Is there a rule of thumb that a monthly pension payment should equal a certain amount of dollars of savings? We hear that we need X dollars for retirement, but with a pension, what might that equate to? Some of us will have pensions from previous employers and wonder what it means in terms of the amount we need to save. (For example, does $1,000 in a monthly pension = $125,000 in savings?) What are good numbers to use in planning? Thank you.
Kathie, it really all boils down to how much of your pre-retirement income you’re trying to replace. That’s what you should focus on. Recent research has shown that spending in retirement isn’t linear as previously thought. You were often told you should plan on spending 70 to 80% of your pre-retirement income in retirement. In fact, spending usually tails off after the kids go to college and leave the house and, eventually, you stop working full time. Then life gets really expensive when you hit uber old age and healthcare expenses ramp up.
That said, on average, aiming for that 80% replacement rate is probably a pretty good move. You need to head to a retirement calculator that allows you to input how much you’re expecting from Social Security and your pension as well as how much you’ve saved. The AARP’s retirement calculator – which you’ll find here – will let you do just that. It’ll run the numbers and help you figure out how much more you need to save to meet your goals.
It’s the start of another month, and that means we’ve compiled another best things to buy list. This month, you’ll hopefully find warmer weather — our fingers are crossed — along with deals in these categories:
Winter clothing. Retailers are clearing their shelves for summer styles — visit any online apparel retailer these days and the new arrivals section is brimming with warm-weather gear — and that means anything winter is going to likely be discounted over the next month. Now’s the time to buy warm coats, corduroys, sweaters and boots for next year.
Amazon Prime. This is a good idea by way of dealnews, which points out that in light of recent rumblings from Amazon about raising the rate for Prime membership (currently $79 a year; an increase may add up to $40 to the cost), it may be worth your while to sign on now and lock in the current fee for the next year. If you think you’ll use and save money with Amazon Prime, that is — and you understand the temptation involved. Amazon Prime customers spend as much as 150% more than non-Prime customers. If you’re purchasing things you’d otherwise buy elsewhere — at a lower cost or at least saving yourself a trip to the store — that’s great. If you’re tempted into impulse buys because they’ll arrive at your door in two days with free shipping, that’s a problem.
Gym memberships. Not only is the new years’ motivation wearing off, but it — fingers crossed — is about to get warm enough to take your exercise outside. So many people may be reconsidering their gym memberships, causing clubs to offer extra incentives and discounts.
Chocolate. Whatever remains on the shelves from Valentine’s Day is likely to be deeply discounted, and your kids won’t mind if the Easter Bunny brings heart-shaped chocolates this year. Feel free to splurge on those once-a-year Cadbury Eggs, though. They’re worth it.
Finally, we found a few deals for the weekend that were too good not to share:
Express. Everything (excluding gift cards and watches) is buy one, get one 50% off. That includes men’s and women’s styles and new arrivals. Plus, now through Sunday, get $25 off every $100 you spend with the promo code 1179.
Gaiam. The site is offering up to 50% off “spring essentials,” like t-shirts, maxi skirts and dresses. Plus, get 15% off and free shipping when you sign up for email offers.
Asos.com. Get an extra 20% off sale items with the code 20MORE. And RetailMeNot has partnered with the online retailer for a discount — use code ASOSRMN15 for 15% off full-price items, plus free shipping, through March 10.
This week we welcome Beverly Harzog, a frequent source of mine when it comes to credit card issues and author of the new book, Confessions of a Credit Junkie: Everything You Need to Know to Avoid the Mistakes I Made. She was nice enough to welcome me to her blog last week and I am happy to return the favor. Here she is with five credit card mistakes to avoid:
Credit cards can be a really useful money management tool. If you take time to understand how to use credit wisely, you can even make a profit from your credit cards.
But if you don’t know the rules of the game, you can end up in trouble in no time at all. Here are five credit card blunders that you want to avoid at all costs.
Mistake #1: You open several credit cards at one time. This mistake is often common among those who are new to credit cards. How do I know this? Because I made this exact mistake when I got out of college.
You open the envelope and pull out your first shiny card and see your name on it. It’s a rush! More offers start rolling in and you don’t see why you shouldn’t apply for all of them.
Well, there are plenty of reasons to stop yourself. Each time you apply for a card, the credit card issuer does what’s called a “hard inquiry.” This can knock two to five points off of your FICO score.
Another good reason to say no to multiple cards? When you’re new to credit, you need to gain experience when it comes to managing a credit line. So take your time and build a good credit history slowly.
Mistake #2: You don’t have a budget. One of the biggest contributors to credit card debt is the lack of a budget. Without a spending limit, you could easily charge more with your credit cards that you can cover with your monthly cash flow.
Remember, a good budget isn’t a constraint that ruins your fun. A budget actually puts you in the driver’s seat because you’ll be able to see a clear view of your expenses and cash flow. And most importantly, you’ll have control over how much you spend.
Mistake #3: You don’t track your spending. This is a detail that often falls between the cracks. You might think this will be a pain, but these days, there are so many options and many of them are even fun to use. You can choose from oodles of smart phone apps, free money management software on the Internet, or create your own spreadsheet if you’re tech savvy.
Be sure that you have a limit for the amount you plan to put on each credit card and then stick to the plan. Check your credit card accounts online every week just to make sure you’re on top of everything.
Mistake #4: You don’t pay your bills on time. Make sure you pay not just your credit card bill on time, but all of your bills on time. If you don’t, your credit score will suffer.
A lot of folks don’t know that a bad credit score can increase the rates they pay for health insurance, car insurance, car loans, and more. An excellent credit score actually helps you save money in many areas of you life.
There are a variety of ways to set up reminders, such as text or email alerts. So do what it takes to pay all of your bills on time and protect your score.
Mistake #5: You carry a balance. Sometimes this starts innocently and you think you’ll carry a balance just this once. But then, before you know it, it’s six months later and your balance is getting bigger due to compound interest.
Look, life can get awful messy at times and emergencies happen. But unless you’re in dire straits, make a vow that you won’t carry a balance.
So pay your bill in full during the grace period. For those who don’t know, when you use your card to make a purchase, the grace period is the amount of time you have to pay the bill before interest charges kick in.
About Beverly: Beverly Harzog is the author of Confessions of a Credit Junkie: Everything You Need to Know to Avoid the Mistakes I Made. She is a nationally recognized credit card expert, author, and consumer advocate. She’s appeared on Fox News, CNN Newsource, ABC News Now, and top media markets across the country. She is a frequent guest on syndicated radio shows, and her advice appears regularly in print and on major websites, including the Wall Street Journal, The New York Times, USA Today, SmartMoney, Money Magazine, U.S. News & World Report, New York Daily News, Washington Post, MSNMoney.com, CNNMoney.com and more. Beverly runs a popular credit card blog on her website and has coauthored two books, The Complete Idiot’s Guide to Person-to-Person Lending and Simple Numbers, Straight Talk, Big Profits! She lives in Johns Creek, GA.
Merrill Edge has a new mobile app, Merrill Edge’s Face Retirement. In response to research from Stanford University that found that being able to see yourself older may encourage you to save more and focus on your retirement planning, the app (and coordinating web version) encourages you to “meet the future you” by aging a picture of yourself. See my aged photo below — while I can’t say the results made me want to save more, they did make me want to buy anti-aging cream.
FORTUNE — In the last two days, I have read two newspaper stories that have me worried.
The first, from Washington Post syndicated columnist Kenneth Harney, pointed to a huge rise in the amount of debt being taken out in the form of home equity lines of credit. “New home equity credit line borrowings soared by 42% in the final three months of 2013 and were up sharply for the entire year, to $111 billion,” he wrote. As for the reasons behind the increase, Harney singled out the comeback in home prices in the last couple of years that sent equity soaring, combined with the fact that teaser rates on HELOCs make them more attractive than a cash-out refi (and that’s before you consider a refi’s closing costs).
The second story, in Monday’s Wall Street Journal, focused on the rise in people taking out student loans not because they want to earn a degree, but because they need the money — and student debt is cheaper and easier (i.e. no credit check) than getting a loan from a bank or leaning hard on your credit card. “College officials and federal watchdogs can’t say exactly how much of the U.S.’s swelling $1.1 trillion in student-loan debt has gone to living expenses,” wrote reporter Josh Mitchell. “[A report from the Education Department's inspector general] also found the schools disbursed an average of $5,285 in loans each to more than 42,000 students who didn’t log any credits at the time.
For more head over to Fortune.com
Hi Jean. We bought our home in 1982 for $67,000 and refinanced in 2001 for $85,000. This company sold our mortgage without our knowledge in 2013 for $72,000 @ 8.5% interest. Unfortunately things happened that were beyond our control. For the past ten years I took care of my parents. They both passed away last year. Our whole life we’ve taken one step forward, three backwards. It seems when we get caught up something else happens that takes us back. Our credit is poor. We have never asked anyone for help; that’s why we are in this mess. We don’t know where to turn. Can you please point us in the right direction. Thank you.
Hi Toni. I have to admit, I can’t tell from your letter exactly where you are right now – but I can sense that it’s somewhere very difficult. And having lost one of my parents, I cannot imagine losing both – let alone in the same year. I’m so sorry for all you’re going through. In situations like these, fixing everything quickly is just not an option. The world of money just doesn’t yield results that dramatic that fast (if it did, I’d have a television show like The Biggest Loser). Rather, it’s the smaller, habitual changes that add up to something meaningful over time. Focus on controlling the things that you can control. The top three things I’d do? 1. Look at your spending and see where you can cut back. 2. Take that money and pay down high interest rate debt if you have it, or save it if you don’t. And 3. Pay your bills on time. Even if you’re just playing a little more than the minimum (a number you should try to nudge up) paying on time will help move your credit in the right direction.
This week is a mixed bag — but there’s truly something for everyone. If you’re a smart shopper and use the following coupons and codes, you could save 50% or more on your weekend’s errands:
Michaels. Feeling crafty? Get 50% off any one regular priced item, through March 1. Don’t worry if you miss the deal — next week’s look promising as well. Starting March 2, you can get 40% off any one regular priced item.
Wendy’s. The restaurant chain is running a promotion to raise money for the Dave Thomas Foundation for Adoption: Purchase a Frosty Key Tag (which is, as it sounds, a tag you can hang from your keychain) for $1 and get a free Junior Frosty every time you present the tag with a purchase, through August 1. That’s a lot of Frosties.
Lowe’s. Get 10% off major appliances priced $399 or more, plus free next-day local delivery and haul away. The deal runs through March 25, and there is some fine print, so be sure to read it.
JC Penney. Two deals, going on through March 1 only: In store, get $10 off $25 or more. Online, get $20 off $100 or more (the online code is GETSVNGS). There will also be door busters in the store, on Saturday only, as part of their Spring for It Sale.
This week we welcome Sophia Bera, a certified financial planner who caters to millennials — though this particular post, about how to maximize your company’s benefits, is a good reminder to us all. Whether you’re just starting a job or you’ve been with the same company for years and haven’t re-looked your benefits in a while, the below advice will help you make the most of what your company is offering.
Do you remember what company benefits you signed up for when you were first hired? Did you make any changes during open enrollment this past year? When it comes to working for a company, the salary offered isn’t the only aspect of the job to take into consideration. Unfortunately, many people only skim through or completely overlook their company benefits package – and this can be a big financial mistake. Many of these benefits come out of your paycheck pre-tax which helps you lower your tax bill and save you thousands of dollars in the long run!
You might be leaving a lot on the table if you fail to comb through your benefits and take advantage of what you company is offering its employees. It’s more than just an employer match in a retirement account (although that is a big benefit you need to be sure to grab). Here’s where to start and what to look for:
Request Your Company Benefits Package
If you work for a company with an HR department, you might want to start there. The department (or whoever is in charge of staffing concerns, if you work for a small business) should be able to provide you with some sort of handbook or paperwork that details what you are entitled to as an employee.
It can be really overwhelming to dive into pages and pages of technical writing on your benefits, but understanding the perks that come with your job is important! By utilizing what you can, you could save thousands of dollars in expenses throughout the year.
Common Company Benefits
Before you start feeling too bogged down in all the paperwork that explains your benefits, take a look through this list so you’ll know what to be on the lookout for:
- Retirement Benefits. The biggest benefit you need to be taking advantage of is any kind of retirement account your employer offers, such as 401(k)s, 403(b)s, or a SIMPLE IRA. Sign up for the retirement plan your company offers and make sure you contribute enough to meet the match if there is one. This is free money! If your employer offers to match your contributions up to 5%, you need to contribute at least 5% of your salary to get the full benefit.
- All Kinds of Insurance. It’s widely known that the majority of companies offer some sort of health insurance coverage to their employees. But they also offer other types of insurance that you need to take advantage of to make sure you and your family will be protected in the event of a disaster or emergency. Your company benefits could include life insurance, disability insurance (both short term and long term), a health savings account, and flex spending accounts (one for health care and one for childcare costs).
- Financial Perks in Addition to Your Normal Salary. In addition to your regular paycheck, your company benefits might include things like stock options in the form of a employee stock purchase plan (or ESPP). This allows you to buy company stock at a discounted price. You might also be entitled to reimbursements on your wardrobe, commuting expenses, or other costs that you incur that are a direct result of working for your employer. This will all depend on the company you work for, so be sure to look into this and ask questions!
Finally, don’t forget about vacation time. On the surface, this might not seem like a financial perk. But remember, when you take vacation days you’re getting paid for hours that you’re not actually working. Be sure to make the most of your paid time off.
Your company benefits package can be a lot to look through, but it’s crucial you take the time to do so. If you’re want to learn more about benefits, you can take a more in-depth look at my post on my website, Gen Y Planning, on how maximizing your company benefits could save you thousands of dollars!
About Sophia: Sophia Bera, CFP® is the Founder of Gen Y Planning and is a financial planner for Millennials. She’s passionate about helping people in their 20s and 30s across the country with their money. She is a contributor for AOL’s Daily Finance website and has been quoted on various websites and publications including Forbes, Business Insider, Yahoo, Money Magazine, InvestmentNews, Financial Advisor magazine, and The Huffington Post. She was named one of the “Top Financial Advisors for Millennials” by the website www.MoneyUnder30.com. Follow her on Twitter @sophiabera or sign up for the Gen Y Planning Newsletter to stay up to date on financial articles geared towards Millennials.
FORTUNE — The most frightening billboard I saw in recent months ran along the Westside Highway in Manhattan. From the good folks at Prudential, it read: The First Person To Live To 150 Is Alive Today, with the subhead, Plan For A Longer Retirement. A few weeks later, our sister publication, Time Magazine, followed in tandem, asking the question on its cover: Can Google Solve Death?
We get it. From a financial (as well as, of course, a medical) perspective, longevity is very likely the issue of the century. What can you do about that? Saving more never hurts, the folks behind America Saves Week, which happens to be now, nudge us to remember on an annual basis. (If you need help saving more, check out the resources here.)
But, the longer your time horizon, the more you may also want to think about socking away in stocks. A new paper from Morningstar Head of Retirement Research David Blanchett along with Michael Finke of Texas Tech University and Wade Pfau of The American College looks at the issue of time diversification, defined as “the anomaly where equities become less risky longer investment periods.” The researchers look at 113 years of data from 20 countries and found that, yes, the longer your time horizon, the more you may want to allocate your investments to equities.
For more, head over to Fortune.
In going through my 88-year-old father’s papers, I came across several capital stock certificates for 100 shares each for “Central Wyoming Oil and Uranium Corporation” dated 1954. I have tried Google searches to find out if they are indeed worth anything but have had no luck. Can you tell me if they are worth anything or what the process would be to find out? I tried the sec.gov website to no avail. Thank you in advance for any help you can give me.
Marie, you’re right — a google search of that company name turns very little up. But there are ways to research the value of paper stock certificates, which were common during your father’s time but are now largely a thing of the past.
First, you want to look at the certificate itself. Does it say cancelled on it, or contain punch holes through the paper? That likely means the certificate has already been cashed in. If you can’t find any signs of cancellation, check to see if your father’s name is on it it — if so, that’s a good start.
Often, though — as seems to be the case in this instance — the company issuing the stock no longer exists. This is common — companies frequently merge with other entities, are purchased, go out of business or end up bankrupt. But the certificate may be printed with the name of the transfer agent, which the SEC says is the best place to start your research. If no agent is listed, or that agency also no longer exists, you can contact the agency that incorporates businesses in the state where the company was located. In your case, that would be Wyoming, and the state has a handy guide to tracing old stock here. They may be able to tell you who the new transfer agent is.
There are also companies who will do this for you, though you should be aware that you’ll likely be charged a fee and you may be chasing something that has little or no value. The Wyoming document referenced above suggests a company called America West Archives, which has a subsidiary, OldStockResearch.com. They charge a research fee of $35 to $45 per company and claim a 95% success rate (keep in mind, that means they’ve turned up results — not necessarily of value — 95% of the time). If they come up with no information, you’ll receive a full refund.
Another option is Scripophily.com, which researches, buys and sells original stock and bond certificates. They charge a flat research fee of $39.95 per company, and again, if no information is turned up, you won’t be charged.
Finally, if you have a brokerage account, you may be able to get your broker to research this for you.
Keep in mind that even if you find that these certificates hold value, if your father isn’t alive anymore, you’ll need to prove that you’re the legal heir to the security. And if the certificate doesn’t have cash value, it may still have collector value, based on condition, age, design, industry and other factors. One of the services above can help you determine if this might apply in your case.