Personal Finance News Tuesday 10/16

Phil's Personal Finance Tip of the Day:

Five Financial Moves Not to Make at Fifty
By Liz Davidson | Forbes

Liz Davidson is CEO of Financial Finesse, the leading provider of unbiased financial education for employers nationwide, delivered by on-staff Certified Financial Planner™ professionals. For additional financial tips and insights, follow Financial Finesse on Twitter and become a fan on Facebook.

Turning fifty used to be a milestone for retirement—you could plan to sock away much more money. That reality has changed dramatically. It is no longer true that:

• You’ll be in your peak earning years at age 50. Baby boomers may not enjoy their fifties as their top wage earning years after all with the fiscal crisis and the recession hitting right at the same time.
• Your kids will be out of the house. With 15.8 million adult children currently living with their parents, and 59% of Baby Boomers providing financial support to adult children who are no longer in school, Baby Boomers are not experiencing an empty nest.
• Your wealth will be higher than it was a decade ago. The “lost decade” of the 2000s continues, with $19.2 trillion of household wealth lost according to the U.S. Treasury.
• You can count on your company pension. Even if you have a pension in place, it doesn’t mean it will be there forever. Ford Motor Company wants to get out of the pension business altogether. They announced earlier this year that they were giving retired workers a choice to either keep their pension or take a lump sum payout. Ford was the first major company to make an offer like this—other companies may follow suit or change payout options altogether.
• You can count on Social Security. Social Security for those under age 55 is up in the air. In order to make sure Social Security is funded for everyone, we could see means testing or pushing out the minimum Social Security ages even further.
• Your expenses will decrease in retirement. Health care expenditures have increased over tenfold since 1980 to $2.6 trillion dollars. Many companies have stopped offering retiree medical benefits, and even discontinued retiree medical benefits for workers who were already retired. This trend of cutting back on retiree medical benefits is even spreading to cash-strapped state governments like Illinois.

Times have certainly changed. In today’s economic environment, once you pass the milestone of your fiftieth birthday, you have to be very careful not to make financial mistakes that you can’t correct. There are a few seemingly benign financial and lifestyle moves that can actually derail your retirement plans – watch out for these:

To read the entire article from Liz Davidson | Forbes:
http://finance.yahoo.com/news/five-financial-moves-not-fifty-101822239.html

Inspirational Quotes@Inspire_Us from Twitter:
Life may not be the party we hoped for, but while we’re here we should dance. -Anonymous

Personal Finance News Monday 10/15

Phil's Personal Finance Tip of the Day:

How to Make Your Retirement Savings Last
By Walter Updegrave | CNNMoney.com

I have about $700,000 and plan on retiring soon at age 62. How can I make this money last at least 30 years? -- Steve, Vevay, Ind.

Making sure your money lasts isn't your only goal for retirement. Presumably, you also want to be able to draw enough from your savings to live relatively comfortably the rest of your life. And I assume you would like to have some flexibility about how you tap this nest egg, so you can fund not just regular living costs but unexpected expenses and the occasional splurge.

I mention this not to quibble, but because understanding that you actually have several goals is important when deciding how to manage your $700,000 stash.

If making sure you didn't outlive your nest egg were your only consideration, you could simply put your entire 700 grand into an immediate annuity, a type of investment that gives you a monthly check the rest of your life. As long as you're prudent about how you go about it -- sticking to highly-rated insurers, spreading your money among enough companies to assure you're fully covered by your state's insurance guaranty association -- you could sit back and collect $3,600 a month, possibly more, for as long as you live.

But you would also give up something -- namely, access to your money. Once you buy the annuity, you can no longer dip into your stash for emergencies and such. You receive only the monthly payments. And unless you buy an immediate annuity with an inflation rider -- which usually means accepting an initial payment that's about 25% less than one without inflation protection -- the purchasing power of your monthly check will decline throughout retirement.

Such shortcomings are why putting your entire stash in an immediate annuity probably isn't the right way to go.

There's another option, however, that can give you the flexibility you need, plus a good shot at inflation protection. Just invest your 700 grand in a relatively conservative mix of stock and bond funds -- say, 50% stocks-50% bonds -- and withdraw the cash you need each year.

To increase the odds that your money will last at least 30 years, you could follow what's commonly referred to as the "4% rule" -- that is, withdraw 4% of your nest egg's value the first year of retirement, $28,000 in your case, and increase that amount by the inflation rate each year to maintain your purchasing power.

To read the entire article from Walter Updegrave | CNNMoney.com:
http://finance.yahoo.com/news/retirement-savings-last-174600419.html

Inspirational Quotes@Inspire_Us from Twitter:
If your happiness depends on what somebody else does, I guess you do have a problem. - Richard Bach

Personal Finance News Saturday 10/13

Phil's Personal Finance Tip of the Day:
The 7 Cs of Success
October 9, 2012 By Harvey Mackay

On the road to success, you may take a few detours, hit some roadblocks and arrive at a different place than you’d planned. I’m still on my journey, and I’m offering you my map for smooth sailing, traveling the Seven Cs of Success.

Clarity: 80 percent of success comes from being clear about who you are, what you believe in and what you want. But you must remain committed to what you want and make sure those around you understand what you’re hoping to accomplish.

A young mathematician was commissioned during wartime as captain of a submarine. Eager to impress his crew and to stress how important it is to strictly observe all safety procedures, the young captain called them all together for a meeting. His instructions went like this:

“I have developed a simple method that you would all do well to learn. Every day, count the number of times the submarine has dived since you boarded. Add to this the number of times it has surfaced. If the sum you arrive at is not an even number—don’t open the hatches.”

Competence: You can’t climb to the next rung on the ladder until you are excellent at what you do now.

Just remember two more things: 1) The person who knows “how” will always have a job, and 2) the person who knows “why” will always be the boss.

Constraints: 80 percent of all obstacles to success come from within. Find out what is constraining you or your company and deal with it.

The Gallup Organization conducted a survey on why quality is difficult to achieve. The greatest percentage listed: financial constraints. Often our lives and careers are shaped by kind of surroundings we place ourselves in and the challenges we give ourselves.

To read the other 4 C's and the rest of the article from Harvey Mackay.com:
http://www.harveymackay.com/the-7-cs-of-success/

Mackay’s Moral: Some people succeed because they are destined to, but most people because they are determined to.

Personal Finance News Friday 10/12

Phil's Personal Finance Tip of the Day:

Secrets of Self-Made Millionaires
By Daniel Bortz | U.S.News & World Report LP

Do you dream of becoming rich but aren't sure how to make your millions--or better yet, billions?

Who better to ask than the rich themselves about how they climbed their way to the top?

Steve Siebold did. He's spent the last 30 years interviewing the world's wealthiest people.

Siebold, author of How Rich People Think, spoke with U.S. News about what the rich have in common, how self-made millionaires attained their wealth, and why now is the best time to strike it rich. Excerpts:

[See What It's Really Like to Be Rich.]

What sparked your fascination with the rich?

I was a broke college student in 1984 and I wanted to be rich. But I didn't feel like I was getting the information I needed from my college business classes. In a lot of the classes, the business professors seemed to put down the rich, and that didn't make sense to me. So I started looking for outside sources until I found a millionaire to interview.

Was he difficult to find?

Yes, because I didn't know any millionaires and I was just a kid. I was probably 19 years old. And I found the rich don't really like to flaunt their wealth. Most of the rich, in my experience, aren't like Donald Trump--they're the polar opposite. They want to be left alone, because as soon as people know they've got a lot of money, people come after them and the media goes after them. They want to be quiet and unexposed.

The deal they made with me was I wouldn't give their name out unless they gave me permission, and very few of them gave me permission.

Have you found any commonalities among the people you've interviewed?

Their personality styles vary: Some are introverts, some are extroverts. But their belief systems around money are the same. That was the one thread that really helped me throughout the process:

They all have a really positive relationship with money. They think about money in terms of freedom, as opposed to the negative relationship a lot of people have with money.

To read the entire article from Daniel Bortz | U.S.News & World Report LP
http://finance.yahoo.com/news/secrets-self-made-millionaires-140214428.html

Scripture of the Day from Dave Ramsey.com:
2 Timothy 4:7 — I have fought the good fight, I have finished the race, I have kept the faith.

Please listen to the Dave Ramsey show live on WOR 710 from 2-4 PM EST. You can also listen to the 3rd hour 4-5 PM EST. at Dave Ramsey.com.

Personal Finance News Thursday 10/11

Phil's Personal Finance Tip of the Day:

To deed or not to deed?

Bob Massi Fox News Legal Analyst

Fox and Friends Thursday October 11th

 

Bob Massi answers your real estate questions:

http://www.foxnews.com/on-air/fox-friends/index.html#/v/1893505268001/to-deed-or-not-to-deed/?playlist_id=162383

 

 

Scripture of the Day from Dave Ramsey.com:

Luke 11:9 — So I say to you: Ask and it will be given to you; seek and you will find; knock and the door will be opened to you.

 

Please listen to the Dave Ramsey show live on WOR 710 from 2-4 PM EST. You can also listen to the 3rd hour 4-5 PM EST. at Dave Ramsey.com.

Personal Finance News Wednesday 10/10

Phil's Personal Finance Tip of the Day:
How to Retire Rich: 6 Smart Steps at Ages 50-66

Focus on the finish line. It's time to get serious about saving, and maybe cutting costs.

By Sandy Block and Jane Bennett Clark | Kiplinger – Tue, Oct 9, 2012 12:24 PM EDT

At this point, retirement isn't a far-off goal you'll worry about someday when you're ready for your second hip replacement. Unless you plan to work until you drop, retirement is staring you in the face.

That means it's time to get deadly serious about saving, especially if you haven't saved enough. And that's true for most people: Nearly a third of Americans age 55 and older have saved less than $10,000 for retirement, according to the Employee Benefit Research Institute. Only 22% have saved $250,000 or more.

With any luck, though, these are still your prime earning years, and some of your major expenses -- such as a down payment on a home and college tui­tion -- are behind you. "With our clients, the last ten years that they work is when they save the most money," says Mark Bass, a certified financial planner in Lubbock, Tex. To make sure you're on track, don't hesitate to seek help from a financial planner or use the many resources available on the Internet.

[More from Kiplinger: State-by-State Guide to Retiree Taxes]

Take advantage of catch-up contributions. Once you're 50 or over, you can contribute thousands more to your 401(k) plan than your younger colleagues. For 2012, you can contribute an additional $5,500 over the annual limit of $17,000, for a total of $22,500. Any employer contribution on top of that is gravy.

Don't stop there. You can also make a $1,000 catch-up contribution to an IRA, for a total contribution of $6,000 in 2012. Unlike with a traditional IRA, you don't have to take annual minimum withdrawals from a Roth once you turn 70 1/2. There are, however, income limits on Roth contributions. You're eligible if your modified adjusted gross income is less than $125,000 ($183,000 if you're married and file jointly).

Dare to downsize. You may have hoped to move to smaller digs as soon as the kids were grown (and the boomerangers departed). But some homeowners who have seen the value of their homes decline in recent years are reluctant to sell until the real estate market rebounds, says Michael J. Nicolini, a certified financial planner in Elkhart, Ind. Even if your home hasn't returned to its former value, moving to a smaller home could save you thousands of dollars a year in taxes, utility costs and insurance. That's money you can funnel into retirement savings.

To read the entire article from Sandy Block and Jane Bennett Clark | Kiplinger:
http://finance.yahoo.com/news/how-to-retire-rich--6-smart-steps-at-ages-50-66.html

Inspirational Quotes@Inspire_Us from Twitter:
In life you are either a passenger or a pilot, it's your choice. -Unknown

Personal Finance News Tuesday 10/9

Phil's Personal Finance Tip of the Day:

How to Survive Unemployment
By Angela Colley | Money Talks News – Mon, Oct 8, 2012 10:46 AM EDT

According to the U.S. Department of Labor’s Mass Layoffs Summary, 1,032,764 people have been laid off so far this year – and that’s just the reported numbers.

If you’re one of the recently unemployed, I feel for you. I’ve been there.

It’s a scary thought to realize you just cashed your last paycheck and don’t know where the next will be coming from. But you’ll survive. I once went unemployed for six months, and did so without spending my weekends at home alone or eating ramen for dinner. I lived well and you can too. Watch the following video, then follow the steps below…

1. Apply for unemployment benefits

You can claim unemployment benefits if you lost your job through no fault of your own. The U.S. Department of Labor says it takes two to three weeks to start receiving benefits after you file a claim, so start the process the instant your job ends. Some states allow you to apply over the phone or online, while others require an in-person visit. To find out what your state offers, check out the DOL’s list of state unemployment offices.

How much you’ll receive is determined by formulas that vary by state, but typically is based on what you earned over the previous 52 weeks. For example, one common formula pays half of what you used to earn, with a cap that’s tied to your state’s average earnings.

In most states, you can receive benefits for up to 26 weeks, but there are programs that can extend it.

For example, a federal program called Emergency Unemployment Compensation (EUC) offers additional benefits, but ends on Dec. 29, 2012.

There’s also a combined state/federal program called Extended Benefits that provides 13 to 20 weeks of additional benefits to those exhausting state compensation. But this program is only available in states where the unemployment rate is above an established threshold. Your state employment office can tell you if your state qualifies.

And don’t get caught off-guard regarding income taxes: Unemployment compensation is taxable.

2. Go on an unemployed budget

Before the Great Recession, financial experts recommended saving three to six months of expenses as an emergency fund, naturally assuming you’d find a new job in that time. And while you might, times have changed. In August, the U.S. Department of Labor said people who have been unemployed long-term made up 40 percent of the total unemployment rate. Given those statistics, you might have to stretch your emergency fund out longer than you wanted to, so put your money on a survivor’s diet now. Here’s how to pull it off:

1. Tally up your savings and unemployment benefits and then divide the total into several months of “income.” This is how much you can spend in a month and survive. (How many months you’ll need is impossible to tell, but play it safe and aim for close to a year or more.)
2. Update your budget and look for savings. For example, when I was first laid off, I went through my bills and realized I could downgrade my cell phone and Internet packages, saving myself $45 a month.
3. Take a hard look at your spending and see what you can cut without losing your quality of life. For example, you don’t really need cable if you have Netflix. In You Don’t Have to Pay for Cable TV, we figured out that the average cable subscription costs $900 a year. Netflix costs about $120 a year. Switch and save $780 year.
4. Be smarter, don’t pinch pennies. You probably can’t spend as much as you used to, but you don’t have to make yourself miserable watching every penny while you’re unemployed. Just use a few easy money-saving techniques, like buying things when they’re on sale, using coupons, or buying generic. We’ve got loads of helpful advice on this site, like: 30 Tips to Save on Food, 7 Things You Should Always Buy Generic, and 205 Ways to Save Money.

To read the entire article from Angela Colley | Money Talks News:
http://finance.yahoo.com/news/survive-unemployment-095001997.html

Scripture of the Day from Dave Ramsey.com:
Proverbs 24:16 — For though the righteous fall seven times, they rise again.

Please listen to the Dave Ramsey show live on WOR 710 from 2-4 PM EST. You can also listen to the 3rd hour 4-5 PM EST. at Dave Ramsey.com.