I’ve earned more than the Social Security income limit for more than 35 years. I own my own business with my wife.
She worked for 12 years before we had children and returned to work five years ago, but earns only $40,000. I earn enough in my business to pay both of us more than the income limit.
She’s a 50% owner in the business and helps with random items.
We plan on retiring at 67 or 70 (10 or 13 years from now). We would be well served for Social Security purposes to split the business income between us, which would surpass the $160,200 maximum, correct?
-J.
Dear J.,
Yes, you’d help your wife boost her future Social Security payments. Benefits are based on your 35 top-earning years, so your wife will get larger checks someday if she can boost her income.
But I’m not sure the two of you will come out ahead in retirement if you maximize your wife’s future Social Security payments. In this scenario, you and your wife would pay a lot more in Social Security taxes. The trade-off might not be worth it.
The $160,200 you refer to is Social Security’s maximum taxable amount for 2023. This cap goes up pretty much every year. Any money you earn above this limit isn’t taxed by Social Security. Those taxes are a hefty 12.4% for self-employed people like you because you have to kick in 6.2% on both the employer’s and the employee’s side. But you’re currently earning a lot of money that isn’t subject to Social Security taxes.
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In a nutshell, if you gave your wife $160,200 of business income, you’d have to fork over nearly $20,000 extra to Social Security. Now, it may be possible to deduct half of the self-employment tax — which includes both Social Security and Medicare taxes — on your income taxes, depending on a host of factors. But that’s a matter to sort out with your CPA.
Paying $20,000 extra in taxes may be worth it if you and your wife want additional guaranteed income from Social Security. But a lot of high-earning people like yourself would prefer to invest that extra money to build a bigger nest egg.
Ultimately, I think you should look at the big picture. What kind of lifestyle do you want in retirement? Approximately how much annual income do you think you’ll need to buy yourself that lifestyle?
As a general rule, you want to replace between 70% and 80% of your pre-retirement income. But your actual needs will depend on a host of factors. If you want to be jet-setting seniors who own multiple beachfront homes, you’ll probably need more. But if you have simple tastes, you’re in good health and you want to retire debt-free somewhere with a low cost of living, you can probably get away with substantially less.
Decide on a goal, then try working backward. Set a target for each source of retirement income you expect to receive: investments, Social Security, business and real estate, etc.
Given your income, you can easily afford to hire a financial planner, and doing so would be well worth it for you. They can use software to make projections for both your retirement needs and income. Then, you can decide whether you’d be better served by boosting your wife’s future Social Security or using that money to invest more. Look for a fee-based financial planner so they’re getting paid based on the service they provide instead of the product they sell you.
A financial planner can also help you project your Social Security benefits under various scenarios. You could estimate your future payments under the arrangement you propose, where you divide your business income between the two of you. But you can also project her payments if she were to receive spousal benefits instead of her own retirement benefit. Your wife would be eligible for 50% of your primary insurance amount (the benefit you get at full retirement age, which is 67 for anyone born after 1957) as long as you both wait until 67 to collect.
Unless you and your wife got a late start on investing, I’m guessing your retirement plans don’t hinge on Social Security. Only about 6% of taxpayers make more than Social Security’s wage cap in a given year. Earning above the taxable maximum for 35 years is pretty rare.
Many Americans will need to squeeze every last penny out of Social Security to afford retirement. About a quarter of adults 65 and older depend on Social Security for at least 90% of their incomes, according to the Center on Budget and Policy Priorities. Fortunately, you can afford a comfortable retirement even if you don’t maximize your Social Security benefits.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].
You probably don’t need us to tell you that the earlier you start saving for retirement, the better. But let’s face it: For a lot of people, the problem isn’t that they don’t understand how compounding works. They start saving late because their paychecks will only stretch so far.
Whether you’re in your 20s or your golden years are fast-approaching, saving and investing whatever you can will help make your retirement more comfortable. We’ll discuss how to save for retirement during each decade, along with the hurdles you may face at different stages of life.
How Much Should You Save for Retirement?
A good rule of thumb is to save between 10% and 20% of pre-tax income for retirement. But the truth is, the actual amount you need to save for retirement depends on a lot of factors, including:
Your age. If you get a late start, you’ll need to save more.
Whether your employer matches contributions. The 10% to 20% guideline includes your employer’s match. So if your employer matches your contributions dollar-for-dollar, you may be able to get away with less.
How aggressively you invest. Taking more risk usually leads to larger returns, but your losses will be steeper if the stock market tanks.
How long you plan to spend in retirement. It’s impossible to predict how long you’ll be able to work or how long you’ll live. But if you plan to retire early or people in your family often live into their mid-90s, you’ll want to save more.
How to Save for Retirement at Every Age
Now that you’re ready to start saving, here’s a decade-by-decade breakdown of savings strategies and how to make your retirement a priority.
Saving for Retirement in Your 20s
A dollar invested in your 20s is worth more than a dollar invested in your 30s or 40s. The problem: When you’re living on an entry-level salary, you just don’t have that many dollars to invest, particularly if you have student loan debt.
Prioritize Your 401(k) Match
If your company offers a 401(k) plan, a 403(b) plan or any retirement account with matching contributions, contribute enough to get the full match — unless of course you wouldn’t be able to pay bills as a result. The stock market delivers annual returns of about 8% on average. But if your employer gives you a 50% match, you’re getting a 50% return on your contribution before your money is even invested. That’s free money no investor would ever pass up.
Pro Tip
If you have a child under 18 who earns money from working, they can contribute to a Roth IRA as long as an adult serves as the account’s custodian.
Pay off High-Interest Debt
After getting that employer match, focus on tackling any high-interest debt. Those 10% average annual stock market returns pale in comparison to the average interest rate for people who have credit card debt — nearly 20% in early 2023. In a typical year, you’d expect a $100 investment could earn you $10. Put that $100 toward your balance? You’re guaranteed to save $20.
If you have federal student loans that have been in automatic forbearance since March 2020, you’ll need to make a budget that includes the minimum payment. Though forbearance remains in effect as of this writing, mandatory payments are likely to resume in 2023.
Take More Risks
Look, we’re not telling you to throw your money into risky investments like bitcoin or the penny stock your cousin won’t shut up about. But when you start investing, you’ll probably answer some questions to assess your risk tolerance. Take on as much risk as you can mentally handle, which means you’ll invest mostly in stocks with a small percentage in bonds. Don’t worry too much about a stock market crash. Missing out on growth is a bigger concern right now.
Build Your Emergency Fund
Building an emergency fund that could cover your expenses for three to six months is a great way to safeguard your retirement savings. That way you won’t need to tap your growing nest egg in a cash crunch. This isn’t money you should have invested, though. Some options include:
Tame Lifestyle Inflation
We want you to enjoy those much-deserved raises ahead of you — but keep lifestyle inflation in check. Don’t spend every dollar each time your paycheck gets higher. Commit to investing a certain percentage of each raise and then use the rest as you please.
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Saving for Retirement in Your 30s
If you’re just starting to save in your 30s, the picture isn’t too dire. You still have about three decades left until retirement, but it’s essential not to delay any further. Saving may be a challenge now, though, if you’ve added kids and homeownership to the mix.
Invest in an IRA
Opening a Roth IRA is a great way to supplement your savings if you’ve only been investing in your 401(k) thus far. A Roth IRA is a solid bet because you’ll get tax-free money in retirement.
In 2023, you can contribute up to $6,500 if you’re younger than 50. The deadline to contribute isn’t until tax day for any given year, so you can still make contributions for 2022 (the limit is $6.000) until April 18, 2023. If you earn too much to fund a Roth IRA, or you want the tax break now (even though it means paying taxes in retirement), you can contribute to a traditional IRA.
If you or your spouse isn’t working but you can afford to save for retirement, consider a spousal IRA. It’s a regular IRA, but the working spouse funds it for the non-earning spouse.
Avoid Mixing Retirement Money With Other Savings
You’re allowed to take a 401(k) loan for a home purchase. The Roth IRA rules give you the flexibility to use your investment money for a first-time home purchase or college tuition. You’re also allowed to withdraw your contributions whenever you want. Wait, though. That doesn’t mean you should.
The obvious drawback is that you’re taking money out of the market before it’s had time to compound. But there’s another downside. It’s hard to figure out if you’re on track for your retirement goals when your Roth IRA is doing double duty as a college savings account or down payment fund.
Start a 529 Plan While Your Kids Are Young
Saving for your own future takes higher priority than saving for your kids’ college. But if your retirement funds are in shipshape, opening a 529 plan to save for your children’s education is a smart move. Not only will you keep the money separate from your nest egg, but by planning for their education early, you’ll avoid having to tap your savings for their needs later on.
Keep Investing When the Stock Market Crashes
The S&P 500 index, which represents about 80% of the U.S. stock market, finished out 2022 with losses around 19%. The stock market has a major meltdown like the March 2020 COVID-19 crash about once a decade.
But when a prolonged bear market or crash happens in your 30s, it’s often the first time you have enough invested to see your net worth take a hit. Don’t let panic take over. No cashing out. Commit to dollar-cost averaging and keep investing as usual, even when you’re terrified.
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Saving for Retirement in Your 40s
If you’re in your 40s and started saving early, you may have a healthy nest egg by now. But if you’re behind on your retirement goals, now is the time to ramp things up. You still have plenty of time to save, but you’ve missed out on those early years of compounding.
Continue Taking Enough Risk
You may feel like you can afford less investment risk in your 40s, but you still realistically have another two decades left until retirement. Your money still has — and needs — plenty of time to grow. Stay invested mostly in stocks, even if it’s more unnerving than ever when you see the stock market tank.
Put Your Retirement Above Your Kids’ College Fund
You can only afford to pay for your kids’ college if you’re on track for retirement. Talk to your kids early on about what you can afford, as well their options for avoiding massive student loan debt, including attending a cheaper school, getting financial aid, and working while going to school. Your options for funding your retirement are much more limited.
Keep Your Mortgage
Mortgage rates vary from week to week, but they’re expected to stay low for most of 2021. Your potential returns are much higher for investing, so you’re better off putting extra money into your retirement accounts. If you haven’t already done so, consider refinancing your mortgage to get the lowest rate.
Invest Even More
Now is the time to invest even more if you can afford to. Keep getting that full employer 401(k) match. Beyond that, try to max out your IRA contributions. If you have extra money to invest on top of that, consider allocating more to your 401(k). Or you could invest in a taxable brokerage account if you want more flexibility on how to invest.
Meet With a Financial Adviser
You’re about halfway through your working years when you’re in your 40s. Now is a good time to meet with a financial adviser. If you can’t afford one, a financial counselor is typically less expensive. They’ll focus on fundamentals like budgeting and paying off debt, rather than giving investment advice.
Tina Russell/The Penny Hoarder
Saving for Retirement in Your 50s
By your 50s, those retirement years that once seemed like they were an eternity away are getting closer. Maybe that’s an exciting prospect — or perhaps it fills you with dread. Whether you want to keep working forever or retirement can’t come soon enough, now is the perfect time to start setting goals for when you want to retire and what you want your retirement to look like.
Review Your Asset Allocation
In your 50s, you may want to start shifting more into safe assets, like bonds or CDs. Your money has less time to recover from a stock market crash. Be careful, though. You still want to be invested in stocks so you can earn returns that will keep your money growing. With interest rates likely to stay low through 2023, bonds and CDs probably won’t earn enough to keep pace with inflation.
Take Advantage of Catch-up Contributions
If you’re behind on retirement savings, give your funds a boost using catch-up contributions. In 2023, you can contribute:
$1,000 extra to a Roth or traditional IRA (or split the money between the two) once you’re 50
$7,500 extra to your 401(k) and most other workplace accounts once you’re 50
The Secure Act 2.0, which passed in December 2022, will increase catch-up contributions to employer-sponsored accounts workers between ages 60 and 63 beginning in 2025.
Work More if You’re Behind
Your window for catching up on retirement savings is getting smaller now. So if you’re behind, consider your options for earning extra money to put into your nest egg. You could take on a side hustle, take on freelance work or work overtime if that’s a possibility to bring in extra cash. Even if you intend to work for another decade or two, many people are forced to retire earlier than they planned. It’s essential that you earn as much as possible while you can.
Pay off Your Remaining Debt
Since your 50s is often when you start shifting away from high-growth mode and into safer investments, now is a good time to use extra money to pay off lower-interest debt, including your mortgage. Retirement will be much more relaxing if you can enjoy it debt-free.
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Saving for Retirement in Your 60s
Hooray, you’ve made it! Hopefully your retirement goals are looking attainable by now after working for decades to get here. But you still have some big decisions to make. Someone in their 60s in 2021 could easily spend another two to three decades in retirement. Your challenge now is to make that hard-earned money last as long as possible.
Make a Retirement Budget
Start planning your retirement budget at least a couple years before you actually retire. Financial planners generally recommend replacing about 70% to 80% of your pre-retirement income. Common income sources for seniors include:
Social Security benefits. Monthly benefits replace about 40% of pre-retirement income for the average senior.
Retirement account withdrawals. Money you take out from your retirement accounts, like your 401(k) and IRA.
Defined-benefit pensions. These are increasingly rare in the private sector, but still somewhat common for those retiring from a career in public service.
Annuities. Though controversial in the personal finance world, an annuity could make sense if you’re worried about outliving your savings.
Other investment income. Some seniors supplement their retirement and Social Security income with earnings from real estate investments or dividend stocks, for example.
Part-time work. A part-time job can help you delay dipping into your retirement savings account, giving your money more time to grow.
Reverse mortgages: If you’ve paid off your home or have significant equity, a reverse mortgage can provide extra income.
You can plan on some expenses going away. You won’t be paying payroll taxes or making retirement contributions, for example, and maybe your mortgage will be paid off. But you generally don’t want to plan for any budget cuts that are too drastic.
Even though some of your expenses will decrease, health care costs eat up a large chunk of senior income, even once you’re eligible for Medicare coverage — and they usually increase much faster than inflation.
Develop Your Social Security Strategy
You can take your Social Security benefits as early as 62 or as late as age 70. But the earlier you take benefits, the lower your monthly benefits will be. If your retirement funds are lacking, delaying as long as you can is usually the best solution. Taking your benefit at 70 vs. 62 will result in monthly checks that are about 76% higher. However, if you have significant health problems, taking benefits earlier may pay off.
Figure Out How Much You Can Afford to Withdraw
Once you’ve made your retirement budget and estimated how much Social Security you’ll receive, you can estimate how much you’ll be able to safely withdraw from your retirement accounts. A common retirement planning guideline is the 4% rule: You withdraw no more than 4% of your retirement savings in the first year, then adjust the amount for inflation.
If you have a Roth IRA, you can let that money grow as long as you want and then enjoy it tax-free. But you’ll have to take required minimum distributions, or RMDs, beginning at age 73 (previously age 72) if you have a 401(k) or a traditional IRA. These are mandatory distributions based on your life expectancy.
The penalties for not taking them are stiff: You’ll owe the IRS 50% of the amount you were supposed to withdraw for tax years 2022 and prior, though the penalty drops to 25% for 2023 and subsequent years.
Pro Tip
Beginning in 2024, Roth-designated employer-sponsored accounts will no longer have RMDs.
Keep Investing While You’re Working
Avoid taking money out of your retirement accounts while you’re still working. Once you’re over age 59 ½, you won’t pay an early withdrawal penalty, but you want to avoid touching your retirement funds for as long as possible.
Instead, continue to invest in your retirement plans as long as you’re still earning money. But do so cautiously. Keep money out of the stock market if you’ll need it in the next five years or so, since your money doesn’t have much time to recover from a stock market crash in your 60s.
A Final Thought: Make Your Retirement About You
Whether you’re still working or you’re already enjoying your golden years, this part is essential: You need to prioritize you. That means your retirement savings goals need to come before bailing out family members, or paying for college for your children and grandchildren. After all, no one else is going to come to the rescue if you get to retirement with no savings.
If you’re like most people, you’ll work for decades to get to retirement. The earlier you start planning for it, the more stress-free it will be.
Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to [email protected].
My grandfather worked hard his entire life and eventually became a fairly wealthy man. When he wrote his will, I was just a baby and my little sister had not yet been born. Half of his estate (minus personal property) goes to our mother, and half goes to me. Our mother has told us our whole lives that when the time comes, I am to split my half with my sister.
Unfortunately, the time has come and it appears that the will was written to say my half is actually to go into a trust, which the lawyer will set up once my grandfather’s properties have been sold. Once funded, there will be hundreds of thousands of dollars in it and I will be the sole beneficiary. My mother is to be the trustee.
(This in itself is an issue since we are estranged and she has proved herself to be untrustworthy time and time again when it comes to money. This is not why I am writing you, although I am curious what, if any, rights I have as a beneficiary to ensure she does not just take the money out of the trust for herself.)
I know that I am not legally obligated to share my half with my sister, but how can I? If my mother elects to just disburse the funds all at once (highly unlikely but I suppose is a possibility), how can I give half of my share to my sister?
Lastly, do you have any advice on what to do with the money itself? My sister and I both have worked to become fairly well established and debt-free so we are both mostly looking at putting most of the money toward our retirement. I don’t think inheritance can be put in a 401(k), though. What other options are there?
-A.
Dear A.,
It’s always refreshing when someone wants to do the right thing, even though they’re not legally obligated to do so. Sharing your inheritance with your sister falls into that category.
As the trustee, your mother has a fiduciary role, which means she’s required to put the interests of the beneficiary (you) ahead of her own. As the beneficiary, you’re entitled to regular financial statements. If your mother fails to provide the requested statements, you can send her a letter of demand. If she still refuses or you suspect she’s stealing or mismanaging funds, you could petition the court to have her removed as trustee. You could also sue her personally for breaching her fiduciary duty.
Got a Burning Money Question?
Get practical advice for your money challenges from Robin Hartill, a Certified Financial Planner and the voice of Dear Penny.
DISCLAIMER: Select questions will appear in The Penny Hoarder’s “Dear Penny” column. We are unable to answer every letter. We reserve the right to edit and publish your questions. But don’t worry — your identity will remain anonymous. Dear Penny columns are for general informational purposes only, but we promise to provide sound advice based on our own research and insights.
Robin Harthill
Thank You for your question!
Your willingness to share your story might help others facing similar challenges.
While we can’t publish every question we receive, we appreciate you sharing your question with us.
The Penny Hoarder’s Robin Hartill is a Certified Financial Planner and the voice of Dear Penny.
Whether your mother disburses the funds all at once or in increments, there’s no reason you can’t just gift your sister half. For any gift that exceeds the annual exclusion amount — $17,000 in 2023 — you need to fill out IRS Form 709. But as long as you don’t gift more than your lifetime exclusion amount — $12.92 million in 2023 — you won’t have to pay taxes on the gifted amount. You’d just need to tell the IRS about it.
Here’s where it gets complicated, though: You’ll pay income taxes on the portion of trust distributions attributable to interest and investment gains, but not the principal. Also, while inheritances aren’t taxable at the federal level, six states (Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania) have an inheritance tax.
You’ll be on the hook for the tax bill since you’re the trust’s beneficiary. But since your sister is receiving half of the money, make sure you subtract half the taxes from her share. For instance, if your distribution triggers an extra $10,000 in taxes, you’d give her half the amount you receive minus $5,000.
You’re correct that you wouldn’t be able to put hundreds of thousands of dollars in your 401(k) at once. Your 401(k) is funded through payroll deductions, and the limit on contributions for anyone younger than 50 is $22,500 in 2023.
But there’s no limit on the amount you can put in a taxable account. You could hang onto that money and use it to max out all tax-advantaged accounts, including 401(k)s and IRAs, each year. Or you could keep the money in the taxable account, knowing you can access it penalty-free at any time. If you hold your investments for over a year, you’d be taxed at long-term capital gains rates, which are just 15% for most Americans.
Since this is a significant amount of money, it’s worth hiring a financial planner to discuss the best ways to invest this money based on your personal goals and risk tolerance. Look for a planner who’s a fiduciary and uses a fee-only model so that they’re compensated based on the services they provide, not what they sell you.
If you keep a close eye on your trust’s financial statements, I think you’ll use this money in a way that would make your grandfather proud. Your letter illustrates the importance of keeping estate documents up to date, though. Fortunately, you’re following your grandfather’s wishes by sharing your inheritance with your sister. But anyone who assumes their beneficiary will do what’s right could leave a lasting family feud as their legacy.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].
Retirement can be a time to relax and enjoy the fruits of your labor, but for many seniors, the reality is that their fixed income is not enough to sustain their desired lifestyle. That’s where passive income comes in. It requires little to no effort to maintain and can provide a consistent revenue stream for retirees. In this article, we’ll explore several passive income ideas that seniors can use to boost their retirement income and live more comfortably and securely.
Due – Due
Passive Income Ideas for Seniors to Boost Retirement Income
1. Sell Your Product on Etsy or Amazon.
If you have a knack for developing unique products, consider selling them on Etsy or Amazon. This can provide a passive income stream as people purchase your products.
One of the benefits of selling products on Etsy or Amazon as a senior is that it can be done from your home with an internet connection.
To get started, you’ll need to create an account on Etsy or Amazon and set up your online store. You’ll also need to decide what products you want to sell and source them from suppliers. Once your store is set up, and you have products to sell, you’ll need to start marketing and promoting your store to drive traffic and sales.
2. Create a Youtube Channel.
If you have a talent or hobby that you enjoy sharing with others, you can create a YouTube channel and monetize your videos with ads. For example, you can create a YouTube channel if you know lost and rare recipes. You can share those recipes on your channel and make a good amount of money over time.
3. Invest in a Franchise
Investing in a franchise can provide a passive income stream through the profits earned by the business. While it requires an upfront investment, a franchise can provide a proven business model and support system, making it easier to generate passive income.
4. Rent out Your Equipment or Car
Put your imagination to use. You may own a boat, bicycle, stroller, surfboard, ladder, camera gear, and a wide range of power tools.
You can locate people who occasionally require such products but don’t want to own them by using peer-to-peer renting websites like the ones listed below:
RVshare (recreational vehicles)
ShareGrid (camera equipment)
Turo (cars)
Boatsetter (boats)
Whatever you rent, keep in mind that standard insurance might not cover the use of your property for commercial purposes. Consult your insurance agent if you need a separate policy because an insurance rider may cover some things.
5. Create and Sell an E-book
If you enjoy writing and have expertise on a particular topic, you can create and sell an e-book as a source of passive income. E-books are digital books that can be read on electronic devices like tablets and smartphones, and they have become a popular way for people to share their knowledge and experiences with others. To create and sell an e-book, you’ll need to create the course once, and it can be sold to multiple students over time.
6. Invest in Peer-to-peer Lending
Peer-to-peer (P2P) lending allows people to lend money to borrowers without needing a traditional financial institution. P2P lending platforms like Lending Club and Prosper allow investors to browse through loan listings and select the loans they want to fund.
As a lender, you’ll earn interest on the loans you fund, and this interest can provide a passive income stream for retirees. P2P lending carries some risk, as there is the potential for default.
However, by diversifying your investments across multiple loans, you can minimize this risk and still generate a decent return on your investment.
7. Open a Dropshipping Store.
A dropshipping store can be a good way for seniors to generate passive income. Here’s how it works: a dropshipping store is an online store that allows you to sell products without stocking inventory. Instead, when a customer orders a product, you purchase it from a third-party supplier and have it shipped directly to the customer.
This means you don’t have to worry about the overhead costs of maintaining a physical inventory or the hassle of fulfilling orders yourself. You can focus on marketing and customer service while the supplier handles the rest.
One of the benefits of starting a dropshipping store as a senior is that it can be done from the farthest corner of the world with an internet connection, so it’s a flexible option for those who may not be able to work a traditional job. It can also be a low-risk way to start a business, as you don’t have to invest a lot of money upfront to get started.
8. Earn Points for Using Your Credit Card.
In the last decade, credit cards have become synonymous with debt. Whenever you type credit card, the search engines give you results on how Americans are past due on their payments and enrolling in debt settlement programs to get back on the right financial track. But that doesn’t have to be the way. Retirees can use credit cards to generate passive income. But how to do it?
If you use credit cards for shopping, please ensure you earn financial rewards. You decide how the award will appear. Some folks have a thing for air miles. Some people get incentives in cash or as a credit on their monthly account.
The variety of rewards credit cards and their benefits and drawbacks may be overwhelming. Read how reward programs work and take advantage of them judiciously.
9. Wrap Advertisements around Your Car.
With the help of businesses like Carvertise, you can turn your car into a moving billboard. They’ll pay you for the right to display repositionable business advertising stickers on your car.
You can make between $100 and $400 monthly, depending on how often and where you drive. A clean driving record and a car with its original paint job are prerequisites.
Pro tip: Scams involving auto advertising are common. Here’s how you can stay safe and protected:
A legitimate business won’t ask for an application fee and will offer a phone line for customer support where you can speak with a live person.
The company should pay for the cost of wrapping the car.
Any organization that doesn’t inquire about your driving history, auto insurance, travel patterns, or vehicle type should be avoided at all costs.
10. Make an App
One of those minds thinks, “There should be a better way to accomplish (something) — and I think I know what it is!”. If so, developing an app might result in additional revenue.
It might also generate nothing at all. But as they say, nothing ventured, nothing gained.
For instance, personal finance author Jackie Beck, who paid off $147,000 in debt, utilized her knowledge to develop the “Pay Off Debt” app.
Unable to code? There are app builder services. You can get help from them.
It’s likely that you already regularly utilize a variety of apps. You can establish a resource that will support you financially for the rest of your life if you can develop a novel idea into a usable app.
This kind of technological asset has paid off handsomely for many diligent inventors, whether you’re into games or are looking for a workable solution to an issue that has motivated you to take action.
11. Become a Package ‘receiver.’
Okay, this theory hasn’t been tested yet. But the moment for this solution has come. The rise of internet shopping has benefited burglars, who find it simple to steal items placed outside the front doors before the intended recipients arrive home from work.
By positioning yourself as a “professional package receiver,” you might be able to contribute to stopping those petty crooks.
Do this: Spread the word about your availability to take deliveries among your friends, on social media, and in your place of worship. You might keep an eye on the delivery company’s tracking information and plan to be at the recipient’s house to receive the item if it is for someone in your neighborhood. Alternatively, you could request that packages be sent to you, the Professional Package Receiver, the Original-Recipient, c/o.
Before requesting a price of, say, $1 per package, find out how much the service is worth to the person who wishes to hire you. You might be taken aback if someone replies, “I’ll give you $5.” Decide if you’ll charge per order or per package and whether you’ll impose a weight restriction, such as no parcels weighing more than 30 pounds.
12. Selling Your Pictures
Almost everyone can now take good photos, thanks to smartphones. The next time you snap a picture of an amazing sunset or a cute kid and dog scene, share it with others. You may sell it with the aid of apps like Foap, which is accessible for Apple and Android devices.
You can perform much better if you have a nice digital SLR camera, a tripod, and other tools. Selling photos on virtually any topic is possible through stock photo agencies like Shutterstock and iStockphoto, emphasizing high-definition, high-quality images.
13. Create a Course Online
Why not make money off of your knowledge if it is useful? You can create a course that might alter someone’s life, either professionally or personally, with the aid of websites like Teachable and Thinkific.
Be aware that online courses cover more than just computer-related subjects. A brief search reveals courses on:
Cake-making
Watercolors
Drone-based filmmaking
Free-diving
Blacksmithing
Yoga
Parenting
Fiction writing
This is only the beginning. A course will require some labor to create, just like an e-book. However, once it is up, the work is finished.
14. Sell Goods through Vending Machines
A profitable chance to sell anything, from food and drinks to t-shirts passively, is provided by vending machines. While there is frequently an upfront cost, a good placement will quickly pay for the machine. Even lower initial costs can be provided by refurbished equipment.
Certain suppliers would give you a machine for free if you just sold their goods. One business that will provide a free machine to suppliers interested in this kind of business arrangement is Pepsi.
15. Promote Your Services as a House or Pet Sitter
Boomers who love animals and don’t mind occasionally staying the night away from home can make some quick cash by just keeping an eye on their neighbors’ pets while they are away. Pet sitting and house sitting go hand in hand and are frequently done together. This kind of low-stress income source presents a reliable and stable possibility if staying a few nights at a pleasant home and spending time with their pets appeals to you.
This kind of business can expand swiftly, thanks to referrals. If your clients like you, there will be a sufficient income each month
16. Tap into the Equity in Your Home
During a recession, homeowners who don’t want to use their retirement money may discover that their house can provide them with cash. Retirees must get inventive, though, as some banks have suspended home equity lines of credit.
One choice for retirees who are 62 years old or above is a reverse mortgage. With a reverse mortgage, a lender pays an older person based on the worth of their property regularly. The loan has to be repaid if the homeowner vacates the property or passes away. Typically, selling the property is necessary to achieve this.
17. Pay Off Your Debt
Huh? You might wonder how settling credit card debt can help you generate passive income.
Although it’s true that you aren’t generating an income stream, you are removing a fixed expense, which improves your cash flow over the long term, so the effect is the same as higher income.
What if you could spend the cash you use each month to settle a debt? The same is true of repaying your mortgage; this is a tremendous chance to spend extra money each month and will make you feel completely independent financially.
Wrapping Up
Remember that while these passive income ideas have the potential to provide a stream of income, they also come with risks and uncertainties. It’s always a good idea to do thorough research and seek advice from a financial advisor before making any decisions.
Retirement is one of the biggest career and life transitions that people ever go through, and 71% of baby boomers say they feel behind on saving for it, according to a 2022 survey. If you’re an adult child of someone nearing retirement, you may also be wondering and worried about how they are going to manage it.
Time is of the essence. “These conversations need to happen sooner rather than later. It gives you and your parents more time to plan,” said Cameron Huddleston, the author of “Mom and Dad, We Need To Talk: How To Have Essential Conversations With Your Parents About Their Finances” and the director of education at Carefull, a financial service for aging adults. “It gives them more options when it comes to saving for retirement, planning for long-term care. You don’t want to wait for emergencies, because then you have fewer options — sometimes no options at all.”
But it’s also a sensitive topic that should be handled without judgment or blame.
These talks can only work if adult children are collaborators with their parents instead of bossy, said Nancy K. Schlossberg, a retired professor of counseling psychology and the author of “Retire Smart, Retire Happy: Finding Your True Path in Life.”
“Older people don’t want their sovereignty taken away,” Schlossberg said. “You have to be able to not take such a strong position — that ‘this is the way to do it, this isn’t.’ What you want as an adult child is to be helpful and find out what would be helpful.”
Here are the best conversation starters you can ask and the most important resources to share with your parents:
1. Ask about their plans and dreams for retirement without judgment.
When you ask your parents whether they have thought about retiring, you want to listen more than speak. Schlossberg suggested questions like “Do you want to talk about your expectations as you retire?” and “As you look ahead, what are you thinking about?”
The role of a collaborator is to help your parents uncover options. That means withholding judgment about what your parents decide to share with you.
Instead of making a negative accusation like “You are not going to be able to take care of this house. This house is too big for you,” Huddleston said to focus on highlighting the benefits within different options.“Make it all about your parents and looking out for their best interest,” she said, suggesting questions like “Oh, you want to get care at home? Is your home set up for you to age in place?”
If your parents are at a loss over how they want to spend their time, ask if there is a field that interested them but that they never had a chance to explore, Schlossberg said. If they state “I’ve always wanted to be X, but there are no possibilities,” then you can respond with “Well, let’s look at some options. Let’s see if we can uncover some together,” she said.
This is also a time to exchange realistic expectations for how involved your parents want to be in your day-to-day life. For example, you might be expecting your parents to help out with caregiving for your children, and they may have totally different plans.
Schlossberg recalled one woman guiltily telling her: “My daughter who lives in another state expects me to come up and babysit as much as I can. I’m not retiring to be a babysitter.”
2. Ask if they have been saving for retirement, and share expert-backed options for improvement.
If your parents tell you that they have not been saving at all, it can be helpful for you to note that they still can.
“It’s never too late,” said David John, a senior strategic policy adviser who works on retirement savings issues at the AARP Public Policy Institute. “But leaving it to the last moment can cost you in ways both financially and emotionally to discover that you had expected something and that you found that you really don’t have the resources to meet that goal.”
The right amount of how much to save varies from person to person. “The important level is, are you saving somewhere in the neighborhood of, say, 8-10% of your income into a retirement plan?” John said. If that’s a huge adjustment, he suggested that people ease their way into it by starting with 3% to 4% and increasing that figure — for example, as a contribution to an employer-sponsored plan like a 401(k) or to an individual retirement account — by a percentage point each year. The IRS also offers catch-up contribution incentives that allow people ages 50 and up to contribute more to 401(k)s and IRAs.
Some near-retirees may not want to talk about their finances at all, Huddleston said, but others “might be incredibly receptive and have wanted to have these conversations with you, [but] they just didn’t know how to start the conversations themselves.”
And if your parents say they have it all figured out and do not need any insight, you can see for yourself by asking them for retirement-saving strategies, suggested Huddleston. “It avoids that role reversal, and parents like to offer advice,” she said. “Then you come back later [and say] ‘Oh hey, thanks for sharing that advice with me. I did a little bit more research and I found this article that said you need to have this much in savings.’”
Education in money management can make a big difference in a person’s retirement. Swarn Chatterjee, a University of Georgia professor who studies retirement planning behavior, found in his research that individuals with higher financial literacy were more likely to plan for retirement, even when they lived in “financial advice deserts” with few advisers.
If your parents are open to your collaboration on a budget, “help [them] map out what resources they have, from their current wealth to their savings and their debt,” Chatterjee said. “Make an estimation of how much they will be able to spend down from that savings and for how long in retirement,” he said, as well as what their current expenditures are and what those will be when they retire.
The bottom line is that financial education makes a big difference for how people retire. And if you can be a helpful resource for your parents, they could be better prepared for the road ahead.
3. Ask if they’ve thought about using a financial planner, and share alternatives if an adviser is not affordable.
Hiring a financial adviser is one way for your parents to get professional help on preparing for retirement. But even if an adviser is not an option for them, there are other ways to get assistance. Some financial advisers charge by the hour, Huddleston noted, so your parents could potentially get a meeting or two to come up with a plan and create a budget. The national Garrett Planning Network can help you search for financial advisers in your area who charge by the hour.
You can also contact a local office of the Financial Planning Association, which has chapters in different states, Huddleston said. “Ask if they have any members who will do pro bono work or provide really discounted services to low-income families,” she suggested.
The lack of financial advisers in underserved communities is a societal challenge, Chatterjee said. But you can still help your parents by getting them connected to online services instead, he added.
4. Ask if they need you to provide financial assistance, and determine what help you can offer.
Questions about the economics of retirement are not idle queries born of simple curiosity. Almost half of midlife adults expect to provide financial support to their parents in the future and are concerned about their ability to do so, according to a 2020 AARP survey. Getting clarity now on the assistance your parents need can help prevent headaches later on.
They might need help paying for utilities, medical costs or housing, Chatterjee said. “Maybe they do not help with all of it. But with some of it, it will help defray their financial stress,” he noted, recommending that adult children determine what assistance they can realistically provide.
Huddleston said that adult children could pool money for a general emergency fund or instead choose to address one expense, like monthly premium payments on a long-term care insurance policy.
If your parents need financial assistance that you cannot give them, it’s OK to say: “This is the help I can provide. I can point you to these resources, but I’m not going to help chip in for medical costs or stop working if you need hands-on care,” according to Huddleston. “By doing this in advance, when those emergencies arise … you are not going to be responding emotionally.“
5. Ask if they are familiar with the Social Security benefit they expect to get.
“Most people don’t really have a good idea about what kind of Social Security benefit they might qualify for and what else they are going to need,” John said.
In a 2022 survey of nearly 1,900 adults across generations, almost half incorrectly thought that if they filed early for Social Security, their benefit would automatically increase upon reaching full retirement age.
To give parents a better idea of what to expect, encourage them to create an online Social Security account. They can then compare the monthly retirement benefits they would receive by applying at different times between the ages of 62 and 70.
“You can say: ‘Hey, Social Security has this great resource. If you set up a ‘My Social Security’ account, it’s going to show you what your projected monthly benefits are,’” Huddleston said.
6. Ask if they’ve thought about long-term care, and find out if they qualify for any options now.
Nearly 7 in 10 adults who are 50-plus believe that they will need assistance with daily activities as they get older, yet fewer than 3 in 10 have thought “a lot” about how they will then continue to live on their own, according to a 2022 AARP survey of 1,000 people.
Many adults incorrectly believe that Medicare covers all the costs of nursing homes or in-home care, Huddleston said. It does not — and long-term care can be pricey. In 2021, the national median monthly cost for a private nursing home room was $9,034.
Medicaid, however, does cover long-term care for those who meet state eligibility requirements. Going to an elder care lawyer who specializes in Medicaid can help your parents navigate the system, Huddleston said.
Veterans, meanwhile, may qualify for long-term care services provided by the Department of Veterans Affairs. And life insurance policies can have riders that let people use some of their monetary death benefits to cover care expenses while they are still alive.
When talking to your parents, mention articles about the subject or use examples from people you know who got involved with caring for aging parents, Huddleston suggested.
Ultimately, topics like these should serve as conversation starters to an ongoing discussion, so your goal should be to serve as a consistent resource of information on your parents’ journey.
”One of the best things a kid can do for their parents is to help them see options,” Schlossberg said. “The more options you see, the more you feel in control.”
I have a 32-year-old daughter who seems to think that it’s OK to not pay rent or be a contributing adult while living with me. I have told her many times that she has to move out, and then she asks for time to get her finances together. That was two years ago.
She has become a drain and a strain because she is not helping me in any way. I’m on a fixed income. I love her, but I have grown not to like her. Any advice would be appreciated.
-L.
Dear L.,
Most of us don’t make big changes when life is going great. So make life uncomfortable for your daughter.
Set a hard deadline for when your daughter needs to be out. Make sure it’s realistic. She’ll need enough money for first month’s rent and a security deposit, plus utilities and basic furnishings. But it shouldn’t be too far out in the future.
If your daughter is working, three months’ notice seems reasonable. If she’s not working, you’ll need to set the deadline a bit further out. But as a condition of temporarily extending her living arrangement, she’s required to apply for a minimum number of jobs each week.
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Assuming your daughter has a job, you can tell her that she needs to pay rent if she wants to stay for the next few months. Require her to set up automatic transfers so that part of her paycheck automatically goes to you. Save the transfers in a separate bank account so that it’s there for her when the move-out deadline arrives.
After you give your daughter her deadline, tell her you’ll be checking in for weekly status updates. Ask her about what steps she’s taken to find a new place, obtain employment, etc.
I’m not sure what your daughter means when she says she wants to get her finances together. But if she needs guidance, a good place to start is by checking her credit reports at AnnualCreditReport.com. She should see any debts she has listed there — but if there are accounts she doesn’t recognize or errors, she’ll want to dispute the information now in case a future landlord checks her credit.
If she has debt, she should set up automatic transfers for at least the minimum amount. Savings is also a crucial component of getting your financial life in order. You’re going to help her out there by requiring “rent” payments.
As long as your daughter is living with you, don’t cook for her or clean up after her. You can also set house rules, like no friends over after a certain hour. The goal is to make growing up more appealing than living with you forever.
If your daughter outright refuses to leave, you may have to escalate things. You could talk to an attorney about how you can legally evict her. Of course, you should go this route only if all else has failed, as evicting your daughter will have lasting damage on your relationship.
Some parents also go the “cash for keys” route of giving their kids money to leave. I don’t know if you can afford to part with the cash your daughter would need to move into an apartment. But if the goal is to get her out of your hair, the financial sting could be worth it.
Again, I’d recommend this only if you’re out of options. Paying your daughter to leave your house won’t help her build strong finances in the long term. Plus, you’ll have to stand firm and tell her no should she run into trouble and ask to move in again.
If your daughter were 22, I’d advocate for a gentler approach. But your daughter is 32. She’s had a free ride for two years. Perhaps being treated like a child will motivate her to start acting like an adult.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].
Retirement is a time to enjoy and relax. But the question is where?
Due – Due
Some people look for a place close to their family and friends, while others want good weather year-round. And still, others want to live in an area with plenty of activities and entertainment.
If you’re looking for a place to retire and need help figuring out what to look for, keep reading this article. We’ll discuss the different essential factors you should consider and give our recommendations on where you can find them.
What Makes a Place Good for Retirement?
Let’s start by discussing how to identify good retirement destinations. Here are some of the most important factors to consider when making your choice:
#1 Cost of Living
The cost of living is a metric that measures the expense of maintaining a certain lifestyle in a particular location. It includes the costs of housing, food, taxes, and other necessities such as clothing and transportation.
So, if you want to get the most out of your retirement savings, you should choose a place with a reasonable cost of living. The lower the cost of living, the more value you get for your money, and the longer your retirement savings will last. By the way, we did a piece on the 12 cheapest states to retire you might want to check out.
#2 Healthcare
Many retirees choose a location with good healthcare coverage, including Medicare and private insurance. But they also don’t realize that this coverage may not always be enough. Even with health insurance, you may encounter high costs and long wait times, and sometimes, you may need to pay for your medical care.
So, suppose you have a pre-existing medical condition. In that case, you might consider moving to a place with a good healthcare system—a place with good healthcare coverage, accessibility, and relatively good healthcare affordability, as well as good doctors for that particular condition.
#3 Climate and Weather
The average temperature in the United States is 30°F, and most people, including you, would probably like to retire somewhere a bit warmer.
So, if you want to look for warm places for retirement, look for areas closest to the equator since they are generally warmer year-round because of their sun exposure. It is also important to note that the farther north or south you go, the colder the climate gets.
Elevation or feet above sea level also plays into the local weather, with higher grounds usually being colder and dryer than the warmer lowlands.
#4 Community Safety and Security
The safety and security of a community are important considerations when choosing a place to retire. You don’t want to find yourself walking down the street and have a pick-pocketer steal your phone and go on a shopping spree with your virtual credit card.
While a safe neighborhood can already be beneficial, it’s also important to look for other factors that might influence the community’s safety. For example, crime rates may be higher in certain areas, especially if the location is run down and has high poverty levels.
So to truly enjoy your retirement, you must thoroughly examine the community you want to live in. It will ensure the safety of your savings and your life.
5 Most Affordable Places To Retire In The USA
If you’re on a tight budget and looking to retire, the good news is that you can still find affordable retirement communities in many parts of the country that fit into most retirees ‘ ideals.
A simple way to look for an affordable place to retire is by checking the cost of living in each State. That way, you can maximize your retirement savings and live comfortably.
#1 Cocoa Beach, Florida
Cocoa Beach, Florida, is a good place for retirement. With mild winters and summers, the city has year-round warm weather that many retirees enjoy. The city also has a large population of retirees who can support and advise new retirees.
Furthermore, Florida is also an affordable state, with the cost of living about one-third less than the national average.
You also won’t need to worry about housing in the State, as they have various affordable housing options if you have no properties in the area. These options can help you save money on housing costs while enjoying all the amenities of living in the Sunshine State.
#2 Asheville, North Carolina
Another city you should consider for retirement if you want to live in an affordable area is Asheville, North Carolina. Its cost of living is lower than most other cities, and its healthcare costs are also low. Not to mention that it has a mild climate, so it’s an excellent place to live year-round.
Furthermore, the State has no shortage of beautiful parks and lakes. So, you can enjoy many outdoor activities in the State if you like an active lifestyle.
Also, if you love to travel around, North Carolina has one of the best public transportation systems in the country. Many of its cities have commuter rail and bus services that connect their neighborhoods to nearby cities and towns.
#3 Kingsport, Tennessee
Kingsport, Tennessee, is another great location for retirees. The cost of living is low, the job market is strong, and there are plenty of places you can live in.
In addition, Tennessee also has a long history of supporting retirees. There are plenty of social services available, including Medicare and Medicaid.
If you’re a fan of outdoor activities, you’ll never be bored in this State, as they have many great outdoor activities, like hiking and biking trails.
If you want to retire in this State, there are a lot of communities that offer affordable housing options for retirees. Overall, it shouldn’t be hard to find a retirement community that fits your budget and your lifestyle when you retire in Tennessee.
#4 Johnstown, Pennsylvania
Johnstown, Pennsylvania, is a small town located in the eastern part of Pennsylvania. It is a lovely place to consider for retirement due to its pleasant climate, low cost of living, and high quality of life.
Not only that, but Pennsylvania is also easy to get around in if you love to travel. It has an extensive public transportation network and a growing number of bike lanes and walkable streets.
If you’re interested in retiring, it’s worth taking the time to look into your options in this State.
#5 Newberry, South Carolina
There are many great reasons to retire in South Carolina, but the best one is that you can retire in a wonderful city like Newberry.
This city is one of the best places to retire if you want to live an active lifestyle. It has warm weather, beautiful beaches, and a low tax rate.
Even better, South Carolina has no income or estate tax, so you don’t have to worry about financial burdens when you start taking distributions from your retirement savings.
5 Places With the Best Healthcare Services
Retirees, like everyone else, need good health insurance coverage in retirement, not just for emergencies but also for preventative healthcare.
It is even more important now because you might be at a higher risk of developing chronic illnesses and conditions as you grow older. The good news is that you can prevent many of these conditions with preventive healthcare.
With that in mind, it is vital to consider the healthcare system of your target retirement location. Certain states have better healthcare systems than others, so here are the top 5 places with the best healthcare systems for retirees:
#1 Honolulu, Hawaii
Hawaii has the best healthcare system in the country and a wealth of recreational activities (big shocker, right?), making it an excellent state to consider for retirement. Plus, it’s warm year-round, so there’s no need for winter clothes!
You will be thrilled with this location if you enjoy beaches and warm weather. Honolulu may not be as exciting as New York or San Francisco, but the city is still vibrant, with plenty to do at all times of the day, 365 days a year.
#2 Gardner, Massachusetts
One of the top places to retire in the country is Gardner, Massachusetts, thanks to its top-rated healthcare system and access to some of the world’s best universities.
Through Medicare, the State offers affordable healthcare coverage for seniors, and there are many resources for retirees, such as classes on retirement planning.
There are also many retirement communities with independent living, assisted living, skilled nursing care, and memory care programs available in the State. So, you will have little to no trouble finding a community during your retirement in Massachusetts.
#3 Torrington, Connecticut
Torrington, Connecticut, may not be the first city that comes to mind when you’re thinking about retirement, but it’s one of the best places in America when it comes to healthcare facilities.
The State ranked #1 among states with no waiting lists and has high-quality hospitals that offer quick response times and excellent access to specialists.
In addition, you can enjoy having easy access to cities like New York City and Boston. So, whether you want an urban environment or a rural area, Connecticut has what you need!
#4 Manchester Township, New Jersey
Manchester Township, New Jersey, is one of the best townships in America for retirees because of its healthcare and retirement benefits which are far better than in most other cities.
One of the reasons why the State is so great for retirees is that it has a high percentage of veterans and military members who can take advantage of its good VA hospitals.
Furthermore, when it comes to amenities, the State has plenty of activities available to seniors, such as golf courses and community centers that provide senior services.
#5 Hemet, California
Hemet, California, is also one of the best cities for retirees, primarily because of its high-quality healthcare.
The State has a high average life expectancy of 81.8 years and a healthy retirement system that provides healthcare coverage through government and private insurance options.
If you, unfortunately, have difficulty paying for your healthcare needs in the State, they have many assistance programs and social services available to help you live comfortably in retirement.
3 Countries in the Caribbean Islands You Can Consider for Retirement
If you’re looking for a place with beaches, warm weather, and a low living cost, you might want to consider retirement in the Caribbean.
Many islands offer just that. Here are our top picks for the top 3 countries in the Caribbean Islands you should consider for retirement:
#1 Malta
Living in Malta means living an exceptionally healthy lifestyle.
Great weather, gorgeous beaches, a deep Catholic faith, and breathtaking architecture make Malta a unique place to retire.
The cost of living is very low–making it affordable for retirees–and healthcare costs are also low. Also, if you’re a pensioner, you’re exempt from paying income taxes in the country.
Overall, with its low cost of living, warm weather, and clean beaches, Malta is a retirement country.
#2 Puerto Rico
Puerto Rico is one of the most affordable places to retire, with the cost of living 8.24% lower than the US average.
Like Malta, the country has beautiful beaches and tropical weather all year round, so if you want a perfect retirement beach lifestyle that won’t break your budget, then Puerto Rico could be the perfect place.
If you want to retire in this country, you’ll only be a 3-hour flight away from the continental US, making it highly accessible to most of your friends and family.
#3 Dominican Republic
Located in the heart of the Caribbean, Dominicans call their country a paradise on Earth. Their beaches are some of the best in the world, and it’s one of the most affordable places to retire in Latin America.
The cost of living is low, and retirees can find a comfortable lifestyle for much less than they would pay back home. It has all four seasons, with temperatures averaging 65-85 degrees Fahrenheit year-round.
There’s an abundance of beaches and natural beauty, as well as great options for active seniors who want to explore. Plus, there are lots of hotels that offer senior discounts!
The Bottom Line
Now that you have read through the facets of a good retirement home, you will have an easier time narrowing down your options. Furthermore, the places listed above should give you ample ideas on where to settle once you’re ready to lay back and enjoy life.
Assess yourself on what your ideal paradise is. Practicalities aside, what do you like personally? Feel free to review this article and cross-check it with what we listed above. We have done the objective analysis for you, and all that is left is your subjective opinion on where you would ideally settle to live the rest of your life.
Find the sweet spot between a practical home and a personally entertaining home. Choose based on more than one factor. Focusing just on practicality risks boredom and misery. On the other hand, focusing blindly on entertainment compromises health and financial safety. Plan and plan carefully. Have a solid idea of your picture-perfect, fun, and practical home, and you’ll be enjoying your golden years in no time the way you always dreamed you would be.
With inflation and the possibility of a recession on everyone’s mind, many are eager to safeguard their personal finances, especially retirement accounts.
It turns out that Generation Z workers are taking those retirement savings particularly seriously — more so even than older generations, including millennials, Gen Xers, and baby boomers, per new research from BlackRock, and there are likely several contributing factors.
Here’s the thing: A lot of people have already put these money secrets to good use. They’ve found hundreds of dollars in savings, secured their family’s financials and padded their bank accounts.
Now it’s your turn, 50-somethings.
Putting all these secrets to use is actually easier than you might think. We’re betting you can knock out at least three or four of these things right now — yes, even from your phone.
Go ahead and join the masses and get in on these money secrets:
1. Ask This Website to Pay Your Credit Card Bills This Month
No, like… the whole bill. All of it.
While you’re stressing out over your debt, your credit card company is getting rich off those insane interest rates. But a website called Fiona could help you pay off that bill as soon as tomorrow.
Here’s how it works: Fiona can match you with a low-interest loan you can use to pay off every credit card balance you have. The benefit? You’re left with just one bill to pay every month, and because the interest rate is so much lower, you can get out of debt so much faster. Plus, no credit card payment this month.
Fiona can help you borrow up to $250,000 (no collateral needed) with fixed rates starting at 2.49%.
Fiona won’t make you stand in line or call a bank. And if you’re worried you won’t qualify, it’s free to check online. It takes just two minutes, and it could save you thousands of dollars. Totally worth it.
All that credit card debt — and the anxiety that comes with it — could be gone by tomorrow.
2. Get a Free Retirement Plan
Every day, 12,000 people retire — and almost 75% don’t have any kind of plan in place. We spend our entire lives saving up, so you’d think we’d do a little more than wing it with last-minute Google searches. That money needs to last our entire retirement!
It makes sense, though. Financial advisors are more interested in serving the super wealthy. That’s how they make the big bucks, after all.
But here’s some good news: A company called Retirable can get you a free retirement plan.
If you’re retiring in the next few years — or are recently retired — Retirable can tell you exactly how much is safe to spend every month alongside Social Security and any part-time income. Plus, it updates as you go, which could help you confidently draw more income per month.
Before you commit to anything, a registered investment advisor will work with you to create a retirement plan specific to your needs and goals. And, if it turns out Retireable isn’t a right fit, your financial advisor will point you in the right direction.
Here’s the thing: your current car insurance company is probably overcharging you. But don’t waste your time hopping around to different insurance companies looking for a better deal.
EverQuote is the largest online marketplace for insurance in the US, so you’ll get the top options from more than 175 different carriers handed right to you.
Take a couple of minutes to answer some questions about yourself and your driving record. With this information, EverQuote will be able to give you the top recommendations for car insurance. In just a few minutes, you could save up to $610 a year.
4. Invest In Something that Could Grow 300% In the Next 15 Years
With inflation, market volatility and newsworthy crypto crashes, it hasn’t been a great year for our precious nest eggs.
But some investments can actually protect you in times of economic uncertainty. One asset that’s remained historically steady — and has even increased in value during times of instability — is gold. In fact, the price of gold is up more than 300% in the past 15 years.
So, how do you invest in gold? A company called Lear Capital can help you through the entire process from start to finish. It’s been in the precious metals business for more than 25 years, and has completed $3 billion in precious metals transactions and for more than 93,000 investors. Plus, you’ll get a 24-hour risk-free guarantee to review your purchase before committing to it.
But the process isn’t necessarily for investor newbies. You’ll need to be able to invest a minimum of $15,000.To learn more, head over to Lear Capital’s site to sign up for your free gold investment kit.
5. Get Paid Up to $140/Month Just for Sharing Your Honest Opinion
If you’re turning blue in the face waiting for a raise at work, it might be time to quit holding your breath and start speaking your mind to someone who wants to listen.
Brands want to hear your opinion to help inform their business decisions on everything from products and services to logos and ads — and they’re willing to pay you up to $140 a month for it.
A free site called Branded Surveys will pay you up to $5 per survey for sharing your thoughts with their brand partners. Taking three quick surveys a day could earn up to $140 each month.
They’ve already paid users more than $20 million since 2012, and the most active users can earn a few hundred dollars a month. Plus, they’ve got an “excellent” rating on Trustpilot.
From inflation to smaller packaging, corporate America is famous for finding new ways to get you to spend more money.
But here’s a way to fight back.
A website called Rakuten will give you a refund from just about every store you shop at online. Which means it can give you up to a 15% cash back every time you buy toilet paper on Target or book that flight home for Thanksgiving.
We talked to Denver resident Colleen Rice, who’s earned more than $526.44 in refunds since she started using Rakuten. For doing nothing. She just uses Rakuten for things she already has to buy, like rental cars and flights.
Plus, if you use Rakuten to earn money back within the first 90 days of signing up, it’ll give you an extra $10 on the first check it sends you.
7. You Can Become Debt Free — Without Paying it All Off
It doesn’t matter how much debt you’re in. Trying to stay on top of it all can be overwhelming. Especially when the overdue credit card notices and threats from creditors start rolling in…
The good news is, a company called National Debt Relief could help you pay off your debt for significantly less than you owe, and in less time. No bankruptcy, no loans and no need to have good credit.
How? It offers a strategy a lot of people don’t know about, called debt relief.
Here’s how it works: If you owe at least $10,000 in unsecured debt (credit card debt, personal loans, medical bills, etc.), National Debt Relief’s experts will create a customized plan just for you. As the monthly payments add up, they negotiate with your creditors to reduce the amount you owe. You then pay off the rest in a lump sum.
On average, you could become debt-free within 24 to 48 months.
National Debt Relief has already helped more than 500,000 people pay off over $5 billion in debt. Find out what your best options are for taking control of your debt and living the life you want. It takes less than a minute to sign up for a free consultation.
But before getting too far into 2023, it’s a good idea to take stock of how your finances may have changed during the last 12 months and make any needed adjustments.
Here are five areas of your finances to check on so you don’t get any unpleasant surprises this year.
5 Financial Surprises (the Bad Kind) to Avoid in 2023
Higher Interest Rates
The Federal Reserve raised interest rates seven times in 2022, and additional hikes are expected in 2023. That means carrying a credit card balance is about to become more costly. It also means you can expect a higher monthly payment if you buy a home or car in the new year.
Consider that the average 30-year mortgage rate on Dec. 20, 2022 was 6.47%, up from 3.25% at the end of 2021. On a home with a $350,000 mortgage, that translates to a monthly payment of $2,205 vs. $1,523 a year ago.
If you’ve got credit card debt (or any other debt with a variable interest rate), prioritize paying it off, as you can expect your debt to get more expensive. And if you’re buying a home or making another major purchase that requires financing, be sure to factor those higher rates into your budget. You probably can’t afford as much house as you could have a year or two ago, when interest rates were nearly zero.
Social Security Taxes
For retirees, first some good news: Social Security payments are getting their biggest cost of living increase since 1981. That raise is especially sweet because Medicare Part B premiums will drop slightly, meaning seniors can hang onto more of their Social Security checks.
The downside of fatter Social Security checks: Some recipients could end up with an unexpected tax bill. Social Security benefits are taxed at the following rates:
50% of your Social Security benefits are taxable if:
Half of your benefits + other income = $25,000 to $34,000 (singles filers) or $32,000 to $44,000 (married couples filing jointly).
85% of your Social Security benefits are taxable if:
Half of your benefits + other income = $34,000 or more (single filers) or $44,000 or more (married couples filing jointly).
If Social Security benefits are your only source of income, it’s unlikely that you’ll owe taxes. But if your higher benefit in 2023 will push your income above the thresholds listed above, start planning for your tax bill now.
Missed Student Loan Payments
If you’ve been taking advantage of student loan forbearance since March 2020 — when all payments and interest on federally held student loans were suspended — be prepared to start making payments again.
If you’re on the standard repayment plan and are unable to make the payments, apply for an income-driven repayment plan, which could substantially reduce your monthly payments when the forbearance period ends. If you’re already on an income-driven plan, update your income to modify your monthly payment.
Overdraft Fees
Overdraft fees are among the most criticized fees assessed by banks, since those who live paycheck to paycheck are the ones likely to accidentally overdraft.
The goods is that a number of institutions eliminated their overdraft fees, including Ally Bank, Alliant Credit Union and Capital One.
In 2022, Bank of America announced it’s slashing overdraft fees from $35 to $10 and intends to drop bounced check fees. Wells Fargo said that it will give customers 24 hours to make good on overdrafts, although it hasn’t budged on the $35 overdraft penalty.
What does that mean for you? If you’re banking at a place that’s socking you with fees, then maybe 2023 should be the year you find a new bank — here’s a rundown of those fee changes, plus a list of banks that don’t charge overdraft fees at all.
Widespread Uncertainty
A growing number of economists are now predicting a recession in 2023, with those polled for Bankrate’s Third-Quarter Economic Indicator pegging the odds of a recession in the next 12 to 18 months at 65%.
An emergency fund is the best way to safeguard yourself against a recession. Ideally, you’d have enough to pay for six months’ worth of necessities, but amassing this much cash can take years. Even if you’re able to stash away enough to live off of for a month or two, that will provide a valuable safety net.
Because the stock market is volatile, this is money you should keep in an FDIC-insured bank account, rather than investing it. The silver lining of those higher interest rates: Some high-yield savings accounts are now paying annual percentage yields (APYs) above 3%.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder.
Someone born in 2000 has about a 1 in 4 chance of becoming disabled before they reach their full retirement age of 67. For a worker who becomes disabled during their working years, Social Security Disability Insurance (SSDI) is a lifeline.
As with Social Security retirement benefits, Social Security disability benefits are available only to workers who have earned work credits and paid payroll taxes. In some cases, spouses and dependent children can collect either type of benefit based on the insured person’s work record.
The SSDI application process is notoriously difficult. People who qualify for benefits must adhere to a number of strict rules, particularly when it comes to working. In this article, we’ll explain how SSDI works and answer some commonly asked questions about disability benefits.
Who Qualifies for SSDI Benefits?
Eligibility for Social Security Disability Insurance is based on two criteria: whether you have a medical diagnosis that meets Social Security’s definition of a disability and your work history.
Medical Diagnosis
You’ll need to be diagnosed with a physical or mental health condition that will render you unable to work for at least a year or is likely to result in death. Social Security’s Blue Book includes an extensive list of conditions that meet the minimum threshold for disability.
But having one or more of the listed conditions doesn’t mean you’ll automatically qualify for disability benefits. Likewise, if your condition isn’t listed, you still may qualify if your medical diagnosis meets Social Security’s disability criteria.
Work History
To collect Social Security, including disability benefits, you’ll typically need 40 work credits. In 2023, you’ll need $1,640 of earnings in a quarter to earn one work credit. You can’t earn more than four credits in any given year.
Younger workers who have paid Social Security taxes can qualify with fewer credits if they become disabled, though. You’ll also need to meet a recent work test, meaning you earned work credits in the period immediately before you became disabled. For example, if you’re 31 or older, you’ll need to have worked in five of the 10 years before you developed a disability.
How Do I Apply for SSDI?
You can apply for Social Security disability online, in person at your local office or by calling 1-800-772-1213 (TTY: 1-800-325-0778).
Along with identifying documents like your birth certificate (or proof of citizenship or lawful alien status if you weren’t born in the U.S.), be prepared to present W-2s or self-employment tax records, medical evidence and documentation related to any temporary or permanent workers’ compensation-type benefits you’ve received.
SSDI benefits have a five-month waiting period. You can’t apply until the sixth month after you became disabled, known in Social Security parlance as your onset date. On top of that, in 2021, it took an average of five months to process an SSDI application, but many states have a longer backlog.
Don’t delay your application just because you don’t have all the documents you need. Social Security staff will help you locate them.
Do I Need an Attorney to Apply for SSDI?
No, but you should seriously consider consulting with an attorney, considering that about two-thirds of initial SSDI applications are denied.
Attorneys who represent SSDI applicants work on contingency, which means they get paid only if you win your case. Charging upfront fees to represent someone in a disability claim is illegal.
If your application is approved, your attorney’s fees are capped at whichever is less: 25% of your first payment (which includes a lump sum back payment for benefits beginning on the sixth month after the onset date) or $6,000.
What if My Application Is Denied?
If your first application for disability benefits is denied, you have four opportunities to appeal. You typically have a 60-day window to take your case to the next level after your claim is rejected.
Ask for reconsideration: You’ll start by requesting a review of your initial application from your local Disability Determination Services, a state-level Social Security office that handles disability claims. During this time, you can submit additional evidence, such as medical records, to bolster your claim.
Request a hearing with an administrative law judge: If your claim is denied, you can request a hearing before an administrative law judge.
Take it to an Appeals Council: If a judge rejects your claim, the next step is to take your case to SSA’s Appeals Council.
Appeal in federal court: If an Appeals Council panel denies your claim, your final option is to challenge the decision in U.S. District Court.
How Are Disability Payments Calculated?
The Social Security Administration calculates your SSDI benefit as if you’ve already reached full retirement age, which is 67 for anyone born in 1960 or later. The maximum SSDI benefit is the same as the maximum monthly benefit for someone retiring at full retirement age: $3,627 in 2023.
But the average SSDI benefit is substantially lower. In 2023, the average SSDI beneficiary will receive just $1,483 per month versus $1,827 for the average retired worker.
Disability benefits are typically lower than retirement benefits because Social Security uses your average total yearly wages to calculate your benefit. Wages tend to increase over time. Because disabled workers often miss out on their higher-earning years, their average income tends to be lower.
Pro Tip
After 24 months of receiving SSDI payments, you’ll typically qualify for Medicare regardless of your age.
Is Working While Collecting SSDI Allowed?
You can work while collecting SSDI, but the limits are strict. Social Security disability benefits stop if you engage in what’s known as substantial gainful activity, defined in 2023 as earning more than $1,470 in a month if you’re not blind or $2,460 if you’re blind.
However, you’re allowed a nine-month trial work period during which you can test a job without jeopardizing your SSDI eligibility. You can take your trial work period months consecutively or spread them out over seven years. During any trial work period month, you can earn any amount without affecting your benefits, but you must report your earnings to Social Security. In 2023, any month in which you earn at least $1,050 counts as a trial work month.
What’s the Difference Between SSDI vs. SSI?
Supplemental Security Insurance (SSI) is available to people who have a disability or are 65 and older, but eligibility is restricted to those with limited income and resources. Unlike SSDI recipients, SSI recipients aren’t required to have earned work credits. The maximum monthly SSI benefit for individuals is just $914 in 2023.
Other Frequently Asked Questions (FAQ)
What Happens to SSDI Benefits When You Reach Retirement Age?
Does Social Security Recognize Partial Disability?
No. While workers’ compensation programs and the Veterans Administration pay benefits for partial disability, you must meet Social Security’s criteria for total disability to receive benefits through SSDI.
Can You Collect Your Spouse’s or Ex’s SSDI?
As with Social Security retirement benefits, you may be eligible for spousal benefits if your current or former spouse receives SSDI monthly benefits. The maximum you can receive is 50% of your spouse’s primary insurance amount — and only if it’s higher than your own Social Security benefit.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to [email protected]
If you’re feeling shaky about your retirement savings, you’re not alone.
According to a 2021 research report by the National Institute on Retirement Security, 56% of respondents said they’re worried about achieving a financially secure retirement.
If your savings fell short in 2022, the new year is a great time to get back on track and reach your retirement goals.
We’ve rounded up a few tips to help get you there.
6 Ways to Boost Your Retirement Savings in 2023
There was a lot going on this year. We get it.
Maybe you started a new job, picked up a side hustle or bought a home. Or maybe you barely made ends meet amid record-high inflation.
Putting aside money for retirement may have been the last thing on your mind.
Following these steps can help transform saving for retirement from an intimidating thought into a wealth-building reality.
Stash money in your 401(k) before 2022 is over.
Open an IRA with a robo-advisor.
If you’re self-employed, open a retirement account.
Don’t panic sell or withdraw money early.
Use some of your tax return to buy I bonds.
Get started, no matter your age.
1. Stash Money in Your 401(k) Before 2022 Is Over
Stepping up your retirement savings now — before 2022 ends — will give you a nice tax gift next year.
That’s because contributions made to a traditional 401(k) before Dec. 31 help lower your yearly taxable income.
It’s not a tax credit or deduction. But lowering your taxable income can save you money at tax time — or even boost your refund.
The maximum you can contribute to a 401(k) in 2022 is $20,500 — or $27,000 if you’re 50 or older — by the end of the year. (The limit rises to $22,500 in 2023.)
2. Don’t Have a 401(k) at Work? Open an IRA With a Robo-Advisor
Not everyone has access to a 401(k).
In fact, 31% of all private industry workers lacked access to any sort of employer-provided retirement plan in March 2022, according to the Bureau of Labor Statistics.
If that’s your situation, you can still save for retirement on your own. And we promise, it’s not as scary as it sounds.
Robo-advisors are online companies that use computer algorithms and advanced software to build and manage your investment portfolio.
They take the guesswork out of investing by picking stocks and bonds that align with your risk tolerance and financial goals.
The best robo-advisors on the market give you access to tax-advantaged individual retirement accounts (IRAs). You can set one up in less than 20 minutes without ever picking up the phone or speaking with an actual person.
Companies like Wealthfront and Betterment give you the option to open either a traditional IRA or a Roth IRA when you create your account.
Both accounts let you contribute up to $6,500 a year in 2023, or $7,500 for people 50 and older.
Roth and traditional IRAs also come with sweet tax perks. But how and when you get a tax break is different. As a quick reminder:
Traditional IRA
Taxes aren’t withheld when you put money in and your contributions lower your yearly taxable income (like a traditional 401(k) does). However, you’ll get a tax bite on the backend when you withdraw money in retirement. If you tap your account funds before age 59.5, you’ll pay a 10% IRS penalty.
Roth IRA
The government takes out taxes when you fund your account and contributions don’t help lower your yearly taxable income. But you won’t pay any taxes when you withdraw money in retirement. Plus you can withdraw your contributions at any time with no taxes or penalties.
Unlike a traditional 401(k), your IRA contribution deadline is April 18, 2023. If you’re worried about paying taxes next year, you can add money to your traditional IRA no later than April 18 — just don’t exceed the yearly contribution limit).
Likewise, if you meant to start an IRA this year but forgot, you can still open an account and fund it in 2023 — but count the contributions toward 2022.
You’ll be able to designate which tax year you want your contributions to count toward when you deposit money into your IRA.
3. Gig Workers and Self-Employed People: Consider One of These Accounts
If you’re a gig worker or self-employed, the word retirement might make you laugh.
Retire? Who can afford to retire?
You don’t get the option of opening a standard 401(k) at work so it may be difficult to know where to start.
A solo 401(k) is an individual 401(k) specifically designed for a business owner with no employees.
It lets you serve as both an employer and an employee — and make contributions in both capacities.
The contribution limit is very high: $66,000 in combined employee and employer contributions in 2023.
Solo 401(k)s also come in both Roth and traditional forms, so you’ll have your choice on tax savings.
Another option is a SEP IRA. Unlike a solo 401(k), you can add a few employees to a SEP IRA. Or you can use it just for yourself.
For a self-employed person, you can contribute up to 25% of your net earnings to a SEP IRA, up to a max of $66,000 in 2023.
As always, don’t contribute more than you can afford. Look at your cash flow and business expenses for the year to decide how much you can comfortably put away each month.
Many people learned this lesson around March 2020 when the stock market nosedived — only to rebound a month or two later.
Remember this: The losses you see inside your retirement account aren’t actual losses until you sell. If you simply wait for the market to recover, your investments will go back up.
A single day — or even a few months — of volatility shouldn’t change your long-term savings plan.
A down market is not a time to panic. In fact, smart investors see it as a time to buy.
Cullen Roche, a Wall Street pro and founder of Orcam Financial Group, summarized it nicely:
“The stock market is the only market where things go on sale and all the customers run out of the store.”
The S&P 500 is down about 19% since January 2022. If you have extra cash on hand, you might want to consider transferring some to your retirement account. This lets you buy additional shares when prices are low.
Then again, timing the market is tricky. A better long-term strategy is dollar-cost averaging, where you invest on a regular schedule no matter what’s happening in the stock market.
If you have money automatically deducted from your paycheck and deposited into your 401(k) or IRA, you’re already practicing dollar-cost averaging. You’re investing on a regular schedule (each time you get paid).
No matter what strategy you choose, don’t withdraw money from traditional retirement accounts early unless it’s a true emergency.
5. Use Some of Your Tax Return to Buy I Bonds
Inflation was stubbornly high in 2022 — and it might stick around for a while in 2023.
Investors tend to shy away from bonds when inflation is high. But some bonds, like Series I bonds from the U.S. Treasury, offer interest rates indexed to inflation. That means their interest payments increase as inflation increases.
In November 2022, the government set a six-month interest rate of 6.89% on I bonds purchased now through April 2023.
There are a couple ways I bonds can help boost your retirement savings.
If you’re a young, risk-taking investor with a stock-heavy portfolio, you can diversify it with a safe asset like I bonds.
Or if you’re an older investor planning to retire in the next two to 10 years, I bonds provide a risk-free place to stash cash while earning a much higher return than CDs or savings accounts.
You can’t buy I bonds through your 401(k) plan or an online broker. You have to purchase them online from the U.S. Treasury Direct website. You can also choose to receive part of your tax refund in paper I bonds.
You can buy up to $10,000 worth of I bonds each year — but you have to wait at least a year after purchase to cash them in. If you decide to buy, make sure you absolutely don’t need access to the money until at least 2024.
6. Stop With the Excuses and Get Started, No Matter Your Age
It may never feel like the right time to get started saving for retirement. It might be confusing and intimidating to open your first 401(k) or IRA. But the only way to overcome those fears is to jump in and get started.
We have easy-to-follow strategies for how to save for retirement whether you’re in your 20s or your 60s.
Boosting your retirement savings doesn’t need to be dramatic or life-altering. If you received a raise at work this year, for example, use a percentage of it to fund your future.
Even setting aside $10 or $20 more from each paycheck next year can make a huge difference.
The worst thing you can do is nothing. Ditch the excuses in 2023 and start contributing what you can reasonably afford to your retirement.
You’ll thank yourself later.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
A new year means new changes to your Medicare coverage.
New rules include eliminating costs for shingle vaccines and capping a month’s supply of insulin to $35.
Here’s a recap of five Medicare changes to expect in the new year.
Medicare Part B premiums are decreasing slightly.
There’s expanded access to behavioral health services.
Some Medicare start dates are changing.
A month’s supply of insulin will be $35.
The shingles vaccine is now free.
1. Medicare Part B Premiums Are Getting Cheaper
Medicare Part B premiums are going down starting Jan. 1. It’s the first decrease in a decade.
The standard Medicare Part B premium will be $164.90 a month in 2023, down from $170.10 in 2022.
The Part B deductible — the cost you pay out-of-pocket each year before Medicare starts paying its share — is also decreasing next year, from $233 in 2022 to $226 in 2023.
Medicare Part B covers a wide range of services, including doctor visits, outpatient surgeries, medical equipment and more. The monthly premium is usually deducted from Social Security checks.
2. Expanded Access to Behavioral Health Services
Expanded access to behavioral health and addiction treatment services are also rolling out next year.
Marriage and family therapists, licensed professional counselors, addiction counselors and certified peer recovery specialists will be able to provide services without a doctor or nurse practitioner physically on site. This is meant to expand access to more people.
Enrollees will be able to access opioid addiction treatment via telehealth (including telephone-only appointments) and mobile units, like vans, to help reach patients in rural and underserved communities.
Finally, Medicare will pay for the initiation of buprenorphine (used to treat opioid addiction) when it’s prescribed via telehealth, instead of just in person.
3. Some Medicare Start Dates Are Changing
If you sign up for Medicare in 2023, your coverage will begin sooner than it did before.
Previously, if you enrolled in Medicare one to three months after turning 65, it could take another two to three months before your coverage kicked in.
Starting in 2023, if you enroll in Medicare one to three months after your 65th birthday, your coverage begins the following month.
4. $35 Insulin
Starting Jan. 1, Medicare beneficiaries will pay no more than $35 for a month’s supply of certain insulin products. You’ll be able to get this copay amount even if you haven’t met your yearly deductible yet.
But the Medicare Plan Finder — the primary website used to help beneficiaries find drug and medical plans during open enrollment — isn’t updated to reflect the $35 insulin price changes.
That can make it tricky to estimate your actual out-of-pocket costs when comparing plans for 2023.
When insulin users access the plan finder, the projected cost could show up as thousands of dollars a year instead of the maximum $420 stipulated by law, according to Kaiser Health News.
“This new $35 cap may not be reflected when you compare plans,” a pop-up window notes when a plan finder user indicates they take insulin.
CMS is already anticipating some confusion.
The federal agency is creating a special enrollment period for people who use a covered insulin product to add, drop or change their Part D coverage any time from Dec. 8, 2022, to Dec. 31, 2023.
Use this online search tool to find the SHIP contact information in your state.
5. The Shingles Vaccine Is Free
Shingles vaccines can be pricey, costing up to $300 per dose without insurance.
Even though all Medicare drug plans cover the shingle vaccine, copays and deductibles still apply. The average Part D copayment for vaccines was $47 in 2020, according to a study by Avalere Health, a health care consulting firm.
That changes in 2023 when the shingles vaccine will be free with no deductible and no cost-sharing to people with Medicare prescription drug coverage.
Shingles is a viral infection that causes a painful rash. The CDC recommends all adults 50 and older get the shingles vaccine.
Cost sharing will also be eliminated for the Tdap (tetanus, diphtheria, whooping cough) vaccine on all Medicare drug plans in 2023.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
When it comes to retirement, saving sooner is better than saving later. But if you’ve already maxed out your 401(k) or don’t have the option to use a 401(k), you’ll have to turn to an IRA or individual retirement account.
Traditional IRAs are just one of your options, however. You can instead put money into a Roth IRA. Financial advisors can help you navigate the ins and outs; however, knowing about Roth IRA withdrawal restrictions and annual contribution limits is essential before investing in this type of account.
This article will explain a Roth IRA, how it works and how you can start one at the earliest opportunity.
A Roth IRA is a type of individual retirement account. As a tax-advantaged individual retirement account, Roth IRAs allow you to contribute after-tax dollars. The best way to understand a Roth IRA is to compare it to a traditional IRA.
A traditional IRA is a tax-deferred account. You contribute money to a regular IRA pre-tax, so you don’t have to pay income taxes on any of those contributions (lowering your gross income).
You can deduct contributions from your IRA each tax year. However, when you withdraw money from your regular IRA, you must pay taxes on those withdrawals since they are no longer tax-deductible.
A Roth IRA is the opposite. You contribute money to the Roth IRA and are taxed on those contributions, just like the rest of your regular income.
However, since that money is taxable income, you don’t owe any taxes when you withdraw money from your Roth IRA. You walk away with more money in Roth IRA income than traditional IRAs.
You can still only take penalty-free withdrawals (or qualified distributions) after you are 59 1/2 years old, according to the SIPC. Still, Roth IRAs are excellent for securing tax-free income when you’re older, regardless of filing status. Roth IRAs are also FDIC-insured in most cases, usually up to $250,000.
Roth IRAs are primarily advantageous if you think you’ll be in a higher tax bracket when you withdraw your money (which is true for many Americans). For instance, if you don’t have much money in your 20s and 30s but earn much more in your 60s, you’ll have to pay more taxes on your withdrawals if you use a traditional IRA.
A Roth IRA allows you to circumvent this downside and have more retirement savings for your golden years. Thus, opening a Roth IRA at a trusted brokerage could be a great way to enjoy tax-free growth of your savings.
How does a Roth IRA work?
A Roth IRA works very similarly to a traditional IRA. You sign up for a Roth IRA account at a financing institution, like Fidelity or Vanguard, and regularly contribute to the account.
Depending on your preferences, you can select your investments individually or have a fund manager take care of them. You can find a Roth IRA from many different financial sources, including:
You have access to many different investment options through a Roth IRA, even if you do a Roth IRA conversion from another account.
Note that all standard Roth IRA contributions have to be made in cash. Therefore, you can’t contribute money to your Roth IRA in the form of property or securities; you have to report those contributions, so they’re taxed according to your tax rate.
Just like regular IRAs, Roth IRA investments grow tax-free. Notably, Roth IRAs are much less restrictive compared to other retirement accounts. You can maintain your Roth IRA indefinitely, and unlike traditional IRAs, there aren’t any required minimum distributions (RMDs).
The early withdrawal penalty for this type of IRA is the same as with a standard IRA, even if you have a brokerage account handle it.
It depends. If your Roth IRA is at a bank, it may be classified under a separate insurance category compared to regular deposit accounts. Because of this, insurance coverage for most IRA accounts isn’t as comprehensive or robust.
That said, the Federal Deposit Insurance Corp. (or FDIC) does provide insurance protection worth up to $250,000 for both traditional and Roth IRAs. Note that account balances are combined instead of protected individually, however.
Contribution rules for Roth IRAs
Roth IRAs, like other IRAs and retirement accounts like 401(k)s, have contribution limits. Roth IRA contribution limits prevent account holders from investing too much money into their accounts at once.
For instance, in 2023, the total yearly contribution you can make to a Roth IRA is $6500 if you are under 50. If you are 50 or older, you can contribute another $1500 to your account as a catch-up contribution.
Withdrawing from a Roth IRA
Just like a traditional IRA, Roth IRAs have specific rules around withdrawals. Specifically, you cannot withdraw any earnings from your Roth IRA without incurring fees unless you are 59 ½ or older.
Note that that’s not the same thing as contributions; you can withdraw contributions (such as the original amount of money you put into the account) at any point. This earnings withdrawal limit prevents people from using their Roth IRA as a traditional investment or stock trading account.
Since most people retire around 59 ½, the government charges a 10% penalty and other taxation fees if you withdraw any earnings or gain money from your Roth IRA early.
In addition, there’s a “five-year rule” to keep in mind. If you start your Roth IRA late in life, you can withdraw your earnings tax-free only if you withdraw that money five years after your first contribution to any Roth IRA under your name.
The five-year time clock begins with your first contribution to any Roth IRA, not just the one from which you want to withdraw funds.
Of course, there are some exceptions to these rules. You could avoid the 10% taxation and penalty rate if you use the earnings from your Roth IRA to buy a home for the first time. But in this case, you can only take out $10,000.
Furthermore, if you have a permanent disability or pass away, you or your beneficiary can take money out of your Roth IRA.
Bottom line: Try to plan that won’t be withdrawing money from your Roth IRA until you retire.
Cryptocurrencies, but remember that the IRS does not let you contribute cryptocurrency directly to your Roth IRA (unless you use a new type of Bitcoin IRA)
Many people open Roth IRAs in conjunction with a 401(k) or instead of traditional IRAs, as Roth accounts offer particular advantages. Some of these include:
No minimum distributions are required: You don’t have to contribute a certain amount each year when you have a Roth IRA.
No income tax for inherited Roth IRAs: Therefore, if you pass your Roth IRA to an error or beneficiary, they can also get tax-free withdrawals (provided that you meet the five-year rule).
Easier withdrawals: With a Roth IRA, you can withdraw any contribution money without taxes or penalties (though you may face penalties if you withdraw investment earnings before the age of 59 ½).
Flexible contribution schedules: You can decide how much you contribute to a Roth IRA and when.
Plenty of time to add contributions: You have until the tax deadline each year to contribute more money into your Roth IRA to reach the $6500 limit.
Extra savings for retirement: You can combine your Roth IRA contributions with a 401(k) retirement plan.
Tax-free distributions: After you’ve held your Roth IRA for five years and are 59 ½ years old, you can take any distributions, including investment earnings, from your Roth IRA without paying federal taxes.
Open at any age: Anyone can open a Roth IRA at any age, provided they have earned income.
How can you start a Roth IRA?
Knowing how to start one for yourself and your retirement future is essential, given the benefits and importance of a Roth IRA.
Check eligibility
Your first step is ensuring you are eligible to open a Roth IRA account. Note that you must have earned some income for the current tax year — this does not include any inheritance money you may have received from others.
Furthermore, income limits may prevent you from opening a Roth IRA. For instance, in the 2023 tax year, the income “phase-out” range (the income bracket allowed to make reduced contributions) is $138,000 and $153,000 as an individual or $218,000-$228,000 as a couple filing jointly.
Remember, too, that there are limits on how much you can invest into your Roth IRA each year.
Your next step is finding the right investment platform to open a Roth IRA. Practically every stock investment company offers Roth IRA accounts. If you already have a 401(k) or traditional IRA account, you can open a Roth IRA at the same organization, which may be easier than finding another organization.
Regardless, if you find a good platform or financial institution, ask questions like:
Whether there are fees to open or maintain your account (such as annual fees).
What kind of customer service the company provides.
What types of investments the company offers for your Roth IRA.
Whether it costs money to trade with your IRA, which could be important if you plan to buy and sell stocks or securities with your account.
Examples of institutions that offer Roth IRAs include Fidelity Investments, Vanguard and Charles Schwab.
Apply for a Roth IRA
Now it’s time to complete the necessary paperwork and apply for a Roth IRA. You can usually do this online or in person if there’s a local branch of your financial institution nearby.
In any case, you’ll need a few pieces of key information to complete the process:
Your Social Security number or SSN.
Your driver’s license or some other type of photo ID.
The bank routing number and checking or savings account number that you want to use to contribute money to your account.
The name and address of your employer.
The name, address and Social Security number for your plan beneficiary; this is the person who can receive money in your Roth IRA if you die.
Choose your investments
After opening your Roth IRA, you get to pick your investments. Most financial institutions have advisors to help you choose suitable investments for your portfolio based on your goals.
For instance, if you want to grow your Roth IRA slowly but surely, your investment advisor may recommend that you choose safe investments.
If, on the other hand, you are young and looking to save aggressively, they may recommend more aggressive, risky investments since you have time to make up for any lost income.
Because many people live longer than before, it may be wise to keep many stocks in your portfolio as you age. Since you live longer, it could be wise to continue holding assets in your Roth IRA even after you retire so you can continue making money to pull from.
Now, you have to make regular contributions to your Roth IRA. Remember, there are no limits on when you can make contributions; you just have to contribute up to the limit to maximize your portfolio’s growth.
As you can see, there’s a lot to like about Roth IRAs, and getting one started is just as easy as starting a traditional IRA. Consider your options carefully before contributing to any retirement account, as the penalty for withdrawing ahead of retirement can make switching your plans more costly than you think.
Big changes are set to roll out for retirement plans after the passage of key provisions collectively known as “Secure 2.0.”
New rules on 401(k) contributions, tax credits and other retirement-related benefits were tucked into a much larger 4,100-page, $1.7 trillion spending bill Congress and President Joe Biden approved Dec. 23.
One change — increasing the required minimum distribution age from 72 to 73 — goes into effect Jan. 1. Others won’t roll out for a few years.
Here are some of the highlights.
7 Changes That Make Managing Your Retirement Plan Easier
1. Auto Enrollment in Workplace 401(k) Plans
Automatic enrollment in 401(k)s is shown to increase workplace participation. Employees are more likely to save for retirement if they don’t have to navigate the often confusing sign-up process.
Secure 2.0 requires employers — with some exceptions for small-business owners — to automatically enroll eligible employees in 401(k) or 403(b) plans. Employees can then opt out of participation if they want.
2. Get Help Finding Your Lost 401(k) Account
Lots of people forget to roll over their 401(k) when they start a new job. Tracking down old 401(k) accounts is tricky at best and a time-consuming nightmare at worst.
Secure 2.0 gives the U.S. Department of Labor authority to create a new “lost and found” database. Workers will be able to search this database for old retirement accounts they may have forgotten about.
The database is set to roll out roughly two years from now.
3. Get Money for Retirement While Paying Down Your Student Loan Debt
Millions of Americans find themselves in a tough situation: Pay off student loan debt or save for their retirement.
Beginning in 2024, employers will be able to make retirement contributions on behalf of employees who are paying off their federal student loans.
For example, if you pay off $500 in student loan debt, your employer could put $500 in your 401(k) account — even if you didn’t make any 401(k) contributions yourself.
To be clear, your employer won’t help you pay off your student loans.
But the hope is that people saddled with student loans won’t have to choose between paying off their debt or saving for their future. With the help of their employer, they can do both at the same time.
4. Revamps the Saver’s Credit to Be More Beneficial for Lower-Income Workers
If you’re a low- or middle-income worker, you can claim the Saver’s Credit by adding money to a 401(k) or individual retirement account.
Depending on your adjusted gross income and tax filing status, you can claim the credit for 50%, 20% or 10% of the first $2,000 you contribute to a retirement account within a tax year.
The Saver’s Credit is worth up to $1,000 for single filers or $2,000 for married couples filing jointly.
But there’s a big problem with the current credit: It’s nonrefundable. So if you don’t owe taxes — which many low- to middle-income workers do not — the credit doesn’t help much.
Secure 2.0 changes that by making the credit refundable.
Beginning in 2027, the credit will feature a federal matching contribution that will be deposited into your IRA or eligible retirement account.
The match will equal 50% of your retirement account contributions, up to a $1,000 match per person. Income limits and phase-out restrictions will apply.
5. Raises the Age for Required Minimum Distributions
You can’t keep your retirement savings in a tax-advantaged account forever. Uncle Sam eventually wants his cut.
Required minimum distributions — or the amount of money you are required to withdraw from your retirement account each year — currently begin at age 72.
Starting Jan. 1, 2023, that age increases to 73. In 2033, the RMD will increase to 75.
Secure 2.0 also cuts the penalty for failing to take RMDs on time in half, from a 50% penalty to 25%.
6. Bigger Catch-Up Contributions for Older Workers
People ages 50 and older can contribute more money to their 401(k) and IRAs than younger workers.
Secure 2.0 bumps those yearly retirement account contributions even higher for people ages 60 to 63.
Starting in 2025, the 401(k) catch-up retirement contributions increase to either $10,000 or 50% more than the regular catch-up amount, whichever is greater. The IRA catch-up amount had been static at $1,000 but will now rise in $100 increments with inflation.
After 2025, those catch-up contributions will be indexed for inflation.
7. Waives the 10% Tax Penalty for Early Retirement Withdrawals in Some Cases
With few exceptions, withdrawing money from retirement accounts before age 59.5 results in a 10% IRS penalty.
Secure 2.0 allows employees to withdraw up to $1,000 per year for an emergency or financial hardship penalty-free.
You won’t be able to withdraw another $1,000 for three years unless you repay the full amount of the original distribution.
You’ll still owe taxes on the withdrawal too, unless you’re withdrawing from a Roth account.
Secure 2.0 also waives the 10% penalty for people with a terminal illness and survivors of domestic abuse.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
As simple words go, “retirement’’ carries a lot of weight and a lot of baggage.
Now that retirement is bouncing around in your mind, and you entertain the thought of giving up your day job, you ask yourself:
Is my retirement income and Social Security going to be enough for my preferred lifestyle?
What am I going to do with myself every day?
One answer responds to both questions. You can “retire,’’ collect Social Security, and still work and make money and be productive. The trick is there’s a limit to how much you can make depending on your age.
If you are at what Social Security deems full retirement age, you can collect and keep your full Social Security benefits and make as much money as you want.
If you are not yet at full retirement age but are receiving Social Security benefits, you can make up to $21,240 a year without penalty. That’s $1,770 a month, or $408 a week. We get into more details later in this post of what happens when you go over that amount.
How You Can Work and Collect Social Security
So let’s dive into the particulars that allow you to work while you are retired and collecting Social Security. And then let’s consider some types of work you can do in retirement to bring in some extra income.
The Meaning of Retirement
There is no such thing as “officially retired.” There is no legal definition, nor is there a legal designation.
You just decide one day you don’t want to work at the job or in the field to which you dedicated the first 30 or 40 years of your professional life. Often this coincides with your 65th birthday because that’s when you qualify for Medicare.
However, you can start taking Social Security benefits before 65, beginning at 62.
Your full retirement age: If you were born Jan. 2, 1959 through Jan. 1, 1960, your full retirement age for retirement insurance benefits is 66 years and 10 months.
Every year earlier reduces the full retirement age by two months. Born in 1958, 66 years and 8 months. Born in 1957, 66 years and 6 months, and so on.
If you were born after the 1959 date, your full retirement age is 67 years old. If you were born 1943 to 1952, your full retirement age is 66.
The government has changed the full retirement age stipulations because people are living longer.
THIS IS IMPORTANT!: If you have reached your full retirement age and you work, you may keep all of your Social Security benefits no matter how much you earn. Find your full retirement age.
Salary Restrictions for 2023
If you are not yet at full retirement age but are receiving Social Security benefits, you can make up to $21,240 a year without penalty in 2023. That’s $1,770 a month, or $408 a week. That benefit increased for 2023 by more than $2,000 per year.
If you make more than that, your benefits are reduced by $1 for every $2 you make over the $21,240.
But get this: Once you reach full retirement age, the money that was subtracted from your Social Security benefits previously are refunded to you. You never really lose those funds, they are just held from you until you reach that magic age.
There are special rules depending on whether you receive a salary or are self-employed when you are working, but they differ based on when they are counted (when you earn the money versus when you get paid). The Social Security Administration website can address those particular items for you.
Suggestions for Work Even Before You Reach Full Retirement Age
Here are some suggestions of part-time jobs that can bring in some extra money. They may be more about what you want to do than what you have been doing. Check out these 13 ways to make money you might not have thought about. And more:
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1. Indoor work
According to the AARP, bookkeeping is the most popular part-time position for workers of a certain age. This makes some sense: it is not physical, requires patience, and is likely not a popular job among younger people.
Perhaps knowing that you may someday require healthcare assistance, it becomes attractive to offer help to those already in need. Older people are encouraged to apply for jobs as assistants to nursing homes and hospitals.
Certainly, certifications will make you more attractive as an employee, but there are jobs specifically for those people who want to help but did not originally work in healthcare and don’t have licenses or certificates.
There may also be opportunity in a less structured way. If you have a friend, or a friend who has a friend, with an older family member or neighbor that needs assistance during the day, let them know you are looking for work. You can offer your services to dive them to medical appointments, make lunch or simply provide a few hours of companionship.
Pro Tip
The Penny Hoarder’s Work-From-Home Jobs Portal makes the remote-job hunt easy. Our journalists scour the web for the best gigs, vet the companies and aggregate the latest listings in one place.
3. Work with Children
Safety and care are uppermost in the minds of school administrations, and they offer several positions for older people interested in part-time work.
While “crossing guard’’ may be the first thing that comes to mind, schools, colleges and universities need staff that can provide some level of security for special events, and older people who may have grandchildren of their own have built-in radar for the well-being of children.
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4. Outdoor Work
Your city or county leisure services or parks department may have work for you. If there’s a forestry department in your area, contact them.
From cleaning parks to walking through wooded areas looking for environmental concerns (downed trees, unexpected flooding, etc.), being paid to take a walk in nature is not a bad way to spend a day.
5. Helping Other Seniors
Many communities have Senior Centers that provide activities and services. Yes, there are people at Senior Centers playing bridge, canasta and chess.
But Senior Centers are also one of the first places employers turn when looking for people to fill paid positions that require attendance and attention. Consider your local Senior Center as a resource for finding a position that suits your interests.
Kent McDill is a veteran journalist who has specialized in personal finance topics since 2013. He is a contributor to The Penny Hoarder.
Typically, retirement is a time when you can kick back and relax. And, there’s nothing wrong with that. You’ve paid your dues, after all. However, learning new skills can help you keep your mind sharp.
Due – Due
Did you also know that in the U.S., many institutions offer senior citizens free college courses? Taking advantage of these programs is a great way to discover new interests, stay on top of your intellectual game, and prevent isolation.
Even better? A grade isn’t always important. Audit classes are often offered without homework or exams for seniors in many schools. Furthermore, retirees may be entitled to free tuition.
With that in mind, here’s a rundown of the requirements for the best colleges for retirees across the country.
Alabama
According to the Alabama Commission on Higher Education, all Alabama residents age 60 and older can enroll in two-year post-secondary institutions for free. These include any of Alabama Community College System’s 24 community and technical colleges, such as Calhoun Community College in Decatur, Alabama Technical Institute, and Marion Military Institute
However, the University of Arkansas offers its silver foxes the chance to become “Senior Razorbacks.” If you didn’t know, the Razorback, the university mascot, is a feral hog known for its “tenacious, wild fighting ability.”
In order to gain access to tuition-free classes, you must:
Have an Arkansas residency
Be at least 60 years of age
Graduated from high school or earned a GED
Obtain an admissions offer from the University of Arkansas
There are some people who are not interested in retiring to Florida. If you’re in that boat, you might want to consider the Last Frontier State if you prefer a colder climate in your retirement years.
At the University of Alaska, which comprises three campuses across the state, residents 65 and older are eligible for free tuition. There are no fees or surcharges associated with course fees and surcharges, and admission to classes is granted on a “space available” basis.
Those who qualify for the Senior Citizen Tuition Waiver must fill out a short form.
Arizona
In Arizona, tuition deals for older residents aren’t free. There is, however, a 50% discount on resident tuition rates at Maricopa (County) Community Colleges for residents 65 and over (currently $85 per credit hour). Fees for registration and specific courses are also required.
Those over the age of 65 are eligible for a senior discount on all for-credit classes in the college system with open seats. Non-credit courses do not qualify for a discount.
Are looking for a classroom environment designed exclusively for seniors? Arizona State University and the University of Arizona offer noncredit courses through their Osher Lifelong Learning Institute, which partners with universities nationwide to offer noncredit courses. The membership fee is $20 per semester.
Arkansas
All state-supported colleges, including community colleges, waive tuition and student fees for Arkansas residents 60 and older.
In this case, the freebie is available only for for-credit courses, and it is subject to availability.
California
As a result of Education Code 89330, CSU students who are seniors are entitled to free tuition. That means all campuses must waive tuition for California residents ages 60 and over. A number of tuition, application, health, and instructional fees are waived.
In addition, California state colleges also waive application fees and class activity fees for older students. For student fees, which cover the student body association and health facilities, you’ll only have to pay $1.
Students in their golden years can take courses in art, the humanities, agriculture, and computer science during regular sessions.
Colorado
The Colorado State University offers free classes for lifelong learners age 55 and older on a space-available basis. But those classes don’t lead to college credits. To request a lifetime learner class visit, complete the Lifetime Learner Class Visitation Request Form. Students who are lifelong learners will not be charged for student services such as student health, counseling, and event tickets.
Continuing education classes such as theater, Italian, and women’s studies are free for lifelong learners. Just note that the cost of additional courses is determined on an individual basis.
Connecticut
Residents 62 years of age and older are eligible to receive free tuition at Connecticut colleges and universities, according to state law. Across the state, the University of Connecticut, Connecticut State University, and 12 regional community-technical colleges follow this policy. But, it may be a good idea to focus on UConn’s senior citizen audit program, which allows seniors to audit undergraduate courses.
Applicants age 62 and older, who have been admitted to UConn and CSU, are eligible for the tuition waiver.
After paying students have enrolled in the course, there must also be enough room in the course.
Tuition is free, but any additional class fees are your responsibility.
Delaware
For Delaware residents 60 and older, Delaware’s three public higher education institutions, including the University of Delaware, waive tuition and other fees. As a matter of state law, Chapter 34, Subchapter X to be exact, it’s enforceable. Be aware, though, that UD’s Over-60 Tuition-Free Degree Program works on a space-available basis and doesn’t cover continuing education.
Residents aged 65 and older have access to classes after paying students have enrolled. A formal degree must be pursued by older applicants, as well as meeting all the class requirements. For example, if only students majoring in that field are eligible.
Students 60 and older must pay lab fees, books, and other supplies related to the course even with free tuition.
Florida
Any Florida resident over 60 who takes for-credit classes at one of Florida’s state universities is exempt from tuition and fees thanks to Florida statute Chapter 1009. But, the credits you earn won’t count toward your degree. Also, all students who pay for classes, as well as state employees, get first dibs.
In particular, UF’s 60-plus program offers free tuition and covers fees for seniors auditing courses. Waivers are subject to availability, and courses may be restricted by the university.
Georgia
Several states’ constitutions mention free education for senior citizens, and Georgia is one of them.
Under Provision 4.2.1.9 in the Georgia Constitution, seniors aged 62 and over are eligible for free college. Unless the course is taken at a dental, medical, veterinary, or law school, state residents do not have to pay tuition for higher education.
An in-state graduate-level tuition waiver and applicable student fees are included in the 62 or Older Program at Georgia Tech, one of the nation’s top tech institutes.
Hawaii
At the University of Hawaii and state community colleges, courses are free for residents aged 60 and older. This is through the Senior Citizens Visitor Program, which is also known as Nā Kūpuna Program. This translates to “honored ancestor”.
No college credit is given, and no permanent records are kept.
Idaho
On a space-available basis, University of Idaho courses is available to Idaho residents aged 60 and older. Each credit hour costs $5, plus $20 for the course.
It is necessary to wait until after regular registration has ended before registering. In addition to lab fees and special course fees, participants must pay other fees.
Participating in this program only gives participants access to the library and class instruction. Unfortunately, unlike paying students, you won’t have access to athletic events or recreation facilities.
Boise State University, the College of Southern Idaho, and Lewis-Clark State College are other Idaho universities that offer free or low-cost tuition to seniors.
Illinois
Are you a Windy City fan, but prefer the suburbs? In that case, the University of Illinois at Urbana-Champaign, a research pioneer, offers more than 5,000 courses in more than 150 undergraduate studies.
Furthermore, if your household income is below 200% of the federal poverty level and you are 65 or older, you can apply free of charge. Also, to attend the university, you must apply and be accepted.
You may qualify for the Senior Citizen Courses Act Tuition Waiver if you meet these requirements. However, the waiver does not cover fees or other non-tuition costs. This program does not offer extramural or correspondence courses.
Those households that meet the low-income requirements may also receive free tuition at the University of Illinois, Southern Illinois University, Chicago State University, Eastern Illinois University, Governors State University, Illinois State University, Northeastern Illinois University, Northern Illinois University, Western Illinois University, and all public community colleges if they meet the low-income requirements.
Indiana
There isn’t as much generosity in the Hoosier State as in other states. On the other hand, residents 65 and older can take up to nine credits at the state’s public universities at 50% off the normal in-state tuition. It is the student’s responsibility to pay lab fees, application fees, and registration fees.
Indiana State University and Indiana University are among the participating schools.
Iowa
In Indianola, Iowa, Simpson College offers non-credit classes tuition-free for people 65 and older. Are you interested in taking a course for credit? Those can be taken for $375 per credit hour at the discounted rate.
FYI, lab courses do not come with a discount or are free. All classes are subject to space availability, and you may only enroll in one course each semester.
Moreover, Des Moines Area Community College offers free for-credit courses to students 62 and older.
Nondegree-seeking undergraduates and graduates at the Medical Center and KU’s main campus may qualify for a senior citizen waiver. Each semester, students are required to submit a form.
Always wanted to cheer on the Wildcats? If so, you can take advantage of Donovan Scholarship tuition waiver.
The program is only available to adults over the age of 65 who are taking academic courses. With the exception of age and class space availability, tuition programs are fairly flexible. With a Donovan Scholarship, you are able to audit classes without earning credit. Alternatively, you can earn credit even if you don’t plan to earn a degree. If you are seeking a degree, you can enroll in courses as well.
The university will need to accept you for admission if you’re working toward a degree. There are no educational requirements for auditing undergraduate courses.
Louisiana
Tuition and registration fees are waived for residents 55 and older at Louisiana’s public colleges and universities. The program also offers half-priced “reference books, manuals, and other aids to instruction which are required by any course in which such student is enrolled when purchased from a public college or university-operated bookstore.”
Maine
Senior citizens (65 years and older) can take advantage of free college tuition at the University of Maine college system. It also includes those irritating mandatory fees colleges and universities so notoriously charge.
All University of Maine outposts offer undergraduate courses for credit or audit free of charge. Just note that there is a space-available basis for acceptance.
Maryland
For students 60 years of age and older, the University of Maryland at College Park offers the Golden ID Card Program that waives tuition. Other fees, however, may apply.
There are, however, a few conditions. Applicants must be Maryland residents, U.S. citizens or legal permanent residents, and retired (defined as “not engaged in gainful employment for more than 20 hours a week”).
It is possible to register for both degree-seeking and non-degree-seeking courses if you meet the university’s admission requirements.
Program participants have access to academic services including library access and can enroll in three courses per semester.
Massachusetts
State residents over 60 years of age, who the Commonwealth calls “senior citizens,” are exempt from tuition at public universities and colleges within Massachusetts’ higher education system. These include UMass Boston and the Massachusetts College of Liberal Arts.
Michigan
As a Michigan state resident, you’ll need to check to see if the public college or university you want to attend offers free or reduced tuition. For example, Northern Michigan University offers “full tuition scholarships” to residents aged 62 and older. Courses taken off-campus or online are not included. To apply, you must pay an application fee (fee waived), and you must purchase books and course materials.
Here are some more examples
Minnesota
Courses are tuition-free for Minnesota residents 62 and older at the University of Minnesota and across Minnesota State Colleges and Universities. Students who participate in the program are also exempt from activity fees, but they must pay administration fees — unless they are auditing the course. Course materials and service fees may also be charged.
Senior citizens can audit courses at the University of Minnesota for free. But if you wish to earn college credits, you must pay the affordable $10 per credit. Lab fees, course fees, and materials must also be paid.
Mississippi
The Magnolia State doesn’t have a statewide program for free (or nearly so) college tuition, unlike many other states. However, specific universities and colleges do offer some incentives for late-life education.
Using the University of Mississippi’s Lifelong Learners Program, Ole Miss seniors age 65 may take one academic course tuition-free (up to four credits). On any University of Mississippi campus, you can attend classes with your younger peers.
The University of Mississippi also caters to true seniors. Up to two on-campus classes per semester can be taken tuition-free by state residents aged 60 and older. There are a limited number of spaces available on a first-come, first-served basis. And as the university states, “senior citizen students are responsible for paying any course or laboratory fees; distance fees; cost of course materials or textbooks. Credit hours taken in excess of the specified limits of this policy shall be paid by the senior citizen as the actual tuition for those hours.”
For both universities, seniors must apply in the usual way.
Missouri
By law, Missouri residents age 65 and older are guaranteed scholarships that include tuition waivers for all public institutions, including community colleges and State Tech. College credit is not given for courses taken by scholarship recipients, and courses are accepted according to space availability.
Moreover, the school is permitted to charge a registration fee of no more than $25 per semester. To apply, you must first go through the application process.
Montana
There are many programs in the Montana State University System that cater to late-life learners. These include the University of Montana and Montana State University campuses, as well as community colleges. Universities within the system offer tuition waivers (or acceptance to the Golden College Program, as the University of Montana calls it) to residents 65 years and older. A senior student’s tuition is covered, but all other fees are their responsibility.
If you are accepted to a course after the third week of the semester, you may need to catch up for three weeks or more.
Nebraska
In Nebraska, older students don’t qualify for a statewide tuition waiver program. There are, however, some colleges that offer free or discounted tuition.
For instance, Chadron State College offers tuition waivers to seniors. As long as there is space available, you may audit one course per semester.
Nevada
The University of Nevada Las Vegas partners with the Osher Lifelong Learning Institute to offer classes to seniors. UNLV reports that the “OLLI at UNLV program is designed specifically for retired and semi-retired adults who are interested in continuing their education and having the opportunity to meet new and interesting peers.”
It is possible for members to attend as many classes as they like, as long as there is space available. Fall or spring semester registration costs $90. The annual membership fee is $175.
A number of past courses have included The American Election System, Films of David Lean, and Nevada History.
New Hampshire
At the University of New Hampshire, seniors can take up to two for-credit courses tuition-free each academic year. Other costs for the class, including fees and required materials, are the responsibility of the student.
The University offers enrollment based on available space, as with most educational institutions.
New Jersey
According to availability, Rutgers offers free college courses to seniors through its Senior Citizen Audit Program. Residents of the Garden State over the age of 62 can audit classes for no tuition cost but must pay for textbooks.
At Rutgers’ campuses in New Brunswick, Camden, and Newark, seniors can take free college courses.
New Mexico
Retirement classes in New Mexico aren’t free, but they’re pretty cheap. As a result of the Senior Citizens Reduced Tuition Act of 1984, this program is governed by statute.
Upon request by the student, all public post-secondary institutions in the state must reduce tuition for senior citizens — age 65 or older. Per credit hour, there is a fee of $5.
There are some restrictions:
Course requirements must be met.
The maximum number of credits you can take per semester is six.
In order to attend a campus, you must enroll there.
If there is an additional course fee, you must pay it.
There must be space available for you to enroll.
New York
There is a bill in the Assembly that would allow learners over 65 to take for-credit courses for free. However, for seniors, many SUNY campuses waive tuition, including SUNY Purchase.
There are also non-credit seminars, workshops, and courses available for retirees at many SUNY campuses.
North Carolina
University of North Carolina campuses and community colleges offer tuition-free audit classes to seniors 65 and older, on a space-available basis. Additionally, there is no registration fee. But there may be an application fee, depending on the college.
Are you interested in earning college credit? Every semester, seniors 65 and older can take six hours of for-credit courses at the state’s community colleges.
North Dakota
There is no law granting free or nearly free tuition to older residents of North Dakota, unlike many other states. Some state schools, however, offer tuition-free programs with some homework.
North Dakota State University offers one audit course per semester to people 65 and older under its Project 65 policy. There is no tuition or fee associated with this program. Academic departments teaching the courses must grant clearance to participants to audit their courses. Grades and credit aren’t given since it’s an audited course.
State residents 65 and older can also attend Bismarck State College tuition-free for one course per semester if space is available. Fees and other mandatory class expenses are not included in the waiver.
And, at Lake Region State College in Devils Lake, students 65 and older can audit classroom courses if space permits, but fees and course materials must be paid.
Ohio
According to Ohio Revised Code Section 3345.27, all public universities and colleges in Ohio, including community colleges, allow residents age 60 and older to audit undergraduate, graduate-level, or online college courses tuition-free. It is your responsibility, though, to obtain instructor approval and to pay any course fees, including lab fees and required course materials.
There is a law that allows schools to forbid certain classes from enrolling students. “in which physical demands upon students are inappropriate for imposition upon persons 60 years of age or older.”
Senior citizens in Oregon are eligible to audit classes at the University of Oregon at no charge under the senior citizen registration classification. Each department must approve the benefit based on space availability.
In addition to creative writing and metalsmithing classes, seniors can take language, digital art, and disability studies courses.
Pennsylvania
Currently, Pennsylvania does not have a tuition-free law for older students. However, if you look hard enough, you can find a few. Pennsylvania State University, for example, offers a Go-60 program in which state residents 60 and up can take up to six credits each semester, tuition-free, for credit or audit.
People 62 and over can audit up to 12 credits at Clarion University of Pennsylvania free of tuition and fees, provided there is space available. The textbooks and other course materials you need will have to be purchased by you.
Older students are also eligible for free tuition at many community colleges in the Keystone State. Residents 65 and older may enroll free of charge in for-credit courses at Bucks County Community College, near Philadelphia. You may have to pay registration fees.
Rhode Island
There are three colleges in Rhode Island where seniors can pursue their desired programs: the University of Rhode Island, Rhode Island College, and Community College of Rhode Island. As a senior, you can apply to these institutions in almost the same way as you would to most colleges. To qualify, one must be at least 60 years old.
In addition to an application for a tuition waiver, these three institutions require a Senior Citizen Means Test. It is administered to determine if the senior applying has a limited income. A FAFSA must also be submitted by seniors who want to pursue a degree.
South Carolina
For seniors who qualify, Clemson University waives tuition costs.
The university offers Senior Citizen Enrollment to South Carolina residents over 60 years old and who reside in the state.
In classes with space available, you can audit or enroll for credit. The best part? You can take as many credits as you want.
South Dakota
The University of South Dakota, South Dakota State University, South Dakota School of Mines and Technology, Northern State University, Dakota State University, and Black Hills State University all offer 45% tuition discounts to state residents 65 and older.
There is a tuition discount only, not a discount on fees or other course expenses. You can take courses for credit or simply audit them. Online courses are not covered.
Tennessee
When you retire in Tennessee and establish residency, you have the opportunity to further your education at an unbelievable price. Residents 65 and older (and possibly 55 and older if you qualify) can take classes for credit at all state-supported universities and colleges. Fees for maintenance, activities, and student activities are also waived.
The only fee you have to pay is a record-keeping fee ($45 a quarter or $70 a semester).
Texas
State-funded colleges and universities in the Lone Star State allow residents 65 and older to take six credit hours per semester. After all, it is the law under Chapter 54 of the Texas Education Code. Fees, books, and continuing education classes are not covered by this award.
As per Utah law, older residents receive free college tuition, if you define “lunch” as college tuition. Residents 62 and older are exempt from tuition and other charges at Utah colleges and universities (space permitting). According to the University of Utah, these are audited courses. To use the library and such, you will also need a University of Utah student card, which costs $10.
There may also be a registration fee that varies by institution: the University of Utah charges $25 per semester, and Salt Lake Community College charges $10.
Vermont
A Vermont resident 65 and older can audit one tuition-free course per semester at a college within the Vermont State Colleges System, including:
Castleton College
Community College of Vermont
Northern Vermont University
Vermont Technical College.
There is no limit to the number of classes you can take. For each course, you will receive a 50% discount off the regular tuition rate, and you can earn undergraduate credits.
Virginia
For Virginia residents age 60 and older taking three full- or part-time courses for academic credit, the Higher Education Act, Code 23.1-640, waives tuition. In the year preceding the award year, an applicant’s individual taxable income cannot exceed $23,850.
Under the Senior Citizen Waiver Program at the University of Virginia, for-credit courses are offered without tuition or fees.
Washington
Students 60 and older are entitled to a tuition and fee waiver at Washington state universities, regional universities, The Evergreen State’s colleges, and Washington’s community colleges and tech schools. These are credit courses.
As the University of Washington’s website states, senior auditors are admitted to classes as nonmatriculated students (up to six credits per semester). It is not necessary for you to take tests, write papers, or participate in class discussions. There are some courses that cannot be taken.
West Virginia
Under West Virginia law, citizens 65 and older are able to enroll in courses for credit or non-credit at reduced tuition and fees.
For non-credit courses, the total tuition and fee charge cannot exceed $50, and for for-credit courses, tuition cannot exceed 50% of the normal rate charged to in-state residents.
Moreover, students who apply as senior citizens will be admitted as non-degree students at West Virginia University. The application fee is $5, and you must indicate whether you wish to apply for credit on the form.
Wisconsin
For adults 50 and older, the University of Wisconsin offers continuing studies programs. There are in-person and online courses available for professional development and personal enrichment. Senior citizens (with instructor approval) can audit courses for free.
Noncredit classes in history, languages, and writing are also offered through the Continuing Studies program at the top public university.
Several Wisconsin colleges and universities offer discounts on graduate courses for seniors, including Marquette University, which offers 50% off graduate courses for Wisconsin residents aged 62 and older. In addition, you can audit undergraduate courses (no grades, no credit) at a half-price discount. When it comes to those over 62 who are interested in graduate courses, they must “have the proper background and prerequisites for the course in question.”
Wyoming
On a space-available basis, Wyoming residents 65 and older can attend classes for free at the University of Wyoming. To attend the university, you must be admitted and show proof of your age and residency.
There are also special incentives available to retirees at some of Wyoming’s community colleges. As an example, Laramie County Community College allows students age 60 and over to take classes for credit at a 20% discount off the resident tuition rate plus course fees. At the beginning of the semester, students must bring their driver’s license to the Student Hub.
FAQs
1. As a senior citizen, how do I apply for online college?
In comparison to younger students, senior citizens find the college application process much easier. Typically, there is no requirement for test scores, such as SAT, ACT, or GRE, and no essay is required.
There will be different requirements for different states and institutions. However, they generally include the following:
A minimum age of 60 is required.
It is mandatory for you to be a U.S. citizen.
High school diplomas or equivalents are required.
The income requirements for certain waivers and discounts must be met.
2. What are the best colleges for seniors?
You should find out what degree or training a job requires if you’re retired and still want to work. You can use the BLS Occupational Outlook Handbook to determine what degree level you need and the field of study you should concentrate on. Also, ensure that the schools you choose match your educational requirements.
For more information, visit those schools’ websites or contact them by phone or email to speak with a knowledgeable staff member.
3. Are senior citizens eligible for tuition waivers?
It is often necessary to get permission from the instructor in order to receive a tuition waiver because space is limited. There may be restrictions on credit-bearing courses at some schools, while noncredit courses may be eligible at others. A high school diploma and proof of state residency are usually required for eligible participants in some states.
Due to the fact that these programs are not well-publicized, finding the right information may take a little digging. Check your state’s policies or search these sites for terms like “lifelong learning,” “tuition waiver,” and “mature students.”
4. What college Grants and scholarships are available for senior citizens?
If you are a senior, you may be eligible for scholarships and grants offered by the state and university, as well as discount programs offered by private companies. You can determine your eligibility for state and federal financial aid by completing the Free Application for Federal Student Aid (FAFSA).
Additionally, state governments and individual universities offer a variety of scholarships exclusively to seniors. You should still check each individual program for specific costs, but so-called “Encore Programs” are generally offered at moderate or no cost.
5. Why should retirees attend college?
The brain may actually grow new cells and make new connections when we learn something new. In particular, this is of particular importance to seniors, as learning may improve cognitive health and reduce the risk of dementia and Alzheimer’s disease.
Besides that, there are other benefits to going back to school for people in their 50s, 60s, and 70s as well:
The benefits of marriage don’t stop at love and companionship. In some situations, marriage can result in more Social Security. If you stay married for at least 10 years, those benefits can last even if you get divorced.
But the rules for marriage and Social Security get complicated. Here are seven things married couples can’t afford not to know.
7 Social Security Rules Every Married Couple Should Know
You don’t automatically get more Social Security benefits just because you’re married. Fewer than 4% of Social Security recipients collect spousal benefits. The vast majority of people will get the biggest benefit by claiming on their own record.
But if your work history is limited and you marry someone who earns significantly more money than you do, you may get more Social Security by claiming spousal benefits. Here’s how it works.
1. You can get up to 50% of your spouse’s full benefit.
The maximum spousal benefit is 50% of your spouse’s primary insurance amount. That’s the benefit they’ll qualify for once they’re full retirement age, which is 67 for anyone born in 1960 or later.
If you take benefits before your own retirement age, you’ll get less than 50%. For example, if you start your benefits at 62 — the earliest age you can take Social Security — you’d receive just 32.5% of their primary amount.
2. You don’t get to claim both benefits.
Sorry, but the perks of marriage don’t include double-dipping. Social Security will give you whichever is higher: your own benefit or your spouse’s benefit, but not both.
If you qualify for some benefits based on your earnings history, technically Social Security will use your own record first. Then they’ll use your spouse’s record to get you the maximum benefit.
3. There’s no extra credit for waiting past full retirement age for spouses.
When you take Social Security on your own record, you’ll get the maximum benefit at age 70. That’s because for every year you delay Social Security, you boost your checks by 8% for life thanks to delayed retirement credits.
But if you’re taking spousal benefits, you can’t earn delayed retirement benefits. Your benefits will max out once you reach full retirement age, which is 67 for anyone born after 1959.
4. You can’t claim a spouse’s Social Security disability.
You can only claim Social Security Disability Insurance (SSDI) if you’ve paid into Social Security yourself and have a qualifying medical condition. You can’t take disability on someone else’s record, including a spouse’s.
5. Divorcing? You may still be able to get their benefits.
If you were married for at least 10 years and you’ve been divorced for at least two years, you can claim your ex’s Social Security. The same spousal rules apply: Your maximum benefit will be 50% of their primary amount. You’ll receive a lower amount if you claim early, and you won’t earn delayed retirement credits for waiting past your full retirement age.
Your ex-spouse needs to be at least 62 for you to claim on their record. Your decision will have absolutely no effect on your ex-spouse. Likewise, if someone you’ve divorced takes Social Security on your record, your benefits won’t be reduced.
6. If you’ve remarried, you can’t claim your ex’s benefits.
Once you remarry, you’re not allowed to claim your ex’s Social Security. But once you’ve been married a year, you can qualify for benefits on your current spouse’s record. If you’ve had more than one marriage that lasted 10 years or more and ended in divorce, Social Security will look at everyone’s record — yours and each ex-spouse’s — and give you the biggest benefit.
7. Survivor’s benefits are up to 100% of the deceased spouse’s benefit.
If your spouse dies before you, you can qualify for up to 100% of their Social Security through survivor benefits if you wait until your full retirement age. You can start survivor benefits as early as 60 (or 50 if you’re disabled), but you’ll receive a reduced amount. These rules apply to ex-spouses as well, provided that the marriage lasted for 10 years. As with spousal benefits, you’ll get whichever is bigger: your own benefit or the survivor benefit, but not both.
There’s also an exception to the remarriage rule for surviving spouses: Widowed and ex-spouses who qualify for survivor benefits can remarry at 60 (or 50 if disabled) and continue to receive their late spouse’s benefits.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to [email protected]
Everyone wants to retire and spend the rest of their lives in comfort and happiness. However, the harsh reality is that a comfortable retirement might take a lot of time to reach for many people unless they properly and intentionally prepare for it.
Due – Due
More often than not, the financial decisions you make today can have a long-term effect, especially on your retirement budget. In fact, the seemingly harmless act of taking out a high-interest loan can significantly contribute to keeping you away from the comfortable retirement life you dream of.
So, to help you optimize your retirement savings, we’ve compiled a list of ways you might unknowingly be eating into your retirement.
Why should you save for retirement?
Saving for something long-term is difficult. Sometimes, even the image of a comfortable retirement life can seem vague to many people, especially when we’re young; thus, when they compare it to a shiny new car, retirement seems to pale in comparison.
So, to drive the point home and to help convince you that saving up for retirement is well worth the sacrifice, we’ve compiled a list of reasons why you should do it.
This list would hopefully paint a better picture of what you should expect when you save for retirement.
#1 You’re probably going to live longer than you expected.
Year after year, technology keeps evolving. Along with that improvement comes advancement in medical technology. As a result, today’s people tend to live longer than the past generations. This longer life span also affects you.
So, if you were expecting to live at least 18 years in retirement, it’s possible that you end up living another 10 or more years on account of advancements in medicine.
It is important to anticipate this longer life span since it can throw off your calculations when deciding on a target amount for your retirement savings. In the end, none of your savings will be wasted, especially since you’ll be spending it all on yourself, your friends, and your family.
#2 Social security may not be enough to cover your expenses.
With today’s rapid rise in inflation, what may be enough in the past might not be enough in the present. That includes your social security.
For example, you’ll need $54k one year from now to afford a $50k lifestyle today due to the current 8% inflation rate. The worst part is that no one knows how the country’s inflation rate will change over time.
So, to consider inflation in preparation for your retirement, you need to supplement your social security with other funding sources like investments and retirement savings. These additional funds would ensure you’ll have enough resources for your retirement.
#3 You can get tax benefits just by saving.
Every paycheck, a huge chunk of it goes to paying taxes. You may or may not agree with these mandatory deductions, but the good news is that there are ways to reduce them.
One of the easiest ways to reduce the taxes you owe is by saving for retirement. The money you put into retirement plans is usually tax-deferred and even tax-free in some states, which reduces the overall taxes you must pay today and leave it for later when you’ll probably be in a lower tax bracket.
This overall deduction in taxes you owe may be insignificant to some, but when they compound over time, you’ll be surprised about how much money you save. In a way, it’s like earning free money just by saving up for retirement.
#4 You can retire independently.
One worry that plagues everyone is the fear of losing their job. They’re worried that if they lose their job, they will have no means of surviving and funding their expenses.
In a way, having a retirement plan and savings can reduce this worry and anxiety because you know that you have funds to support you. You will not need your employer’s or your family’s approval to retire.
The peace of mind you get from having these savings is insurmountable. The idea that you can retire independently without the permission of anyone is empowering.
#5 You deserve to enjoy retirement.
Lastly, there’s no better reason to save for retirement than planning to enjoy it.
We all know that workers are the backbone of society. The value you brought to the economy with your hard work is immeasurable.
The least you could do for yourself is to save up for your retirement so that you can fully enjoy it.
But, regardless of the benefits, many people don’t save enough, and others have a strong saving strategy but unwillingly splurge on a shopping spree setting them back months or even years from their goal.
10 Ways you’re blowing your retirement savings
If that already convinced you to start saving up, then keep reading. This list might help you optimize your savings because sometimes saving for retirement is simply just not enough.
If you don’t remedy these things immediately and let them foster, you can unwittingly push your retirement further away. Even worse, you may blow your savings entirely and end up old and broke.
So, without further ado, these are some things that you might be doing that are blowing your retirement savings.
#1 You keep upsizing
One mistake many people make when preparing for retirement is to keep upsizing. You might be thrilled with the amount of money you find in your bank account that you start thinking that you can afford a more expensive car or a bigger house.
Though there’s nothing inherently wrong with upsizing, the problem is that these small upgrades, over time, compound and eat up a considerable portion of your paycheck.
If you’re not careful, the extra expenses might consume the money that should go to your retirement savings. This inflated cost of living might eventually push your retirement further away.
#2 You spend too much on your children and grandchildren.
Suppose you have a child or children who are now adults out of education. If that’s the case, you should avoid indulging them and allowing them to lay back and depend on you financially. Instead, serve as their guiding light on their road to becoming self-sufficient adults and not appease them with never-ending support.
Similarly, if you already have grandchildren, only burden yourself with raising them if no one else can. You already did your job with your own children. Let them take on the responsibility of raising their kids themselves.
Furthermore, it’s not uncommon for grandparents to feel the need to spoil their grandchildren with gifts. Some will go as far as to go shopping online from outside the United States and have expensive gifts shipped to their grandchildren when they’re traveling. While giving your grandchildren gifts once in a while is fine, you should refrain from spoiling them rotten with gifts, as this can seriously eat into your savings.
Kids today usually want tech presents, which can be vary expensive, with a PS5 going for $500 and an iPhone 13 going for as much as $1,300 or more. The worst part is that, if you get them used to fancy gifts, the day you can’t afford the latest console or mobile phone, they’ll start lashing out at you for no good reason.
Remember, you can be a good parent or grandparent without excessive showering of affection through financial means.
#3 You don’t diversify your investments.
The best way to protect your wealth is to spread it among various securities and forms of investment. If there’s a danger that one adverse event could ruin that one investment, putting all your money into that asset could be a recipe for disaster. Never put all your eggs in a single basket.
By diversifying, you lower the likelihood of suffering a total loss in any one investment. When it comes to investing, having a “go big or go home” mentality focused on a single holding is an almost surefire way to blow your retirement savings.
#4 Your investments are underperforming.
Just like playing a casino game or betting on horses on the race track, risks always come with investments, and success may rise or fall at times.
However, unlike games that rely purely on luck, investing is a calculated risk. This is why investing requires taking the time to study the markets and the business environment, current events, and your investments’ patterns in response.
If this type of analysis is not one of your key strengths, hiring an expert as an adviser is also an option. Spending a little extra to ensure the performance of your investments will be worth it in the long run.
#5 You have no healthcare plan.
You might be tempted to forego a healthcare plan if you are strong and healthy. However, we strongly advise against that. You should always pay attention to your healthcare plan because you never know when you’ll need it.
In fact, growing older, the chances of getting hospitalized increase little by little. Please remember that you won’t be young and healthy forever. Not to mention, there will always be a chance for emergencies to arise, no matter how old you are.
Having no healthcare plan means you have no safety net at all and requires covering your medical bills by yourself. Hospital bills can take your retirement savings out in a single blow and even leave you indebted if you’re not careful.
#6 You pay too many taxes.
Always make sure you are on top of your taxes. Even though paying taxes is a must, there are fiscally responsible ways to lower the amount of money you have to hand over to the government.
You might want to give up some of your salary for novated leases. This strategy is an example of a “salary package,” in which your company takes money from your paycheck to pay your monthly expenses. It can work in your favor by reducing the total amount of your income subject to taxation.
There are several more ways to take charge of your tax bill. To minimize it, we suggest hiring a knowledgeable accountant or tax specialist.
#7 You’re not careful with your money.
As humans, by nature, we are designed to want more. There will always be endless desires, be it new items, investing in a new skill or hobby, or living a more lavish lifestyle.
As a result, some people might take advantage of that mindset and lure you into a get-rich-quick scam. They will tempt you with promises of a more lavish lifestyle in exchange for your money.
As a rule of thumb, never buy into schemes that sound too good to be true, as it could lead to losing all your money.
#8 You have no emergency fund.
A healthcare plan, as mentioned above, is an emergency investment. Emergency funds serve a similar function. Always set aside a part of your income for your emergency fund. Unexpected expenses are frightening if you don’t have a fund for emergencies to shield yourself with.
One example would be the global pandemic that occurred not long ago. If you had no emergency fund at that time and suddenly lost your job, or your business suddenly closed down, it most probably would have been a difficult two years for you.
So, to lessen the risk of losing your savings to an unforeseen event, we recommend you build your emergency fund and avoid life catching you off guard.
#9 You’re borrowing from your retirement savings.
It’s a common scenario for a person to take “just a little bit” of their retirement savings to pay for something they feel they need. Eventually, if they’re not careful, they have already spent a proper fraction of their savings, and it will take considerable money to get back on track.
The temptation to withdraw money from your savings account will always be there. However, you must be disciplined and not spend the money set aside for your future, especially considering that early withdrawals from a retirement account are usually subject to high fees imposed by the IRS.
To remedy this, open up a separate account for your savings so you don’t always see how much you have saved. After all, you can’t be tempted by something you can’t see.
#10 You spend too much on debt.
Paying interest on your debt is like throwing money away. Debt is a double-edged sword. If you aren’t careful with debt, you may end up drowning in interest without even realizing it. This only applies to bad debt, though, like high-interest car loans or credit card debt. It doesn’t apply to debt acquired to finance a profitable business or another source of income.
It will always be ideal to only borrow money if you are confident you can pay it back immediately. An excessive debt might result in a scenario where the money that should have gone into your savings would be wasted on debt interest alone.
If you currently have debt, we recommend paying it off as soon as possible to reduce the money you pay in interest. When doing so, it’s also good practice to focus on paying the debt with the highest interest rate first.
The bottom line
It will be challenging to picture living in the distant future. However, while the destination might still be far ahead, it couldn’t hurt to be prepared. We heavily recommend it. Having a retirement plan and sticking to it can help you in ways you can’t even count.
And if you already have a good deal of savings set aside for retirement, be mindful not to blow it all off before you retire since it can be easy to lose, especially if you’re not careful. Be sure to watch out for the things we listed in this article, and you’ll be just fine.
Most people fall into one of two categories. They are either savers or spenders. Savings are often prioritized for the future to secure retirement and financial security. Spenders prioritize their everyday desires and requirements while maintaining a sound financial situation with the idea of covering their retirement obligations in the future with better income or innovative solutions.
Due – Due
Both of these ideas have advantages and disadvantages.
People who joined the FIRE movement (financial independence/retire early) now say they wish they hadn’t. Only one-third of American seniors have enough funds to live on, while 63% live paycheck to paycheck.
But as a typical individual, which is the better option for you? Saving money or spending it?
Let’s evaluate both choices and make a decision.
What is living a good life?
You’ve probably heard someone declare at some point in their life that they don’t care about money or if they have a stable financial future. Don’t undervalue the significance of leading a successful financial life.
People often claim that happiness is beyond the reach of money. But it can also provide you and the protection and safety of your loved ones, making your life happier.
Humans require money to pay for all the necessities of existence, including food, shelter, medical expenses, and quality education. To pay for these items, you don’t need to be rich or have a lot of money, but you will need some money until you pass away.
Understanding personal finance is crucial since money is required to buy the necessary supplies and services to survive. Living a good financial life means managing your finances responsibly and using your income to maintain a happy life.
Benefits of living a good life
You can exchange your work for goods you value because money exists.
Living a solid financial life while spending money has several significant advantages:
It gives you a vision
Understanding your current status is the first step toward a successful financial life. This covers your present behaviors and financial statements like your cash flow statement (how much money is coming in as opposed to how much is going out) and net worth statement (what you own and owe). Clarifying your current situation will enable you to determine what is feasible and how to achieve your goals.
It liberates you
You can live anywhere you choose, take care of your necessities, and participate in your hobbies when you have enough money. With the freedom of spending money, you may not only get what you want, but also can get out of financial issues swiftly. With a decent amount of cash, you may consolidate credit cards, pay back payday loans, pay off your personal loan or mortgage, get a car, support kids for education and many more things. You’ll experience even more freedom since you’ll be able to spend your time as you like if you achieve financial independence and have enough money to support yourself without working.
It empowers you to take care of your requirements
You can launch a business, construct your dream home, cover the expenses of starting a family or achieve other objectives you think will improve your quality of life if you have money.
It ensures your security and safety
You won’t ever have to worry about having a roof over your head, enough to eat, or being able to see a doctor when you’re sick if you have enough money in the bank. You won’t be able to afford everything you desire because of this, but you will be able to lead a secure middle-class life.
Downsides of living a good financial life
Of course, there are also undeniable drawbacks to leading a lavish lifestyle, such as:
Multiple issues from a love of money or an obsession with it
You might engage in unethical or even criminal behavior, such as theft or defrauding others, if you continuously attempt to get as much money as possible. If you place excessive importance on money or material possessions, it could also cause issues for you and your family. You probably won’t be happy if you have money but no one to live with or anything to do.
Money can cause conflicts
There may be a lot of conflict in your life if you and your spouse or other family members can’t agree on what should be done with the money.
One of the main reasons why American couples divorce is money. Most of these drawbacks have more to do with how people interact with money and their attitudes about it than money itself. You may approach earning and saving money responsibly without letting it interfere with your daily life.
Now we will discuss saving for retirement and its benefits.
What is saving for retirement
Even though retirement may not be on your mind, it’s crucial to start saving now. It will be simpler to achieve your financial objectives and make investments for the future.
According to studies, only 7% of young professionals plan to save money each month. But many of us don’t know that developing a practice of saving money has several advantages and aids in maintaining the purchasing power of your funds.
When it comes to retirement planning, there are three crucial factors to consider:
Forming the behavior of saving money
Saving to maintain the purchasing power of your money
Releasing capital for investment
Although having a sizable retirement fund will give you confidence, saving money is only the first step in creating a financially rewarding future. Saving for retirement does not imply developing wealth at this time; instead, it means setting aside money for future wealth-creating endeavors that will protect the value of your arduous retirement savings.
Keep in mind that retirement planning takes time. It’s a marathon, not a sprint. Starting now, you can put your money to work for you so that you outlive your retirement savings and your wealth, not the other way around.
Benefits of saving for retirement
Get financial elasticity
If you wait until later in your career to start saving for retirement, you’ll need to save much more of your income before retiring. When controlling your ongoing spending, saving $100 monthly instead of $1,000 can make a significant difference. And the importance of compound interest cannot be emphasized enough!
Have access to a retirement plan provided by your employer? Utilize it as quickly as you can. If you don’t contribute to the plan, you’re wasting free money for your retirement, as most employers will match payments up to a specific proportion.
Take the benefits of compound interest
The most significant advantage of retirement investment is probably compound interest. Even though no specific rate of return is guaranteed, starting your retirement savings sooner in your work will result in more money with a lower capital investment than if you wait until later in your career. Compound interest is the process through which an amount of money increases significantly due to interest that keeps adding to itself over time.
You will have $1050 at the end of the year if you invest $1,000 in an account that grows at a rate of 5% annually, for instance. You’ll receive a 5% return on $1050 the following year, which after two years will equal $1102.50.
Have access to assets with higher risks and rewards
You have access to a more diverse portfolio if you invest early. You have the opportunity to invest in higher-risk, higher-reward opportunities. Investment possibilities with a high potential return might give you a more significant financial safety net when you retire. Early retirement investment also raises the likelihood that your investments will survive market turbulence.
Build strong protection against inflation
We’ve been hearing the word “inflation” a lot lately, and it’s vital to understand how it affects your capacity to retire comfortably. It’s a fact of life that we all must deal with and take into account when making retirement plans. People have a better chance of having their retirement funds keep up with inflation if they start investing in them earlier in their careers.
Don’t rely on Social Security benefits
Because of increased longevity among a rapidly aging population that is also rising, coupled with slower population growth, more and more Americans will continue to rely on Social Security benefits. In the long run, Social Security will not be financially sustainable since it will give out more than it takes in.
Social Security benefits are frequently considered when people prepare their finances for retirement. It is essential to plan for the potential that Social Security won’t be an option given the program’s uncertain future.
Get support for extended life expectancies
The average lifespan of people has increased. The longer you live, the more money you’ll probably need to retire and take care of yourself when you cannot work.
Additionally, the expense of your medical treatment will probably rise as you age. Despite having the option to use Medicare coverage, you will still need to budget for out-of-pocket costs. You need to start saving for retirement as soon as possible because healthcare costs are rising every year.
Keep a balance between the both – Is it possible?
Even though you can’t buy happiness, having independence, stability, and the ability to follow your aspirations can make you happy. Work hard, earn money, and develop financial literacy to achieve this. By investing your money, you may make it work for you and increase your output, and eventually, you should have enough to retire.
The truth is that you are not required to choose a side. Striking a balance between spending extravagantly and living as if there is no tomorrow is optimal. These quick methods will help you locate that “sweet spot.”
Make sure you earn enough
Make sure you have enough money to decide whether to spend or save. You can only spend on necessities if you don’t have a sizable salary. There won’t be any extra money for consumption or retirement savings.
If you’ve reduced your spending to the absolute minimum but are still having difficulties making ends meet, it might be time to take a closer look at your pay. Take a part-time or freelance job if you’re saving for a big purchase or want to contribute more to your retirement account.
Identify where you stand
Although it might be step one, consider this to be step zero. Determine where you fit on the saver/spender spectrum by looking at your current way of life and income. This will help you map out your future course.
Then, you might find it helpful to contrast your spending and saving patterns with your income range. With your income, do you spend more on your home, groceries, travel, or pleasures than the average household? Check how much money you have left to consider it as savings.
Over the previous 63 years, the rate of personal savings in the United States has averaged 8.95%. At the moment, it’s about 3.1%.
Your personal finances are probably better than most of your friends if you’re saving more than this. If not, it can indicate that you’re moving away from being a “saver” and toward being a “spender.”
Put priorities first
You might spot some patterns and trends as you review your spending. You might never dine out, but you take a costly vacation every few months. Maybe you are always keen to buy the latest gadgets and tools.
It is advised that you should prioritize your necessities first such as groceries, insurance premiums, payday loan payments or consolidate credit cards.
Do you intend to lead the same way after retirement?
Or do you want to live frugally and explore the world after your work life is over?
Even so, do you have plans to retire now?
A majority of people are still working into their 70s and 80s because they love the social interaction, the organized atmosphere, and the effort to keep their minds active and engaged. If you fall into this category, you have a much-reduced need to save money right now.
However, even if you expect to work well until retirement age, you’ll need to be prepared for things to go wrong with your plan.
Be adaptable and make changes
No one here possesses a crystal ball. Your situation, as well as the general economy, can be incredibly uncertain.
Remember that few economists anticipated the current surge in inflation and a sharp increase in interest rates. Even though there is a global health crisis and record-breaking inflation, anything can happen. A medical emergency could destroy your job and wealth at any time.
Therefore, your retirement and savings goals need to be adaptable, regardless of whether you consider yourself a spender or a saver. The finest plans leave room for the unexpected.
