Wednesday’s need-to-know money news

Today’s top story: How to max out your Roth IRA in 2018. Also in the news: Why smarter cars aren’t saving us money on car insurance, 4 tax breaks that could help those caring for elderly parents, and 5 money moves that will help you retire early.

How to Max Out Your Roth IRA in 2018
Tips to keep you on track.

Why Smarter Cars Aren’t Saving Us Money on Car Insurance
Need a little more time.

If You’re Caring for Elderly Parents, 4 Tax Breaks May Help
See what’s available to you.

5 Money Moves That Will Help You Retire Early
Strategic planning.

Thursday’s need-to-know money news

Today’s top story: 5 tips to get back on budget after the holidays. Also in the news: Thinking twice about that in-flight credit card offer, how a Roth IRA works, and how paying your child an allowance can pay off in the long run.

5 Tips to Get Back on Budget After the Holidays
Reigning in the spending.

Think Twice About That In-Flight Credit Card Offer
Reading the fine print.

How Does a Roth IRA Work?
Know this important retirement tool.

Paying allowance can pay off, if you do it right
How much is enough?

Tuesday’s need-to-know money news

Today’s top story: Resolving to slim down your credit cards in the new year. Also in the news: Why you need a Roth IRA even if you have a 401(k), how to reach your 2018 travel goals with credit card rewards, and what to know about the major cryptocurrencies besides Bitcoin.

This New Year, Resolve to Slim Down Your Credit Cards
Taking a look at balance transfer cards.

Why You Need a Roth IRA — Even If You Have a 401(k)
Unique benefits.

How to Reach 2018 Travel Goals With Credit Card Rewards
Maximizing your miles.

What to Know About the Major Cryptocurrencies Besides Bitcoin
Etherium, Litecoin and more.

Q&A: How to balance using retirement savings wisely with enjoying what you’ve earned

Dear Liz: I am 82, and my husband is 85. We are retired military, so we have a middling pension and some Social Security. Our monthly income of about $5,000 covers our monthly expenses. We rent in an independent living senior community. We have excellent health benefits via Tricare for Life. We both worked hard and are very thrifty. We have no debts.

We have savings of about $320,000. Our kids say we should spend some of our savings on cruises and things, but we just can’t let go! Are we in danger of running out of money? I am getting tired of always cooking and would like to eat out now and then. We do not want to be a burden for our kids and grandkids.

Answer: Your kids have the right idea. While you can, you should be enjoying some of the pleasures you’ve earned. You’re also smart to be careful.

You face at least two major threats to your financial stability. One is a reduction in income when one of you dies. The survivor will receive one Social Security check instead of two, and the pension income could go away or be reduced, depending on the payment option chosen at retirement.

The other threat is the potential need for custodial care. A long stay in a nursing home or a prolonged period where you need help at home could eat through most if not all your savings. Custodial care that helps people perform daily activities such as bathing, dressing, eating or toileting is not covered by Medicare or other health insurance, including Medicare supplements or wraparounds like the plan you have. Instead, Medicare covers limited periods of skilled nursing care, which typically requires licensed nurses to provide, while supplemental and wraparound policies can help pay co-insurance for such care.

There is a government program that pays for custodial care, called Medicaid. To qualify, the person needing care typically must have no more than $2,000 in assets. The spouse is allowed to have up to $120,900, although the limit can be lower depending on the state.

A visit with a fee-only financial planner could help you determine how much you need to prepare for these events. With that information, you should have a better idea of how much more you can safely spend.

Q&A: There’s a big difference in various kinds of bonds

Dear Liz: My mutual funds and IRA are mostly in stocks with very little in bonds. I’m thinking I should have more in bonds, but just don’t know how much I should transfer from the stock funds and which bond fund to pick. Are they all the same?

Answer: Just as with stock funds, bond funds have different compositions, fees and investment philosophies. There’s a fairly big difference, for example, between a rock-solid U.S. Treasury bond and a “junk” or low-rated bond.

There’s also a difference in fees between funds that are trying to beat the market (active management, which is more expensive) versus merely matching the market (passive management, which is less expensive and typically offers better results).

The ideal asset allocation, or mix of stocks, bonds and cash, also varies depending on your age and risk tolerance. There are a variety of asset allocation calculators on the web you can try, or you can consult a fee-only planner.

Another option is turn the task over to a target date retirement fund, which manages the mix for you, or a robo-advisor, which invests according to computer algorithms.

Whatever you do, keep a sharp eye on the fees you’re charged. The average bond fund had an expense ratio of 0.51% in 2016, according to the Investment Company Institute. There’s little reason to pay much more than that, and ideally you’d try to pay less.

Q&A: Saving for retirement can’t wait

Dear Liz: I have a family member who at 57 has no savings, a house whose value is 58% mortgaged and debt from a family member of $180,000.

This person is just starting a new job that will cover expenses with about $1,000 left over each month. The job offers a 401(k) but doesn’t allow contributions until employees have been with the company for eight months.

This person has paid into Social Security so that will be there (hopefully!) at retirement. What would be the best way for this person to start saving toward retirement?

Answer: Your relative shouldn’t wait to be eligible for the 401(k). People 50 and older can contribute up to $6,500 annually to a traditional IRA or a Roth IRA, which is $1,000 more than the usual limit.

If your relative didn’t have a previous job that offered a workplace plan in 2017, then this year’s contributions to a traditional IRA should be deductible.

Next year, when your relative is eligible for the 401(k), the deductibility of contributions will depend on that person’s income. In 2018, deductibility begins to phase out when modified adjusted gross income reaches $63,000 for singles. If IRA contributions aren’t deductible, after-tax Roth contributions typically are a better deal, but the ability to contribute to a Roth begins to phase out for singles at $120,000 in 2018.

Encourage your relative to save and to delay starting Social Security for as long as possible. When Social Security makes up the majority of one’s income in retirement — as it will for your relative — it’s important to maximize that check.

It’s not clear why your relative has been saddled with a family member’s debt, but any retirement plan needs to include options for paying off, settling or even erasing (through bankruptcy) such a substantial amount. Your relative should talk to a credit counselor and a bankruptcy attorney to better understand the options.

Wednesday’s need-to-know money news

Today’s top story: 5 Halloween hazards and how insurance can help. Also in the news: The secret to optimizing credit card rewards, how to make money driving for Amazon Flex, and why Millennials may end up saving more for retirement than their parents’ generation.

5 Halloween Hazards and How Insurance Can Help
Don’t get tricked.

The Secret to Optimizing Credit Card Rewards? Be Disloyal
Loyalty is overrated with credit card rewards.

Make Money Driving for Amazon Flex: What to Expect
Make money driving for Amazon that you can then spend on Amazon.

Millennials May End Up Saving More For Retirement Than Their Parents’ Generation
What has changed.

Tuesday’s need-to-know money news

Today’s top story: 7 signs you’ve gone from frugal to cheap. Also in the news: 7 ways to avoid becoming a scary student loan statistic, following the lead of Millennials to save more for retirement, and retirement community fees that can be deducted as medical expenses.

7 Signs You’ve Gone From Frugal to Cheap
A slippery slope.

7 Ways to Avoid Becoming a Scary Student Loan Stat
Don’t become a statistic.

To Save More for Retirement, Follow These Millennials’ Lead

You can deduct these retirement community fees as medical expenses
Unexpected savings.

Wednesday’s need-to-know money news

Today’s top story: How a public adjuster can help with hurricane insurance claims. Also in the news: How to choose a student credit card, how millennials got a 6-figure start on retirement saving, and Equifax is waiving their credit-freeze fees.

How to Choose a Student Credit Card
Finding the right card for you.

How a Public Adjuster Can Help With Hurricane Insurance Claims
You don’t have to go it alone.

How Millennials Got a 6-Figure Start on Retirement Saving
Already ahead of the game.

Equifax Is Waiving Their Credit-Freeze Fees for 30 Days
How kind.

Wednesday’s need-to-know money news

Today’s top story: Don’t get taken by government grant scams. Also in the news: When you should and shouldn’t tap your Roth IRA, using your credit cards to pay for child care, and a report that finds many American teens lack basic financial skills.

Don’t Get Taken by Government Grant Scams
The government doesn’t want to give you money.

When You Should — and Shouldn’t — Tap Your Roth IRA
Let your interest rate be your guide.

Should You Use Credit Cards to Pay for Child Care?
Depends on the card.

Report finds many American teens lack basic financial skills
Not a good sign.