January 28, 2016

Empty-nesters are missing prime opportunity to save for retirement

"Day care, sneakers, cell phones, maybe college – kids are expensive. When they grow up, empty-nesters face a decision about what to do with their extra money.
What they choose is crucial to their retirement security for two reasons – one obvious, and one subtle but very important."
"The obvious thing to do after being freed from child-rearing obligations is to put more money into an employer retirement plan. But 401(k) saving increases only modestly after the kids leave home," according a study by the Center for Retirement Research "comparing empty-nesters with parents whose kids are still living at home."
Read more at http://squaredawayblog.bc.edu/squared-away/empty-nesters-arent-saving-enough/

Test your financial common sense

Why the poor do better on these simple tests of financial common sense...
And implications for the non-poor...
"If you spend all your time thinking about money, chances are, you're going to get pretty good at thinking about money. Indeed, new research suggests that the poor -- for whom concerns about cash are inescapable -- are not as prone to certain financial mistakes often made by the affluent."
Research shows that conventional wisdom about poverty is... wrong.
Try a few of these tests for yourself.
Here's the first question.
You're shopping for an iPad. Just when you think you've picked one out, the clerk lets slip that the same model is $50 cheaper at another big-box retailer. That other store is half an hour's drive away. If the iPad costs $1,000, is it worth going to save $50? What if the device costs $500? $300?
Read all about it:

January 27, 2016

Keeping financial resolutions on track

Okay it's that time of year... the end of January when many New Year's resolutions have fallen by the wayside.  Research shows that it takes multiple attempts to change behavior. Don't give up: just hit the reset button.
Three steps you need to follow to get back on track are:
1. Set actionable goals. 
2. Push the reset button.
3. Automate your savings and bills.
Read the details at: http://money.usnews.com/money/blogs/my-money/articles/2016-01-26/why-youve-probably-already-given-up-on-your-financial-new-years-resolution  

January 21, 2016

It's Easy to Lose Money in the Bond Market

Compared to stocks, bonds are often considered to be a "safe" investment. However, it is easy to lose money in bonds, especially as interest rates rise, which is the current situation. Because bonds promise to pay a fixed interest rate, set at the time of purchase, if prevailing interest rates in the economy increase, the value of existing bonds decrease because investors can purchase new bonds that pay a higher interest rates than older existing bonds. Another factor to consider is inflation; bonds generally pay modest interest rates which, after paying taxes on the income, may translate to just breaking even or even losing money. Another factor to consider is the possibility that the bond issuer will default and fail to make regular interest payments and even default on repayment of the principal. Read the details at: http://time.com/money/4186106/bonds-investing-risk/

January 20, 2016

Are you tempted to pay with your smart phone? It's time to learn about mobile payments

Consumer Action published a guide on mobile payments using your smart phone.
"The idea behind mobile payments is simple: Instead of paying with cash, check, credit or debit card, consumers can use their smartphone to pay for purchases via a mobile app."
"To help consumers understand their mobile payment choices, Consumer Action looked into how four of these payment systems work. Popular mobile payment systems Apple Pay and PayPal Mobile recently gained two new competitors: Android Pay and Samsung Pay."
Find out the details and how to protect yourself at: http://www.consumer-action.org/news/articles/mobile_payments_guide_fall_2015

Earned income tax credit

Consumer Action has published the 2015 information about the earned income tax credit. "The Earned Income Tax Credit (EITC) helps low-to-moderate-income, working taxpayers get more money back when they file their federal income tax return. A tax credit means that you will be eligible for a larger tax refund because it reduces the amount of money you may owe the federal government." In addition he is available in Chinese and Vietnamese Spanish and Korean. Check out the information on their website at: http://www.consumer-action.org/english/articles/get_credit_for_your_hard_work_eng

January 19, 2016

3 Investment Gurus Share Their Model Portfolios

Investing doesn't have to be complicated!
"How do some of the most respected investors on the planet think Americans should be investing their money? NPR talked to three about what a retirement portfolio should look like."
diversify, pay low fees, & adjust your asset allocation as you age. Check out the advice from an interview with the experts on NPR: http://www.npr.org/2015/10/17/436993646/three-investment-gurus-share-their-model-portfolios

Did you overspend on Christmas and the Holidays?

The Institute of Consumer Financial Education has 10 steps to help you cope the bills coming in from holidays. Read their advice at: http://icfe.info/broadcasts/broadcast1601.html

January 18, 2016

What you need to know about Medicare - via YouTube

The Center for Retirement Research at Boston College has a blog post about Medicare. Anyone close to age 65 or already enrolled in Medicare should take a few minutes to read the blog post and click on the associated YouTube links to make sure that they understand Medicare enrollment and the various parts of the program. Check out: avoid Medicare enrollment mistakes: http://squaredawayblog.bc.edu/squared-away/avoid-medicare-enrollment-mistakes/

Don't let debt collectors bully you

The tech collection industry is growing rapidly and using more and more illegal and egregious strategies to try to extract payments from people often do not owe them money. Check out this advice from Michelle Singletary's Washington Post column:
Is a debt collector on your case? Don’t be bullied. http://wapo.st/1W5p8RK

"To move forward financially, first face your past"

I really enjoy the down to earth financial perspective and advice that Michelle Singletary provides in the Washington Post. A recent column is entitled "to move forward financially first face your past." I invite you to check out the shells perspective and advice on this topic, review your past and apply her wisdom to your own life now. see: https://www.washingtonpost.com/business/get-there/to-move-forward-financially-first-face-your-past/2016/01/05/f3467fc6-b3fd-11e5-9388-466021d971de_story.html

Time to reboot your financial life? Try this 21-day fast

It's far enough along in the new year that many of the New Year's resolutions have fallen by the wayside.  Now is the time to hit the reset button. Washington Post financial columnist Michelle Singletary provides a great structure for getting your finances under control. At the time when many of us need to lose the extra pounds added over the holidays and tighten our financial belts  to pay those credit card bills, a financial fast may just be the ticket. To help with the process check out Michelle Singletary's book, “The 21 Day Financial Fast: Your Path to Financial Peace and Freedom.”
The main idea is to put away the credit cards& the financial belt and simplify your life for 21 days don't spend anything extra beyond the necessities. Singletary provides guidance and support.  Shutting down all spending on anything other than absolute necessities for 21 days helps you focus and reassess really necessary. In order to change behaviors you need to stick to a plan that becomes habit. For more information read Singletary's column describing the 21 day fast:

Once the kids move out the parents need to buckle down and save the money they would have spent on their kids

A study by the Center for rRtirement Research at Boston College revealed that when adult children leave home parents are failing to take the opportunity to boost their retirement savings. "The CRR researchers found that on average households increased contributions to 401(k) plans by just 0.3 percent to 1 percent of their earnings when their kids leave home" as reported by Steve Vernon. He explains: "Once you're no longer supporting your kids financially, you have a golden opportunity to improve your retirement security, either by significantly boosting your 401(k) contributions or paying down your mortgage faster. It's understandable to celebrate the departure of child-related spending by going on a spending or travel spree -- just realize that such spending comes at the expense of your financial freedom in your retirement years." So get gear buckle down and start boosting retirement contributions when the kids leave home. While many parents continue to help support their adult children after they leave home, both parents and children need to consider the long-term impact of the failure to adequately prepare financially for a potentially long retirement. The kids will definitely appreciate financially secure parents who are not dependent on their children in retirement. Read Vernon's article at: http://www.cbsnews.com/news/parents-are-missing-a-golden-opportunity-to-save/?utm_source=newsletter&utm_medium=email&utm_content=Parents%20Miss%20Chance%20to%20Save%20More&utm_campaign=Winter%202016%20Newsletter

January 16, 2016

Winning Powerball is Harder than Ever

According to Jo Craven McGinty writing in The Wall Street Journal (1/16/16), in October the Powerball system was revised to reduce the chance of winning from 1 in 175 million to only 1 in 292 million. Rejiggering the system means it takes longer for a winner to appear while the jackpot amount increases. The bigger the jackpot, the more tickets are sold. So... how delusional are you? Replace your lottery dreams with the reality of improved financial security in later life. A much better use of your money is to open a myRA account and add to it weekly what you would spend on lottery tickets. https://myra.gov/

January 15, 2016

Disasters and financial planning: A guide for preparedness and recovery

"Natural disasters quickly turn into financial disasters. On Hurricane Katrina’s 10th anniversary, the National Endowment for Financial Education and other organizations have released a guide, Disasters and Financial Planning.  The guide includes tips on how to insure properly against hurricanes, floods, or forest fires and how to hire contractors to make repairs after disaster hits."
"Disasters often strike quickly and without warning. Whether it is a weather emergency, natural disaster or personal crisis due to illness, unemployment or disability, most families will experience some form of disaster that leaves them with little or no time to think before making important decisions." check it out at: http://www.aicpa.org/interestareas/personalfinancialplanning/resources/consumercontent/disasterfinancialissues/pages/disasters%20and%20financial%20planning%20%20a%20guide%20for%20preparedness.aspx or type the title in your search engine.

Lotteries hurt the poor, but not as badly as Utah’s tax system

An editorial in The Salt Lake Tribune newspaper on January 14 explains how Utah's income tax system hurts low and moderate income persons. While the lottery has been called a tax on the poor, public policies such as income taxes should be progressive and not regressive. However Utah's flat tax is among the most regressive ways to levy an income tax.
"The primary source of revenue for Utah's public education system is an income tax structure that favors the rich. The state relies on sales taxes, which dig much more deeply into the purses of the poor, for just about everything else.
If anything, this regressive tax structure — one that helps those at the top of the income ladder fight off anyone who might try to climb up after them — is more cruel to the working classes than any lottery would ever be."
Pay attention to what the politicians are saying about their proposals for taxes both at the state and the federal level. While a flat tax might sound attractive in making it easier to file a tax return it is very regressive and hurts low and moderate income people while it benefits the wealthy. Read the full editorial at: http://www.sltrib.com/opinion/3414753-155/editorial-lotteries-hurt-the-poor-but

How much do you need to retire?

Fidelity investments has just published a report on how much one needs as a multiple of income in order to retire comfortably. See the chart below and get more information from: https://www.washingtonpost.com/news/get-there/wp/2016/01/12/how-big-your-retirement-fund-should-be-at-every-age-according-to-one-guide/

January 12, 2016

Cool easy to use Social Security tool

One of the most important decisions retiree makes is when to start claiming Social Security retirement benefits. To get an estimate of the benefits of delaying claiming the consumer financial protection Bureau has an easy to use tool. You simply input your date of birth highest year's income and it provides an estimate of monthly benefits depending upon which year you choose to retire. The tool isn't as precise as your actual Social Security earnings record but it serves the purpose of illustrating the benefits of delaying claiming. Check it out: http://www.consumerfinance.gov/retirement/before-you-claim/

January 11, 2016

Avoid tax traps & scams to put all of your refund to work building wealth

Mark your calendar for Wednesday, January 13 for the start of Financial Planning for Women for 2016. The topic is: Tips & Tricks for Saving Money with Taxes. The presenter is Karli Sproul, who works for H&R block. She is a graduate of the family finance program and an excellent and knowledgeable speaker.
Financial Planning for Women (FPW) is a monthly educational seminar that meets the second Wednesday of most months at two times: 11:30-12:30 p.m. in the USU Taggart Student Center room 336 (Bring a lunch), and at 7:00-8:30 p.m. at the Family Life Center, 493 North 700 East, Logan (at bottom of Old Main Hill). The longer evening time slot allows for more discussion. Programs are free and registration is not required. Men are always welcome. New attendees will receive copies of personal finance magazines.
Each time you attend FPW between January and March you get entered into a drawing for a free financial advising session; other prizes: Carl Richard’s book: the one-page financial plan and books on Social Security planning and managing your money in retirement.

What would you gain in dollars by delaying Social Security?

You're probably all aware that delaying claiming Social Security retirement benefits increases your benefit by about 8% each month each year. The Center for retirement research has an online tool to help you see the benefit of delaying. As a New Year's resolution to improve your personal finances take just a few minutes to get an estimate of the value of delaying for you.
"To encourage people to plan better and to become less reliant on Social Security, the Center has developed two online calculators to help you determine how much income you’ll need in retirement and how much workers under 50 should save."

Deception in the Financial Service Industry

"To be blunt, there is deception all around us. The primary presidential elections are a perfect example – whether it is Republicans debating with Republicans, Democrats questioning other Democrats, or Republicans and Democrats fighting each other, there is so many half-facts and conflicting information that it is impossible for everything said to be true."
"There is an equal amount of deception in the financial service industry. Whether you are watching CNBC, reading Forbes Magazine, or listening to a local salesperson promote his financial product, it is hard to believe we are ever getting the complete story from an unbiased perspective regarding any personal finance issue."
What type of behaviors should make you skeptical of your financial advisor? Read Lon Jeffries' blog post: http://networthadvice.com/deception-in-the-financial-service-industry

Four Essential Financial Resolutions

Yes, it really does make sense to make firm, achievable, resolutions.  
Four essential financial resolutions: "You must have an emergency fund. 
Index funds should make up most of your investment portfolio.
 Buy a home, but only one that you can afford. 
And don't forget life insurance." 
Source: Ron Lieber in The New York Times.

"Living below your means, saving aggressively, staying focused on the long term and diversifying your retirement income stream are lessons that the average investor can take from the wealthiest 1% of Americans," according to Sean Williams, in The Motley Fool.

How much investment risk can you tolerate?

According to Manisha Thakor, director of wealth strategies for women at Buckingham and the BAM Alliance, "individuals who had a clear, concise and documented investment plan were least likely to have knee-jerk, counterproductive reactions to market volatility."
An investment policy statement should address five points:
• "Your target asset allocations for stocks, bonds and hard assets."
•"Your trigger points for rebalancing (for example, moves of plus or minus 5% for major asset classes, and plus or minus 25% for subclasses)."
• "Clarity about where cash flows will come from to fund daily living expenses, which helps reduce fear when portfolio values decrease."
• "An understanding of your willingness, ability and need to take risk so you understand why you are subjecting yourself to this volatility."
• "Specific goals for your portfolio so you can link the need for discipline with the outcomes that long-term, successful portfolio management produces."
Source: The Wall Street Journal, January 11, 2016, R11. 
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