards">Weak Credit? You Can Still Get a Mortgage Despite Tough Lending Standards</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/make-these-5-money-moves-before-applying-for-a-mortgage">Make These 5 Money Moves Before Applying for a Mortgage</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-to-build-equity-in-your-home">How to Build Equity in Your Home</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/watch-out-for-these-5-last-minute-home-buying-costs">Watch Out for These 5 Last Minute Home Buying Costs</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-times-buying-a-home-with-cash-is-bad-for-your-budget">5 Times Buying a Home With Cash Is Bad for Your Budget</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing buying a home credit score down payments hidden costs homeownership income mortgages qualifying single Tue, 18 Jul 2017 09:00:09 +0000 Camilla Cheung 1985091 at http://www.wisebread.com 5 Downsides to a Bigger Paycheck http://www.wisebread.com/5-downsides-to-a-bigger-paycheck <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-downsides-to-a-bigger-paycheck" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-600673276_0.jpg" alt="downsides to a bigger paycheck" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Can earning more money ever be a bad thing? If you were to walk into work tomorrow and were told you had received a 25 percent pay increase, you'd be pretty pleased, right? Most of us would be overjoyed, and would immediately start thinking about how the extra money could improve our lives. However, it's definitely worth considering the downsides to a bigger paycheck. Be prepared, or the pay raise could cost you.</p> <h2>1. You start to depend on that big salary</h2> <p>It's a fact that almost all of us fit our lifestyles to our earnings. The more we earn, the more we spend. We upgrade to bigger cars, bigger houses, and commit to larger purchases. We take on more debt, knowing we'll easily pay it off.</p> <p>But what happens if that big paycheck goes away? Layoffs are a part of life, and they happen in almost every industry. What will happen if that money you have come to rely on suddenly goes away? Do you have savings in place to cover yourself for an emergency? You could find yourself having to downsize your whole life because the money you made is simply not available any more. So even if you do get a raise, your best bet is to continue living like you haven't, and socking the rest away, if you can. (See also: <a href="http://www.wisebread.com/you-got-a-raise-now-what?ref=seealso" target="_blank">You Got a Raise! Now What?</a>)</p> <h2>2. With more money comes more responsibility</h2> <p>Most companies will expect something in return for the extra money they have just given you. Yes, you have earned it. Yes, you were probably working above and beyond your current salary to get the raise. But that's the rub. Now you have to work above and beyond the new salary to keep management impressed. After all, if you continue to do what you had done before the raise, it will seem like you're coasting. Or worse, that you're ungrateful for the new salary.</p> <p>Some people find that with the new responsibilities and expectations, plus longer hours, they have actually received a pay cut. For example, 40 hours per week for $2,000 becomes 50 hours per week for $2,300. Yes, it's more money. But the hourly rate has gone from $50 down to $46. These people may actually have been better off without the raise. More money, yes. But at what cost?</p> <h2>3. You're now in the firing line</h2> <p>Make no mistake, when it's time for a company to examine its payroll and look at cost-cutting, the larger salaries come under greater scrutiny. In fact, some companies actually have a threshold, and once you are above it, you are instantly put into consideration for a layoff when the time comes to make cuts.</p> <p>Of course, if you are simply going from $20,000 a year to $25,000 a year, you most likely don't have to worry. But if you get launched from $50,000 a year to $80,000 a year, or thrown into a six-figure salary, you suddenly represent a more significant figure on the balance sheet. Is there anything you can do about this? Make yourself worth it to the company. Sure, you may earn $120,000 a year; but you saved the company twice that in the last six months. Without you, they'd be missing out.</p> <h2>4. You can lose certain benefits and tax advantages</h2> <p>First, don't let anyone tell you that getting a raise could mean you actually take home less money due to the tax brackets. Only the portion of your salary over a certain amount would be taxed at that higher rate.</p> <p>However, you can lose out on certain benefits and tax breaks by earning more money. If you qualified for an apartment based on low income, and then get a raise, you may no longer be eligible to live there. Child tax credits are phased out above specific incomes, and every $1,000 over that threshold <a href="https://turbotax.intuit.com/tax-tools/tax-tips/Family/7-Requirements-for-the-Child-Tax-Credit/INF15610.html" target="_blank">reduces the credit by $50</a>. Education credits and the Earned Income Credit are also means tested, as well as many other benefits. And your ability to contribute to a tax-preferred Roth IRA retirement account diminishes and is eventually eliminated after you make a certain income.</p> <p>It's possible that your pay raise could kick you off the programs you rely upon. Of course, you shouldn't let that stop you from celebrating your own success at work, but just be mindful of your budget.</p> <h2>5. Expect jealousy from some people</h2> <p>With a pay raise comes the chance to buy the things you have been dreaming of. You may upgrade your car, your home, your wardrobe, or your vacation destinations. And some people will take notice of that. Expect snarky remarks like, &quot;Must be nice&quot; and &quot;Wish I could afford to eat out like that.&quot; <a href="http://www.wisebread.com/how-to-rise-above-financial-jealousy" target="_blank">This is jealousy</a>, pure and simple.</p> <p>Anyone who really cares for you will be happy that you have been rewarded for your years of hard work. But if you have a friend or relative who is genuinely upset by your good fortune, perhaps because they can no longer afford to eat where you eat, or take joint vacations, remind them that life is a marathon, and we all run at our own pace. Assure them that their time will definitely come, and point out that you have had to make several sacrifices to get the additional income.</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-downsides-to-a-bigger-paycheck&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Downsides%2520to%2520a%2520Bigger%2520Paycheck.jpg&amp;description=Why%20Earning%20More%20Isnt%20Always%20Better"></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%20Downsides%20to%20a%20Bigger%20Paycheck.jpg" alt="5 Downsides to a Bigger Paycheck" 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/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/5-downsides-to-a-bigger-paycheck">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/10-things-you-should-never-do-after-getting-a-raise">10 Things You Should Never Do After Getting a Raise</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-to-earn-more-money-without-working-more-hours">6 Ways to Earn More Money — Without Working More Hours</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-simple-steps-to-discovering-your-true-salary-potential">6 Simple Steps to Discovering Your True Salary Potential</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/you-got-a-raise-now-what">You Got a Raise! 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/didnt-get-the-raise-ask-for-this-instead">Didn&#039;t Get the Raise? Ask for This, Instead</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Career and Income Extra Income career tips income make more money pay raise paycheck raise wage increase Fri, 07 Jul 2017 09:01:05 +0000 Paul Michael 1979455 at http://www.wisebread.com 4 Ways to Make Money Doing Household Chores http://www.wisebread.com/4-ways-to-make-money-doing-household-chores <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-ways-to-make-money-doing-household-chores" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/love_to_keep_my_home_nice.jpg" alt="Love to keep my home nice" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When it comes to earning extra money, many well-paying side hustles, such as graphic design, require specialized skills, experience, and pricey software or equipment. The requirements can be a major obstacle to launching a lucrative side gig.</p> <p>However, there are several ways you can make money doing chores you do everyday, for other people. Whether you are a champion at ironing or can always pick the ripest fruit at the grocery store, here are four ways you can make additional income.</p> <h2>Doing laundry</h2> <p>For busy families, the laundry pile can quickly become a mountain. Between work and school, some people struggle to keep up. That means they often scramble to find clothes for the next day. That's a perfect opportunity for you to make money. You can charge families a fee to wash or iron their clothes and do it on your own schedule.</p> <p>One company that connects side hustlers with clients is <a href="http://www.laundrycare.biz/" target="_blank">Laundry Care</a>. Clients pay $35 per bag of laundry, which is about three loads. Contractors take home a percentage of the fee, and can earn extra money for doing additional services like ironing.</p> <h2>Shopping for groceries</h2> <p>If you don't mind the grocery store, you can make up to $25 an hour as a shopper for <a href="https://www.shipt.com/" target="_blank">Shipt</a> or <a href="https://www.instacart.com/" target="_blank">Instacart</a>. Clients place their orders online through the company apps, and shoppers can opt to fulfill orders that fit their schedules. You can take on jobs that work for you. If you're tight on time, you may decide to just complete one or two large orders a week. Or you can take several orders back-to-back when you need the cash. (See also: <a href="http://www.wisebread.com/21-fresh-food-delivery-services-that-can-save-you-big?ref=seealso" target="_blank">21 Fresh Food Delivery Services That Can Save You Big</a>)</p> <h2>Cleaning houses</h2> <p>If you enjoy keeping things clean, you can earn up to $22 an hour cleaning other people's homes. Rather than having a contract with a large, expensive cleaning company, some families prefer to hire someone as needed. And others just need someone for special occasions, such as when they're moving or having a party. You can make a good hourly wage when you have the time.</p> <p>If you have professional cleaning experience, and client references, you can sign up to work as a cleaner through <a href="https://www.handy.com/" target="_blank">Handy.com</a>. Handy will connect you directly with clients and you can select the gigs that match your needs.</p> <p>If you don't have experience, or want to set your own rates, you can set up an account on <a href="https://www.care.com/" target="_blank">Care.com</a>. Families can search for you when they need a cleaner, and Care.com handles the payments and administrative work for you.</p> <h2>Running errands</h2> <p>Whether it's dropping off the dry cleaning or picking up prescriptions, managing and making time for all of life's necessary errands can be difficult. To relieve some of the burden, many professionals hire help to handle those little chores for them. If you have some spare time and don't mind driving or walking around town, you can make extra money without much stress.</p> <p><a href="https://www.taskrabbit.com/" target="_blank">TaskRabbit</a> is one company that connects clients with on-demand help. From furniture assembly to making medical appointments, TaskRabbit workers provide much needed assistance. And depending on the job's requirements, you can make over $20 an hour. (See also: <a href="http://www.wisebread.com/find-a-side-gig-at-these-4-best-micro-jobs-sites?ref=seealso" target="_blank">Find a Side-Gig at These Micro-Job Sites</a>)</p> <p>Another service to check out is <a href="https://postmates.com/" target="_blank">Postmates</a>. Postmates is an on-demand delivery service for meals, office supplies, and more. If someone's phone charger broke and they need a new one, you can make money by picking it up for them and delivering it. You can make over $25 an hour as a Postmates courier.</p> <p>Doing extra laundry or running some simple errands can help you pay off debt or boost your emergency fund, empowering you to build more secure finances.</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/4-ways-to-make-money-doing-household-chores">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-surprising-ways-to-earn-money-online">7 Surprising Ways to Earn Money Online</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/15-ways-to-make-money-on-halloween">15 Ways to Make Money on Halloween</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-you-can-earn-18-to-25-an-hour-with-amazon-flex">How You Can Earn $18 to $25 an Hour With Amazon Flex</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-i-make-800-on-month-on-ebay-selling-used-clothes">How I Make $800 on Month on eBay Selling Used Clothes</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-to-earn-extra-money-with-your-car">7 Ways to Earn Extra Money With Your Car</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Extra Income Home chores cleaning earn extra money household chores income making money side gig side hustle Tue, 30 May 2017 08:30:12 +0000 Kat Tretina 1955478 at http://www.wisebread.com Does Your Net Worth Even Matter? http://www.wisebread.com/does-your-net-worth-even-matter <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/does-your-net-worth-even-matter" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-672689634.jpg" alt="Woman wondering if her net worth even matters" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Do you know your net worth? That's how much is left after subtracting your liabilities from the total value of your cash and assets.</p> <p>At first glance, figuring out how much you're worth may seem pointless. You're probably not going to bump Warren Buffett or Bill Gates from their spots on any &quot;World's Wealthiest People&quot; list anytime soon. But no matter how much you earn, knowing your net worth is important.</p> <p>Here are three reasons why monitoring your net worth can help you manage money better. (See also: <a href="http://www.wisebread.com/10-ways-to-increase-your-net-worth-this-year?ref=seealso" target="_blank">10 Ways to Increase Your Net Worth This Year</a>)</p> <h2>1. Your net worth doesn't lie</h2> <p>In our culture, it's easy to convince ourselves that we're doing better with money than we actually are. We can finance nice cars, pay for the latest fashions with plastic, and even &quot;buy&quot; a more expensive home than we can realistically afford. But our net worth tells it like it is, and that can be a very helpful financial wake-up call.</p> <p>In the personal finance classic, <a href="http://amzn.to/2qjAM5i" target="_blank">The Millionaire Next Door</a>, authors Thomas Stanley and William Danko draw an important distinction between people who look wealthy but aren't (they call them &quot;Big Hat, No Cattle&quot;), and those who don't look wealthy but are (where the title of their book came from). If you're going to build wealth, it's far better to be in the latter group.</p> <p>The concept of being unassumingly wealthy is also known as &quot;<a href="http://www.wisebread.com/5-reasons-stealth-wealth-is-the-best-wealth" target="_blank">stealth wealth</a>,&quot; and it's a lifestyle worth striving for. People with &quot;stealth wealth&quot; maintain a high net worth by avoiding dumping their cash into shallow, depreciative purchases. Their modest approach to money management allows them to achieve such dreams as early retirement, entrepreneurship, traveling the world, and more.</p> <p>After calculating your net worth, ask yourself: Do I look wealthier than I am, or am I wealthier than I look?</p> <h2>2. Your net worth shows whether you're making progress</h2> <p>To be sure, there are other ways to define your life and determine whether you're moving forward or backward. Tallying your net worth each year, however, and monitoring the trend that develops can be very helpful. If you're going to build a nest egg large enough to support your family in your later years, you need that trend to be moving in an upward direction.</p> <p>Earning more each year and increasing your standard of living may make you feel like you're getting ahead, but an increase in your net worth will show if you actually are.</p> <p>Of course, there will be occasional down years. The recession of 2007 to 2009 erased a lot of wealth, but those who didn't panic eventually recovered &mdash; and then some.</p> <h2>3. Your net worth helps you pinpoint financial issues</h2> <p>Each time you calculate your net worth (a natural time to do so is at the end of each year), don't just retain the bottom line number. Keep the components.</p> <p>On the asset side, track the value of your home (Zillow will give you an estimate), your retirement savings, other savings, the value of your car(s), and other assets. Then look at changes within each asset.</p> <p>With our household's retirement accounts, I don't just record the balance. I also record how much we contributed each year and how much our investments earned. How much we contribute is much more under our control than the returns we earn. I want to at least make sure we're doing our part. The earnings side is important as well. If you see year after year of meager returns, it's probably time to re-evaluate your investing process.</p> <p>On the liabilities side, track how much you owe on your house and other debts, such as vehicle and student loans. This annual exercise will provide a helpful reminder to perhaps put more focus on getting out of debt or make sure you're on track to be mortgage-free at least by the time you retire.</p> <h2>The big picture</h2> <p>To a great degree, net worth is an &quot;internal&quot; metric. It's mostly about how you're doing now compared to how you were doing last year and the year before.</p> <p>If you'd like more context, <em>The Millionaire Next Door</em> has an interesting way of defining &quot;wealthy.&quot; Whereas many people think of someone who has a net worth of $1 million or more as wealthy, Stanley and Danko's definition created more of a level playing field for people across the spectra of age and income: multiply your age times your annual pretax household income, divide by 10, and then subtract any inherited wealth. That, they said, is what your net worth should be.</p> <p>If you have significantly more than that, you have a low-consumption, high-wealth-building lifestyle and you're considered wealthy for someone of your age and income. If your net worth is significantly less than that, you're probably consuming too much of your income and investing too little. (See also: <a href="http://www.wisebread.com/6-money-moves-to-make-if-your-net-worth-is-negative?ref=seealso" target="_blank">6 Money Moves to Make If Your Net Worth Is Negative</a>)</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/does-your-net-worth-even-matter">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/these-13-numbers-are-the-keys-to-understanding-your-finances">These 13 Numbers Are the Keys to Understanding Your Finances</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-high-is-your-score-on-the-most-important-measure-of-wealth">How High Is Your Score on the Most Important Measure of Wealth?</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/are-your-assets-costing-you-too-much">Are Your Assets Costing You Too Much?</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-quiet-millionaire-parts-4-5-building-your-net-worth">The Quiet Millionaire: Parts 4 &amp; 5 - Building Your Net Worth</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/6-celebrities-with-shockingly-low-net-worths">6 Celebrities With Shockingly Low Net Worths</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance assets cash debts income investments liabilities metric net worth saving money wealth Wed, 17 May 2017 08:00:11 +0000 Matt Bell 1947498 at http://www.wisebread.com 5 Questions to Ask Before You Start Claiming Your Social Security Benefits http://www.wisebread.com/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-511524588 (1).jpg" alt="Couple asking questions before claiming social security benefits" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>According to a 2016 poll conducted by Gallup, 59 percent of retirees rely on Social Security payments as a major source of income. Odds are that you, too, will need Social Security benefits to cover at least <em>some </em>of your living expenses after you retire. Because of this, you'll want these benefits to be as large as possible when retirement actually arrives.</p> <p>Here are five key questions to ask before you start taking your Social Security benefits.</p> <h2>1. Are you willing to take a smaller monthly benefit for the rest of your life?</h2> <p>Taking Social Security benefits before your full retirement age will cost you in the form of a lower monthly payout. This payout will remain at this lower level for the rest of your life.</p> <p>You can determine how much of a hit you'll take claiming benefits early by visiting the Social Security Administration's <a href="https://www.ssa.gov/planners/retire/retirechart.html" target="_blank">retirement planner site</a>. As the site shows, if you start taking your Social Security payments before you hit your full retirement age, your monthly benefit will be lower.</p> <p>How much lower? If your full retirement age is 67 and you start taking your benefits at 62, your monthly Social Security payment will be reduced by about 30 percent. If you start taking them at 64, they'll be lower by about 20 percent. Even if you start taking them one year earlier at 66, they'll still be lower &mdash; by about 6.7 percent a month. And remember, this is for the rest of your life.</p> <p>As you can see, claiming benefits early can significantly reduce the amount of money you receive each month. Let's say you are slated to receive $1,000 a month in Social Security benefits and your full retirement age is 67. If you started taking your benefits at age 62 &mdash; the earliest you can take them &mdash; your monthly benefit would fall to $700.</p> <h2>2. Can you continue working?</h2> <p>While retiring early reduces your monthly Social Security benefits, working past your full retirement age actually increases them.</p> <p>The Social Security Administration says that if you delay receiving your Social Security benefits until you hit 70, your monthly payment will be 32 percent higher than if you had retired at full retirement age.</p> <p>Say your full retirement age is 66, and you'd receive $1,000 from Social Security every month starting at that age. If you wait to start claiming your benefits until you turn 70, your monthly payment would rise significantly to $1,320. You'd just have to determine whether you could hold off on receiving those payments until your 70th birthday.</p> <h2>3. How much have you saved for retirement?</h2> <p>Most people can't survive on Social Security benefits alone during their retirement years. Instead, they rely on a mix of savings from different sources &mdash; everything from 401(k) plans, to IRAs, to annuities.</p> <p>How much you've saved for retirement will play a key role in how early you should take your Social Security benefits. If you've saved a significant amount of money for retirement, you might not need as large a monthly Social Security payment to meet your retirement goals. But if you haven't saved much, you might need that larger benefit payment. At the same time, working for a few extra years might help you boost your retirement nest egg, at least by a bit.</p> <h2>4. How healthy are you?</h2> <p>While there are financial upsides to waiting to claim your Social Security benefits, there are also times when this doesn't make sense. Often, this depends on your health.</p> <p>If you're not healthy, you might need to retire early for your physical wellbeing. And while it's impossible to predict how long you'll live after retiring, if you're suffering from health problems, your post-retirement life might not last as long. Retiring as early as possible, and claiming those Social Security benefits earlier, might then be the best choice. (See also: <a href="http://www.wisebread.com/3-reasons-to-claim-social-security-before-your-retirement-age?ref=seealso" target="_blank">3 Reasons to Claim Social Security Before Your Retirement Age</a>)</p> <h2>5. What kind of retirement do you want?</h2> <p>How do you plan to spend your retirement years? Are you looking forward to quiet days spent with your grandchildren, reading books, and pursuing a hobby? Or do you want to travel the world?</p> <p>If you're looking for a lower-key, less-costly retirement, taking your benefits early &mdash; and receiving smaller Social Security payments &mdash; might make sense. But if you want a busier, more extravagant retirement, holding off until full retirement age, or later, might be the smarter choice.</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/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits">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/3-reasons-to-claim-social-security-before-your-retirement-age">3 Reasons to Claim Social Security Before Your Retirement Age</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-smart-ways-to-boost-your-social-security-payout-before-retirement">6 Smart Ways to Boost Your Social Security Payout Before 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/5-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</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/three-of-the-toughest-decisions-youll-face-in-retirement">Three of the Toughest Decisions You&#039;ll Face 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/heres-how-you-should-budget-your-social-security-checks">Here&#039;s How You Should Budget Your Social Security Checks</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement benefits early retirement full retirement age health Teaser: income social security Mon, 08 May 2017 09:00:08 +0000 Dan Rafter 1940328 at http://www.wisebread.com 6 Reasons It's Never Too Late for a Career Change http://www.wisebread.com/6-reasons-its-never-too-late-for-a-career-change <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-reasons-its-never-too-late-for-a-career-change" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-509227828.jpg" alt="Woman learning it&#039;s never too late for a career change" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Life's too short to spend your workday being unhappy. If you're dreading going into the office, it's time to grab your career by the horns and switch things up. It's never too late &mdash; and here's why. (See also: <a href="http://www.wisebread.com/8-signs-you-should-quit-your-job?ref=seealso" target="_blank">8 Signs You Should Quit Your Job</a>)</p> <h2>1. You shouldn't wake up every morning dreading the workday</h2> <p>I've been my own boss for the past nine years, ditching the nine-to-five grind shortly after moving to Manhattan in 2008. I didn't like working a thankless job every day while I made somebody else better off than myself. I chose a harder road &mdash; it's not easy paying your bills on time when you're responsible for your own income &mdash; but it's provided me a freedom that has facilitated an overall happiness in my life.</p> <h2>2. Your skills may be transferable (or you can learn new ones)</h2> <p>Many people are afraid they're not qualified for a career change, but unless you have a very specific job with specific qualifications, chances are your skills are transferable. But even if what you want to do requires a particular skill that you're lacking, you still may be able to find educational resources to help you learn. (See also: <a href="http://www.wisebread.com/how-to-make-a-major-career-switch-without-going-back-to-school?ref=seealso" target="_blank">How to Make a Major Career Switch Without Going Back to School</a>)</p> <h2>3. You're never too old to start something new</h2> <p>I might sound like one of those motivational posters here, but you're only limited to what you limit yourself to. Perhaps you're hesitant to apply for a certain job because you think you're too old. But it's important to ask yourself first &mdash; too old for what, for whom?</p> <p>You'll never know what the outcome of a situation will be unless you throw yourself into it. You have to apply to a job to know whether or not you're qualified. Every individual brings his or her unique perspective &mdash; and yours may be the one the company is looking for. Either way, it's worth a shot, and certainly better than sitting at home feeling sorry for yourself.</p> <h2>4. It doesn't matter how many years you've invested in your current company</h2> <p>I hate to break this to you, but, in all likelihood, your company will drop you like a bad habit when it no longer has any use for you. As such, you shouldn't feel obligated to stay with an organization just because you've been there forever and they've been good to you. That's great, and you should probably thank them for it, but that doesn't mean you owe them a lifetime of service (especially if you don't have a pension). If you feel like it's time to move on, it's time to move on. Eat the farewell cake, say your goodbyes, and press ahead.</p> <h2>5. You can probably accommodate a change of income</h2> <p>Most of us are looking for upward financial mobility when changing careers, but it's not the end of the world if the job that will make you happy pays a bit less. I'm not encouraging you to send yourself or your family into debt because of it, but if you have the option to downsize your life and reduce your monthly budget to accommodate your new, lower-paying career, by all means do it. Money isn't everything. If you can live just fine with less of it and still wake up with a smile on your face, you're doing something right.</p> <h2>6. Many companies also want to switch things up</h2> <p>The traditional workplace is undergoing massive changes to accommodate modern appetites for flexible hours, less commuting, working from home, and so on. Top candidates take roles at one company for a few years before being offered something more interesting and moving on. Companies no longer expect lifelong service in the way they used to, and these changing attitudes have paved the way for businesses in general to be more flexible in the way they attract talent.</p> <p>All of this means that now, more than ever, it's easier to take the plunge and try a new career.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/6-reasons-its-never-too-late-for-a-career-change">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/why-nows-the-right-time-to-jumpstart-your-career">Why Now&#039;s the Right Time to Jumpstart Your Career</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-4-jobs-people-quit-the-most">The 4 Jobs People Quit the Most</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-you-should-quit-your-job">8 Signs You Should Quit Your Job</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-ways-working-from-home-can-save-and-cost-you-big">10 Ways Working From Home Can Save (And Cost) You Big</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/9-jobs-you-may-not-have-considered-but-should">9 Jobs You May Not Have Considered (But Should)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Career and Income career changes happiness income jobs never too old quitting resigning skills working Thu, 27 Apr 2017 20:00:10 +0000 Mikey Rox 1934993 at http://www.wisebread.com 7 Lessons From Tax Day to Remember for Next Year http://www.wisebread.com/7-lessons-from-tax-day-to-remember-for-next-year <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-lessons-from-tax-day-to-remember-for-next-year" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-546177866.jpg" alt="Woman learning tax lessons she should&#039;ve learned this week" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Cue the sigh of relief: Another tax season has come and gone. Before you kick back and relax, though, take a little moment of self-reflection. Did Tax Day make your stress levels soar?</p> <p>If the answer is yes, it's time to brush up on a few key lessons to take with you into the 2017 tax year. We guarantee you'll be breathing a little easier come next April.</p> <h2>1. Keep track of all your income</h2> <p>Specifically, don't forget about taxes you'll need to pay on any income you earn during the year outside of a full-time job. This includes money from freelance work or self-employment, dividends on investments, interest payments, and even gambling winnings. Be sure to track all of this income so that you're not surprised by a tax bill later.</p> <h2>2. Save all of your paperwork</h2> <p>Make sure you keep careful track of any forms and paperwork necessary to file your taxes. This includes your W-2 or any 1099s, as well as documents from banks, investment firms, and your mortgage company. These forms are usually sent out in February.</p> <p>More immediately, if you make any contributions to charity, you'll need the documentation. If you own a small business, you'll need receipts for all expenses you plan to deduct. If you plan to seek deductions for any unreimbursed medical expenses, you'll need a bill from your health care provider. All of these are important in order to enter accurate information on your tax return. As you gather them throughout the year, set them aside in a file or box that you keep in a safe place.</p> <h2>3. Deductions and credits are your friends</h2> <p>A credit is a straight reduction in your tax bill. A deduction means you reduce the amount of your income that is taxable. Either way, these tax breaks should not be overlooked.</p> <p>You can get a tax credit for having a kid. You can get a tax deduction if you pay interest on your mortgage. You can get a tax deduction for charitable donations. There are even deductions and credits for using energy-efficient appliances or driving a hybrid car. The list of possible deductions and tax credits is massive, and chances are, you qualify for at least a few. Most tax preparers and tax preparation programs will walk you through these deductions and credits to make sure you're getting the maximum benefit. If you haven't paid much attention to potential tax deductions or credits in the past, however, make sure you start this year. It could save you significant money.</p> <h2>4. Understand how tax-advantaged investment accounts differ</h2> <p>In addition to claiming tax credits and deductions, you can reduce your tax bill in advance simply by saving for retirement. If you use a 401(k), traditional IRA, or Roth IRA to build your nest egg, there are considerable tax advantages, and you need to understand the main differences.</p> <p>With a 401(k) and traditional IRA, any money you contribute to your account throughout the year will be deducted from your taxable income now. In some cases, this could move you into a lower tax bracket and save you considerable money on this year's tax bill. With a Roth IRA, money you contribute is taxed now, but you will not have to pay taxes on any investment gains when you withdraw the money at retirement.</p> <h2>5. If you are getting a big return, that's not a good thing</h2> <p>Getting money back on your taxes is certainly better than owing so much to the IRS that you pay a penalty. But if you are getting a considerable amount back after filing your return, you may have had too much taken out of your paycheck and overpaid taxes throughout the year. So in a sense, the government has been holding onto your money interest-free for no reason when you could have been using it for yourself. To make sure this doesn't happen again, ask your employer for a new W-4 and increase the number of exemptions you claim.</p> <h2>6. If you make a mistake, you can amend your return</h2> <p>Tax time can be nerve wracking because people are petrified of making a mistake and having the IRS come after them. But the actual chances of the government knocking on your door are quite low. The IRS simply does not have the staff to audit many individuals, and when they do, they usually target either very wealthy people or people with very complicated tax returns.</p> <p>If you do discover that you made a mistake, you can file an amended return without much hassle. Simply file Form 1040X, Amended Tax Return, along with the corrected (or missing) documents you did not originally file with your return. This happened to me once when I forgot to report some dividend income, and I never had the taxman knock on my door. (See also: <a href="http://www.wisebread.com/the-easiest-way-to-avoid-a-tax-audit?ref=seealso" target="_blank">The Easiest Way to Avoid a Tax Audit</a>)</p> <h2>7. Use your taxes as a learning opportunity</h2> <p>Even with all these lessons under your belt, tax time can still be a tedious and stressful time of year. When all else fails, change your perspective. I personally find the process of doing taxes to be fairly educational. You can see a clear picture of how much money you actually took in during the year, and how much the government takes. The process of finding deductions can be a learning experience as well. If you approach doing your taxes with an attitude of curiosity, you may find the whole process to be less painful.</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/7-lessons-from-tax-day-to-remember-for-next-year">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-common-tax-mistakes-we-need-to-stop-making">5 Common Tax Mistakes We Need to Stop Making</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-7-most-common-tax-questions-for-beginners-answered">The 7 Most Common Tax Questions for Beginners, Answered</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-easiest-way-to-avoid-a-tax-audit">The Easiest Way to Avoid a Tax Audit</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/what-to-do-when-your-tax-preparer-makes-a-mistake">What to Do When Your Tax Preparer Makes a Mistake</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/101-tax-deductions-for-bloggers-and-freelancers">101 Tax deductions for bloggers and freelancers</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes advice audits credits deductions forms income investing IRS tax lessons tax returns w-2 Fri, 21 Apr 2017 08:00:10 +0000 Tim Lemke 1931721 at http://www.wisebread.com How "Carried Interest" May Affect Our Taxes http://www.wisebread.com/how-carried-interest-may-affect-our-taxes <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-carried-interest-may-affect-our-taxes" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-508011393.jpg" alt="what is carried interest" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>A lot has happened since now-president Donald Trump and candidate Hillary Clinton debated on October 9 at Washington University in St. Louis. If you're like most taxpayers, you probably don't remember the candidates bantering about something called &quot;carried interest.&quot;</p> <p>During the debate, Trump was asked what steps he'd take to make sure that the wealthiest of U.S. taxpayers pay a fair share of taxes. Trump responded by saying that he'd eliminate carried interest. What Trump actually meant, though, was that he would change the way carried interest is taxed. Clinton, too, supported making this change. And so did former president Barack Obama.</p> <p>You can be forgiven if you have no idea what carried interest is. That's because it's something that only benefits the general partners who manage private equity and hedge funds. And most of us can't invest in these private funds because it is so expensive to do so. Investors must usually pony up at least $250,000 to make an investment in one of these funds.</p> <p>Carried interest is one way that the managers of these expensive hedge funds and private equity funds make a profit. But just because carried interest only benefits a select few, doesn't mean that it's not important to the U.S. economy. According to the Tax Foundation, if Congress taxed carried interest as ordinary income, it could <a href="https://files.taxfoundation.org/legacy/docs/TF_Options_for_Reforming_Americas_Tax_Code.pdf" target="_blank">cost the country 2,200 jobs</a>. On the positive side, the Tax Foundation said that changing how carried interest is taxed would also generate about $15 billion during the next 10 years in the form of more taxes sent to the federal government.</p> <h2>What Is Carried Interest?</h2> <p>The best way to understand carried interest is to look at your own investing habits. Say you invest some money in a stock. You hold onto that stock for five years, and its value rises. You then sell the stock and earn a solid profit.</p> <p>That profit is known as a capital gain, and you have to pay taxes on it. But the tax rate for a capital gain is lower than the tax rate for standard wages and income. In general, wages and salary income is taxed at a top rate of 39.6%. Capital gains, though, are taxed at a top rate of 23.8%.</p> <p>You can then see that income made from capital gains is even more valuable than the income you make from your salary.</p> <p>The same basic concept holds true for the managers of hedge and private equity funds. These managers are paid from fees generated by the fund. But they are also paid in carried interest, which is a share of the profits made by the fund. If the fund increases in value, the managers of the fund receive a financial boost in the form of carried interest.</p> <p>Today, carried interest is taxed as capital gain income, not as salary or wage income. Obviously, this is a nice perk to fund managers, who have to pay less in taxes on carried interest.</p> <h2>How Should It Be Taxed?</h2> <p>During the campaign, Trump said that carried interest should be taxed the same way the country taxes ordinary income. Why? Because carried interest is really part of the salary of a fund manager. So why shouldn't it be taxed that way?</p> <p>Others, though, make a different argument. The Tax Policy Center cites the common argument that fund managers should not be viewed as typical workers, but <a href="http://www.taxpolicycenter.org/briefing-book/what-carried-interest-and-how-should-it-be-taxed" target="_blank">rather as entrepreneurs</a>. Entrepreneurs are allowed to treat part of their financial returns as capital, and fund managers should be given the same tax break, according to this argument.</p> <p>Will Congress ever change the way carried interest is taxed? That's probably not a priority right now. And you can bet that most U.S. taxpayers will remain unaware of what carried interest even is.</p> <p>But the topic of carried interest might come up again whenever politicians, financial experts, and policymakers debate how the country can make its tax code fair to everyone.</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/how-carried-interest-may-affect-our-taxes">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/did-your-parents-give-you-a-whole-life-insurance-policy-heres-what-to-do-with-it">Did Your Parents Give You a Whole Life Insurance Policy? Here&#039;s What to Do With It.</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-reasons-to-invest-in-stocks-past-age-50">7 Reasons to Invest in Stocks Past Age 50</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-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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/101-tax-deductions-for-bloggers-and-freelancers">101 Tax deductions for bloggers and freelancers</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/should-you-take-out-a-loan-backed-by-your-investments">Should You Take Out a Loan Backed by Your Investments?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Taxes capital gains carried interest donald trump fund managers income tax advantages wealthy Mon, 13 Mar 2017 10:30:10 +0000 Dan Rafter 1904507 at http://www.wisebread.com 3 Ways More Money in Retirement Might Cost You http://www.wisebread.com/3-ways-more-money-in-retirement-might-cost-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/3-ways-more-money-in-retirement-might-cost-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-622064048.jpg" alt="Learning how more money in retirement might cost you" title="" class="imagecache imagecache-250w" width="250" height="142" /></a> </div> </div> </div> <p>You might think that there is no such thing as too much money in retirement. After all, without a steady income from working, you need your retirement nest egg to last you throughout your golden years. So more money must be better, right?</p> <p>Well, as The Notorious B.I.G. once said, the more money we come across, the more problems we see &mdash; even in retirement. While I would never discourage anyone from saving as much as they can for retirement, it is a good idea to recognize what kinds of additional problems a large retirement portfolio could cause you.</p> <p>Here's what you need to know about the potential pitfalls of having more money in retirement:</p> <h2>1. You Will Owe Taxes on Tax-Deferred Retirement Accounts</h2> <p>According to the Bureau of Labor Statistics, as of December 2016, <a href="https://www.bls.gov/opub/btn/volume-5/pdf/defined-contribution-retirement-plans-who-has-them-and-what-do-they-cost.pdf" target="_blank">44% of all workers</a> were participating in a tax-deferred defined contribution plan, such as a 401K or an IRA. These types of retirement accounts allow workers to put pretax dollars aside for their retirement, where the money grows tax-free. Once you reach age 59&frac12;, you may withdraw money from such tax-deferred accounts without penalty.</p> <p>The potential trouble comes from the fact that any distribution you take from your tax-deferred account is taxable as ordinary income. This means that you will be taxed on that income in the same way you would be taxed on the same amount of income from a job. Because of the taxes you will owe on your distributions, the money in your tax-deferred retirement account is worth less than the dollar amount.</p> <p>Since many workers anticipate having a lower tax bracket in retirement than they do during their career &mdash; that is, they expect to have a much lower retirement income than career income &mdash; it makes sense to put off the taxes they will pay on the money in their 401K or IRA until after retirement. However, for anyone who manages to create a large retirement portfolio from a modest salary during their career, the tax burden in retirement will be much larger.</p> <h2>2. Required Minimum Distributions May Force You to Withdraw Money You Don't Want</h2> <p>If you put money aside into a tax-deferred account, the IRS will want to see its cut of the money eventually. For that reason, the IRS requires each account holder to begin withdrawing money during the year that he or she reaches age 70&frac12;. There is a minimum amount you must withdraw, and the IRS levies a stiff penalty for failing to do so &mdash; you will owe 50% of the amount that should have been withdrawn.</p> <p>In addition, the required minimum distribution is calculated based on your date of birth, the balance of each tax-deferred account as of December 31 of the previous year, and one of three <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/required-minimum-distribution-worksheets" target="_blank">IRS distribution tables</a>. That means your required minimum distribution must be recalculated each year using your new end-of-year balance from the previous year and your new distribution period according to the IRS distribution table. Getting the amount wrong can be potentially costly, and if you have a great deal of money in your tax-deferred accounts, you will be required to take more money than you necessarily want to access in one year.</p> <p>Don't forget, this required minimum distribution is also taxed as regular income (as we discussed above), so in addition to potentially withdrawing money you don't want, you will also owe taxes on the amount that you are required to withdraw.</p> <h2>3. You Will Be Taxed on Your Social Security Benefits</h2> <p>Many people are unaware of the fact that up to 85% of their Social Security benefits may be subject to income tax in retirement. The higher a retiree's non-Social Security income, the more likely it is that they will owe taxes on their Social Security check.</p> <p>The way the IRS determines whether your benefits are taxable is by calculating something known as provisional income. The formula for determining the provisional income is: One-half of your Social Security benefits, plus all your other income, including tax-exempt interest. (While tax-exempt interest is included in this calculation, tax-free distributions from a Roth IRA are not.)</p> <p>Your provisional income is compared to an upper and lower base amount to determine how much of your Social Security benefits are taxed, if any. If you file as single, then your lower base amount is $25,000. If your provisional income is above that amount, then you owe taxes on 50% of your Social Security benefits. The upper base amount for single filers is $34,000. If your provisional income is above that amount, then you owe taxes on 85% of your Social Security benefits.</p> <p>What this means is that the more money you take from your retirement accounts, the more of your Social Security benefits are considered taxable.</p> <p>For instance, if you are single and you take $38,000 from your IRA in retirement each year, then you are in the <a href="https://taxfoundation.org/2017-tax-brackets" target="_blank">25% tax bracket</a> and you owe taxes on 85% of your Social Security benefits since your income is above the upper base limit. If you decide to withdraw an additional $1,000 from your IRA one year, your additional $1,000 in income will cause $850 more of your Social Security income to be considered provisional income, making it subject to taxation at your marginal tax rate of 25%. You'll owe $462.50 on your $1,000 withdrawal ($1,850 x 25% = $462.50) between your IRA taxes and your Social Security benefit taxes.</p> <h2>More Money in Retirement Is a Good Problem to Have</h2> <p>Though having a large nest egg may cause some headaches after your retirement, it's important to remember that this is a better problem to have than facing retirement <a href="http://www.wisebread.com/10-signs-you-arent-saving-enough-for-retirement" target="_blank">without enough savings</a>. Just recognize that large amounts of money need to be properly managed and you need to stay on top of your financial life post-career. You can handle each of the financial problems that you may see with a larger retirement portfolio, as long as you are aware of them and prepared for them.</p> <p> &nbsp;</p> <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/3-ways-more-money-in-retirement-might-cost-you">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/heres-how-your-taxes-will-change-when-you-retire">Here&#039;s How Your Taxes Will Change When You Retire</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/why-tax-day-is-april-15-and-other-weird-financial-deadlines">Why Tax Day Is April 15 and Other Weird Financial Deadlines</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-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</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/three-of-the-toughest-decisions-youll-face-in-retirement">Three of the Toughest Decisions You&#039;ll Face 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/heres-how-you-should-budget-your-social-security-checks">Here&#039;s How You Should Budget Your Social Security Checks</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Taxes 401k benefits contributions income IRA social security tax brackets tax-deferred Wed, 08 Mar 2017 10:00:10 +0000 Emily Guy Birken 1901333 at http://www.wisebread.com