Update 03/15/2017: The Fed has announced a quarter point increase as expected.
For almost 10 years, while our economy has been struggling to recover from the recession, one thing that has been a big plus and important to people has been the historic lows in interest rates, but that may be about to change. While the job market was down, the stock market was down, and the emotions of the American people were down, interest rates were adjusted so that many people were still able to afford to buy a home and use their credit cards. But, the Federal Reserve Board (a.k.a. the Fed) raised interest rates last December for just the second time in the last 10 years. That may be the beginning of a huge change over the next couple of years, and that begs a lot of questions.
What a Fed Interest Rate Hike Could Mean
1. How certain is a rise in interest rates?
There is little doubt that interest rates will go up again, beginning this coming week. On Wednesday, March 15th the Fed is expected to announce just that. It’s a move that was almost guaranteed by the good news about the job reports released last week, increases of 235,000 jobs and the drop of the unemployment rate to a low 4.7%. There was also good news about wage growth that further indicates the recovery is moving along at a much better rate than before. Continue reading
Have you ever seen the old TV show “The Odd Couple”? You know the original that starred Jack Klugman as “Oscar” and the brilliant Tony Randall as “Felix”. You can learn a lot of things on TV you know, especially when it come from the genius of someone like Neil Simon and his iconic comedy. Back in the day, my favorite and most memorable episode of the show featured Felix explaining in a courtroom scene how you should never “assume” anything and on a chalkboard he draws the memorable line that: “when you assume, you make an ass of u and me!”
As funny as that line is, making assumptions about things doesn’t always cause a chuckle. When you make assumptions about your finances, for example, you often find that what you assumed would happen just doesn’t happen at all. Assumptions about your retirement plan may be shot to pieces because you assumed your plan made years ago would be just fine! When it comes to finances, rather than assume anything you should be planning for the worst and hoping for the best. You want to be able to react and adjust to what you don’t really know, don’t you? Continue reading
For an amount of money like $5,500 a year ($6,500 for those over age 50), all of us have an awful lot riding on an IRA. According to the Investment Company Institute, Americans had over $24.6 trillion dollars socked away in total retirement assets with $7.5 trillion in IRA accounts as of the second quarter of 2016. That makes IRAs the biggest place that people have parked their money for retirement in the country. In addition to direct contributions, a lot of that money has come from rollovers of retirement assets from previous employers’ accounts.
Opening an IRA account seems like it’s a fairly simple thing. You go to a bank or you can pick a brokerage firm or a mutual fund company (even online), fill out a few forms, and then move some money into the account. But, there are a lot of things that can go wrong when and if you stub your toe in the IRA process. It can wind up costing you a lot of money, and that is the money that you are counting on for your retirement and that can screw up your “golden years” if you’re not careful. Continue reading
We are closing in on the time of year when Medicare and Social Security will be making changes to the benefit amounts and the costs to the over 50 million recipients of the programs, which include both retirees and the disabled. Right now, there’s potential for a real financial heartache and what will scare you is what is currently being considered for 2017. The official announcements for the Social Security Board of Trustees (SSBOT) and the Medicare Board of Trustees (MBOT) will come in just a few weeks in October 2016. In fact, the MBOT just met this month to gauge the need to increase Medicare costs to its covered users.
Any adjustment in the COLA (Cost of Living Adjustment) or Medicare premiums will be announced in October by the SSBOT. I’m sure it will be debated and discussed as it has been done over the years, since two of the past three years have seen no increase to benefits as they made the decision that inflation was at zero. These decisions have been highly controversial because many recipients feel that there is significant inflation in many basics like food, healthcare, and prescription medicines while SSBOT uses a “basket of items” to make their decision. The significant fall of the price of gasoline has had a big impact on cost of living, despite the fact that it isn’t the big influence on seniors and disabled people that it is on younger, healthier active ones who work, commute, and even travel more often that SS recipients. Continue reading
I’ve been retired officially for a couple of years now and I did a pretty good job of trying to save and prepare for my golden years. But truth be told, almost every month I wonder if I will have enough to last. Is it possible to outlive your money that you’ve stashed away in retirement plans? Actually, it’s the biggest fear of retired folks today and that’s according to experts. Over 44% of all persons and 41% of all retirees think they may and actually fear they might outlive their money!
Prepare yourself right now and avoid these pitfalls than can make your retirement a lot less than “golden” if you don’t get it right. Continue reading
Social Security has been around now for over 80 years and has helped millions and millions of Americans live more comfortably in their senior years. But what about the future of Social Security? It’s something you learn about when you’re young, and like most people, think about it just occasionally until you draw nearer to the time when you will receive it. Although it was never designed to be the sole supporter of your retirement, it has become just that for millions of people. It’s now more than 50% of retirement income for the vast majority of all Social Security recipients.
According to the Social Security Administration (SSA), 52% of all beneficiary couples and 74% of all beneficiary singles received at least 50% of their retirement funds from Social Security payments in 2015! For 22% of all couples and 45% of all singles, Social Security is shockingly 90% of their retirement funds. Those numbers are growing every year. That is pretty scary. Continue reading
When you are in your 50’s and are thinking about your retirement and all the pleasant thoughts of having your time be all your own, you may be in for the shock of your life! I tell you this so that you react now and don’t wait a minute longer to prepare yourself for the retirement realities that may be just around the corner.
Even if you are 40, or even 30 something, and you think retirement is a goal that is close at hand for you, you should know more about what waits in retirement that perhaps you think can’t or won’t happen to you. For most of us, 50 is a toll booth that stands between you and the path to a financially happy retirement in the sense that it’s a mile marker and it’s up to you to make sure you have your “easy pass” ready to meet the toll collector. It’s not too late to reach into your pocket for the exact change and make sure that you don’t have to get off the road and travel the long way towards your peace and contentment. Continue reading
Every April since 2003, the United States has recognized and celebrated National Financial Literacy Month. It was called for by a joint resolution in congress and is one path to educating the citizens of our country about the importance and real necessity of developing a working knowledge in mastering the language, principles, and actions of finance.
But nowhere is it more important to begin that education than with our youth. High school financial literacy is more important than ever before. There are many levels of education and responsibilities that kids come in contact with that can be the inspiration and key to their developing a full understanding of the principles of financial education. I recently read a book that I think can really help both student and parent in that quest. Continue reading
Last week, I wrote about How to Avoid Those Annoying Fees. But some fees can be even worse than that, robbing you of huge savings for retirement, as Michael from Stretch A Dime explains in today’s guest post.
The first thing I would suggest for you to do is login to your retirement savings account (IRA, 401k, or any other type) and check the expense ratio of the funds you have your money invested in.
If you don’t pay careful attention, 1% can cost you very dearly on your retirement savings count. Let me show you…
We all make money mistakes in our lives. I have, and what I try to do is to never make the same mistake twice. Being a man and working continuously for well over 40 years, I’ve had the chance to recoup my losses and make up for some of the money errors that might have cost me dearly now that I’m in retirement. But women, especially those who are married and are looking to raise a family, may not be so fortunate to recover from some of the same mistakes that men make for some very good reasons.
So in honor of Women’s Money Week, I’m going to look at some difficult situations and highlight the potential pitfalls that a woman may stumble over if she doesn’t deal with them early on. Time, which is often your friend when it comes to finance, can be your very best buddy if you take action sooner rather than later. Here’s what I’m talking about. Continue reading