Category Archives: Retirement

Carnival of Retirement

From steps you can take early in life to ensure a comfortable retirement, to tips for getting there faster, to what you do once you’re there, these articles can help you navigate your way to the ultimate goal: retirement. Enjoy!

Jacob @ My Personal Finance Journey @ My Personal Finance Journey writes Early Retirement Risks – And How to Prepare for Them – This post describes some of the risks you could face in early retirement, plus some strategies to help you deal with them.

SB @ One Cent at a Time writes What is your Financial Goal – Do you currently have a financial goal? Do you have a finite number in mind and a defined date in which you plan to hit it? Know more about why having a personal financial goal is important.

Michael Kitces @ Nerd’s Eye View writes Solving The Annuity Puzzle – Inflexibility For Handling Potential Health Care Shocks In Retirement – Economic theory suggests most retirees should utilize immediate annuities for lifetime retirement income, yet very few actually do. Two researchers think they have solved this “annuity puzzle” with a look at how health care “shocks” can impact a retirement plan.

Money Cone @ Money Cone writes Lump Sum Investing or Dollar Cost Averaging? – If you happen to have a windfall – inheritance, winning the lottery or a large tax refund, is it better to invest it all at once or spread it out over a period of time?

Melissa @ Minting Nickels writes 10 Ways to Be Frugal Without Reusing Toilet Paper – Are you looking for ways to save more money? Perhaps your income has reduced in the past few months and you really need to cut back. Making more money is difficult these days, so why not try to reduce your spending to make up for your shortfall in cash flow? Here are 10 easy ways

Maria @ The Money Principle writes One needs an emergency fund after all! – Today I changed my mind on the matter of maintaining an emergency fund. Here I set three conditions when this is absolutely necessary.

Christopher @ This That and The MBA writes Why Life Insurance Matters – Preparing yourself for what happens later in life is important. You can’t be too sure about what’s around the corner, so having something for you and your loved ones to fall back on in extreme circumstances. Building up savings in your bank account could help with that, but a better way to guard your loved ones against future financial instability is to take out a life insurance policy.

Roger the Amateur Financier @ The Amateur Financier writes How Much Does It Cost To Travel The World? – World travel is always a good goal, so this article discusses just how much it would cost to visit numerous countries around the world over a year.

krantcents @ KrantCents writes How to Think Rich and Be Rich – You’re in your 20s or 30s, you have student debt, you’ve accumulated some credit card debt and it looks like you’ll never be able to buy a home. There is a way to think about money that can help solve these problems. Our thoughts precede actions and actions precede results.

Tushar @ Earn More and Save writes 3 Side Businesses You Can Start for Less than $100 – The post 3 Side Businesses You Can Start for Less than $100 appeared first on Earn More And Save.The recent recession has left today’s job market stagnant. Due to this many people are left unemployed or underemployed.

MMD @ IRA vs 401k Central writes All the Great Things About Reaching Your Maximum 401k Contribution – Do you make the maximum 401k contribution to your account every year? If you don’t, then you’re severely missing out on the power of time and compound returns.

SFB @ Simple Finance Blog writes The Basics of Equity Mutual Funds – Equity mutual funds are a means to buy into a stocks portfolio. As a shareholder, you will be able to possess indirect ownership in a basket of securities.

Everything Finance @ Everything Finance Blog writes What Are the 6 Best Investment Options in 2013? – There is a great deal of uncertainty in the financial world that is causing some investors to wonder where to put their money. If you keep a close eye on the financial developments in 2013, you can find plenty of ways to make a profit with your investments.

Kyle @ The Penny Hoarder writes You Can Negotiate For Everything – You might know of someone who negotiates everywhere for everything, and your first instinct may be to think that it’s incredible embarrassing.

DW @ Great Passive Income Ideas writes What Are Some Great Work From Home Ideas? – Once you take the leap and look for work from home ideas, the dream of never having to leave your own house becomes a very real possibility. Here is our list of different things you can try to make that happen.

Tony @ We Only Do This Once writes How to Deal With Your Finances – I haven’t written about finances in awhile, because these days I barely think about them. That’s not to say that I don’t have payments and bills and unexpected expenses. It’s because I have focused hard on getting out of debt for the last 2 years — and these days, I am almost debt-free and worry little about finances. It’s a beautiful thing.

Tushar @ Start Investing Money writes 3 Ways Small Savings Goals Can Make a Big Difference – How many times have you read blog posts and articles that talk about making lots of small changes to the way you spend money? This is one of the simplest rules about budgeting, since you can make several small changes and they’ll add up to one big one.

Matt Becker @ Mom and Dad Money writes Why Do You Have to Beat the Market? – When we step back and look at the bigger picture, it becomes pretty clear that beating the stock market is a fairly irrelevant goal for most of us. We have actual financial goals that truly matter to us, and these goals are most effectively achieved if we completely ignore the desire to beat the market. So feel free to let go of the marketing hype and spend your time and money in a way that truly benefits you.

Investor Junkie @ Investor Junkie writes Not Tracking Your Investment Performance Is Like Flying Blind – If you are going to be a successful investor, you need to track your investments on a regular basis.

Bank Free Credit @ Bank Free Credit writes 4 Ways to Find Free Travel Accommodations – If you’re willing to consider alternatives to the mainstream, there are plenty of ways to travel on a budget! Consider these 4 methods

Wayne @ Young Family Finance writes Answer Yourself Out Of Debt – Trying to get out of debt? It seems hard, but it can be done. Answers to the questions you ask yourself when you want to get out of debt.

Grayson @ Debt RoundUp writes Money Multitasking – Concept and Execution – Have you ever thought that you are stretching yourself too thin with regards to your money? Are we pushing the limits with our money multitasking and becoming inefficient? If we do too many tasks at once, we tend to lose productivity and creativity. There have been many studies on the effects of taking on too many tasks at one time, so why can it not be pushed to what we do with our money?

Pauline @ writes Easy Life-Long Money Making Opportunities You Can Start Today – One of the greatest things I’ve come to learn about growing my wealth is that there are plenty of simple money making opportunities out there that will enhance my ability for achievement.

Pauline @ Reach Financial Independence writes Early retirement in the US vs abroad – Early retirement can be easily achieved in a country with low costs of living. Is it worth it?

Corey @ 20s Finances writes 3 Ways to Further Your Career – Find out what easy steps you can take to improve your career.

Ted Jenkin @ Your Smart Money Moves writes Entrepreneur Series – Lesson 4 – Avoid Rookie Mistakes – I am not a professional athlete. However, I would imagine that the rookie year on any of the professional sports circuits has to be daunting in nature.

CAPI @ Creating a Passive Income writes Expanding Income: How to Set Up a Home Business – Looking to expand your income? How about starting your own home business? It’s not as bad as you think – read here for some great tips and our how-to guide.

S @ Grad Money Matters writes Increase Your Net Income – Have you ever wondered how much your coworker earns per hour? Is it more or less than you? It seems that everyone is hung up on wages these days, but this is absolutely not the most important measure when it comes to wealth.

Mike @ Annuity Rates HQ writes Top 27 Annuity Articles from Non-Biased Sources – Annuities are not always easy to understand. The problem is that you main source of information might be your financial adviser… who will eventually make money if he sells you one.I’ve searched the web for several hours and read over 100 articles about annuities. I’ve published the top 27 articles about annuities from non-biased sources.

Luke @ Learn Bonds writes How Expensive Are Bonds Relative to Stocks Now? – Even with the recent increase in interest rates, bonds are still far overpriced in comparison to stocks. Here’s an analysis of why this is the case.

John S @ Frugal Rules writes What Makes a Company Worth Investing in? – There are many things that you can look at if you’re interested in investing in stocks. By following some of the basics you can start to build a stock portfolio that will serve you well and help set you up for long term needs like retirement.

Usiere Uko @ Financial Freedom Inspiration writes Acquire Assets First, Before Liabilities – If you want to stay on top in the game of money, you need to acquire assets first before liabilities.

Jon @ Novel Investor writes 3 Safe Investments That Went Wrong – Over the past few years investors have turned to bonds, income stocks, and gold for safety. It paid off until now, because safe investments don’t last forever.

Anton Ivanov @ Dreams Cash True writes Portfolio Planning Basics – Picking an Asset Allocation – Asset allocation has a large impact on investment portfolio performance. Learn the basics of picking an asset allocation for your portfolio.

Debt Guru @ Debt Free Blog writes Tips on Tuition Troubles – A Parent’s Guide – These days, parents are bracing for their children’s college debt. Tuition troubles are tricky, but not impossible. Here are tips on how to solve them!

Michael @ Financial Ramblings writes Personal Capital: Online Investment Tracking Made Easy – If you’re like me, you have multiple investment accounts — IRA, 401(k), brokerage account, etc. This can make it hard to keep track of your asset allocation and make sure your portfolio as a whole is structured as you’d like it. In this article, I discuss an online investment tracking/management tool called “Personal Capital” that makes it easy to keep track of everything in one place.

Rich El @ Modest Money writes Top 10 Emotional Money Lessons to Improve Your Finances – The line of poverty for many is closer than you think. Fixing the emotional issues will help you prosper in the financial side of life.

Glen Craig @ Free From Broke writes What is Long Term Care Insurance, and Should I Buy It? – Among the many types on insurance you may need is long term care insurance. But what is it? Take a look at what LTC is and if you should buy it.

Why is it So Hard to Get Ahead?

Broken piggy bank

It doesn’t take a genius to realize that if you spend every dollar you earn, you’ll never build up savings. Everyone knows that if you want to buy a car or house, or ever be able to retire, you need to save money. So why do so many people fall so far short of their goals?

It Takes a Long Time To Save That Much

Saving up a down payment for a house requires a lot of dedication for an extended period of time. When you first decide to start saving, you’re motivated and excited at the prospect of owning a house. But two years later when you only have $10,000 saved and you need $50,000 for a down payment, your motivation may start to wane. Skipping restaurant meals and shopping trips wasn’t so difficult when you were gung-ho about your goal, but after months and months of sacrifice, you may begin to feel like you’re never going to make it to the goal, so why bother trying? May as well enjoy your life now and worry about the future tomorrow, right?

They Think Only About Cash Flow

When it comes to car buying, the first question most people ask is, “what’s the monthly payment?” This is the wrong question to ask. Dealers are more than willing to accept a tiny down payment and stretch out a payment plan for 6 years or more to reduce the monthly payments. Paying $400/month for your car may not sound like such a bad deal right now,  but what happens if you lose your job two years from now and can’t make the payments any more? Are you really willing to bet on your job security for the next 6+ years just so you can have a shiny new car? On top of that, though your monthly payment may seem manageable, over the course of 6 years, you’ll be paying thousands of dollars in interest, which is just plain silly.

Retirement is So Very, Very Far Away

Even home ownership is a short term goal compared to retirement. Many people in their 20′s fool themselves into thinking that they have so much time until retirement that they don’t have to worry about it yet. Also, while you’re early in your career, you’re rapidly learning new skills, focusing on career advancement, exploring new possibilities, and are generally excited about work. The prospect of working into your 80′s doesn’t sound so bad — after all, your job is great! So why bother putting money into your 401(k) when you’re going to keep working forever?

Expensive Things Must Be Better

For many people, they just have an impossibly hard time accepting that pricing is not always based on value. “This shirt costs $50, so it must be higher quality than that one which only costs $20.” “I need granite counter tops because everything else is such poor quality.” “This apartment is too cheap, there must be a catch!” (Ok, there probably is a catch, but it may be something you’re perfectly happy living with, so don’t write it off until you dig deeper.)

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Can You Reach Early Financial Independence if You’re Not an Entrepreneur?

financial independenceWe all want to have enough money that we can live comfortable lives without having to work every day at a job we don’t enjoy. Many people however, have resigned themselves to the notion that they will only be able to reach that point after 40 years of suffering through that miserable job. Then there are the others who read books or take to the internet to learn from people who have managed to achieve financial freedom much earlier. And one thing becomes quickly apparent: a huge portion of those people are entrepreneurs.

One of the best ways to reach financial independence early is to start your own business, be it a plumbing company, a bakery, a monetized blog, or something as ambitious as a software company. But what if you’re interested in getting ahead financially, but don’t have an entrepreneurial spirit? Is there no hope for you? I should say not! Let’s take a look at how hard it really is to reach financial independence. Let’s pick a nice round number, $1 million dollars, to represent financial independence. In reality, your number may be lower or it may be higher, but many people still set $1 million as their goal, so let’s go with that. What would it take to build up $1 million in 10 years? 20 years? 30 years? 40 years? Looking at the required monthly savings at a few different growth rates, it’s really not as scary as you might think.

Monthly Savings Required
Years to $1 million 6% 8% 10%
10 $6072 $5430 $4842
20 $2154 $1687 $1306
30 $991 $667 $439
40 $500 $285 $157

Ok, maybe the 10 year numbers are scary, but are any of the others really so bad? In fact, saving $1 million in 40 years is downright easy! Anyone working a regular 9-5 job should be able to save $1 million in 40 years. But of course, the whole point was to reach financial independence as quickly as possible, and 40 years isn’t very fast. So is it feasible to achieve the higher savings rates required for a quicker path to financial independence if you’re working a regular office job? According to Wikipedia, the 2012 median household income was $45,018. To reach $1 million in 20 years at a modest 8% growth rate, you would have to save $20,244 each year, or about 45% of the median household income. It may require some sacrifice, but with careful budgeting, finding little bits of extra money on the side, and taking steps to minimize your taxes, it can be done. Or you could aim for 30 years, which would require only $8004 of yearly savings at an 8% growth rate, or about 18% of the median household income. Now that’s doable for just about anyone!

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Reflections on Christmas

ChristmasNow that another Christmas is past us, I’ve been thinking more about the holiday season, frugality, family, and giving. As perhaps you’ve noticed, I hate the concept of expected gifts. I believe gifts should come from the heart, not because the calendar tells you it’s time to buy things. It kills me to see the kids tearing open a dozen gifts and throwing the things that don’t immediately interest them over their shoulder. And the ones that do hold their interest may only do so for a week or two, until they’re distracted by some other new toy or video game. So it came as a bit of a surprise to me when my fiancé and I were shopping for a couple last minute Christmas gifts, and I suggested to him that we buy an additional gift for two of his nephews.

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2012 Goal Update

finance goalsIt’s not quite the end of the year yet, but I thought I’d take a moment to look back on my goals for 2012 and see how I did. When I started up this blog back in May, I set several goals for myself. They were stretch goals – I would need to be close to perfect with my finances to meet them. But what’s the point in setting goals you know you’re going to reach, anyway? The whole idea of setting goals is to give you something that’s just out of reach to shoot for.

I set four financial goals and one health goal for myself:

finance goals

Down Payment Fund – Reach $10k by the end of the year
Other Taxable Investments – Reach $13k by the end of the year
Dividend Income – Earn $400 over the course of the year across all taxable accounts
Retirement – Max out IRA and invest in a REIT

health goals

Weight Loss – Get my body fat percentage down to 25%

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Running Outside Will Get You to Retirement Faster

Yes, you read that title correctly. I intend to argue in this post that running outside will get you to retirement faster than running on a treadmill. How do I plan on arguing this point? Well through an analogy, of course!

It’s the age-old question of which is more important in building wealth: saving money or increasing your income. In this analogy, speed = income and distance = net worth.

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Enough is Enough – Bring Back the Refs

For anyone who watched the Packers/Seahawks game last night, it’s become very clear that enough is enough with these replacement refs. We’ve been watching botched calls all season, but now the outcome of a game has been directly affected by poor calls. It’s time to do something about it, right?

For anyone who isn’t a football fan, here’s what happened: the Packers were up 12-7. The Seahawks were down to the last play of the game. The quarterback, Russell Wilson, passed to wide receiver Golden Tate in the end zone. The pass soared into a mob of players, where it was apparently caught by Green Bay defensive back M.D. Jennings. Tate also made a play for the ball (after a blatant case of pass interference against Green Bay cornerback Sam Shields that would have ended the game wasn’t called), and the two wound up with simultaneous possession. Two refs came rushing in, one called a touchback (meaning Jennings intercepted the ball in the end zone), and the other called a touchdown. The ref who signaled touchdown gave his signal a split second before the ref who signaled touchback, so the ruling on the field was a touchdown. Now here’s the problem: in the case of simultaneous possession, the offense gets the ball, so it would be a touchdown. BUT simultaneous possession only comes into play when both players obtain possession at the same time. In this case it was pretty clear that Jennings made possession first and then Tate got his hands on the ball afterward, so it would be an interception. The play was reviewed, and the officials ruled that there wasn’t enough evidence in the replays to overturn the touchdown call, so the touchdown stands. More importantly, the incredibly uncontroversial question of whether or not Tate committed PI isn’t reviewable by instant replay. The question of who had possession is at least arguable, the real refs might have gotten it wrong too. But it is clear that Tate committed PI, and the real refs would have undoubtedly called it, giving Green Bay the win.

Everyone who cares even the slightest bit about football agrees that this is the last straw. The lockout has got to end. There was hope that after last night’s atrocity, the league would realize that they need to come to an agreement and get the real refs back on the field next weekend, but it’s not looking like that’s going to happen. But what exactly are the refs demanding that the league is so stubbornly opposing?

The refs’ demands

  1. Higher salaries – With all the talk about refs having to work a second job just to get by, I assumed they were making practically nothing. I did some research and found a lot of different numbers cited around the web for what the average salary is for an NFL ref, ranging from as low as $25-70k all the way up to $150k, but the sites that offer the most details on how the salaries are paid agree that it’s around $150k. So what the hell is their problem? The problem is that everyone else is getting big money – the players, the owners and the coaches. The refs are just as vital to the game, so they feel like they should be compensated more.
  2. Keep their pensions – The NFL wants to replace the pension plan with a 401k plan, freezing current pensions. The refs would get whatever’s in their pensions now, but future benefits would disappear. The refs are fine with switching over to 401k plans for new refs, but they are demanding that current refs get to keep their pension plans.

The league’s demands

  1. Replace pensions with 401k – The league wants to replace pensions with 401ks to reduce their costs. They’re following the rest of the country here; most companies no longer offer pension plans. The problem is that most companies have had to cut costs to stay successful; the NFL is making more money than ever, they don’t have to cut costs.
  2. Accountability – The league wants to be able to bench refs who make poor calls, much like a player would be benched if he wasn’t performing well. The refs oppose this because they question who should have the authority to decide when to bench a ref. This also ties into their salary demands. Refs’ salaries come from a pool that is distributed out based primarily on seniority. In order to be able to bench under-performing refs, the NFL wants to hire 21 new refs, but has not indicated that they will increase the salary pool by a proportionate amount, so the refs are worried their salaries will go down.
So who’s right? Well it’s really hard to say. On the one hand, the refs are already making a TON of money to work part time jobs. Sure, those jobs are incredibly stressful, but most people would agree that nobody making $150k/year for a part time job in which retirement benefits (whether it be a pension or a 401k) are included should be complaining about their compensation. Until you look at how much money everyone else involved in pro football is making. The minimum salary a rookie player can make is $390k/year. The lowest paid NFL coach makes $1.25 million/year. The league netted about $9 billion last year, and profits are just going up. The difference in what the refs want to receive and what the league wants to pay is about $5 million. Yes, they are fighting over half a percent of the league’s profits.
Both sides of this argument are being incredibly greedy, but I believe the main thing to remember is that this isn’t a strike, it’s a lockout. The refs aren’t striking because they want better benefits. The refs are being locked out by the league because the league offered them a new plan that reduces their benefits, and the refs, understandably, won’t agree to it. In my opinion, that places the blame squarely on the NFL. For a growing organization that is currently netting $9 billion/year to reduce the benefits of a small group of its employees by $5 million/year is just evil. Sure, nobody should complain about getting a salary of $150k/year plus retirement benefits, but when those benefits are being slashed for no perceivable reason other than greed on the part of the owners, I have to side with the refs. The NFL has to bring the refs back. The integrity of the game depends on it.