Money Sense on Fortune

XSmallToday’s Fortune column is based on an Arizona Pathways to Life Success (APLUS) study, which found that more than half of college graduates rely on their parents for financial support (that includes nearly half of those employed full-time). Additionally, these recent grads don’t seem to value the same things many of us did at their ages. Nearly 30% said marriage and having children wasn’t important — and roughly 20% don’t value owning a home. And 16% — gulp – said living on their own is unimportant. For more — and to see my take on the matter — head over to Fortune.com.

Jean on Morning Joe

Has it become impossible for America’s middle class families to save money? This morning I weighed in on Morning Joe. See my take below:

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Mailbag Monday: Calculating Your Retirement Numbers

Nest Egg with coinsI always read columns on many magazines and financial shows on finding your retirement number. This number is always into the hundred thousand or million dollar amount for your retirement. This number is based on certain criteria so a retiree will live comfortably. For a person who has no mortgage payment, a small amount of debt, no credit card or personal loan. That individual with a pension/401k plan and Social Security would not need the high dollar number that is always brought up. What is your input on that?  That is my position I will be upon retiring in 5 years. Thank you.

–Adrian

 

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Wednesday Welcome: Three Steps to Maximize Your 401(k)

This week we welcome Roger Wohlner, an Illinois fee-only financial advisor and blogger at The Chicago Financial Planner. Since I met Roger at the FINCON blogging conference last year, he’s become a frequent source of mine when I’m reporting a column or television segment. I asked him to bring his wisdom to you today. Below, he offers some tips for making the most of your 401(k) plan.

indexThe financial press carried numerous stories during the financial crisis about the evils of 401(k) plans — in several cases it was referred to as a “201(k).”  There are many lousy 401(k) plans out there, but there are also many excellent ones as well.  Here are a few tips to help you maximize the benefit of your workplace retirement plan.

Get started.  This might seem intuitive, but you can’t benefit from your employer’s 401(k) plan unless you are participating.  If you haven’t started deferring a portion of your salary into the plan, this is great time to start.  Look at your budget, determine how much you can afford to defer each pay period and as the Nike folks say “…just do it…”  Many plans allow you to do everything online. Otherwise, contact the plan administrator at your company. (more…)

Wednesday Welcome: How to Motivate Yourself to Save Money

This week David Ning joins the blog. David is the writer behind MoneyNing, a blog that encourages readers to take action when it comes to their finances. The action he’s encouraging today? Some simple steps you can take to get more money in the bank. You know we love that!

moneyning-headshot-1“Savings is boring, so why do it?” says pretty much everyone around you. Luckily, you know better, but still, stepping on the gas could be difficult to maintain at times. If you are struggling to stay focused on saving money, then you need a few tricks to help ease the perceived sacrifice. Here are a few such suggestions:

Celebrate a milestone generously. Savers know the key to long term success is to keep the fire up. That’s why it’s important to relax for a brief moment every time you reach a mini goal to bring out the bubbly. It’s like resting just so you can actually walk farther. Aside from validating the effort you put behind reaching this milestone, you are also giving the present a bit of a priority. After all, today is just as important as the future.

Look at history. Sometimes, all it takes to remind yourself of the effects of modern day consumerism is looking at everything you bought but no longer use. Open up the closet, dig out the cabinets and check out the garage when you have a chance. Do you even get any enjoyment out of much of that junk taking up space anymore? Now what if you just bought half of those things and saved the rest? (more…)

New SEC Guidance for Financial Advisors

handshakeJust recently the Securities and Exchange Commission (SEC) granted money managers and advisors the right to feature third-party reviews on their marketing materials. Meaning: Your advisor can now use your dazzling Facebook review (of him) to boost his business. I asked WalletHub CEO Odysseas Papadimitriou for the run down – why you should care and what this means for the advisory industry? Here’s what he had to say:

JC: What finally sparked the SEC to allow this?

OP: Not sure, but we hope that sites like Yelp & WalletHub that have allowed reviews on financial advisors irrespective of financial gain had something to do with this. 

JC: What does this mean for consumers/investors?

OP: This represents a major breakthrough for consumers and investors. In a world where everyone relies heavily on the internet for fast-paced information, this will allow investors to react faster. Additionally, consumers/investors are now free to compare the professionals who manage our money with the same level of discernment and transparency that has long been available in other segments of the market – from hotels to restaurants and consumer electronics. In other words, the SEC is making ground breaking strides to level the playing field.

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Money Sense on Fortune

jobreportIf you’ve been following me for a while now, then you might already know my take on target-date funds (TDFs). I’m a proponent — especially if you’re aiming to rebalance your portfolio — and need some help along the way. In this week’s column, I take you through what you need to know about TDFs when it comes to retirement.

FORTUNE – More than 51 million Americans have an active 401(k) retirement account, according to the Investment Company Institute.  And if recent statistics from Vanguard hold across the category – more than half have at least some of their money in a target-date fund. That’s a lot of dough and it’s growing fast.  According to BrightScope, target-date fund balances overall hit $500 billion in assets in 2012.  The company is estimating them to reach $2 trillion by 2020.

In many ways, that’s a good thing.  That shift has tempered the bi-polar tendencies of many 401(k) investors.   According to Vanguard, 10 years ago, 13% of their self-directed 401(k) investors held no stocks and 22% held only stocks.   No matter how you slice it, those investors were taking too little or too much risk.  Last year those numbers dropped to 10% and 13%, respectively – a result, at least in part, of making TDFs the default option on many retirement plans.

I’ve been a proponent of TDFs over the years.  I like the way they help humans who say they are going to rebalance their portfolios but never seem to get around to it stay at least in the vicinity of the track. Which is not to say I think they’re perfect.

For the full column, head over to Fortune.com

Mailbag Monday: IRA Income Requirements

retirementI want to open up an IRA, however I do not have any earned income from employment.  I am on disability. Could I qualify for an IRA?

– Dave

Hi Dave.  Generally, no.  There are a few exceptions — alimony and scholarships, for example.  But perhaps the biggest is spousal income.  If you have a spouse who works, you (and your spouse) can both make contributions based on that income.

Not being able to qualify for an IRA, however, doesn’t mean you shouldn’t save.  Invest your money in a discretionary account just as you would an IRA, based on your age and your risk tolerance – and let the time value of money work on your behalf.

You can open a discretionary account at any major brokerage.

Money Sense on Fortune

vacationIn this week’s FORTUNE column, I make a case for frequent-flier miles. You’ll never guess who steered me in the right direction.

FORTUNE — Like many of you, I’ve been reading the doomsday headlines about frequent-flier mile programs. “The Sad Decay of Frequent Flyer Programs,” Wired intoned. “Now May Be A Good Time To Bail Out of Frequent-Flier Mile Programs,” grimaced the New York Times.

Sorry, but I’m not ready to do that yet. I know that compared to many of you, I am not all that frequent a flier, but particularly in the spring and the fall when my speaking business heats up, I’m on the road almost weekly. I can point you to the best salad at O’Hare (the Taqueria with smoky shrimp at Tortas Frontera) and explain why you shouldn’t bother with the cramped food court at Jet Blue’s (JBLU) Terminal 5 at JFK (Balthazar scones down the hall). And I’ve gotten used to the fact my husband and I can take a nice vacation about every 18 months courtesy of our miles, which for years we’ve embellished by putting just about every purchase on Citibank’s American Advantage card.

Over the past few years, however, redemption has gotten harder. Flying to the places we want to fly (Italy and Hawaii, most recently), when we want to fly there (summer and Christmas break, respectively), and sitting where we want to sit (up front, it’s a long flight) has meant forking over double the miles it used to take. Most recently, even having the miles to spend, it was excruciating to get seats.

For more, and to see who helped me with the article (and my future travel), head here.

Wednesday Welcome: Find the Money for an Emergency Fund

This week we welcome Bill Somerville, a writer for the website Money Crashers. He’s here to give you some ideas for building your emergency cushion — as you know, I think having emergency money on hand is one of the keys to financial success (it’s even a Money Rule — #15: Emergencies Happen).  

piggybankchangeUnemployment remains high, no one is exactly sure what the Affordable Care Act truly means for healthcare costs, and the last government shutdown caused hundreds of thousands of workers a temporary job loss. During times like these, you have to protect yourself financially, and step number one means creating an emergency fund. If you’re currently dealing with credit card debt, student loans, or high monthly expenses, you may think an emergency fund belongs on the back burner. Don’t make that mistake. With just a bit of planning and forethought, you can devise a plan to both establish the backup money you need and to watch it grow in the right financial product. Do so, and your finances are going to be resistant to nearly any financial fluctuation or calamity. Here’s how to get it done.

1. Cut the Cost of Your Food Bill
If you’ve never thought about clipping coupons before, then you’re simply missing the boat when it comes to saving on groceries. They’re in the Sunday paper, but they’re also in your smartphone if you download apps like Yowza or RetailMeNot, and they are available at food manufacturers’ websites as well. Just commit to not using a coupon for something you wouldn’t normally buy – that’s spending money as opposed to saving it.

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