Phil's Personal Finance Tip of the Day:
How Much Should You Have In Your 401(k) To Retire?
By Ryan C. Fuhrmann | Investopedia
The discussion on how much and individual needs by the time they retire used to be pretty straightforward. With $1 million in savings, at a 5% interest rate, one could be reasonably assured of having $50,000 in annual income by investing in long-term bonds and simply living off the income. With $2 million, an individual could assume a six-figure annual income without having to dip into principal. (For more on how you can achieve these targets, read How To Save More For Your Retirement.)
TUTORIAL: Retirement Plans
Unfortunately, interest rates have been on a steady decline for roughly three decades now. Back in 1980, nominal Treasury Bill rates were roughly 15%, but these days a 30-year Treasury is yielding just over 3%. Lower yields on bonds has made the investing equation in retirement more difficult and was only exacerbated by the credit crisis, which has also served to complicate the manner in which individuals save to have enough to live off in retirement.
Primary Retirement Income
The primary savings vehicle for most Americans these days is through a 401(k) retirement plan. Individuals have traditionally been able to also count on Social Security benefits, but the long-term picture for this savings vehicle is murky at best, so ideally shouldn't be part of the savings equation. Deciding how much to save first requires having a retirement goal in mind, such as an overall savings level or annual income target listed above.
Given these retirement goals, an individual can make an attempt to reverse engineer, or back into a current level of savings. Other important considerations include one's current age, current savings levels and estimated retirement age. Other major inputs consist of estimating market return levels, such as the growth rates of stocks, bond interest rates and inflation rates over the long term. (For more on inflation, check out Combating Retirement's Silent Killer: Inflation.)
As you can see, there are a wide array of inputs that are far from certain. Many websites, including Investopedia, bankrate.com and the non-profit organization AARP, provide retirement calculators to help individuals enter and tweak the key variables to come up with annual savings goals. AARP asks individuals to estimate retirement age, current savings levels and percentages of income saved, and desired spending levels in retirement.
To read the entire article from Ryan C. Fuhrmann | Investopedia :
http://finance.yahoo.com/news/much-401-k-retire-120000945.html
Yesterday is but today's memory, tomorrow is today's dream. - Khalil Gibran
Monday, July 1, 2013
Saturday, June 29, 2013
Personal Finance News Saturday 6/29
Phil's Personal Finance Tip of the Day:
Make like a pencil and get the lead out
By
Teamwork. As I like to say, even the Lone Ranger had Tonto. You can’t do it all alone. My definition of teamwork is a collection of diverse individuals who respect each other and are committed to each other’s successes. Teamwork sometimes requires people to play roles that aren’t as glamorous as they’d like.
For example, I once asked a symphony conductor which instrument is the most difficult to play?
Without missing a beat, the conductor replied: “Second fiddle. I can get plenty of first violinists.
But finding someone who can play second fiddle with enthusiasm is a real problem. When we have no second violin, we have no harmony.” And you just can’t be successful without harmony or teamwork.
Criticism. Giving and taking criticism is no easy task, but it is necessary if you want to become better. If you ignore the problem and hope it goes away, you are not going to improve. Every office I’ve ever worked in or done business with has been made better because of suggestions or criticisms of the people who spend their working hours there. No one ever choked to death swallowing his or her own pride! Admit you aren’t perfect. Remember that the goal of honest criticism is to make you better than you were before.
To read the entire article By
Make like a pencil and get the lead out
By
Teamwork. As I like to say, even the Lone Ranger had Tonto. You can’t do it all alone. My definition of teamwork is a collection of diverse individuals who respect each other and are committed to each other’s successes. Teamwork sometimes requires people to play roles that aren’t as glamorous as they’d like.
For example, I once asked a symphony conductor which instrument is the most difficult to play?
Without missing a beat, the conductor replied: “Second fiddle. I can get plenty of first violinists.
But finding someone who can play second fiddle with enthusiasm is a real problem. When we have no second violin, we have no harmony.” And you just can’t be successful without harmony or teamwork.
Criticism. Giving and taking criticism is no easy task, but it is necessary if you want to become better. If you ignore the problem and hope it goes away, you are not going to improve. Every office I’ve ever worked in or done business with has been made better because of suggestions or criticisms of the people who spend their working hours there. No one ever choked to death swallowing his or her own pride! Admit you aren’t perfect. Remember that the goal of honest criticism is to make you better than you were before.
To read the entire article By
Friday, June 28, 2013
Personal Finance News Friday 6/28
Phil's Personal Finance Tip of the Day:
First person: How my family saved $1,281 a year on our cable bills
Here's one family's true story about how a few phone calls saved them more than $1,200 a year on their cable TV and Internet service.
By Terence Loose | Yahoo! Homes
Do you feel like the cost of entertaining your family with cable TV and Internet is running a little steep?
And before you scoff at the idea, consider what a May 2013 Consumer Reports telecom survey found: Of the surveyed respondents who negotiated the rate on their triple- or quad-play bundle, about 44 percent reported savings of up to $50 a month.
Each one of us went about it a little differently, though, so read on for our stories and pick the style that best fits you for a chance at savings. Because, frankly, if my mom can do it, anyone can.
Terence Loose's Approach Saves $381 per Year
Like most suburban middle-class households, my cable bill ran on autopilot: Around the second of every month, I got my Oceanic Time Warner cable TV and Internet bill and promptly ignored it.
Then some automated system removed $143.35 from my bank account and I went on with my TV watching and Internet surfing. I knew that the promotional deal I received when I signed up had long-since vanished and my rate had increased, but I figured there wasn't much I could do about it.
After speaking to woman I'll call Sally for about 10 minutes, explaining that it was very annoying that I, a loyal customer for over four years, was paying over $40 more per month than other customers, she assured me that she could help me out. I thought, "Wow, that was easy."
Then she offered to drop my monthly Internet modem lease fee: total savings, $3.95.
That simply wasn't enough, so I added that I could always switch to DISH satellite service (something Blyskal said to say). But Sally held firm and I could see I wasn't going to get far. So I asked for a supervisor and was promptly switched to John (not his real name either).
John was super-nice and asked what webpage I was getting my under-$100 figure from. I told him and he said, "That's our mainland rate; I'm sorry I can't give you that."
I live in Oahu, Hawaii.
I thought about bargaining some more, but frankly, I'm that guy who pays full price to the hat salesman at the flea market, so I said "thanks" and declared victory.
Total savings: $31.80 per month / 381.60 per year
[Do you want to save money on your cable bill? Click to compare rates from providers in your area.]
To read the entire article from Terence Loose | Yahoo! Homes :
I don't measure a man's success by how high he climbs, but how high he bounces when he hits bottom. -George Patton
Thursday, June 27, 2013
Personal Finance News Thursday 6/27
Phil's Personal Finance Tip of the Day:
6 Ways to Prepare for a Medical Emergency Now
By Gerri Detweiler | Credit.com
Michelle wants to buy a home but can’t get a loan. The problem? An emergency room bill from six years ago that is listed on her credit reports as severely past due. John is fighting a $406 bill he received after being seen in the ER for what the doctor diagnosed as a case of the flu. And Jerry is struggling to pay over $1,300 in ER copays on his limited Social Security income. These are just a few of the many stories readers have shared with us describing their debt problems following a medical emergency.
While someone with a serious or chronic medical problem might expect to wind up in the emergency room or hospital periodically, no one plans to get the flu, break a bone or get in a car accident.
More than 54 million people reported having trouble paying medical bills at the start of 2012, according to a survey from the Centers for Disease Control. And medical bills are often cited as a major contributor to bankruptcy.
How can you prepare so that a medical emergency doesn’t wipe you out financially? Here are six strategies:
Research Local Hospitals
When our reader Quentin’s daughter injured her ankle, he and his wife took her to the emergency room. They suspected a broken ankle. After X-rays were taken, they were told their daughter had no broken bones, and she was sent home with an ankle brace. That wasn’t the end of it though:
Two months later we get a bill from the hospital for $1500.00. They stated that my wonderful Blue Cross/Blue Shield (Federal) wouldn’t pay the bill. I call my Insurance Co and find out that the Hospital isn’t (a Preferred Hospital). Then I get an Insurance statement from BCBS stating that they covered the xray bill ($900). Then I get another bill from the Doctor (which my daughter or wife never saw) for $950. Again BCBS stating that this Doctor wasn’t a preferred provider. So I appeal the bill with BCBS and they agree to pay the $1,500 hospital bill, but only $250 of the Doctor bill. So now I’m getting $700 Doctor bills in the mail.
If you have health insurance, make sure you know the locations near your home, work, and/or children’s schools that participate in your health insurance network. Not only will you save money by going to an “in network” provider (which usually means lower out-of-pocket costs), these providers must agree to a fee schedule negotiated by the insurance company. If the amount they charge is higher than that, too bad. They can’t “balance bill” patients for the difference.
A warning, though: the physicians you see at an emergency room may be contractors of the hospital and therefore may not participate in your insurance network. It’s nearly impossible for patients to know this; but you certainly can try to ask – provided you are not in severe pain or unconscious when you make it to the hospital.
Before you travel, do the same thing: find out how your insurance company handles care outside your local area and scout out participating hospitals and urgent care providers.
Don’t have insurance? Request information about local hospitals’ financial assistance policies and review them to figure out which ones may be willing to work with you to reduce the bill.
Be faithful in small things because it is in them that your strength lies. -Mother Teresa
6 Ways to Prepare for a Medical Emergency Now
By Gerri Detweiler | Credit.com
Michelle wants to buy a home but can’t get a loan. The problem? An emergency room bill from six years ago that is listed on her credit reports as severely past due. John is fighting a $406 bill he received after being seen in the ER for what the doctor diagnosed as a case of the flu. And Jerry is struggling to pay over $1,300 in ER copays on his limited Social Security income. These are just a few of the many stories readers have shared with us describing their debt problems following a medical emergency.
While someone with a serious or chronic medical problem might expect to wind up in the emergency room or hospital periodically, no one plans to get the flu, break a bone or get in a car accident.
More than 54 million people reported having trouble paying medical bills at the start of 2012, according to a survey from the Centers for Disease Control. And medical bills are often cited as a major contributor to bankruptcy.
How can you prepare so that a medical emergency doesn’t wipe you out financially? Here are six strategies:
Research Local Hospitals
When our reader Quentin’s daughter injured her ankle, he and his wife took her to the emergency room. They suspected a broken ankle. After X-rays were taken, they were told their daughter had no broken bones, and she was sent home with an ankle brace. That wasn’t the end of it though:
Two months later we get a bill from the hospital for $1500.00. They stated that my wonderful Blue Cross/Blue Shield (Federal) wouldn’t pay the bill. I call my Insurance Co and find out that the Hospital isn’t (a Preferred Hospital). Then I get an Insurance statement from BCBS stating that they covered the xray bill ($900). Then I get another bill from the Doctor (which my daughter or wife never saw) for $950. Again BCBS stating that this Doctor wasn’t a preferred provider. So I appeal the bill with BCBS and they agree to pay the $1,500 hospital bill, but only $250 of the Doctor bill. So now I’m getting $700 Doctor bills in the mail.
If you have health insurance, make sure you know the locations near your home, work, and/or children’s schools that participate in your health insurance network. Not only will you save money by going to an “in network” provider (which usually means lower out-of-pocket costs), these providers must agree to a fee schedule negotiated by the insurance company. If the amount they charge is higher than that, too bad. They can’t “balance bill” patients for the difference.
A warning, though: the physicians you see at an emergency room may be contractors of the hospital and therefore may not participate in your insurance network. It’s nearly impossible for patients to know this; but you certainly can try to ask – provided you are not in severe pain or unconscious when you make it to the hospital.
Before you travel, do the same thing: find out how your insurance company handles care outside your local area and scout out participating hospitals and urgent care providers.
Don’t have insurance? Request information about local hospitals’ financial assistance policies and review them to figure out which ones may be willing to work with you to reduce the bill.
Be faithful in small things because it is in them that your strength lies. -Mother Teresa
Wednesday, June 26, 2013
Personal Finance News Wednesday 6/26
Phil's Personal Finance Tip of the Day:
Beware of These Online Retail Pricing Strategies
By Susan Johnston | U.S.News & World Report LP
From free shipping to rapidly fluctuating prices, here's what consumers should know about new strategies in online pricing and marketing.
In e-commerce's infancy, a few key players competed for business online, so comparing prices and shopping online was relatively simple. Now, as big retailers gain market share and startups roll out innovative new strategies for pricing and marketing, identifying the best value is anything but clear-cut for the average consumer.
In fact, fluctuating prices and abandoned shopping carts mean the price you pay for a new camera or leather couch may be a lot different than what your friend pays, even if you buy from the same online retailer. Here's a look at several trends to watch.
1. Fluctuating prices. Thanks to dynamic pricing, which is used by retailers like Amazon, online prices tend to fluctuate more than prices in physical stores. Online stores can easily update prices minute by minute, but "in a physical store, they're not going to go around and retag everything," points out Niraj Shah, CEO of Wayfair.com, an online retailer for home products and furnishings.
Prices might vary depending on an item's popularity, your proximity to a brick-and-mortar store carrying the same item or other intelligence gathered through Internet cookies. "With popular items, the volatility of the market will be higher," says Arie Shpanya, CEO of WisePricer.com, which helps companies monitor and adjust pricing. "Electronics is the category that's having the most price change." Keep in mind that if you see a price you're happy with, you may want to buy right away because the price might be higher or lower when you refresh the page.
[Read: How to Avoid Online Ticket Scammers.]
Some retailers have been accused of discriminatory pricing based on information gathered about the customer - for instance, past buying history, whether the customer browsed a price-comparison website first and their location. "If I'm shopping from my office or my home, I might get two different prices," Shah says. For more expensive purchases, try checking the price on multiple devices, such as a laptop, tablet and smartphone, to ensure you're getting the best one.
To read the entire article from Susan Johnston | U.S.News & World Report LP:http://finance.yahoo.com/news/beware-online-retail-pricing-strategies-135504470.html
The man who does not read good books has no advantage over the man who can't read them. - Mark Twain
Beware of These Online Retail Pricing Strategies
By Susan Johnston | U.S.News & World Report LP
From free shipping to rapidly fluctuating prices, here's what consumers should know about new strategies in online pricing and marketing.
In e-commerce's infancy, a few key players competed for business online, so comparing prices and shopping online was relatively simple. Now, as big retailers gain market share and startups roll out innovative new strategies for pricing and marketing, identifying the best value is anything but clear-cut for the average consumer.
In fact, fluctuating prices and abandoned shopping carts mean the price you pay for a new camera or leather couch may be a lot different than what your friend pays, even if you buy from the same online retailer. Here's a look at several trends to watch.
1. Fluctuating prices. Thanks to dynamic pricing, which is used by retailers like Amazon, online prices tend to fluctuate more than prices in physical stores. Online stores can easily update prices minute by minute, but "in a physical store, they're not going to go around and retag everything," points out Niraj Shah, CEO of Wayfair.com, an online retailer for home products and furnishings.
Prices might vary depending on an item's popularity, your proximity to a brick-and-mortar store carrying the same item or other intelligence gathered through Internet cookies. "With popular items, the volatility of the market will be higher," says Arie Shpanya, CEO of WisePricer.com, which helps companies monitor and adjust pricing. "Electronics is the category that's having the most price change." Keep in mind that if you see a price you're happy with, you may want to buy right away because the price might be higher or lower when you refresh the page.
[Read: How to Avoid Online Ticket Scammers.]
Some retailers have been accused of discriminatory pricing based on information gathered about the customer - for instance, past buying history, whether the customer browsed a price-comparison website first and their location. "If I'm shopping from my office or my home, I might get two different prices," Shah says. For more expensive purchases, try checking the price on multiple devices, such as a laptop, tablet and smartphone, to ensure you're getting the best one.
To read the entire article from Susan Johnston | U.S.News & World Report LP:http://finance.yahoo.com/news/beware-online-retail-pricing-strategies-135504470.html
The man who does not read good books has no advantage over the man who can't read them. - Mark Twain
Tuesday, June 25, 2013
Personal Finance News Tuesday 6/25
Phil's Personal Finance Tip of the Day:
5 reasons we're glad we refinanced to a 15-year mortgage
By Kristie Farnham | Yahoo! Contributor Network
Sure, we could pay it off sooner by making extra payments each month, but we knew it would be difficult for us to follow through unless that payment was a requirement, not a mere option. We decided to reevaluate our finances and look into shortening the term of our home loan.
So in August 2012 -- just a year after buying our house -- we refinanced. We went from a 30-year 4.25 percent mortgage to a 15-year loan at 3.375 percent. Our monthly payment increased by over $350, from a principal and interest payment of $875 a month to $1,229.
This increase was not insignificant in our budget. We had to make changes in our lifestyle, including restraint when it came to purchasing things that we didn't necessarily need.
Now in Summer 2013, a year after our refinance, there are several reasons why we are pleased with our decision.
1. Savings. Our initial 30-year loan was for approximately $177,000 at 4.25 percent, which meant we would have been charged more than $136,000 in interest. Our refinanced 15-year loan is for about $173,000 at an interest rate of 3.375 percent, which reduces our finance charges to around $48,000. So, while an interest rate differential of .875 percent may not seem like much at first glance, our interest savings as a result of refinancing amounts to over $88,000.
[Want to refinance and save on your mortgage? Click to find a lender now.]
2. Money for college. In 14 years, our two older children will be in college and our youngest will be a sophomore in high school. We save as much as we can every month but realize that it may not be enough to cover the costs associated with putting these three through college. By eliminating our mortgage early, we will have extra money to count on when the bills for higher education start rolling in.
To read the entire article from Kristie Farnham | Yahoo! Contributor Network :http://homes.yahoo.com/news/5-reasons-were-glad-refinanced-15-mortgage-171700719.html
The brick walls aren't there to keep us out, the brick walls are there to give us a chance to show how badly we want something. -R Pausch
5 reasons we're glad we refinanced to a 15-year mortgage
By Kristie Farnham | Yahoo! Contributor Network
My husband and I purchased our home in Hudson, Wis., in 2011 with a 30-year mortgage. In the months following our move in, we found ourselves questioning that 30-year term. Currently in our 30s, it dawned on us that we would most likely have grandchildren before our mortgage was paid off.
Sure, we could pay it off sooner by making extra payments each month, but we knew it would be difficult for us to follow through unless that payment was a requirement, not a mere option. We decided to reevaluate our finances and look into shortening the term of our home loan.
So in August 2012 -- just a year after buying our house -- we refinanced. We went from a 30-year 4.25 percent mortgage to a 15-year loan at 3.375 percent. Our monthly payment increased by over $350, from a principal and interest payment of $875 a month to $1,229.
This increase was not insignificant in our budget. We had to make changes in our lifestyle, including restraint when it came to purchasing things that we didn't necessarily need.
Now in Summer 2013, a year after our refinance, there are several reasons why we are pleased with our decision.
1. Savings. Our initial 30-year loan was for approximately $177,000 at 4.25 percent, which meant we would have been charged more than $136,000 in interest. Our refinanced 15-year loan is for about $173,000 at an interest rate of 3.375 percent, which reduces our finance charges to around $48,000. So, while an interest rate differential of .875 percent may not seem like much at first glance, our interest savings as a result of refinancing amounts to over $88,000.
[Want to refinance and save on your mortgage? Click to find a lender now.]
2. Money for college. In 14 years, our two older children will be in college and our youngest will be a sophomore in high school. We save as much as we can every month but realize that it may not be enough to cover the costs associated with putting these three through college. By eliminating our mortgage early, we will have extra money to count on when the bills for higher education start rolling in.
To read the entire article from Kristie Farnham | Yahoo! Contributor Network :http://homes.yahoo.com/news/5-reasons-were-glad-refinanced-15-mortgage-171700719.html
The brick walls aren't there to keep us out, the brick walls are there to give us a chance to show how badly we want something. -R Pausch
Monday, June 24, 2013
Personal Finance News Monday 6/24
Phil's Personal Finance Tip of the Day:
Midyear Tax Moves to Save on Your 2013 Return
Smart planning now could save you big bucks when you file next year.
Shelving your taxes until next spring could cost you money, especially this year. The tax law passed earlier in the year as part of the deal to avert the fiscal cliff imposes a new 39.6% marginal rate on taxable income over $400,000 ($450,000 for married couples). Taxpayers in this bracket will pay 23.8% on dividends and long-term capital gains — not the 15% rate that applies to most investors.
Other changes reach down the income chain. Taxpayers with adjusted gross income of $250,000 or more ($300,000 for married couples) will effectively pay higher marginal rates because Congress resurrected phaseouts of itemized deductions and personal exemptions. And taxpayers with modified adjusted gross income of $200,000 or more ($250,000 for married couples) face a new 3.8% surtax on net investment income.
Read more at http://www.kiplinger.com/article/taxes/T055-C005-S002-midyear-tax-moves-to-save-on-2013-return.html#hCqqsVMmXwW71Gl1.99
Take the first step in faith. You don't have to see the whole staircase, just take the first step. -Martin Luther King Jr.
Midyear Tax Moves to Save on Your 2013 Return
Smart planning now could save you big bucks when you file next year.
Shelving your taxes until next spring could cost you money, especially this year. The tax law passed earlier in the year as part of the deal to avert the fiscal cliff imposes a new 39.6% marginal rate on taxable income over $400,000 ($450,000 for married couples). Taxpayers in this bracket will pay 23.8% on dividends and long-term capital gains — not the 15% rate that applies to most investors.
See Also: The Most-Overlooked Tax Deductions
Other changes reach down the income chain. Taxpayers with adjusted gross income of $250,000 or more ($300,000 for married couples) will effectively pay higher marginal rates because Congress resurrected phaseouts of itemized deductions and personal exemptions. And taxpayers with modified adjusted gross income of $200,000 or more ($250,000 for married couples) face a new 3.8% surtax on net investment income.
Read more at http://www.kiplinger.com/article/taxes/T055-C005-S002-midyear-tax-moves-to-save-on-2013-return.html#hCqqsVMmXwW71Gl1.99
Take the first step in faith. You don't have to see the whole staircase, just take the first step. -Martin Luther King Jr.
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