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Tag: Savings Account

The Basics of Medicare Eligibility

  • Insurance
  • Photography
  • 5 min
  • 3 days ago

Medicare is a federal health insurance program widely used by U.S. citizens and permanent residents age 65 and older. The program also applies to those younger than age 65 who have disabilities, end-stage renal disease (ESRD) or other diseases. But … Continue reading →

The post The Basics of Medicare Eligibility appeared first on SmartAsset Blog.

  • January 12, 2021
Tagged Credit, Financial Advisor, Financial Wize, FinancialWize, health
Read More
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How does Medicare eligibility work?

Medicare is a federal health insurance program widely used by U.S. citizens and permanent residents age 65 and older. The program also applies to those younger than age 65 who have disabilities, end-stage renal disease (ESRD) or other diseases. But Medicare has multiple parts, and the eligibility requirements vary for each. 

Who Is Eligible for Medicare?

U.S. citizens or permanent residents who’ve lived in the U.S. for more than five years qualify for Medicare if they’re age 65 or older. Those younger than age 65 also qualify for Medicare if they disabilities or life-threatening diseases.

Medicare Eligibility for People Over 65

If you’re age 65 or older, you can get Part A coverage without paying premiums, as long as you or your spouse worked and paid Medicare taxes for at least 10 years, according to the U.S. Department of Health and Human Services. In order to skip the premium payments, though, one of the following must apply to you:

  • You are receiving Social Security or Railroad Retirement Board retirement benefits
  • You are eligible to receive Social Security or Railroad Retirement Board benefits but have not collected them
  • You or your spouse had a Medicare-covered government job

Being eligible for Part A coverage also guarantees your eligibility for Part B Medicare coverage. The only difference is that you’ll have to purchase Part B coverage. However, if you’re receiving Social Security or Railroad Retirement Board benefits at least four months prior to turning 65, you’ll be automatically enrolled in Part B.

Medicare Eligibility for People Under 65

If you’re under age 65, you can enroll in Medicare if you:

  • Have received Social Security Disability Insurance (SSDI) checks for at least 24 months
  • Have been diagnosed with end-stage renal disease (ESRD)
  • Have amyotrophic lateral sclerosis (ALS)
  • Have permanent kidney failure which requires dialysis or a transplant

You’ll automatically receive Part A and Part B coverage if you’ve either gotten disability benefits from Social Security for 24 months, or if you’ve received certain disability benefits from the Railroad Retirement Board for 24 months, according to medicare.gov.

Medicare Eligibility for Part C and Part D

Medicare Part C is a Medicare health plan that’s typically offered by private insurance companies. Also known as Medicare Advantage, you’re eligible for Part C if you’re enrolled in Part A and Part B, you don’t have ESRD and the option is available in your area. These plans include health maintenance organizations, preferred provider organizations, special needs plans, private fee-for-service plans and Medicare medical savings account plans.

Offered by private insurance companies, Medicare Part D provides prescription drug coverage. You’ll need to be enrolled in Part A or Part B to be eligible. You won’t be eligible, however, if you’re enrolled in Part C coverage.

Bottom Line

Eligibility requirements for Medicare vary based on a number of different factors such as age and medical history and condition. This is why it’s crucial to do your research so you can determine which parts of Medicare best align with your retirement savings goals.

Retirement Planning Tips

  • Not sure you’re saving enough for retirement? Our retirement calculator can help you determine your estimated Social Security benefits, how much money you need to retire and how much annual income you’ll need in retirement.
  • A financial advisor can offer advice on any of your Social Security, Medicare or retirement savings needs. SmartAsset’s free financial advisor matching tool connects you with up to three local advisors.

Photo credit: ©iStock.com/filadendron

The post The Basics of Medicare Eligibility appeared first on SmartAsset Blog.

Source: smartasset.com

How Long Does It Take to Refinance a House (+ 5 Ways to Speed Up the Process)

  • Home Buying
  • 8 min
  • 3 days ago

We’re all looking for ways to cut down on expenses — especially fixed expenses that lock us into a contracted bill month after month. One common way to spare your budget is to decrease your living expenses, including your house…

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The post How Long Does It Take to Refinance a House (+ 5 Ways to Speed Up the Process) appeared first on MintLife Blog.

  • January 12, 2021
Tagged All, Auto, Auto Loans, budget, car loan
Read More
Full view here

We’re all looking for ways to cut down on expenses — especially fixed expenses that lock us into a contracted bill month after month. One common way to spare your budget is to decrease your living expenses, including your house payment. Refinancing your loan could help cut down on your mortgage payments and could update your loan terms, saving you money. If you’re considering refinancing, you may ask, “how long does it take to refinance a house?”

Refinancing your home can be tedious but it could help your budget in the long run. Luckily, we’re here to help by sharing the typical refinancing process and detailing how to make it as efficient as possible.

How Long Does It Take to Refinance?

How Long Does It Take to Refinance?

Typically, refinancing a house takes 45 days, but it may vary depending on your financial situation and your lender vetting process. Preparing your financials early and picking the appropriate lender for your case are a few factors that could help the timeline of your updated mortgage loan. To speed up the refinancing application process, skip to our section below or keep reading to refinance your home in seven steps.

Steps to Refinance Your Home

Refinancing your mortgage has its positives and potential negatives. You could decrease your monthly mortgage payments, get a shorter loan period, or lock in a better interest rate. But you could also end up spending more on application fees or face prepayment penalties. Before speaking with a lender, research the refinancing process, requirements, and added costs that could deter your ideal result.

The 7-Step Home Refinancing Timeline

Step 1: Define Your Financial Goals

Start by asking yourself what you’d like to get out of a refinancing loan agreement. Do you want to shorten your loan term? Do you want to secure an interest rate lower than your current rate? Or, do you want both? Determine your ideal end result, verify your investment choice, and seek a lender that supports your goals.

Step 2: Compare Lenders (and Reviews)

Ask around or search online to find the right lender for you and your goals. Pick out a few professionals you’d be interested in working with and ask them their rates, terms, and requirements. To help narrow down your lender options, seek out reviews online or ask for referrals in your network to ensure you pick the right choice.

Step 3: Double-Check for Additional Fees or Costs

Refinancing a loan can rack up a bill you may not be aware of until after you start the loan process. Attorney, application, inspection, appraisal, and title searches are a few refinancing tasks that you could be charged for. To budget for these expenses, save a bit extra from each paycheck or assess your current savings account using our app. If you have enough saved, start inquiring about this loan. If you don’t, put extra cash into savings each month until you have enough to cover the extra charges.

Mortgage Refinancing Documents

Step 4: Apply for Your Best Loan Estimate

Once you’ve found the right loan for your financial goals, the next step is to fill out your application.. To submit your application, you may have to provide proof of income, assets, debts, and other forms that complete your financial portfolio. These documents may be helpful in the application process:

  • Proof of income: W2 earnings statements, 1099 DIV income statements, Federal tax returns for the last two years, bank statements for the last few months, recent paycheck stubs.
  • Credit information: your credit score and your credit reports from the last three years will be pulled for you, upon your approval.
  • Proof of assets: reports from your checking, savings, retirement, and other investment accounts.
  • Proof or insurance: providing evidence of your homeowners and title insurance.
  • Debts statements: statements of any debt accounts open — student loans, credit cards, current home loan, auto loans, etc.

Step 5: Start the Loan Process and Appraise Your Home

It’s now time to begin the loan process and appraise the value of your home. Once you’re approved for your loan, it’s time to get your home inspected, appraised, and conduct a title search. To ensure you’re on track with your timeline, prepare all your documents ahead of time. Skip to our section below for more ways to speed up this process.

Step 6: Wait for Underwriters to Cross-Reference

Now, the underwriters take it from here. Underwriters double-check your financial information to ensure everything is accurate before approving your loan. Your creditworthiness and debt-to-income ratio are generally the key factors underwriters will look at. Your property details, including when you bought your house and your home’s value, are a few other determining factors. This process may be the longest time constraint, taking a few days up to a few weeks.

Step 7: Close Your Loan to Lock in Your Interest Rate

Once your loan is approved and you’ve agreed upon your terms, it’s time to lock in your rate. This stage is commonly known to stretch your timeline as well. It can take your lawyer anywhere from one day to two months to settle your current loan and redeem your property. Keep in mind, this is typically where you pay the brunt of your fees whether you’re approved or denied. These fees may include closing costs and application fees.

Ways to Speed up the Application Process

credit score of 620 or higher, it may be the right time to check in on your score. Use our app to see your credit score, your credit history, and helpful tips to boost your ranking.

  • Avoid taking on more debt: Your credit score is impacted by your debt. Maxing out your credit card could negatively impact your credit score and cost more in the long run. Focus on paying off debts and only spending your readily available money to free up more credit utilization.
  • Stay away from applying for new credit: Additionally, inquiring about new debt opportunities could drop your credit score up to eight points. Next time you’re offered a new credit card or a deal on a car loan, take a few days to analyze the potential credit changes that could impact your refinanced mortgage.
  • Do what you can to accommodate your appraiser and lender: During this process, you may run into a couple issues — such as needing different paperwork or extra signatures. While life can get busy, do your best to make your appraisers and lenders live’s easy. Doing so could speed up your process and earn you a better home loan in no time!
  • Refinancing your home takes time, but it can be well worth it in the long run. Getting a lower interest rate and a shorter term length could lessen your payments going towards interest. Use our app and our loan calculator to see what refinancing could do for your budget.

     

    The post How Long Does It Take to Refinance a House (+ 5 Ways to Speed Up the Process) appeared first on MintLife Blog.

    Source: mint.intuit.com

    How Much Is Enough For Retirement?

    • Financial Advisor
    • Financial Freedom
    • Financial Planning
    • Retirement
    • 7 min
    • 3 days ago

    If you’re thinking about how much is enough for retirement, you’re probably contemplating a retirement and need to know how to pay for it. If you are, that’s good because one of the challenges we face is how we’re going to fund our retirement. Determining then how much retirement savings is enough depends on a …

    Continue reading “How Much Is Enough For Retirement?”

    The post How Much Is Enough For Retirement? appeared first on GrowthRapidly.

    • January 12, 2021
    Tagged 401(k), All, Buying, Buying a house, Debt
    Read More
    Full view here

    If you’re thinking about how much is enough for retirement, you’re probably contemplating a retirement and need to know how to pay for it. If you are, that’s good because one of the challenges we face is how we’re going to fund our retirement.

    Determining then how much retirement savings is enough depends on a number of factors, including your lifestyle and your current income. Either way, you want to make sure that you have plenty of money in your retirement savings so you don’t work too hard, or work at all, during your golden years.

    If you’re already thinking about retirement and you’re not sure whether your savings is in good shape, it may make sense to speak with a financial advisor to help you set up a savings plan.

    Check Out Now

    • 5 Tips to Optimize Your Retirement Account Withdrawals Read Now
    • People Who Retire Comfortably Avoid These Financial Advisor Mistakes

    How Much Is Enough For Retirement?

    Your needs and expectations might be different in retirement than others. Because of that, there’s no magic number out there. In other words, how much is enough for retirement depends on a myriad of personal factors.

    However, the conventional wisdom out there is that you should have $1 million to $1.5 million, or that your retirement savings should be 10 to 12 times your current income.

    Even $1 million may not be enough to retire comfortably. According to a report from a major personal finance website, GoBankingRates, you could easily blow $1 million in as little as 12 years.

    GoBankingRates concludes that a better way to figure out how long $1 million will last you largely depends on your state. For example, if you live in California, the report found, “$1 Million will last you 14 years, 3 months, 7 days.” Whereas if you live in Mississippi, “$1 Million will last you 23 years, 2 months, 2 days.” In other words, how much is enough for retirement largely depends on the state you reside.

    For some, coming up with that much money to retire comfortably can be scary, especially if you haven’t saved any money for retirement, or, if your savings is not where it’s supposed to be.

    Related topics:

    How to Become a 401(k) Millionaire

    Early Retirement: 7 Steps to Retire Early

    5 Reasons Why You Will Retire Broke

    Your current lifestyle and expected lifestyle?

    What is your current lifestyle? To determine how much you need to save for retirement, you should determine how much your expenses are currently now and whether you intend to keep the current lifestyle during retirement.

    So, if you’re making $110,000 and live off of $90,000, then multiply $90,000 by 20 ($1,800,000). With that number in mind, start working toward a retirement saving goals. However, if you intend to eat and spend lavishly during retirement, then you’ll obviously have to save more. And the same is true if you intend to reduce your expenses during retirement: you can save less money now.

    The best way to start saving for retirement is to contribute to a tax-advantaged retirement account. It can be a Roth IRA, a traditional IRA or a 401(k) account. A 401k account should be your best choice, because the amount you can contribute every year is much more than a Roth IRA and traditional IRA.

    1. See if you can max out your 401k. If you’re lucky enough to have a 401k plan at your job, you should contribute to it or max it out if you’re able to. The contribution limit for a 401k plan if you’re under 50 years old is $19,000 in 2019. If you’re funding a Roth IRA or a traditional IRA, the limit is $6,000. For more information, see How to Become a 401(k) Millionaire.

    2. Automate your retirement savings. If you’re contributing to an employer 401k plan, that money automatically gets deducted from your paycheck. But if you’re funding a Roth IRA or a traditional IRA, you have to do it yourself. So set up an automatic deposit for your retirement account from a savings account. If your employer offers direct deposit, you can have a portion of your paycheck deposited directly into that savings account.

    Related: The Best 5 Places For Your Savings Account.

    Life expectancy

    How long do you expect to live? Have your parents or grandparents lived through 80’s or 90’s or 100’s? If so, there is a chance you might live longer in retirement if you’re in good health. Therefore, you need to adjust your savings goal higher.

    Consider seeking financial advice.

    Saving money for retirement may not be your strong suit. Therefore, you may need to work with a financial advisor to boost your retirement income. For example, if you have a lot of money sitting in your retirement savings account, a financial advisor can help with investment options.

    Bottom Line:

    Figuring out how much is enough for retirement depends on how much retirement will cost you and what lifestyle you intend to have. Once you know the answer to these two questions, you can start working towards your savings goal.

    How much money you will need in retirement? Use this retirement calculator below to determine whether you are on tract and determine how much you’ll need to save a month.

    More on retirement:

    • Find Out Now 7 Questions People Forget to Ask Their Financial Advisors
    • 7 Mistakes Everyone Makes When Hiring a Financial Advisor
    • Compare Fiduciary Financial Advisors — Start Here for Free.
    • 7 Situations When You Need a Financial Advisor – Plus How to Find One Read More
    • 5 Tips to Optimize Your Retirement Account Withdrawals Read Now
    • People Who Retire Comfortably Avoid These Financial Advisor Mistakes

    Working With The Right Financial Advisor

    You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

    The post How Much Is Enough For Retirement? appeared first on GrowthRapidly.

    Source: growthrapidly.com

    How to Choose the Best Healthcare Plan for Your Budget

    • Financial Clarity
    • 7 min
    • 3 days ago

    Healthcare expenses can take a huge chunk out of any family’s budget so I want to break down how a family can weigh the pros and cons of a traditional health plan vs a high deductible one. Health Insurance Getting…

    Full Story

    The post How to Choose the Best Healthcare Plan for Your Budget appeared first on MintLife Blog.

    • January 12, 2021
    Tagged budget, cons, Family, Family Finances, Financial Goals
    Read More
    Full view here

    Healthcare expenses can take a huge chunk out of any family’s budget so I want to break down how a family can weigh the pros and cons of a traditional health plan vs a high deductible one.

    Health Insurance Getting Too Expensive

    If I asked you what’s are your biggest expenses each month, what would you say? If you’re like most families, you’d probably mention rent (or mortgage), food, or transportation. And yes, those are huge expenses for the typical family.

    However, one of the largest can be healthcare. The crazy thing is how much it can drain from your budget even if you’re a relatively healthy family.

    We found out firsthand a few years ago when my husband’s employer had open enrollment. Each year we review the health insurance options and it seemed to us that the costs kept rising. After having kids, we went with the ‘basic’ family plan and the monthly premiums still rose pretty fast. Finally, we hit our limit.

    With the latest update, our monthly premiums would pretty much be the same as our mortgage. Considering we only visit the doctors for the girls’ annual well visits, we knew we needed to change things up. We know we’re not the only family dealing with this.

    Right now for a family of four, the average monthly premium paid is $833 or  $9,996 annually. Add in the costs of the average deductible and you can see what a huge chunk of money health insurance can be.

    However, this year when you get ready to review your options during open-enrollment, you may want to look into whether a high deductible health plan is a practical and affordable solution for your family.

    How High Deductible Health Plans Work

    As the name suggests, a High Deductible Health Plan (HDHP) comes with a larger deductible than a typical health insurance plan. The appeal for employers and insurance companies to offer this is that you’re taking on more financial responsibility for your health care costs.

    The upside for you is that you should see a drop in the monthly premiums. For us, we saw a difference of a few hundred dollars for each month for premiums. Using a $300/month in savings, that’s like an extra $3,600/year that can be used for other financial goals that you may have.

    Huge Tax Wins with a Health Savings Accounts

    Another reason why a high deductible plan may be appealing for families is the ability to have a Health Savings Account (HSA).  It’s an extremely tax-advantaged account that you can use to pay for medical expenses.

    If this sounds familiar, it may be because you’ve heard of or used a Flexible Spending Account (FSA). That’s what’s typically offered with the ‘more standard’ health plans. Basically you put money in there before taxes.

    We used an FSA for years and it helped us to pay for regular expenses like my glasses and contacts. The problem was making sure we calculated enough to go into the account because if we didn’t use it by the end of the year, we’d lose it.

    With a Health Savings Account, however, whatever you don’t use you keep. It can then grow in the account over the years. After saving enough to cover things like the deductible, you may decide to invest a portion to improve growth over the long term.

    Making it even better is the fact that your HSA contributions are tax-deductible. Depending on your employer, they may also offer contributions to your HSA. That’s a fantastic bonus!

    What really sweetens the deal is that families can contribute up to $6,900 each year, that money grows tax-free, and if we use the money for qualified medical expenses, what we pull out is tax-free.

    Sounds amazing, right?

    It’s enough to make you want to jump in and switch right now, but a high deductible and HSA may not be the best solution for your family.

    The Pros and Cons of High Deductible Health Plans

    A high deductible plan sounds great, but there are some costs to consider. With the higher deductible, you need to be aware of what your typical annual expenses would be to make sure you’re coming out ahead.

    For example, if you have chronic health issues that require regular visits and perhaps medication, then you’d be paying a lot of money upfront before you hit your deductible and have your insurance cover their portion.

    One way you can review your expenses is by using Mint to pull the numbers quickly. You can then easily see how much you’ve paid out of pocket.

    When we looked at a few years of expenses, it confirmed that our visits were pretty much limited to annual well-visits (which are covered by HDHP plans), meaning we can save a significant amount of money.

    When I spoke to a certified financial planner about what families need to consider, he pointed out families should also be aware of their out of pocket maximums with the plan they are looking into.

    You want to have enough stashed away (either with your general savings or with your HSA) to cover those expenses.

    A relative of mine recently had a procedure done. Even with insurance, her portion came out to be $3,000!

    Thankfully she has some savings she can tap into, but still, that’s quite a bit of money.

    So please run the numbers to make sure you could absorb a medical problem, especially during that first year of switching plans.

    Choose the Best Plan for Your Family

    So after weighing the costs and benefits, took the leap and switched over to a high deductible health plan and opened an HSA. Years later, we feel it was the best decision for our situation.

    I hope you now have a better understanding of your options when it comes to health insurance. Having that knowledge can assist you in making the best decision for your family and finances.

    I’d love to hear from you – what plan are using now? Do you have any plans on switching?

     

    The post How to Choose the Best Healthcare Plan for Your Budget appeared first on MintLife Blog.

    Source: mint.intuit.com

    How to Save for Retirement in Your 20s, 30s, 40s, 50s and 60s

    • Credit 101
    • Retirement
    • 19 min
    • 3 days ago

    You don’t want to work the rest of your life. Here’s how to save in your 20s, 30s, 40s and 50s, even if retirement seems light years away.

    This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

    • January 12, 2021
    Tagged 401(k), All, budget, Budgeting, Career
    Read More
    Full view here

    You probably don’t need us to tell you that the earlier you start saving for retirement, the better. But let’s face it: For a lot of people, the problem isn’t that they don’t understand how compounding works. They start saving late because their paychecks will only stretch so far.

    Whether you’re in your 20s or your golden years are fast-approaching, saving and investing whatever you can will help make your retirement more comfortable. We’ll discuss how to save for retirement during each decade, along with the hurdles you may face at different stages of life.

    How Much Should You Save for Retirement?

    A good rule of thumb is to save between 10% and 20% of pre-tax income for retirement. But the truth is, the actual amount you need to save for retirement depends on a lot of factors, including:

    • Your age. If you get a late start, you’ll need to save more.
    • Whether your employer matches contributions. The 10% to 20% guideline includes your employer’s match. So if your employer matches your contributions dollar-for-dollar, you may be able to get away with less.
    • How aggressively you invest. Taking more risk usually leads to larger returns, but your losses will be steeper if the stock market tanks.
    • How long you plan to spend in retirement. It’s impossible to predict how long you’ll be able to work or how long you’ll live. But if you plan to retire early or people in your family often live into their mid-90s, you’ll want to save more.

    How to Save for Retirement at Every Age

    Now that you’re ready to start saving, here’s a decade-by-decade breakdown of savings strategies and how to make your retirement a priority.

    Saving for Retirement in Your 20s

    A dollar invested in your 20s is worth more than a dollar invested in your 30s or 40s. The problem: When you’re living on an entry-level salary, you just don’t have that many dollars to invest, particularly if you have student loan debt.

    Prioritize Your 401(k) Match

    If your company offers a 401(k) plan, a 403(b) plan or any retirement account with matching contributions, contribute enough to get the full match — unless of course you wouldn’t be able to pay bills as a result. The stock market delivers annual returns of about 8% on average. But if your employer gives you a 50% match, you’re getting a 50% return on your contribution before your money is even invested. That’s free money no investor would ever pass up.

    Pay off High-Interest Debt

    After getting that employer match, focus on tackling any high-interest debt. Those 8% average annual stock market returns pale in comparison to the average 16% interest rate for people who have credit card debt. In a typical year, you’d expect a  $100 investment could earn you $8. Put that $100 toward your balance? You’re guaranteed to save $16.

    Take More Risks

    Look, we’re not telling you to throw your money into risky investments like bitcoin or the penny stock your cousin won’t shut up about. But when you start investing, you’ll probably answer some questions to assess your risk tolerance. Take on as much risk as you can mentally handle, which means you’ll invest mostly in stocks with a small percentage in bonds. Don’t worry too much about a stock market crash. Missing out on growth is a bigger concern right now.

    Build Your Emergency Fund

    Building an emergency fund that could cover your expenses for three to six months is a great way to safeguard your retirement savings. That way you won’t need to tap your growing nest egg in a cash crunch. This isn’t money you should have invested, though. Keep it in a high-yield savings account, a money market account or a certificate of deposit (CD).

    Tame Lifestyle Inflation

    We want you to enjoy those much-deserved raises ahead of you — but keep lifestyle inflation in check. Don’t spend every dollar each time your paycheck gets higher. Commit to investing a certain percentage of each raise and then use the rest as you please.

    Saving for Retirement in Your 30s

    If you’re just starting to save in your 30s, the picture isn’t too dire. You still have about three decades left until retirement, but it’s essential not to delay any further. Saving may be a challenge now, though, if you’ve added kids and homeownership to the mix.

    Invest in an IRA

    Opening a Roth IRA is a great way to supplement your savings if you’ve only been investing in your 401(k) thus far. A Roth IRA is a solid bet because you’ll get tax-free money in retirement.

    In both 2020 and 2021, you can contribute up to $6,000, or $7,000 if you’re over 50. The deadline to contribute isn’t until tax day for any given year, so you can still make 2020 contributions until April 15, 2021. If you earn too much to fund a Roth IRA, or you want the tax break now (even though it means paying taxes in retirement), you can contribute to a traditional IRA.

    Your investment options with a 401(k) are limited. But with an IRA, you can invest in whatever stocks, bonds, mutual funds or exchange-traded funds (ETFs) you choose.

    Pro Tip

    If you or your spouse isn’t working but you can afford to save for retirement, consider a spousal IRA. It’s a regular IRA, but the working spouse funds it for the non-earning spouse. 

    Avoid Mixing Retirement Money With Other Savings

    You’re allowed to take a 401(k) loan for a home purchase. The Roth IRA rules give you the flexibility to use your investment money for a first-time home purchase or college tuition. You’re also allowed to withdraw your contributions whenever you want. Wait, though. That doesn’t mean you should.

    The obvious drawback is that you’re taking money out of the market before it’s had time to compound. But there’s another downside. It’s hard to figure out if you’re on track for your retirement goals when your Roth IRA is doing double duty as a college savings account or down payment fund.

    Start a 529 Plan While Your Kids Are Young

    Saving for your own future takes higher priority than saving for your kids’ college. But if your retirement funds are in shipshape, opening a 529 plan to save for your children’s education is a smart move. Not only will you keep the money separate from your nest egg, but by planning for their education early, you’ll avoid having to tap your savings for their needs later on.

    Keep Investing When the Stock Market Crashes

    The stock market has a major meltdown like the March 2020 COVID-19 crash about once a decade. But when a crash happens in your 30s, it’s often the first time you have enough invested to see your net worth take a hit. Don’t let panic take over. No cashing out. Commit to dollar-cost averaging and keep investing as usual, even when you’re terrified.

    Saving for Retirement in Your 40s

    If you’re in your 40s and started saving early, you may have a healthy nest egg by now. But if you’re behind on your retirement goals, now is the time to ramp things up. You still have plenty of time to save, but you’ve missed out on those early years of compounding.

    Continue Taking Enough Risk

    You may feel like you can afford less investment risk in your 40s, but you still realistically have another two decades left until retirement. Your money still has — and needs — plenty of time to grow. Stay invested mostly in stocks, even if it’s more unnerving than ever when you see the stock market tank.

    Put Your Retirement Above Your Kids’ College Fund

    You can only afford to pay for your kids’ college if you’re on track for retirement. Talk to your kids early on about what you can afford, as well their options for avoiding massive student loan debt, including attending a cheaper school, getting financial aid, and working while going to school. Your options for funding your retirement are much more limited.

    Keep Your Mortgage

    Mortgage rates are historically low — well below 3% as of December 2020. Your potential returns are much higher for investing, so you’re better off putting extra money into your retirement accounts. If you haven’t already done so, consider refinancing your mortgage to get the lowest rate.

    Invest Even More

    Now is the time to invest even more if you can afford to. Keep getting that full employer 401(k) match. Beyond that, try to max out your IRA contributions. If you have extra money to invest on top of that, consider allocating more to your 401(k). Or you could invest in a taxable brokerage account if you want more flexibility on how to invest.

    Meet With a Financial Adviser

    You’re about halfway through your working years when you’re in your 40s. Now is a good time to meet with a financial adviser. If you can’t afford one, a financial counselor is typically less expensive. They’ll focus on fundamentals like budgeting and paying off debt, rather than giving investment advice.

    A woman waves her hands in the air as she overlooks a mountainous view in Alaska.

    Saving for Retirement in Your 50s

    By your 50s, those retirement years that once seemed like they were an eternity away are getting closer. Maybe that’s an exciting prospect — or perhaps it fills you with dread. Whether you want to keep working forever or retirement can’t come soon enough, now is the perfect time to start setting goals for when you want to retire and what you want your retirement to look like.

    Review Your Asset Allocation

    In your 50s, you may want to start shifting more into safe assets, like bonds or CDs. Your money has less time to recover from a stock market crash. Be careful, though. You still want to be invested in stocks so you can earn returns that will keep your money growing. With interest rates likely to stay low through 2023, bonds and CDs probably won’t earn enough to keep pace with inflation.

    Take Advantage of Catch-up Contributions

    If you’re behind on retirement savings, give your funds a boost using catch-up contributions. In 2020 and 2021, you can contribute:

    • $1,000 extra to a Roth or traditional IRA (or split the money between the two) once you’re 50
    • $6,500 extra to your 401(k) once you’re 50
    • $1,000 extra to a health savings account (HSA) once you’re 55.

    Work More if You’re Behind

    Your window for catching up on retirement savings is getting smaller now. So if you’re behind, consider your options for earning extra money to put into your nest egg. You could take on a side hustle, take on freelance work or work overtime if that’s a possibility to bring in extra cash. Even if you intend to work for another decade or two, many people are forced to retire earlier than they planned. It’s essential that you earn as much as possible while you can.

    Pay off Your Remaining Debt

    Since your 50s is often when you start shifting away from high-growth mode and into safer investments, now is a good time to use extra money to pay off lower-interest debt, including your mortgage. Retirement will be much more relaxing if you can enjoy it debt-free.

    FROM THE RETIREMENT FORUM
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    See more in Retirement or ask a money question

    Saving for Retirement in Your 60s

    Hooray, you’ve made it! Hopefully your retirement goals are looking attainable by now after working for decades to get here. But you still have some big decisions to make. Someone in their 60s in 2021 could easily spend another two to three decades in retirement. Your challenge now is to make that hard-earned money last as long as possible.

    Make a Retirement Budget

    Start planning your retirement budget at least a couple years before you actually retire. Financial planners generally recommend replacing about 70% to 80% of your pre-retirement income. Common income sources for seniors include:

    • Social Security benefits. Monthly benefits replace about 40% of pre-retirement income for the average senior.
    • Retirement account withdrawals. Money you take out from your retirement accounts, like your 401(k) and IRA.
    • Defined-benefit pensions. These are increasingly rare in the private sector, but still somewhat common for those retiring from a career in public service.
    • Annuities. Though controversial in the personal finance world, an annuity could make sense if you’re worried about outliving your savings.
    • Other investment income. Some seniors supplement their retirement and Social Security income with earnings from real estate investments or dividend stocks, for example.
    • Part-time work. A part-time job can help you delay dipping into your retirement savings account, giving your money more time to grow.

    You can plan on some expenses going away. You won’t be paying payroll taxes or making retirement contributions, for example, and maybe your mortgage will be paid off. But you generally don’t want to plan for any budget cuts that are too drastic.

    Even though some of your expenses will decrease, health care costs eat up a large chunk of senior income, even once you’re eligible for Medicare coverage — and they usually increase much faster than inflation.

    Develop Your Social Security Strategy

    You can take your Social Security benefits as early as 62 or as late as age 70. But the earlier you take benefits, the lower your monthly benefits will be. If your retirement funds are lacking, delaying as long as you can is usually the best solution. Taking your benefit at 70 vs. 62 will result in monthly checks that are about 76% higher. However, if you have significant health problems, taking benefits earlier may pay off.

    Pro Tip

    Use Social Security’s Retirement Estimator to estimate what your monthly benefit will be.

    Figure Out How Much You Can Afford to Withdraw

    Once you’ve made your retirement budget and estimated how much Social Security you’ll receive, you can estimate how much you’ll be able to safely withdraw from your retirement accounts. A common retirement planning guideline is the 4% rule: You withdraw no more than 4% of your retirement savings in the first year, then adjust the amount for inflation.

    If you have a Roth IRA, you can let that money grow as long as you want and then enjoy it tax-free. But you’ll have to take required minimum distributions, or RMDs, beginning at age 72 if you have a 401(k) or a traditional IRA. These are mandatory distributions based on your life expectancy. The penalties for not taking them are stiff: You’ll owe the IRS 50% of the amount you were supposed to withdraw.

    Keep Investing While You’re Working

    Avoid taking money out of your retirement accounts while you’re still working. Once you’re over age 59 ½, you won’t pay an early withdrawal penalty, but you want to avoid touching your retirement funds for as long as possible.

    Instead, continue to invest in your retirement plans as long as you’re still earning money. But do so cautiously. Keep money out of the stock market if you’ll need it in the next five years or so, since your money doesn’t have much time to recover from a stock market crash in your 60s.

    A Final Thought: Make Your Retirement About You

    Whether you’re still working or you’re already enjoying your golden years, this part is essential: You need to prioritize you. That means your retirement savings goals need to come before bailing out family members, or paying for college for your children and grandchildren. After all, no one else is going to come to the rescue if you get to retirement with no savings.

    If you’re like most people, you’ll work for decades to get to retirement. The earlier you start planning for it, the more stress-free it will be.

    Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to DearPenny@thepennyhoarder.com.

    This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

    Source: thepennyhoarder.com

    Why It’s Harder to Get Credit When You’re Self-Employed

    • Credit 101
    • 12 min
    • 3 days ago

    Around 6.1% of employed Americans worked for themselves in 2019, yet the ranks of the self-employed might increase among certain professions more than others. By 2026, the U.S. Bureau of Labor Statistics projects that self-employment will rise by nearly 8%.  Some self-employed professionals experience high pay in addition to increased flexibility. Dentists, for example, are […]

    The post Why It’s Harder to Get Credit When You’re Self-Employed appeared first on Good Financial Cents®.

    • January 12, 2021
    Tagged All, build credit, building, Buying, car loan
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    Around 6.1% of employed Americans worked for themselves in 2019, yet the ranks of the self-employed might increase among certain professions more than others. By 2026, the U.S. Bureau of Labor Statistics projects that self-employment will rise by nearly 8%. 

    Some self-employed professionals experience high pay in addition to increased flexibility. Dentists, for example, are commonly self-employed, yet they earned a median annual wage of $159,200 in 2019. Conversely, appraisers and assessors of real estate, another career where self-employment is common, earned a median annual wage of $57,010 in 2019.

    When you work for yourself, you might have to jump through additional hoops to qualify for credit.

    Despite high pay and job security in some industries, there’s one area where self-employed workers can struggle — qualifying for credit. When you work for yourself, you might have to jump through additional hoops and provide a longer work history to get approved for a mortgage, take out a car loan, or qualify for another line of credit you need.

    Why Being Self-Employed Matters to Creditors

    Here’s the good news: Being self-employed doesn’t directly affect your credit score. Some lenders, however, might be leery about extending credit to self-employed applicants, particularly if you’ve been self-employed for a short time. 

    When applying for a mortgage or another type of loan, lenders consider the following criteria:

    • Your income
    • Debt-to-income ratio
    • Credit score
    • Assets
    • Employment status

    Generally speaking, lenders will confirm your income by looking at pay stubs and tax returns you submit. They can check your credit score with the credit bureaus by placing a hard inquiry on your credit report, and can confirm your debt-to-income ratio by comparing your income to the debt you currently owe. Lenders can also check to see what assets you have, either by receiving copies of your bank statements or other proof of assets. 

    The final factor — your employment status — can be more difficult for lenders to gauge if you’re self-employed, and managing multiple clients or jobs. After all, bringing in unpredictable streams of income from multiple sources is considerably different than earning a single paycheck from one employer who pays you a salary or a set hourly rate. If your income fluctuates or your self-employment income is seasonal, this might be considered less stable and slightly risky for lenders.

    That said, being honest about your employment and other information when you apply for a loan will work out better for you overall. Most lenders will ask the status of your employment in your loan application; however, your self-employed status could already be listed with the credit bureaus. Either way, being dishonest on a credit application is a surefire way to make sure you’re denied.

    Extra Steps to Get Approved for Self-Employed Workers

    When you apply for a mortgage and you’re self-employed, you typically have to provide more proof of a reliable income source than the average person. Lenders are looking for proof of income stability, the location and nature of your work, the strength of your business, and the long-term viability of your business. 

    To prove your self-employed status won’t hurt your ability to repay your loan, you’ll have to supply the following additional information: 

    • Two years of personal tax returns
    • Two years of business tax returns
    • Documentation of your self-employed status, including a client list if asked
    • Documentation of your business status, including business insurance or a business license

    Applying for another line of credit, like a credit card or a car loan, is considerably less intensive than applying for a mortgage — this is true whether you’re self-employed or not. 

    Most other types of credit require you to fill out a loan application that includes your personal information, your Social Security number, information on other debt you have like a housing payment, and details on your employment status. If your credit score and income is high enough, you might get approved for other types of credit without jumping through any additional hoops.

    10 Ways the Self-Employed Can Get Credit

    If you work for yourself and want to make sure you qualify for the credit you need, there are plenty of steps you can take to set yourself up for success. Consider making the following moves right away.

    1. Know Where Your Credit Stands

    You can’t work on your credit if you don’t even know where you stand. To start the process, you should absolutely check your credit score to see whether it needs work. Fortunately, there are a few ways to check your FICO credit score online and for free. 

    2. Apply With a Cosigner

    If your credit score or income are insufficient to qualify for credit on your own, you can also apply for a loan with a cosigner. With a cosigner, you get the benefit of relying on their strong credit score and positive credit history to boost your chances of approval. If you choose this option, however, keep in mind that your cosigner is jointly responsible for repaying the loan, if you default. 

    3. Go Straight to Your Local Bank or Credit Union

    If you have a long-standing relationship with a credit union or a local bank, it already has a general understanding of how you manage money. With this trust established, it might be willing to extend you a line of credit when other lenders won’t. 

    This is especially true if you’ve had a deposit account relationship with the institution for several years at minimum. Either way, it’s always a good idea to check with your existing bank or credit union when applying for a mortgage, a car loan, or another line of credit. 

    4. Lower Your Debt-to-Income Ratio

    Debt-to-income (DTI) ratio is an important factor lenders consider when you apply for a mortgage or another type of loan. This factor represents the amount of debt you have compared to your income, and it’s represented as a percentage.

    If you have a gross income of $6,000 per month and you have fixed expenses of $3,000 per month, for example, then your DTI ratio is 50%.

    A DTI ratio that’s too high might make it difficult to qualify for a mortgage or another line of credit when you’re self-employed. For mortgage qualifications, most lenders prefer to loan money to consumers with a DTI ratio of 43% or lower. 

    5. Check Your Credit Report for Errors

    To keep your credit in the best shape possible, check your credit reports, regularly. You can request your credit reports from all three credit bureaus once every 12 months, for free, at AnnualCreditReport.com. 

    If you find errors on your credit report, take steps to dispute them right away. Correcting errors on your report can give your score the noticeable boost it needs. 

    Related: How to Dispute Errors On Your Credit Report

    6. Wait Until You’ve Built Self-Employed Income

    You typically need two years of tax returns as a self-employed person to qualify for a mortgage, and you might not be able to qualify at all until you reach this threshold. For other types of credit, it can definitely help to wait until you’ve earned self-employment income for at least six months before you apply. 

    7. Separate Business and Personal Funds

    Keeping personal and business funds separate is helpful when filing your taxes, but it can also help you lessen your liability for certain debt. 

    For example, let’s say that you have a large amount of personal debt. If your business is structured as a corporation or LLC and you need a business loan, separating your business funds from your personal funds might make your loan application look more favorable to lenders.

    As a separate issue, start building your business credit score, which is separate from your personal credit score, early on. Setting up business bank accounts and signing up for a business credit card can help you manage both buckets of your money, separately. 

    8. Grow Your Savings Fund

    Having more liquid assets is a good sign from a lender’s perspective, so strive to build up your savings account and your investments. For example, open a high-yield savings account and save three to six months of expenses as an emergency fund. 

    You can also open a brokerage account and start investing on a regular basis. Either strategy will help you build up your assets, which shows lenders you have a better chance of repaying your loan despite an irregular income. 

    9. Provide a Larger Down Payment

    Some lenders have tightened up mortgage qualification requirements, and some are even requiring a 20% down payment for home loans. You’ll also have a better chance to secure an auto loan with the best rates and terms with more money down, especially for new cars that depreciate rapidly.

    Aim for 20% down on a home or a car that you’re buying. As a bonus, having a 20% down payment for your home purchase helps you avoid paying private mortgage insurance.

    10. Get a Secured Loan or Credit Card

    Don’t forget the steps you can take to build credit now, if your credit profile is thin or you’ve made mistakes in the past. One way to do this is applying for a secured credit card or a secured loan, both of which require collateral for you to get started.

    The point of a secured credit card or loan is getting the chance to build your credit score and prove your creditworthiness as a self-employed worker, when you can’t get approved for unsecured credit. After making sufficient on-time payments toward the secured card or loan, your credit score will increase, you can upgrade to an unsecured alternative and get your deposit or collateral back.

    The Bottom Line

    If you’re self-employed and worried that your work status will hurt your chances at qualifying for credit, you shouldn’t be. Instead, focus your time and energy on creating a reliable self-employment income stream and building your credit score.

    Once your business is established and you’ve been self-employed for several years, your work status won’t matter as heavily. Keep your income high, your DTI low, and a positive credit record, you’ll have a better chance of getting approved for credit. 

    The post Why It’s Harder to Get Credit When You’re Self-Employed appeared first on Good Financial Cents®.

    Source: goodfinancialcents.com

    4 Tips for Handling Finances After a Pay Cut

    • Building Wealth
    • Money
    • 9 min
    • 3 days ago

    woman sitting on the floor doing work on her computer

    Millions of Americans faced pay cuts as the coronavirus pandemic affected industries. While many workers were laid off, some were furloughed, and others kept their jobs but at lower salaries as businesses struggled to stay afloat. Some workers are reexamining their budgets to cut some of their expenses until they get another job or their […]

    The post 4 Tips for Handling Finances After a Pay Cut appeared first on SoFi.

    • January 12, 2021
    Tagged 401(k), All, Auto, budget, Budgeting & Goals
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    woman sitting on the floor doing work on her computer

    Millions of Americans faced pay cuts as the coronavirus pandemic affected industries. While many workers were laid off, some were furloughed, and others kept their jobs but at lower salaries as businesses struggled to stay afloat.

    Some workers are reexamining their budgets to cut some of their expenses until they get another job or their employer restores pay cuts. Taking a pay cut means facing the reality of no longer living the same financial life.

    Americans often aren’t so good at saving for emergencies such as a car repair or sudden illness, or for their retirement. A recent survey found that 59% of U.S. residents say they live paycheck to paycheck.

    Less than 40% of working adults think their retirement savings are on track, and 25% have no retirement savings or pension at all, according to the latest Federal Reserve Report on the Economic Well-Being of U.S. Households.

    Another alarming fact is that 4 in 10 adults have said that if they had an emergency and had to pay a bill of $400, they would have to borrow the money or sell an item they own. And that is in so-called normal times. Here are four strategies to handle finances after a pay cut.

    1. Update Your Budget

    There are several ways to deal with the changes to your budget after a change to your salary. Create a budget if you do not already have one. List all your expenses for weekly purchases, from groceries to gasoline and parking fees. Add monthly bills, including rent or mortgage, car loan, cable, cellphone, utility bills, credit cards, student loans, and any other debt such as personal loans.

    Update your budget and examine all your expenses to see which ones you can lower or eliminate, even temporarily, for the next six months. Add your income and include part-time jobs, tax refunds, bonuses, and any child support, alimony, or help from parents. This will help you determine how much money you can spend for necessities, expenses, entertainment, and other items such as doctor visits.

    There are several free apps that can help you manage your debt easily and update it as your financial circumstances change. To track your spending, decide if you want to track it daily, weekly, or biweekly. You might try different time periods before you decide on one. Some people prefer to keep up with their spending on old-fashioned pen and paper.

    SoFi Relay.

    After you track your spending for two or three months, you will see a pattern emerge of where most of your money goes. You can also look at older bank and credit card statements to see what you were spending money on last year compared to this year. This will help determine if you had one-time expenses such as medical bills, airplane tickets, hotel stays, wedding gifts, or a vacation. You might be surprised at what you’re spending your money on. For instance, you might be spending a lot of money on entertainment or buying gifts.

    In addition to a budget, create a financial plan for both short- and long-term goals. A plan will help you determine when you can pay off any loans and how much you want to save, say, for a down payment on a house.

    2. Cut Expenses

    One place many consumers can cut costs is from entertainment, such as their cable bill or streaming services. These can really add up. Canceling all or some of these services can improve your cash flow, which is how much money you have left over at the end of the month. Another place where you can slash expenses is from your food budget. Consider using digital coupons, shopping at warehouse clubs, or going out to eat for lunch instead of dinner.

    Your expenses include debt such as credit cards, student loans, and personal loans. Paying more than the minimum balance, refinancing to a lower interest rate. and making extra payments can help you pay down the principal amount, or the original amount that you borrowed, sooner.

    Consider refinancing your student loans by checking out both fixed and variable rates. Interest rates are at historic lows. You might be able to pay down your credit card bills faster by taking out a personal loan; those interest rates are often lower. And if that’s the case, the debt could be paid sooner.

    Automating the payment of bills can make your life easier. This will also help you avoid paying late fees. You can either have your bills paid automatically through your checking account or set yourself a reminder on your calendar if you have some bills such as utilities that are a different amount each month.

    You can also automate your savings. You can have money taken out of your checking or savings account each month and have it automatically invested into your workplace 401(k) plan or an individual retirement account.

    Snip, Snip, Snip

    When your salary has been slashed, there are several ways you can save money immediately and long term.

    Call your mortgage, auto loan, utilities, credit card, and student loan companies to see if you can defer payments for several months. Skipping a few payments can help you get back on your feet sooner. If the company cannot provide this option, see if the interest rate can be lowered on, say, credit cards.

    Check with your local nonprofit organizations. Many provide food or partial payments for utility bills. Your local food bank is a good place to start; this can help you lower your monthly grocery bill.

    Look online to see if stores are offering deals. Stock up on staples such as beans, rice, and pasta if they are on sale.

    If you are still short of money, you might consider talking to family members and friends about obtaining a short-term loan or working on a small project to earn some extra money.

    cash management account that keeps track of weekly spending—which then allows creation of a budget based on habits.

    There are no account fees for SoFi Money® and you can earn cash-back rewards on spending. And SoFi members can gain financial advice—at no cost.

    Learn more about SoFi Money® today.



    SoFi Money®
    SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
    Neither SoFi nor its affiliates is a bank.
    Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
    SoFi Relay is offered through SoFi Wealth LLC, an SEC-registered investment advisor. For more information, please see our Form ADV Part 2A, a copy of which is available upon request and at www.adviserinfo.sec.gov . For additional information on SoFi Wealth LLC, SoFi Relay, and products and services of affiliates, see SoFi.com/legal.
    Advisory services are offered through SoFi Wealth, LLC an SEC-registered Investment adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at adviserinfo.sec.gov .
    Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer to sell, solicitation to buy or a pre-qualification of any loan product offered by SoFi Lending Corp and/or its affiliates.
    Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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    The post 4 Tips for Handling Finances After a Pay Cut appeared first on SoFi.

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    Money Market Account or Checking Account: Which Is Best For You?

    • Office Furniture Items
    • 11 min
    • 3 days ago

    Depending on how you plan to spend and save, a money market or checking account—​or both—​could suit your needs.

    The post Money Market Account or Checking Account: Which Is Best For You? appeared first on Discover Bank – Banking Topics Blog.

    • January 12, 2021
    Tagged ATM, Automatic Transfer, Banking, Banking 101, Cash Back
    Read More
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    If you’re looking for a new bank account that allows you to easily store as well as access your cash, you might be thinking about opening a money market account or checking account. But how do you know which to choose? Decisions, decisions. Both types of accounts have unique advantages, depending on your savings and spending goals.

    “Think about how you will be using the money within the account,” says Jill Emanuel, lead financial coach at Fiscal Fitness. “Is this money for daily, weekly or monthly use? Or is it money that will not be needed regularly?”

    When comparing a money market account vs. a checking account, consider how often you'll need to access the funds in the account.

    You’ll probably need a little more to go on before answering the question, “How do I decide between a money market account or checking account?” No worries. Our roundup delves into the features of both types of accounts to help you determine which one could be right for your financial plans, or if there’s room for both in your money mix.

    Get easy access to your funds with a checking account

    In simple terms, a checking account allows you to write checks and make purchases with a debit card from the money you deposit into the account. That debit card can also be used to withdraw cash from the account via an ATM.

    When deciding between a money market account or checking account, Emanuel says most people use a checking account for the primary management of their monthly income (i.e., where a portion of your paycheck is deposited) and daily expenses (often small and frequent transactions). “A checking account makes the most sense as the account where the majority of your transactions occur,” she adds. This is because a checking account typically comes with an unlimited number of transactions—whether you’re withdrawing cash from an ATM, transferring money to a savings account or swiping your debit card.

    While a checking account is a good home base for your finances and a go-to if you need to easily and quickly access your funds, this account type typically earns little to no interest. Spoiler: This is one key difference when you compare a money market account vs. a checking account.

    “If you plan to use your account for monthly bill payments and day-to-day transactions, you would be better suited with a checking account, as these support daily and frequent use.”

    – Bola Sokunbi, certified financial education instructor and founder of Clever Girl Finance

    Grow your balance with a money market account

    When you’re comparing a money market account vs. a checking account, think of a money market account as a savings vehicle that allows you to earn interest on the balance you keep in the account.

    “A money market account is an interest-bearing bank account that typically has a higher interest rate than a checking account,” says Bola Sokunbi, certified financial education instructor and founder of Clever Girl Finance.

    With some money market accounts, you can even earn more interest with a higher balance. Thanks to its interest-earning potential, a money market account can be the way to go if you’re looking for an account to help you reach your savings goals and priorities.

    If you’re deciding between a money market account or checking account, you may think that a money market account seems like a typical savings account with your ability to earn, but it also has some features similar to a checking account. With a money market account, for example, you can withdraw cash from an ATM and use a debit card or checks to access money from the account. There are no limits on ATM withdrawals or official checks mailed to you.

    You can withdraw cash from ATMs and write checks with a money market account or checking account.

    Before you decide to use this account for your regular bills and your morning caffeine habit, know that federal law limits certain types of withdrawals and transfers from money market accounts to a combined total of six per calendar month per account. If you go over these limitations on more than an occasional basis, your financial institution may choose to close the account.

    Don’t need regular access to your funds and want your money to grow until you do need it? Then the benefits of a money market account could be for you.

    Deciding between a money market account or checking account

    Still debating money market account or checking account? Here are some financial scenarios to help you determine which account may best suit your current needs and goals:

    Go with a checking account if…

    • You want to keep your funds liquid. If you’re thinking money market account or checking account, know that a checking account is built for very regular access to your funds. “If you plan to use your account for monthly bill payments and day-to-day transactions, you would be better suited with a checking account, as these support daily and frequent use,” Sokunbi says. Think rent, cable, utilities, groceries, gas, maybe that morning caffeine craving. You get the idea.
    • You want to earn rewards for your spending. When you’re comparing money market account vs. checking account, consider that with some checking accounts—like Discover Cashback Debit—you can earn cash back for your debit card purchases. The best part is you are earning cash back as you keep up with your regular expenses—no hoops to jump through or extra account activity needed. Then put that cashback toward fun things like date night, lunch at your favorite spot or a savings fund dedicated to something special.

    Get 1% cashback on Debit from Discover. 1% cashback on up to $3000 in debit card purchases every month. Limitations apply. Excludes Money market accounts.Discover Bank,Member FDIC.Learn More
    • You want to deposit and withdraw without the stress of a balance requirement. If you do your research when comparing money market accounts vs. checking accounts, you’ll find that some checking accounts don’t require a minimum balance (or much of one). However, you may be required to maintain a minimum balance (and potentially a higher one) with a money market account in order to avoid a fee. If you’re accessing your money frequently and need to make large withdrawals, a checking account with no minimum balance requirement is a convenient option.

    Go with a money market account if…

    • You want to earn interest. “If your money is just sitting there, it should be earning money,” Emanuel says of the money market account or checking account question. “I spoke with a woman recently who told me she’d had around $50,000 sitting in her checking account for at least the last 10 years, if not longer. If that money had been in a money market account for the same period of time, she would have earned thousands of dollars on it. Instead she earned nothing,” Emanuel says.
    • You want to put short-term savings in a different account. If you have some short-term savings goals in mind (way to go!), you may benefit from keeping your savings separate from your more transactional checking account so you don’t dip into them for a different purpose. That whole out of sight, out of mind thing. “A money market account is the perfect place for money that will be accessed less frequently, such as an emergency fund [a.k.a. rainy day fund], a vacation fund or a place to park money after you’ve received an inheritance or proceeds from selling a home,” Emanuel says.
    • You need an account to fund your overdraft protection. If you’re comparing money market account vs. checking account, consider that a money market account could also cross over to support spending goals. One way is in the form of overdraft protection. If you enroll in overdraft protection for your checking account, for example, you could designate that funds be pulled from your money market account to cover a balance shortfall.

    “A money market account is the perfect place for money that will be accessed less frequently, such as an emergency fund [a.k.a. rainy day fund], a vacation fund or a place to park money after you’ve received an inheritance or proceeds from selling a home.”

    – Jill Emanuel, lead financial coach at Fiscal Fitness

    Using both accounts to achieve your financial goals

    Speaking of crossover. Both spending and saving are vying for your attention, right? Consider leveraging both types of accounts if you have needs from the checking and money market account lists above.

    “Personally, I use my checking account for bill payments, my day-to-day spending, writing checks and for any automatic debits I have each month,” Sokunbi says. She’s added a money market account to the mix “because of the higher interest rate—to store my savings for short-term goals, for investing or for money I’ll be needing soon,” she explains. Maybe it’s not about deciding between a money market account or a checking account, but getting the best of both worlds.

    Before opening a money market account or checking account, do your research and compare your options to see which bank offers the best package of low or no fees and customer service, in addition to what you need from an interest and access to cash perspective.

    The post Money Market Account or Checking Account: Which Is Best For You? appeared first on Discover Bank – Banking Topics Blog.

    Source: discover.com

    How To Retire At 50: 10 Easy Steps To Consider

    • Financial Advisor
    • Home Decor
    • Investing
    • Personal Finance
    • Retirement
    • 9 min
    • 4 days ago

    Can you retire at 50? On average, people usually retire at 65. But what if you want to retire 15 years earlier than that like  at 50? Is it doable? Below are 10 easy steps to take to retire at 50.  Retiring early can be challenging. Therefore, SmartAsset’s free tool can match you with  a …

    Continue reading “How To Retire At 50: 10 Easy Steps To Consider”

    The post How To Retire At 50: 10 Easy Steps To Consider appeared first on GrowthRapidly.

    • January 11, 2021
    Tagged All, Buying, Buying a house, Debt, Extra Money
    Read More
    Full view here

    Can you retire at 50? On average, people usually retire at 65. But what if you want to retire 15 years earlier than that like  at 50? Is it doable? Below are 10 easy steps to take to retire at 50.  Retiring early can be challenging. Therefore, SmartAsset’s free tool can match you with  a financial advisor who can help to work out and implement a retirement income strategy for you to maximize your money.

    10 Easy & Simple Steps to Retire at 50:

    1. How much you will need in retirement.

    The first thing to consider is to determine how much you will need to retire at 50. This will vary depending on the lifestyle you want to have during retirement. If you desire a lavish one, you will certainly need a lot.

    But according to a study by SmartAsset, 500k was found to be enough money to retire comfortably. But again that will depends on several factor.

    For example, you will need to take into account where you want to live, the cost of living, how long you expect to live, etc.

    Read: Can I Retire at 60 With 500k? Is It Enough?

    A good way to know if 500k is possible to retire on is to consider the 4% rule. This rule is used to figure out how much a retiree should withdraw from his or her retirement account.

    The 4% rule states that the money in your retirement savings account should last you through 30 years of retirement if you take out 4% of your retirement portfolio annually and then adjust each year thereafter for inflation.

    So, if you plan on retiring at 50 with 500k for 30 years, using the 4% rule you will need to live on $20,000 a year. 

    Again, this is just an estimation out there. You may need less or more depending on the factors mentioned above. For example, if you’re in good health and expect to live 40+ years after retiring at 50, $500,000 may not be enough to retire on. That’s why it’s crucial to work with a financial advisor.

    Get Matched With 3 Fiduciary Financial Advisors
    Managing your finances can be overwhelming. We recommend speaking with a financial advisor. The SmartAsset’s free matching tool will pair you with up to 3 financial advisors in your area.

    Here’s how it works:

    1. Answer these few easy questions about your current financial situation

    2. In just under one minute, the tool will match you with up to three financial advisors based on your need.

    3. Review the financial advisors profiles, interview them either by phone or in person, and choose the one that suits your’ needs.

    Get Started Now>>>

    2. Maximize your tax-advantaged retirement accounts.

    Once you have an idea of how much you need in order to retire at 50, your next step is to save as much as possible at a faster rate. If you are employed and you have a 401k plan available to you, you should definitely participate in it. Nothing can grow your retirement savings account faster than a 401k account.

    See: How to Become a 401k Millionaire.

    That means, you will need to maximize your 401k contributions, for example. In 2020, and for people under 50, the 401k contribution limit is $19,500.  Also, take advantage of your company match if your employee offers a match.

    In addition to the maximum contribution of $19,500, your employer also contributes. Sometimes, they match dollar for dollar or 50 cents for each dollar the worker pays in.

    In addition to a 401k plan, open or maximize your Roth or traditional IRA. For an IRA, it is $6,000. So, by maximizing your retirement accounts every year, your money will grow faster.

    3. Invest in mutual or index funds. Apart from your retirement accounts (401k, Roth or Traditional IRA, SEP IRA, etc), you should invest in individual stocks or preferably in mutual funds. 

    4. Cut out unnecessary expenses.

    Someone with the goal of retiring at 50 needs to keep an eye on their spending and keep them as low as possible. We all know the phrase, “the best way to save money is to spend less.”

    Well, this is true when it comes to retiring 15 years early than the average.  So, if you don’t watch TV, cancel Netflix or cable TV. If your cell phone bill is high, change plans or switch to another carrier. Don’t go to lavish vacations.

    5. Keep an eye on taxes.

    Taxes can eat away your profit. The more you can save from taxes, the more money you will have. Retirement accounts are a good way to save on taxes. Besides your company 401k plan, open a Roth or Traditional IRA.

    6. Make more money.

    Spending less is a great way to save money. But increasing your income is even better. If you need to retire at 50, you’ll need to be more aggressive. And the more money you earn, the more you will be able to save. And the faster you can reach your early retirement goal.

    7. Speak with a financial advisor. 

    Consulting with a financial advisor can help you create a plan to. More specifically, a financial advisor specializing in retirement planning can help you achieve your goals of retiring at 50. They can help put in a place an investment strategy to put you in the right track to retire at 50. You can easily find one in your local area by using SmartAsset’s free tool. It matches users with financial advisors in just under 5 minutes.  

    8. Decide how you will spend your time in retirement.

    If you will spend a lot of time travelling during retirement, then make sure you do research. Some countries like the Dominican Republic, Mexico, Panama, the Philippines, and so many others are good places to travel to in retirement because the cost of living is relatively cheap.

    While other countries in Europe can be very expensive to travel to, which can eat away your retirement money.  If you decide to downsize or sell your home, you can free up more money to spend.

    9. Financing the first 10 years.

    There is a penalty of 10% if you cash out your retirement accounts before you reach the age of 59 1/2. Therefore, if you retire at 50, you’ll need to use money in other accounts like traditional savings or brokerage accounts. 

    10. Put your Bonus, Raise, & Tax Refunds towards your retirement savings. 

    If retiring at 50 years old is really your goal, then you should put all extra money towards your retirement savings. That means, if you receive a raise at work, put some of it towards your savings account.

    If you get a tax refund or a bonus, use some of that money towards your retirement savings account. They can add up quickly and make retiring at 50 more of a reality than a dream.

    Retiring at 50: The Bottom Line: 

    So can I retire at 50? Retiring at 50 is possible. However, it’s not easy. After all, you’re trying to grow more money in less time. So, it will be challenging and will involve years of sacrifices, years living below your means and making tough financial decisions. However, it will be worth it in the long run. 

    Read More:

    • How Much Is Enough For Retirement
    • How to Grow Your 401k Account
    • People Who Retire Comfortably Avoid These Financial Advisor Mistakes
    • 5 Simple Warning Signs You’re Definitely Not Ready for Retirement

    Speak with the Right Financial Advisor

    You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning to retire at 50, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

    The post How To Retire At 50: 10 Easy Steps To Consider appeared first on GrowthRapidly.

    Source: growthrapidly.com

    How to Start Investing in the Stock Market

    • Home Decor
    • 9 min
    • 4 days ago

    Although investing in the stock market can feel intimidating at first, it could be the key to achieving your financial goals. Short of hitting the lottery or building a thriving business that you can sell, buying securities that increase in value over time is usually the easiest path to wealth.  After all, the average savings […]

    The post How to Start Investing in the Stock Market appeared first on Good Financial Cents®.

    • January 11, 2021
    Tagged 401(k), All, building, Buy, Buying
    Read More
    Full view here

    Although investing in the stock market can feel intimidating at first, it could be the key to achieving your financial goals. Short of hitting the lottery or building a thriving business that you can sell, buying securities that increase in value over time is usually the easiest path to wealth. 

    After all, the average savings account pays out a paltry 0.05% APY according to the Federal Reserve Bank of St. Louis, yet the average stock market return is around 10% per year before accounting for inflation. 

    Unless you want your money to languish in a savings account where it’s worth less with each passing year, learning to invest should be at the top of your to-do list.

    6 Steps to Start Investing in the Stock Market

    But, how do you start down a path that is notoriously complicated and has the potential to leave you with less money than you started? Here are a few top steps you should take to get started.

    1. List Your Goals

    Ask yourself what you hope to accomplish by investing in the stock market. A few examples of investment goals might include: 

    • Making a quick profit by investing in the short-term, and reselling stocks at a higher price,
    • Creating a source of passive income you can use later on,
    • Growing investment earnings so it can cover your retirement, or
    • Saving money for a specific goal.

    As you list out your goals, make sure you have the extra money to invest on a regular basis, while also having cash set aside for emergencies. If you have a lot of credit card debt or other high-interest debt, you might even consider paying it off before you begin investing. After all, the average credit card interest rate is currently over 16% —  and you might not get an investment return anywhere close to that.

    2. Start With Retirement Savings Accounts

    There are advantages that come with investing in a retirement account. Accounts, like a workplace 401(k), a SEP IRA, or a Solo 401(k) are tax-advantaged, giving you the chance to reduce your taxable income (and thus, pay less in taxes) when you contribute. 

    With a 401(k) plan from your job, for example, you can contribute up to $19,500 in 2020 and again in 2021. If you’re age 50 or older, you can also contribute another $6,500 each year which is called, a “catch-up contribution”. The amount you contribute is taken off of your taxable income, so your tax liability is lower.

    You might also qualify for an “employer match” on contributions to your employer-sponsored retirement account. Check with your company’s human resource department to learn if your employer offers this benefit. 

    Other retirement accounts to consider include a traditional or Roth IRA. You can deduct your full traditional IRA contribution from your taxable income, if you don’t have a retirement plan at work. Another option is funding a Roth IRA which lets you contribute using after-tax dollars instead. This means you won’t get a tax deduction for contributing, but Roth IRA funds grow tax-free and you can take distributions at retirement age without paying any taxes. 

    In 2021, contribution limits for IRAs stay the same as 2020. You can contribute up to $6,000 to an IRA, or $7,000 if you’re age 50 and older. 

    3. Open a Brokerage Account

    In addition to investing for retirement, you can also open a taxable brokerage account. You won’t get any upfront tax advantages for opening a brokerage account, but you get the chance to buy and sell stocks and other securities, or buy and hold them for the long-term.

    There are excellent brokerage account options for beginners or experienced investors, many of which let you invest in some capacity without any fees. Some of the top firms to consider include: 

    • Betterment: Best for Beginners
    • Robinhood: Best for No Minimum Balance Requirement
    • M1 Finance: Best for Free Trades
    Learn More About Betterment

    4. Compare Costs and Fees

    You might not have a lot of options if you’re investing in your workplace retirement plan at first. If you have the option to select a brokerage firm, you’ll need to compare the fees and costs involved in investing. Fees and costs to watch out for include:

    • Investment management fees. These fees can be nonexistent or as high as 1% of your account balance (or more).
    • Expense ratios. Specific funds, like index funds or mutual funds, might carry this fee.
    • Transaction fees. You might pay transaction fees when buying or selling a stock or another security.
    • Front-end loads. This fee can be charged on some investments upfront.
    • Annual account fees. A charge that’s tacked on just for using your brokerage account.

    These are just some of the main fees to watch out for, but there are plenty of others. If you want to figure out how much you’re paying in fees on your investment accounts, the free retirement fee analyzer tool from Personal Capital is a good place to start.

    5. Start Off With Simple Investments

    You’ve probably heard plenty about the “hot stocks” of the last few years, and how investors who got in early have gotten rich by being in the right place, at the right time. Unfortunately, most “regular” investors don’t hear about hot stocks until it’s too late.

    As a beginning investor, it’s usually best to keep your stock market strategy simple by investing in what you understand. Some beginning investments to consider include exchange-traded funds (ETFs), which are made up of various investments that track an index or focus on a specific industry sector. You could even stick to index funds, which are another type of investment that tracks an index and are mostly “hands-off” for the investor.

    Target-date funds are another type of simple investment to consider. These funds include a selection of stocks and bonds that adjust for less risk over time. If you purchase a target-date fund that’s meant to last until 2050, for example, your risk would be high at first but slowly taper down as you approached 2050 or whatever “target date” you choose for retirement.

    6. Research Before Jumping on Complex Strategies

    If you’re curious about more complex investing options, you’ll need to learn more about how and when to invest. Some resources to turn to include investing books, like:

    • The Little Book of Common Sense Investing by John C. Bogle
    • Investing All-In-One for Dummies by Eric Tyson

    You could also check out top investing forums like Seeking Alpha or the Bogleheads forum, taking the time to read through questions and answers from investors at the top of their game.

    Blog posts that can help you get started with some investing basics include: 

    • How to Invest Essentials for Beginners & Intermediates
    • How the Stock Market Works
    • How to Buy Stock Online

    The Bottom Line

    Investing in the stock market can be nerve-racking, but starting with common-sense investments in place (e.g. employer-sponsored retirement account) and uncomplicated investments (like index funds), lets you ease into the process slowly.

    Over time and with more experience, you’ll have a better sense of when — and when not to — shy away from the risks of the stock market.  

    The post How to Start Investing in the Stock Market appeared first on Good Financial Cents®.

    Source: goodfinancialcents.com

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