Today’s top story: Preparing your home for the winter months. Also in the news: Common credit card myths, how to save on your Thanksgiving travel, and what you shouldn’t buy on Black Friday.
Seven Essential Home Maintenance Tips for Winter
Preparing your home for the cold months ahead.
5 Common Credit Card Myths
Time for some mythbusting.
Money Saving Tips For Thanksgiving Travel 2013
Going over the river and through the woods doesn’t have to cost a fortune.
How to prepare your ‘retirement landing’
Avoiding turbulence as you approach the runway.
13 Things Not to Buy on Black Friday
Just because it’s on sale doesn’t mean it’s a bargain.
Today’s top story: How to manage your elderly parents’ money and protect them from identity theft. Also in the news: Changes to health savings accounts, open enrollment season, and personal finance tips from evil millionaires.
How to Manage Your Elderly Parent’s Money
Protecting elderly parents from identity theft.
The Best Personal Finance Tips from Evil Millionaires
Who better to learn from?
How to Make Smart Benefits Choices for 2014
How to approach open enrollment season for 2014.
7 Tips to Cut Flight Costs During the Holidays
How to arrive at your holiday destination for less.
Treasury Loosens Rules on Health Spending Accounts
Up to $500 can be rolled over to the next year IF your company offers the option.
Today’s top story: Fighting back against bad credit. Also in the news: financial horror stories, retiring on one million dollars, and mastering your finances through TED talks.
Haunted By Bad Credit? 5 Ways to Fight Back
Busting the ghosts of bad credit.
Top 5 TED Talks to Master Your Finances
Listening to the experts.
6 Financial Horror Stories That Could Happen to You
Read with the lights on.
Can you retire worry-free on $1 million?
10 people you’re not tipping enough
Tips on tipping.
Today’s top story: Tackling your financial fears. Also in the news: How to trust your financial advisor, curbing holiday spending, and how to sell your haunted house.
Fear of Finance: 5 Tips to Make Dealing With Money Less Scary
It’s time to face your fears head-on.
How Do I Know I Can Trust My Financial Advisor?
Trust is key.
Wellness quantified: These 6 healthy habits will save you money
Nurturing your wallet can be as important as nurturing your body.
3 Ways to Curb Pre-Holiday Money Stress
These tips could help you actually enjoy the holidays.
Real Haunted Houses: What Owners Need to Know
How to sell your house and the spirits hanging out in the attic.
Today’s top story: What veterans need to know about VA mortgages. Also in the news: Generation Y and retirement, the dangers of car title loans, and what the World Series and retirement have in common.
What Veterans Need to Know About Getting a Home Loan
Navigating the world of VA mortgages.
Retirement Tip for Gen Y: Save Now!
Taking control of your financial future.
The Consumer Perils of a Car Title Loan
Easy money can come at a huge price.
7 Things the World Series Can Teach Us About Retirement
Be prepared for extra innings.
The five worst things you can do with your money
Short of just setting it on fire.
Dear Liz: I’m in my late 60s and plan to retire in about two years. I have a pension that will pay close to my current take-home income. I also have about $500,000 in annuities and IRAs. These plus Social Security make retirement look good. But right now finances are tight. Should I continue to put $1,300 a month into my retirement plan or use that money for expenses and travel now — while we’re still relatively young?
Answer: You appear to be in the fortunate position of being able to try a “practice retirement.”
The term was created by mutual fund company T. Rowe Price after it discovered that people who have saved substantial amounts for retirement by age 60 may not have to save much more to have a comfortable retirement. Just putting off the day when they take Social Security and tap their retirement funds may be enough. That’s because Social Security benefits grow about 7% to 8% a year, plus inflation adjustments, for each year you delay starting your checks. Not starting retirement plan distributions also allows your nest egg to grow, and the delay shortens the length of retirement you’ll need to cover.
T. Rowe Price found that people who have saved four to eight times their annual income by their early 60s may be able to crank back on their retirement contributions. Instead, they could use the money to “practice retirement” by taking some trips and doing some of the other things they had planned for golden years while continuing to work.
The company recommends practice retirees continue to contribute enough to employer retirement plans to get any available match (it’s free money, after all), while delaying the start of Social Security to age 70 if possible.
T. Rowe Price researchers assumed that its practice retirees would live only on their savings and Social Security. The fact that you have such a generous pension means you may not need as much saved as they recommend. In any case, if this idea appeals to you, run it past a fee-only financial planner who can review your situation and ensure the plan is viable for you.
Dear Liz: I’m beginning to realize that I have no idea how to budget. I make plenty of money but always seem to come up short. I’m trying to find the best person to help me make a budget. Do I talk to a CPA or a financial counselor? If so, how do I find the right person?
Answer: Budgeting has three basic steps: figuring out where your money is going now, deciding where you want it to go in the future, and monitoring your spending to make sure you stay on track with those goals.
Just because something is simple doesn’t mean it’s easy, however. People often fail to account for predictable but irregular expenses, such as car repairs. Once those crop up, the budget is thrown into disarray and people often give up on the spending plan.
Budgeting also can be difficult if you’re overspending on your overhead. If too much of your income is going for basic expenses, you may not have enough left over to live a comfortable life, pay off debt and save for the future, regardless of how many other expenses you trim. People who spend too much on shelter (mortgage or rent) and transportation (car payments and attendant costs) in particular often find they can’t create a balanced budget. Your “must haves” — shelter, transportation, food, utilities, insurance and minimum loan payments — ideally should be 50% or less of your after-tax income to create a workable budget.
Some people find that online solutions, such as the Mint.com financial tracking site, are enough to get them started with a budget. Other people need hands-on help. If your tax pro or financial advisor has experience helping people create and monitor budgets, that’s certainly one place to turn. Otherwise, check to see whether your local community college offers basic money management courses. Another option is a nonprofit agency affiliated with the National Foundation for Credit Counseling at http://www.nfcc.org. Many of these agencies offer classes or hands-on help creating budgets.
Today’s top story: Four credit card strategies to get you through the holidays. Also in the news: Bank of America teams up with Khan Academy, how to recover from a setback in retirement planning, and how to make saving money a little less painful.
4 Holiday Credit Card Strategies
Don’t go into holiday shopping without a battle plan.
Tips for Recovering from a Financial Setback in Retirement
Don’t let a momentary setback derail your long term goals.
Khan Academy Teams Up with Bank of America
The duo will offer personal finance lessons.
5 Big Budgeting Mistakes Most People Make
Tracking your actual expenses is absolutely crucial.
5 Ways to Make Saving Money a Little Easier
Simple tips to take the sting out of saving money.
NerdWallet recently published a fascinating study contending that high debt loads will prevent today’s college graduates from retiring before age 73. I have a few nitpicks with the study, but the underlying message is clear: millennials will have to be a lot smarter than previous generations if they want a decent, on-time retirement.
First, my nitpicks. NerdWallet contends the current average retirement age is 61. It’s actual 62 for women and 64 for men, according to the most recent research by Alicia Munnell, director of the influential Center for Retirement Research at Boston College. (Munnell authored another interesting brief showing that the “real” Social Security retirement age is now 70, which gives people the same expected length of retirement they had back in 1940. Furthermore, an argument could be made to move it to 73 for millennials, who will live even longer than Boomers. I won’t make that argument, though, since I wouldn’t have to wait that long…I’m sure most others wouldn’t, either.)
The NerdWallet study also assumes that paying off student loans inevitably will prevent millennials from making significant contributions to their retirement funds for the first 10 years of their careers—years when they would get the most benefit from retirement contributions. Thanks to the miracle of compounding, $1,000 contributed to a retirement account can grow to $20,000 or more by retirement age. Wait 10 years to contribute that first $1,000, and your growth is cut by half, to $10,000.
So here’s what millennials should know:
Retirement contributions can’t wait. Retirement really has to be your top priority from the time you get your first paycheck. You can’t get back lost opportunities to save and nothing—including debt repayment—is more important than this.
Don’t be in a rush to pay back student loans. Federal student loans, especially, are flexible debt with a ton of consumer protections. If you can’t pay your student loans and contribute to a retirement fund, then consolidate your loans to a longer payback period so that you can put some money away for tomorrow. Yes, you’ll pay more interest on your loans, but that cost will be swamped by the growth of your retirement accounts once you factor in the tax breaks and compounding you’ll get. If you have a company match, the calculation’s even more of a slam dunk.
Get a better 401(k). Beggars can’t be choosers, and many millennials will have to take what they can get in this very tough job market. As they build their skills and networks, though, they should start looking for positions with companies that offer good 401(k)s with generous matches. In the meantime, they should contribute to any workplace plan that’s offered. No plan? Set up an IRA with automatic transfers to fund it. You’ve got to find a way to save if you want to quit work someday.
Today’s top story: The warning signs of elder financial exploitation. Also in the news: Five harmless things that can hurt your credit, news apps to help college and financial aid searches, and what to do if you win the lottery.
Warning Signs of Elder Financial Exploitation
How to detect financial exploitation of our seniors.
5 Seemingly Harmless Things That Can Hurt Your Credit
How library fees and traffic tickets can ding your credit score.
20 new apps to help your college and financial aid search
Finding financial aid from your smart phone.
7 Painless Ways to Cut Expenses in Retirement
Ways to cut back without feeling the pinch.
Spending: What you need to know about winning a lottery
Someone has to win.