Are you in the final countdown to retirement? Congratulations! This can be an amazing time full of new opportunities. Put yourself in the best position possible for your next adventure with these seven retirement readiness tips.
1. Revamp your budget.If you’re retiring soon, some expenses will likely go up — like medical and travel. But others will probably go down. You may not need to spend as much on clothes for work, and you may not even need a second car if you’re married. If you’re going to lose employee-sponsored health insurance and are not yet Medicare eligible, you’ll have to budget for purchasing insurance privately or buying it through one of the Affordable Care Act exchanges. And while you may have hoped to have all your debt paid off before retirement, unfortunately for many this is not the case. But you should at least audit all your debt including:...
By age 30, college grads with student loans have half as much saved for retirement as those with no loans, according to research from Boston College. It’s important not to sacrifice retirement goals at the expense of paying down student debt. But to do so, you need to step back and look at the big picture.
Delaying saving for retirement can have disastrous consequences. First, there’s an opportunity cost for sitting on the sidelines — and young people have the most to lose due to the longer investment horizon their age allows for. Second, not participating in a company-sponsored 401(k) plan and taking maximum advantage of any company match is “leaving money on the table.” You want to save for your future, but you also want to get that monkey off your back, so what are you supposed to do?
You probably have to find a way to do both....
A report by Federal Reserve economist Joanna Stavins combined Equifax data with the 2015-2016 Federal Reserve Bank of Boston’s Survey of Consumer Payment Choice(SCPC)on how consumers pay for purchases. Comparing self-reported measures with objective data, she found that people tend to have fewer credit cards with higher limits than they report. According to her research, it’s estimated that 44% of adults have revolving credit that they don’t pay off in full each month with an average balance of $6600.
The study also included average credit card balances for various age brackets. Debt is becoming an increasingly larger part of the financial planning landscape. And it has different implications at different ages. Here are the average balances for each age group in the study and how carrying debt can impact them at each phase of life.
Age <25: The average credit card debt for this age group is $2340*. You may...
According to collegeboard.org, the average yearly full-time student budget for tuition and fees, room and board, books, and other incidentals at an in-state public four-year college is currently more than $25,000. For a private four-year college, that costs skyrockets to more than $50,000. With the potential total price of an undergraduate degree now topping $200,000, parents are understandably concerned about how they’re going to handle such a daunting expense. Fortunately, there are a number of options available for parents trying to fund the dream. Here’s a comparison of three popular plans.
Prepaid Tuition Plans
If you’re fortunate enough to live in a state that still offers a prepaid plan, then you may be able to save ahead and lock in tuition at current rates at eligible schools. Plans may cover two-year community college, four-year programs or even graduate school in some cases. It’s important to note that they do not,...
Loss aversionsounds like a good thing — trying to avoid losing. What could be wrong with that? Unfortunately, if taken too far, it can actually be a threat to your long-term financial health. Loss aversion is the tendency to prefer avoiding potential losses over acquiring equal gains. We dislike losing $20 more than we like getting $20. Yet, this common bias can come with a heavy cost.
Excessive risk avoidance can hurt you when, for example, it keeps your money out of the market and tucked away in low-risk, low-interest savings accounts — where purchasing power can be eroded by inflation over time. Delaying enrollment in your employer-sponsored 401(k) plan due to fear of market downturns can cripple opportunities for future growth.
Loss aversioncan also lead to undue stress and anxiety. You stay invested, but worry constantly, which can create health and other problems. Finally, it can result in shortsighted...
When we think retirement age, 65 is often the first number that comes to mind. But that doesn’t mean it should be your final answer. While it’s often a starting point for consideration, there are several factors that could make another age a better choice for you. Here are eight considerations to keep in mind when making this very important decision.
1. Your plans.If you want to start a business, run a charity or create a foundation — those could take a while to get off the ground. Make sure you allow enough time for your dreams to come to fruition.
2. Your money.While you may want to retire by 60, you might not be able to afford to given your current savings. In that case, delaying retirement and working a few extra years may be well worth the wait.
3. Your health.Do you have any chronic or progressive health...
Sometimes small moves can yield big results. If you want to plan for a better, more secure retirement, start by increasing your 401(k) contribution by just 1%. You might be thinking that 1% can’t possibly make that much of a difference — but you’d be wrong.Here’s what Fidelity Investments found when they ran the numbers on the effect of a 1% retirement account increase for employees at different ages and salary levels.
Example #1: Suzi, age 35, earning $60,000 per year.If she put less than $12 more into her retirement account each week, Suzi could accrue over $85,000 more by retirement.*
What could that money buy her?According to cars.com the average new car payment is now $523 per month. With her additional savings, Suzi could ride in style for 162 months during retirement — that’s more than 13 years of new car smell!
Example #2: Andrew, age 45, earning $70,000...
Target date funds (TDFs) have grown increasingly popular since their inception over two decades ago. In fact, 72% of retirement plans have TDFs as their default option and more than 40% of retirement plan account holders use a TDF. With so many employees invested in Target date funds, it’s important to understand how they tend to behave in markets under pressure and their likelihood to adhere to a long-term investment strategy. The good news for plan sponsors with TDFs under management is that those invested in them tend to stay put — even during volatile and declining markets.
A recent study by Fidelity examined the behavior of their TDF investors during two particularly volatile periods of the stock market: the 2007-2009 bear market and the 2015 downturn. They found that TDF investors tended to maintain consistent savings behavior and retain their market exposures during both of these declines. Interestingly, even...
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