August 27, 2014

Deciding when to claim Social Security Retirement Benefits

Deciding when to claim SS retirement benefits is a critical financial decision that takes a lot of thought, analysis, and planning. And you cannot depend on SSA employees (or their website) to guide you through the process to make an optimal decision. One reliable source that is reasonably easy to understand is: Social Security Spousal Benefits Simplified: http://wealthmanagement.com/retirement-planning/social-security-spousal-benefits-simplified-0
http://wealthmanagement.com/retirement-planning/early-full-or-delayed-social-security-benefits
http://wealthmanagement.com/retirement-planning/six-good-reasons-start-collecting-social-security-full-retirement-age

Also see links to related articles at the bottom of the website.

August 26, 2014

5 Investing Myths

"The securities industry has figured out how to subconsciously trigger knee-jerk responses that encourage bad investor behavior. It does so largely by instilling fear and anxiety, and playing on the appeal of greed."  Daniel Solin explains "common investing myths that, if believed and acted upon, may prevent you from saving enough to retire."
1. You are in control.
2. Positive personal traits are indicative of investing skill. (think: Bernie Madoff)
3. “Investment pros” are skilled in “beating the market.”
4. Investment clubs are a source of sound investment advice.
5. Alternative investments are good choices. 
Get the details at: http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2014/08/25/5-investing-myths-may-stop-you-from-retiring-on-time

August 25, 2014

Earthquake Safety

Besides the obvious safety concerns, earthquakes pose major financial risks if you don't have earthquake insurance on your house. Homeowners insurance specifically excludes damage from earthquakes. Check out "earthquake" on this blog for specific insurance info and read: "Putting down roots in earthquake country" available at:
http://ussc.utah.gov/putting_down_roots.html

August 21, 2014

Out with Binge eating; In with Binge saving!


Also called "power saving," "Barbara Friedberg offers five ideas for people who want to boost their retirement saving, including 'binge saving,' which boils down to saving a high percentage of disposable income. It will be hard, but 'you may find the reward of seeing your account grow quite motivating,' she writes." "Get your head out of the sand and face reality."
"Warning: This article is only for those committed to making a retirement savings change!"

Details at: http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2014/08/19/the-tiny-house-movement-and-binge-saving-the-new-retirement

Why You May Not Be as Ready for Retirement as You Think

"A new book by Wharton finance professor Richard Marston, Investing for a Lifetime: Managing Wealth for the “New Normal,” dispels some common beliefs about what Americans need to save for retirement. Recent reports have indicated that Americans should save eight times their income for retirement; Marston argues you should be saving closer to 15 times your income if you want to maintain your current standard of living."
"In a recent interview with Knowledge@Wharton, Marston shares advice from his book on how to reach that goal by saving and investing." listen to podcast, watch teh video or read the trasnscript.  http://knowledge.wharton.upenn.edu/article/retirement-planning-marston/

Why Hot Mutual Funds Won’t Stay That Way



“Any investor who's read the fine print of his or her mutual fund prospectus is familiar with the phrase "past performance is no guarantee of future results," or something to that effect. Of course, very few investors ever actually read the fine print, but a recent report from the ratings agency Standard & Poor's makes a strong case they ought to.”
“The "Persistence Scorecard" is published twice a year by S&P Dow Jones Indices. It tracks the consistency of the top performing, actively managed U.S. mutual funds. Index and sector funds are not included in the sample.” Several findings in particular stand out from the most recent edition of the scorecard, released last month. The details should be enough to convince even the most loyal and diehard investors that it's time to give up actively managed mutual funds and make the switch to passive, market-matching index funds:
  • Less than four percent of the 687 funds studied from March 2012 through March 2014 managed to stay in the top quartile of performers. Only 18.66 percent of 1,372 funds studied for the same time period stayed in the top half.
  • Out of 715 funds studied from March 2010 through March 2014, only 0.28 percent stayed in the top quartile of performers. Only 4.47 percent out of 1,431 funds studied for the same time period stayed in the top half.
“In other words, even when actively managed funds perform extremely well, they’re not likely to sustain that performance for an extended period of time.” Directly quoted from John Grgurich, The Fiscal Times.  Read more at: http://www.thefiscaltimes.com/Articles/2014/08/19/Why-Your-Hot-Mutual-Fund-Probably-Won-t-Stay-Way

Americans Are Idiots When It Comes to Investing



“For all the financial pain real estate and gold have inflicted in recent years, Americans can’t seem to put an end to their long-standing love affair with those investments.”  
 Gallup Poll results
 "The problem is that picking real estate and gold as your favorite investments simply doesn't make sense" according to Suzanne McGee of The Fiscal Times. Read the details at:

The problem is that picking real estate and gold as your favorite investments simply doesn’t make sense. - See more at: http://www.thefiscaltimes.com/Columns/2014/04/24/Americans-Are-Still-Idiots-When-It-Comes-Investing#sthash.PSHlUNgE.dpuf
The problem is that picking real estate and gold as your favorite investments simply doesn’t make sense. - See more at: http://www.thefiscaltimes.com/Columns/2014/04/24/Americans-Are-Still-Idiots-When-It-Comes-Investing#sthash.PSHlUNgE.dpuf
The problem is that picking real estate and gold as your favorite investments simply doesn’t make sense. - See more at: http://www.thefiscaltimes.com/Columns/2014/04/24/Americans-Are-Still-Idiots-When-It-Comes-Investing#sthash.PSHlUNgE.dpuf




The problem is that picking real estate and gold as your favorite investments simply doesn’t make sense. - See more at: http://www.thefiscaltimes.com/Columns/2014/04/24/Americans-Are-Still-Idiots-When-It-Comes-Investing#sthash.PSHlUNgE.dpuf



The problem is that picking real estate and gold as your favorite investments simply doesn’t make sense. - See more at: http://www.thefiscaltimes.com/Columns/2014/04/24/Americans-Are-Still-Idiots-When-It-Comes-Investing#sthash.PSHlUNgE.dpuf



The problem is that picking real estate and gold as your favorite investments simply doesn’t make sense. - See more at: http://www.thefiscaltimes.com/Columns/2014/04/24/Americans-Are-Still-Idiots-When-It-Comes-Investing#sthash.PSHlUNgE.dpuf
The problem is that picking real estate and gold as your favorite investments simply doesn’t make sense. - See more at: http://www.thefiscaltimes.com/Columns/2014/04/24/Americans-Are-Still-Idiots-When-It-Comes-Investing#sthash.PSHlUNgE.dpuf

Wealth Gap Widens: 2000-2011


The widening wealth gap is a political as well as economic issue with broad ramifications for American society. 
"According to  Distribution of Household Wealth in the U.S.: 2000 to 2011 and associated detailed tables, median household net worth decreased by $5,124 for households in the first (bottom) net worth quintile and increased by $61,379 (or 10.8 percent) for those in the highest (top) quintile (Figure 1). Median net worth of households in the highest quintile was 39.8 times higher than the second lowest quintile in 2000, and it rose to 86.8 times higher in 2011." Although the political factions in our country hold widely differing views as to whether or not this is a problem, and if so, how to address it, improving the quality of K-12 education, which certainly requires a larger financial commitment, is certainly one part of a complex picture. However, all the anti-tax rhetoric stands in the way of solving a critical issue facing the U.S.

Recent retirees living on less; Depend on Social Security

The Squared Away Blog summarizes a study of recent, fairly well-off (median assets = $473,000) retirees conducted by T. Rowe Price.
"Many recent U.S. retirees in a new survey receive less than two-thirds of what they earned during their working years, and they’ve made significant adjustments along the way."
Many report living "on less than the 70 percent to 80 percent of their pre-retirement income that most financial planners and retirement experts estimate they need.  And four out of 10 are living on 60 percent or less."
Social Security is their largest income source.
Besides being more affluent than average, they are likely to encounter more financial stresses, especially related to health care costs, as they age.
http://squaredawayblog.bc.edu/squared-away/retirees-live-on-less/

Want to buy a home? Take a class

"In case anyone has forgotten, buying a home can be damaging to your financial health.
But prospective first-time homeowners may want to take advantage of still-low mortgage interest rates and the recent, slower increases in house prices.  Homebuyer classes can provide an excellent crash course in the mysteries of mortgages, maintenance, taxes, and risks – information that can help preclude the kind of mistakes made during the subprime mortgage crisis.
There’s a tool on the website of the federal government’s Consumer Financial Protection Bureau (CFPB) to search for first-time homebuyer classes and housing counselors. Enter your desired zip code here to find classes and counselors nearby.
The agencies listed appear to be mostly non-profits and were approved by the U.S. Department of Housing and Urban Development.  It’s wise to do some research on a specific agency to find out where the non-profit’s underlying funding comes from and what services it offers.
So, is now a good time to buy a house?  Conventional wisdom says this depends on how long the buyer intends to live in the house – the longer the better to cover the high upfront costs of buying and moving and to ride out price fluctuations in the housing market.
Affordability – and not the potential for profit – should drive the home-buying decision, and borrowing costs remain low.  Interest rates on 30-year fixed mortgages are just over 4 percent.
Most of all, buying a home requires a buyer to take on the required responsibilities, financial and otherwise." quoted from the Squared Away Blog.

August 19, 2014

$245,340 to Raise a Child Born in 2013




WASHINGTON, August 18, 2014 - "U.S. Department of Agriculture (USDA) released its annual report, Expenditures on Children and Families, also known as the Cost of Raising a Child. The report shows that a middle-income family with a child born in 2013 can expect to spend about $245,340 ($304,480 adjusted for projected inflation*) for food, housing, childcare and education, and other child-rearing expenses up to age 18. Costs associated with pregnancy or expenses occurred after age 18, such as higher education, are not included."
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