Let's Talk About Life Insurance
Have you had a conversation with your family about life insurance?
It might not feel like the most natural discussion to have around your dinner table, yet it’s one of the most important. While the topic can feel a little heavy, it doesn’t have to be. Talking about life insurance and the steps you’re taking to protect your family can be reassuring and empowering to everyone in your family.
September is Life Insurance Awareness Month, an ideal time for families to start or continue conversations about money management, financial planning and life insurance. Some of the latest research helps us understand why it's critical to have these conversations in the first place.
In fact, in January 2024, 51% of consumers reported owning life insurance, which is down significantly from 63% in 2011, according to LIMRA’s annual Insurance Barometer Study. In addition, 22% of people who own life insurance say they do not have enough coverage.
Another study, commissioned by Prudential, showed that while people with higher household incomes are more likely to have life insurance than those with lower incomes, 15% of those with household incomes of $100,000 or more do not have any life insurance coverage.
The main reason to have life insurance is because you want your loved ones to receive money after you die to help them financially. But there are many other reasons, too. Let’s start by understanding the opportunities to include life insurance as part of your overall financial plans.
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Here's why it's so important to have a family conversation about life insurance and financial planning. It may be easier than you think.
This Grocery Method Can Save You Time and Money
If you’re tired of spending a fortune every time you go to the grocery store, this viral budgeting method could help. The 6-to-1 grocery method, popularized on TikTok by Chef Will Coleman, can help make grocery shopping easier and put more money in your pocket.
Even though inflation is cooling, grocery prices remain elevated, putting a strain on many household’s budgets, and the last inflation report actually showed a jump in food prices. The food at home index rose 0.4% in September, with a 2.3% increase for all food items over the previous year. Meats, poultry, fish and eggs rose 3.9% over the previous year.
High prices have led many individuals to try alternative budgeting methods, like the 60/30/10 method, to more effectively manage their money. The 6-to-1 grocery method tackles one particular aspect of your spending — grocery shopping.
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The 6-to-1 grocery method can help you save money, reduce waste, and eat healthier.
Your Kid Is a New Driver:
Will Your Car Insurance Take a Hit?
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The most exciting day of your life may in fact be when you first became a parent. Gone are the days when the father-to-be paces in the waiting room smoking a cigar while the mother-to-be promises bloody murder. Fast-forward 15 or so years into the future, when you took your little bundle of joy out for their first time to practice driving. Remember how great that felt, the wind in your hair, the freedom of having a personal chauffeur in your future, images of the second job as a taxi driver to your child slowly fading away?
No? You mean you were petrified, holding on to the inside of the car for dear life and questioning every choice you’ve made in your life? Yeah, join the club. Teaching your kid to drive is not for the faint of heart, and that includes your insurance company.
Most likely, but you can try to lessen the blow by asking about discounts and teaching your child as much as you can before they get their license.
How to Buy Homeowners Insurance
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Are you buying a home? Congratulations. That's a huge milestone. With it comes the need to protect this new asset for the years ahead. How to protect it? You'll need homeowners insurance.
Unfortunately, home insurance rates are high. Rates have increased 11.5% since 2022 and now cost $2,728 per year, or $227 per month on average, according to MarketWatch. So you'll want to shop around to ensure you get the best price.
But before you can start comparing quotes, you’ll need to decide how much and what type of coverage to get. A home’s insurance value is based on the cost to rebuild the house, not the market value.
You can get an estimate of the home’s rebuilding cost at AccuCoverage.com, which asks many questions about the house's size, building materials and additional details. It then uses the same building-cost database that insurers use. Or you can work with an agent or the insurer to come up with an estimate.
Here's what you need to know about buying homeowners insurance.
Planning to buy homeowners insurance for the first time? Here's what you need to know and how to get started.
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Quit putting it off, because it's vital for you and your heirs. From wills and trusts to executors and taxes, here are some essential points to keep in mind.
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NYSUT NOTE: Life insurance is absolutely vital, from covering daily basics to taking outstanding debts off your family members' plates. Metropolitan Life Insurance Company's Term Life Insurance Plan, endorsed by the NYSUT Member Benefits Trust, offers term life insurance coverage for you or your spouse/certified domestic partner. At premiums negotiated especially for NYSUT members, qualified applicants can get coverage up to $1 million.
The 10 Cheapest Countries to Visit
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If you're planning your next solo or family vacation and have to stick to a strict budget, no problem. We've found the cheapest countries to visit around the world. Despite the effects of inflation on everything from eggs to electric cars, there are many places where the dollar will work in your favor, getting you an exotic trip for less than you might expect.
Our ranking is based on the average estimated daily cost you'll pay once you reach your destination, considering daily prices for accommodation and food for one person. The missing element is the cost of airfare, but flight costs vary so much depending on the time of year you're traveling, and where you're flying from, and to, that it's not helpful to factor those into our selections. If you want to know how to find and save money on flights to Europe, we've got some strategies for doing just that.
To inspire your flight hunting, here are 10 of the cheapest countries to travel to in 2024.
Data sources include TheGlobalEconomy.com, Numbeo's cost of living database, and Budget Your Trip.
Despite inflation, there are still great places to visit in the world where you can have an amazing experience without breaking the bank.
529 Plans Hit a New Milestone: Why They're So Popular
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More families have been taking advantage of 529 plans than ever, with the number of new accounts opened rising each year. And thanks to this surge in popularity, 529s have just hit a new milestone.
Savings in 529 plans across the country have surpassed half a trillion dollars for the first time, according to the College Savings Plans Network (CSPN), a network of the National Association of State Treasurers. Over $508 billion has been invested across 16.8 million open 529 accounts nationally, with the average size of each account increasing from $13,188 in 2009 to $30,295 in 2024.
529 plans are powerful tools that can help you tackle rising education costs. So if you’re looking to save for your child or grandchild’s future college expenses, opening a 529 plan could be the best way to do so, given the plan's favorable tax treatment and the rising cost of a college education.
Mary Morris, Chair of the College Savings Plans Network and CEO of Invest529 says she finds it “encouraging” to see families increasingly recognize “the importance of postsecondary education and that 529 plans exist to help them make that a reality.”
Here’s what you need to know about 529 savings plans and why they’re more popular now than ever.
Recently, 529 plans hit a new milestone with over half a trillion dollars being saved in plans across the country. Why are 529 plans so popular?
Eight Strategies for Deciding When to File For Social Security
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Waiting until age 70 to file for Social Security retirement benefits can be an effective way to reduce the risk that you’ll run out of money in your later years. But in some instances, filing for benefits at your full retirement age (FRA) or even earlier could provide the additional financial security you and your family need now. You can file as early as 62, but your payments will be reduced because you aren't typically entitled to 100% of your benefit until age 67.
In some cases, you may not be able to wait until full retirement age — let alone until age 70 — to file for benefits.
Not sure when to file? Take a look at these eight strategies for determining when to file for Social Security.
Applying at age 70 maximizes your monthly payout, but claiming early could provide advantages that can’t be quantified on a spreadsheet.
10 Things To Know Before Medicare Open Enrollment Starts
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Getting a handle on the basics of Medicare can help protect your health — and your nest egg — in retirement, so making the right choices during Medicare open enrollment is arguably one of the most important financial decisions you can make.
Open enrollment runs from Oct. 15 to Dec. 7 each year. You can tell by the advertisements that inundate the airwaves and your mailbox. You’re likely even already getting unsolicited calls and emails. All kinds of health insurance brokers and companies want to dazzle you with their offerings.
First, let’s review the basics. As most retirees know, Medicare has several parts. Part A, which is offered at no cost, generally covers hospitalizations. Part B covers outpatient medical care. Part D is prescription drug coverage provided by private insurers.
Medicare Advantage is the umbrella term for plans offered by private insurers regulated by Medicare to replace parts B and D. Medigap plans, also offered by private companies, are supplemental plans that cover copays and coinsurance charges imposed under Medicare Part B. While some people assume that Medicare will cover all their healthcare costs, experts warn there are things Medicare won't cover.
A 65-year-old retiring in 2024 could expect to spend an average of $165,000 in healthcare and medical expenses throughout retirement, according to data from Fidelity Investments. This highlights the importance of reviewing your Medicare plan choices during open enrollment each year to ensure you have the best coverage to meet your needs.
What Retirees Must Know About Telehealth
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Don't Make These Big Mistakes When Claiming Your Social Security Benefits
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Although Social Security adds stability to many people's retirement plans, nearly half (49%) don’t know how to maximize their benefits, according to a recent survey by Nationwide Financial. Another 33% of adults said they don’t know at what age they are or were eligible for full retirement benefits.
It's not hard to understand why many Americans are unclear about how Social Security benefits work. The rules are extensive and can be confusing. According to the survey, many people aren’t sure what their full retirement age (FRA) is, at what age they are eligible for full benefits, and if they should take benefits early or delay benefits until later in life. With over 72 million Americans on track to collect benefits from Social Security this year, knowing when to retire and how to maximize benefits is crucial.
If you don’t know how Social Security works, when to claim your benefits or how to maximize your benefits, you could be missing out on reaching your retirement goals. Here's what you need to know.
New survey reveals that many people don't know their full retirement age, aren’t sure the age they are or were eligible for full retirement benefits or take benefits too early.
© 2020 The Kiplinger Washington Editors Inc.
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There’s Medicare Part A, Part B, Part D, Medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare—and much more.
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Are Credit Cards an Alternative Source of Income?
Why would a bank take $15,000 out of a client’s account with no explanation or any chance for the client to stop the action?
That’s the question my friend asked herself after receiving a distressed call from her son, an accomplished entrepreneur. What happened next highlights the danger of relying too heavily on credit.
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Thinking that having credit available means you have another source of income is misguided.
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How Lower Interest Rates Affect Your Finances
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Thinking that having credit available means you have another source of income is misguided.
CREDIT
Are Credit Cards an Alternative Source of Income?
Finance Fundamentals
The 6-to-1 grocery method can help you save money, reduce waste, and eat healthier.
This Grocery Method Can Save You Time and Money
Most likely, but you can try to lessen the blow by asking about discounts and teaching your child as much as you can before they get their license.
Your Kid Is a New Driver: Will Your Car Insurance Take a Hit?
Quit putting it off, because it's vital for you and your heirs. From wills and trusts to executors and taxes, here are some essential points to keep in mind.
Are You an Estate Planning Procrastinator? Where to Start
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When you're married but only one spouse works, leaving retirement planning to the working partner puts financial security at risk. A joint effort is vital.
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Recently, 529 plans hit a new milestone with over half a trillion dollars being saved in plans across the country. Why are 529 plans so popular?
529 Plans Hit a New Milestone: Why They're So Popular
SAVINGS
Experts say the Federal Reserve will cut interest rates again at the next Fed meeting. Here's what that means for savings rates.
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Here's why it's so important to have a family conversation about life insurance and financial planning. It may be easier than you think.
INSURANCE
Let's Talk About Life Insurance
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Despite inflation, there are still great places to visit in the world where you can have an amazing experience without breaking the bank.
The 10 Cheapest Countries to Visit
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Many people don't know their full retirement age, aren’t sure the age they are or were eligible for full retirement benefits or take benefits too early.
Don't Make These Big Mistakes When Claiming Your Social Security Benefits
MEDICARE
Medicare beneficiaries will have a lower out-of-pocket maximum for their Part D Prescription drug coverage in 2025.
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Medicare open enrollment means you're bombarded with choices. Here's what you need to know.
10 Things To Know Before Medicare Open Enrollment Starts
Three Medicare Changes on the Horizon for 2025
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Applying at age 70 maximizes your monthly payout, but claiming early could provide advantages that can’t be quantified on a spreadsheet.
Eight Strategies for Deciding When to File For Social Security
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Rates are high this year, but you can still score a low mortgage rate with these tips.
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Planning to buy homeowners insurance for the first time? Here's what you need to know and how to get started.
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How to Buy Homeowners Insurance
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Need a Financial Planner?
Medicare open enrollment means you're bombarded with choices. Here's what you need to know.
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There’s Medicare Part A, Part B, Part D, Medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare—and much more.
There’s no one-size-fits-all formula for how much you’ll need.
Emergency Funds: How to Get Started
You worked hard to build your retirement nest egg. But do you know how to minimize taxes on your savings?
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10 Questions Retirees Often Get Wrong About Taxes in Retirement
It’s often smart to borrow to boost your income and your assets.
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Why visit a government office to get your Social Security business done? You can do much of that online.
14 Social Security Tasks You Can Do Online
Finding the lowest rate to protect you and your vehicle can be a challenge.
Reshop Your Car Insurance
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Parents may now use money from their 529 college-savings plans to help their children pay off student loans.
A New Way to Pay College Loans
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People have lots of questions about the new $3,000 or $3,600 child tax credit and the advance payments that the IRS will send to most families in 2021. Here are answers to some of those questions.
CORONAVIRUS AND YOUR MONEY
MOBILE VERSION TO BE COMPLETED AFTER DESKTOP APPROVAL
There are limits on what debt collectors can do to recoup what you owe. If you have medical debts, you have even more rights.
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How to Keep Tabs on Your Credit Reports
Free weekly access is ending, but several services let you view your credit files more than once a year.
CORONAVIRUS AND YOUR MONEY
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You might be surprised to see some of the things you'll find yourself spending less or more on in your golden years.
10 Things You'll Spend Less and More on in Retirement
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CORONAVIRUS AND YOUR MONEY
The pandemic has created significant challenges for all types of senior living communities.
A COVID Storm Hits Senior Living
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Retirees wanting to take a cruise should plan for additional safety measures, such as temperature checks and wearing a mask in public areas.
How Cruise Ships Are Setting Sail During COVID
Use our road map to find an advisor who will truly look out for your best interests.
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How to Find a Financial Planner You Trust
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Auto and Home Insurance
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What Not to Do When Planning Your Retirement
How Lower Interest Rates Affect Your Finances
Committing any of these four common mistakes can set you back in your golden years. Here's how to increase your chances of a successful retirement.
The Fed's rate cuts will provide relief for some borrowers, but savers will have to work harder to get decent returns.
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A complete and up-to-date estate plan can help ease your loved ones' worries and make things easier for them after you pass.
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Three Medicare Changes on the Horizon for 2025
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Medicare open enrollment runs from October 15 to December 7 each year. During this period, you can switch from original Medicare to a Medicare Advantage plan, or vice versa. You can also choose a new Advantage plan or new Medicare Part D prescription drug coverage. Knowing more about changes to Medicare taking effect in 2025 will help you select the best plan when the time comes.
Here are three ways Medicare will change in 2025:
Medicare beneficiaries will have a lower out-of-pocket maximum for their Part D Prescription drug coverage in 2025.
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Inflation tops health care costs as the biggest concern, and many preretirees are boosting their saving rate.
Living a Life of Purpose after Retirement: 3 Action Steps to Take
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When someone asks about what you do, the answer shouldn’t be, “I’m retired.” There is more to the second half of your life … a lot more.
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3 Strategies to Avoid Running
Out of Money in Retirement
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For a financially sustainable retirement that could last 30 years or more, here are three ways to help manage your risks and avoid financial roadblocks in your golden years.
The trend of increasing life expectancy means that Americans are much more likely to live 25, 30 or even 35 years in retirement. The benefits of this trend include spending more time with your family and a higher chance of meeting your great-grandchildren. The downsides include the increased potential for running out of money close to the end of this retirement.
Today’s retirees can expect to live 40% longer than those who retired 70 years ago. Recent research reveals that affluent Americans are likely to live longer. This means that if you’ve had consistent access to health care and high income, you are more likely to enjoy a longer lifespan. Men in the top quintile of income born in 1960 will live on average 12.7 years longer than men who are in the lowest quintile of income; for women the equivalent is 13.6 years.
These raw numbers can be headache-inducing. However, the implications are profound. What they mean basically is that those who have recently retired or who are getting ready to retire, one out of three women and one in five men can expect to live to 90 years or beyond.
As retirements lengthen, they require more financial resources to support not only day-to-day expenses, but also the increased health care expenses that can crop up due to aging. It’s no surprise then, that 60% of pre-retirees surveyed by Allianz fear running out of money in retirement.
Fortunately, holistic retirement planning built around three strategies — minimizing taxes, managing savings and reducing market downside risks — can mitigate the risk of running out of money in retirement.
My friend’s son has started several successful businesses and worked in various fields, but as an entrepreneur, his income can be cyclical, sporadic and, at times, volatile. He’d called in a rare panic, blurting out information he usually wouldn’t share so freely and confessing that $15,000 had been stolen from one of his accounts.
My friend is nothing else if not a very protective mother bear; she doesn’t necessarily become involved in her son’s escapades, but because he seldom shared this type of information with her, she became concerned. She wanted to know what was going on, and eventually, he shared the story in painstaking detail.
As it turned out, even though he had maxed out all his credit cards while in between business ventures, he’d put together a plan to go to Europe and said he kept an account with $15,000 that was now gone.
When my friend asked how this money had been stolen, he told her it had been taken directly from his account without any warning or explanation.
She asked if the bank was applying it to his credit card debt.
He said that wasn’t possible because the credit card debt had been through a different bank.
She wondered if there was a paper trail proving the bank took the money without his authorization. If so, he could request it be returned to his account.
She kept asking questions until he specified which account and bank the money had disappeared from. The answer took her by surprise because she didn’t even know he had accounts with that bank.
She dug deeper and soon discovered that no, in fact, he did not have a checking or savings account with that bank.
But he did have a credit card. And that card had $15,000 of available credit — the money he’d been “saving” for his trip.
What had happened was not that the bank had stolen his money. When all his other cards were maxed out, his credit score had gone down, so the bank lowered his credit limit. That wasn’t his money, and it hadn’t been stolen; it had never been his to begin with.
No, he insisted. That was his money. He was saving that credit as his only source of income.
But what is income?
A cautionary tale
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You’ve scrimped and saved, but are you really ready to retire? Here are some helpful calculations that could help you decide whether you can actually take the plunge.
See if you can relate to this … You have contributed to a 401(k), 403(b) or other employer-sponsored account at work, maybe you’re paying extra on the mortgage or have already paid it off, you keep cash on hand for those unexpected expenses or upcoming big-ticket purchases and you often wish there was a way to pay less in taxes.
You have worked for 30 or 40 years and are at or approaching Social Security eligibility and are now looking at when to take Social Security to maximize your benefits.
Sound familiar? Now, here’s what often comes next … You look at the account statements and begin to wonder whether the investments you have are the right ones to own for where you are in life. You begin weighing your options for making withdrawals from your retirement accounts. You aren’t sure exactly how this is done, and you’re nervous about the risk of a stock market pullback and the possibility of running out of money. And then it happens, you begin searching the internet for answers. (That may even be how you ended up here!) After a lot of searching and reading you realize that there are just too many opinions to choose from, and you resort to simply eliminating options that you’re not as familiar with or have heard negative things about. Then you take what’s left and try to put together a coherent strategy while continuing a search to find information that supports what you have contrived.
This is an all-too-common situation. Maybe this is exactly where you are or perhaps it describes something similar, but either way, you wouldn’t be reading this far into the article without some truth to what I am describing.
Regardless of the details, what you do next is critical to your long-term success. The decisions you make will determine the trajectory of your financial future, and it’s imperative to have a good plan to follow.
How to Know When You Can Retire
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You’ve scrimped and saved, but are you really ready to retire? Here are some helpful calculations that could help you decide whether you can actually take the plunge.
See if you can relate to this … You have contributed to a 401(k), 403(b) or other employer-sponsored account at work, maybe you’re paying extra on the mortgage or have already paid it off, you keep cash on hand for those unexpected expenses or upcoming big-ticket purchases and you often wish there was a way to pay less in taxes.
You have worked for 30 or 40 years and are at or approaching Social Security eligibility and are now looking at when to take Social Security to maximize your benefits.
Sound familiar? Now, here’s what often comes next … You look at the account statements and begin to wonder whether the investments you have are the right ones to own for where you are in life. You begin weighing your options for making withdrawals from your retirement accounts. You aren’t sure exactly how this is done, and you’re nervous about the risk of a stock market pullback and the possibility of running out of money. And then it happens, you begin searching the internet for answers. (That may even be how you ended up here!) After a lot of searching and reading you realize that there are just too many opinions to choose from, and you resort to simply eliminating options that you’re not as familiar with or have heard negative things about. Then you take what’s left and try to put together a coherent strategy while continuing a search to find information that supports what you have contrived.
This is an all-too-common situation. Maybe this is exactly where you are or perhaps it describes something similar, but either way, you wouldn’t be reading this far into the article without some truth to what I am describing.
Regardless of the details, what you do next is critical to your long-term success. The decisions you make will determine the trajectory of your financial future, and it’s imperative to have a good plan to follow.
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How to Know When You Can Retire
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You’ve scrimped and saved, but are you really ready to retire? Here are some helpful calculations that could help you decide whether you can actually take the plunge.
See if you can relate to this … You have contributed to a 401(k), 403(b) or other employer-sponsored account at work, maybe you’re paying extra on the mortgage or have already paid it off, you keep cash on hand for those unexpected expenses or upcoming big-ticket purchases and you often wish there was a way to pay less in taxes.
You have worked for 30 or 40 years and are at or approaching Social Security eligibility and are now looking at when to take Social Security to maximize your benefits.
Sound familiar? Now, here’s what often comes next … You look at the account statements and begin to wonder whether the investments you have are the right ones to own for where you are in life. You begin weighing your options for making withdrawals from your retirement accounts. You aren’t sure exactly how this is done, and you’re nervous about the risk of a stock market pullback and the possibility of running out of money. And then it happens, you begin searching the internet for answers. (That may even be how you ended up here!) After a lot of searching and reading you realize that there are just too many opinions to choose from, and you resort to simply eliminating options that you’re not as familiar with or have heard negative things about. Then you take what’s left and try to put together a coherent strategy while continuing a search to find information that supports what you have contrived.
This is an all-too-common situation. Maybe this is exactly where you are or perhaps it describes something similar, but either way, you wouldn’t be reading this far into the article without some truth to what I am describing.
Regardless of the details, what you do next is critical to your long-term success. The decisions you make will determine the trajectory of your financial future, and it’s imperative to have a good plan to follow.
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How to Know When You Can Retire
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You’ve scrimped and saved, but are you really ready to retire? Here are some helpful calculations that could help you decide whether you can actually take the plunge.
See if you can relate to this … You have contributed to a 401(k), 403(b) or other employer-sponsored account at work, maybe you’re paying extra on the mortgage or have already paid it off, you keep cash on hand for those unexpected expenses or upcoming big-ticket purchases and you often wish there was a way to pay less in taxes.
You have worked for 30 or 40 years and are at or approaching Social Security eligibility and are now looking at when to take Social Security to maximize your benefits.
Sound familiar? Now, here’s what often comes next … You look at the account statements and begin to wonder whether the investments you have are the right ones to own for where you are in life. You begin weighing your options for making withdrawals from your retirement accounts. You aren’t sure exactly how this is done, and you’re nervous about the risk of a stock market pullback and the possibility of running out of money. And then it happens, you begin searching the internet for answers. (That may even be how you ended up here!) After a lot of searching and reading you realize that there are just too many opinions to choose from, and you resort to simply eliminating options that you’re not as familiar with or have heard negative things about. Then you take what’s left and try to put together a coherent strategy while continuing a search to find information that supports what you have contrived.
This is an all-too-common situation. Maybe this is exactly where you are or perhaps it describes something similar, but either way, you wouldn’t be reading this far into the article without some truth to what I am describing.
Regardless of the details, what you do next is critical to your long-term success. The decisions you make will determine the trajectory of your financial future, and it’s imperative to have a good plan to follow.
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How to Know When You Can Retire
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You’ve scrimped and saved, but are you really ready to retire? Here are some helpful calculations that could help you decide whether you can actually take the plunge.
See if you can relate to this … You have contributed to a 401(k), 403(b) or other employer-sponsored account at work, maybe you’re paying extra on the mortgage or have already paid it off, you keep cash on hand for those unexpected expenses or upcoming big-ticket purchases and you often wish there was a way to pay less in taxes.
You have worked for 30 or 40 years and are at or approaching Social Security eligibility and are now looking at when to take Social Security to maximize your benefits.
Sound familiar? Now, here’s what often comes next … You look at the account statements and begin to wonder whether the investments you have are the right ones to own for where you are in life. You begin weighing your options for making withdrawals from your retirement accounts. You aren’t sure exactly how this is done, and you’re nervous about the risk of a stock market pullback and the possibility of running out of money. And then it happens, you begin searching the internet for answers. (That may even be how you ended up here!) After a lot of searching and reading you realize that there are just too many opinions to choose from, and you resort to simply eliminating options that you’re not as familiar with or have heard negative things about. Then you take what’s left and try to put together a coherent strategy while continuing a search to find information that supports what you have contrived.
This is an all-too-common situation. Maybe this is exactly where you are or perhaps it describes something similar, but either way, you wouldn’t be reading this far into the article without some truth to what I am describing.
Regardless of the details, what you do next is critical to your long-term success. The decisions you make will determine the trajectory of your financial future, and it’s imperative to have a good plan to follow.
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How to Know When You Can Retire
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You’ve scrimped and saved, but are you really ready to retire? Here are some helpful calculations that could help you decide whether you can actually take the plunge.
See if you can relate to this … You have contributed to a 401(k), 403(b) or other employer-sponsored account at work, maybe you’re paying extra on the mortgage or have already paid it off, you keep cash on hand for those unexpected expenses or upcoming big-ticket purchases and you often wish there was a way to pay less in taxes.
You have worked for 30 or 40 years and are at or approaching Social Security eligibility and are now looking at when to take Social Security to maximize your benefits.
Sound familiar? Now, here’s what often comes next … You look at the account statements and begin to wonder whether the investments you have are the right ones to own for where you are in life. You begin weighing your options for making withdrawals from your retirement accounts. You aren’t sure exactly how this is done, and you’re nervous about the risk of a stock market pullback and the possibility of running out of money. And then it happens, you begin searching the internet for answers. (That may even be how you ended up here!) After a lot of searching and reading you realize that there are just too many opinions to choose from, and you resort to simply eliminating options that you’re not as familiar with or have heard negative things about. Then you take what’s left and try to put together a coherent strategy while continuing a search to find information that supports what you have contrived.
This is an all-too-common situation. Maybe this is exactly where you are or perhaps it describes something similar, but either way, you wouldn’t be reading this far into the article without some truth to what I am describing.
Regardless of the details, what you do next is critical to your long-term success. The decisions you make will determine the trajectory of your financial future, and it’s imperative to have a good plan to follow.
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Find Income-Producing Assets
When you’re looking to fill your income gap, the obvious solution is to generate more income to fill it. How this is done can vary from person to person, but the primary outcome you’re looking for is income regardless of how you go about it.
If you’re wanting to remain active, you can consider taking on a part-time job, start or buy a business, acquire some rental properties or work another full-time job that you enjoy.
If you prefer not to work and want passive income, then you’re going to have to rely on income-oriented investments. This would be through specific types of income annuities or select alternative investments that are designed specifically for income.
When doing this, be sure you are working with a qualified professional who is properly licensed and who can education you on your options.
Get A Checklist
It is always a good idea to work off of a checklist, and regardless of where you are in this process, there are likely a few tweaks that can help increase your probability for a successful retirement. I encourage you to formulate a plan that articulates where you are, where you’re going and what needs to be done to start receiving the income you need.
You can download a retirement checklist for free and use it as a guide as you prepare for your retirement. In addition, taking a retirement readiness quiz can be a good idea, too. A quiz is a useful tool to measure your level of understanding about a topic or your readiness for progressing toward something.
This article was written by and presents the views of our contributing adviser(s), not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About The Author
Brian Skrobonja, Investment Adviser Representative
Founder & President, Skrobonja Financial Group LLC
Brian Skrobonja is an author, blogger, podcaster and speaker. He is the founder of St. Louis Mo.-based wealth management firm Skrobonja Financial Group LLC. His goal is to help his audience discover the root of their beliefs about money and challenge them to think differently. Brian is the author of three books, and his Common Sense podcast was named one of the Top 10 by Forbes. In 2017, 2019 and 2020 Brian was awarded Best Wealth Manager and the Future 50 in 2018 from St. Louis Small Business.
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NYSUT NOTE: Are you considering professional financial planning guidance? The NYSUT Member Benefits Corporation-endorsed Financial Counseling Program offers access to a team of Certified Financial Planners® and Registered Investment Advisors that provide members with fee-based financial counseling services. Get unbiased advice that is customized specifically for you and your financial situation. Visit the website for more information or to enroll.
© 2022 The Kiplinger Washington Editors Inc.
How to Know When You Can Retire
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You’ve scrimped and saved, but are you really ready to retire? Here are some helpful calculations that could help you decide whether you can actually take the plunge.
See if you can relate to this … You have contributed to a 401(k), 403(b) or other employer-sponsored account at work, maybe you’re paying extra on the mortgage or have already paid it off, you keep cash on hand for those unexpected expenses or upcoming big-ticket purchases and you often wish there was a way to pay less in taxes.
You have worked for 30 or 40 years and are at or approaching Social Security eligibility and are now looking at when to take Social Security to maximize your benefits.
Sound familiar? Now, here’s what often comes next … You look at the account statements and begin to wonder whether the investments you have are the right ones to own for where you are in life. You begin weighing your options for making withdrawals from your retirement accounts. You aren’t sure exactly how this is done, and you’re nervous about the risk of a stock market pullback and the possibility of running out of money. And then it happens, you begin searching the internet for answers. (That may even be how you ended up here!) After a lot of searching and reading you realize that there are just too many opinions to choose from, and you resort to simply eliminating options that you’re not as familiar with or have heard negative things about. Then you take what’s left and try to put together a coherent strategy while continuing a search to find information that supports what you have contrived.
This is an all-too-common situation. Maybe this is exactly where you are or perhaps it describes something similar, but either way, you wouldn’t be reading this far into the article without some truth to what I am describing.
Regardless of the details, what you do next is critical to your long-term success. The decisions you make will determine the trajectory of your financial future, and it’s imperative to have a good plan to follow.
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How to Know When You Can Retire
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You’ve scrimped and saved, but are you really ready to retire? Here are some helpful calculations that could help you decide whether you can actually take the plunge.
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How to Know When You Can Retire
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You’ve scrimped and saved, but are you really ready to retire? Here are some helpful calculations that could help you decide whether you can actually take the plunge.
See if you can relate to this … You have contributed to a 401(k), 403(b) or other employer-sponsored account at work, maybe you’re paying extra on the mortgage or have already paid it off, you keep cash on hand for those unexpected expenses or upcoming big-ticket purchases and you often wish there was a way to pay less in taxes.
You have worked for 30 or 40 years and are at or approaching Social Security eligibility and are now looking at when to take Social Security to maximize your benefits.
Sound familiar? Now, here’s what often comes next … You look at the account statements and begin to wonder whether the investments you have are the right ones to own for where you are in life. You begin weighing your options for making withdrawals from your retirement accounts. You aren’t sure exactly how this is done, and you’re nervous about the risk of a stock market pullback and the possibility of running out of money. And then it happens, you begin searching the internet for answers. (That may even be how you ended up here!) After a lot of searching and reading you realize that there are just too many opinions to choose from, and you resort to simply eliminating options that you’re not as familiar with or have heard negative things about. Then you take what’s left and try to put together a coherent strategy while continuing a search to find information that supports what you have contrived.
This is an all-too-common situation. Maybe this is exactly where you are or perhaps it describes something similar, but either way, you wouldn’t be reading this far into the article without some truth to what I am describing.
Regardless of the details, what you do next is critical to your long-term success. The decisions you make will determine the trajectory of your financial future, and it’s imperative to have a good plan to follow.
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How to Know When You Can Retire
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You’ve scrimped and saved, but are you really ready to retire? Here are some helpful calculations that could help you decide whether you can actually take the plunge.
See if you can relate to this … You have contributed to a 401(k), 403(b) or other employer-sponsored account at work, maybe you’re paying extra on the mortgage or have already paid it off, you keep cash on hand for those unexpected expenses or upcoming big-ticket purchases and you often wish there was a way to pay less in taxes.
You have worked for 30 or 40 years and are at or approaching Social Security eligibility and are now looking at when to take Social Security to maximize your benefits.
Sound familiar? Now, here’s what often comes next … You look at the account statements and begin to wonder whether the investments you have are the right ones to own for where you are in life. You begin weighing your options for making withdrawals from your retirement accounts. You aren’t sure exactly how this is done, and you’re nervous about the risk of a stock market pullback and the possibility of running out of money. And then it happens, you begin searching the internet for answers. (That may even be how you ended up here!) After a lot of searching and reading you realize that there are just too many opinions to choose from, and you resort to simply eliminating options that you’re not as familiar with or have heard negative things about. Then you take what’s left and try to put together a coherent strategy while continuing a search to find information that supports what you have contrived.
This is an all-too-common situation. Maybe this is exactly where you are or perhaps it describes something similar, but either way, you wouldn’t be reading this far into the article without some truth to what I am describing.
Regardless of the details, what you do next is critical to your long-term success. The decisions you make will determine the trajectory of your financial future, and it’s imperative to have a good plan to follow.
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How to Know When You Can Retire
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You’ve scrimped and saved, but are you really ready to retire? Here are some helpful calculations that could help you decide whether you can actually take the plunge.
See if you can relate to this … You have contributed to a 401(k), 403(b) or other employer-sponsored account at work, maybe you’re paying extra on the mortgage or have already paid it off, you keep cash on hand for those unexpected expenses or upcoming big-ticket purchases and you often wish there was a way to pay less in taxes.
You have worked for 30 or 40 years and are at or approaching Social Security eligibility and are now looking at when to take Social Security to maximize your benefits.
Sound familiar? Now, here’s what often comes next … You look at the account statements and begin to wonder whether the investments you have are the right ones to own for where you are in life. You begin weighing your options for making withdrawals from your retirement accounts. You aren’t sure exactly how this is done, and you’re nervous about the risk of a stock market pullback and the possibility of running out of money. And then it happens, you begin searching the internet for answers. (That may even be how you ended up here!) After a lot of searching and reading you realize that there are just too many opinions to choose from, and you resort to simply eliminating options that you’re not as familiar with or have heard negative things about. Then you take what’s left and try to put together a coherent strategy while continuing a search to find information that supports what you have contrived.
This is an all-too-common situation. Maybe this is exactly where you are or perhaps it describes something similar, but either way, you wouldn’t be reading this far into the article without some truth to what I am describing.
Regardless of the details, what you do next is critical to your long-term success. The decisions you make will determine the trajectory of your financial future, and it’s imperative to have a good plan to follow.
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Important Planning Considerations: Insurance & Long-Term Care
LONG TERM CARE INSURANCE
Your retirement plan isn’t complete until you’ve looked into getting the insurance you need, including a plan for long-term care.
LIFE INSURANCE
Millennials are feeling the need for life insurance due to COVID-19, and the way they’re shopping for it is different than in the past.
How Millennials Are Changing the Life Insurance Game
ESTATE PLANNING
The COVID-19 pandemic isn’t going away soon. This health crisis is dangerous for older Americans. Here is an overview of what you need to cover.
Saving for a rainy day can be a tall order, especially if you have recently experienced a financial setback. Taking even small steps can help you work toward the larger goal of building up your emergency savings.
SAVINGS
Rebuilding Emergency Savings: Take a Realistic Approach
HAPPY RETIREMENT
Finance Fundamentals
Conversation Starter 1: Money talks pay off
Fidelity Investment's 2021 Couples & Money Survey highlights that couples who make decisions about their finances together experience positive benefits. These are heartening statistics in contrast to the 2014 American Psychological Association's survey revealing that 31% of adults with partners cite money as a major source of conflict in a relationship.
In light of these findings, consider these talking points:
Heading into retirement brings a slew of new topics to grapple with, and one of the most maddening may be Medicare. Figuring out when to enroll in Medicare and which parts to enroll in can be daunting even for the savviest retirees. There's Part A, Part B, Part D, Medigap plans, Medicare Advantage plans and so on.
And what is a doughnut hole, anyway? To help you wade into the waters of this complicated federal health insurance program for retirement-age Americans, here are 11 essential things you must know about Medicare.
Medicare Basics: 11 Things You Need to Know
Rebuilding Emergency Savings: Take a Realistic Approach
What if I need money fast but don’t have enough in my emergency fund?
If you find yourself in the midst of an emergency and haven’t built up sufficient savings, the guidance above may feel like too little, too late. Fortunately, there are short-term sources of funding and relief available, from temporary loan forbearance and debt relief, to lines of credit and new credit cards with zero-interest promotional periods, to employer assistance and unemployment.
The Fed's rate cuts will provide relief for some borrowers, but savers will have to work harder to get decent returns.
Beginning in 2025, people with Part D plans won’t have to pay more than $2,000 in out-of-pocket costs, thanks to a provision in the Inflation Reduction Act of 2022. The $2,000 cap will be indexed to the growth in per capita Part D costs, so it may rise each year after 2025. Part D enrollees will also have the option of spreading out their out-of-pocket costs over the year rather than face high out-of-pocket costs in any given month.
This new rule applies only to medications covered by your Part D plan and does not apply to out-of-pocket spending on Medicare Part B drugs. Part B drugs are usually vaccinations, injections a doctor administers, and some outpatient prescription drugs.
If you are enrolled or looking to enroll in Medicare Part D plans in 2025, review your choices carefully by using the Medicare Plan Finder. You can compare different plans and see whether the prescriptions you take will be covered.
This change to Medicare prescription drug coverage may cause problems for some people who delay enrolling in Medicare because they are covered by employer health insurance.
1. New $2,000 annual cap on out-of-pocket prescription costs
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Getting a bill for a medical procedure or an appointment you thought your insurance would cover can throw you for a loop. But if you think the bill was sent to you in error or you believe the amount listed is wrong, you can—and should—fight back. First, though, you need to know common mistakes to look for, as well as what your insurance plan does and does not cover.
Start by reviewing your insurer’s explanation of benefits. Was the service in network—that is, from providers that have typically agreed to reduced reimbursement from your insurance company? Next, call your insurer and ask the insurance representative to explain why the claim was denied (in part or in full), why certain services weren’t covered and what you need to do to fix it.
Denials of claims for in-network procedures are usually the easiest to resolve, says Katalin Goencz, a medical insurance and reimbursement specialist in Stamford, Conn. (Goencz also serves as the president of the nonprofit group Alliance of Claims Assistance Professionals.) If a provider sends incorrect information, it is required to resubmit corrected info directly to the insurance company once the provider has been alerted, she says. For example, an error in how a procedure was coded could lead to a denial, as could an outdated insurance card.
In some cases, you could simply be billed erroneously. For example, the Coronavirus Aid, Relief and Economic Security (CARES) Act mandated that providers offer COVID-19 vaccines and boosters at no charge. Providers are prohibited from charging co-payments or administrative fees. However, you could receive a bill for a COVID-19 vaccination if the provider bills you directly instead of your insurer or due to human error in medical billing systems. If you’re charged for a vaccine, call your provider and dispute the charges. Your insurer may also be willing to help you get the bill waived.
Likewise, the Affordable Care Act requires your insurance to cover all of the costs of annual physical exams and other preventive care. However, if your doctor decides to order extra tests, such as an electro-cardiogram to track heart issues, your insurance company may conclude that the service isn’t a necessary part of your physical exam and send you a bill.
How to Get Your Grown Children to Move Out
The number of adults who live with their parents has been increasing for decades. For many, that’s a good thing. But if you’d like to uproot yours, here’s how.
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How to Get Your Grown Children to Move Out
Whether you’re getting married or just moving in together, every couple needs to come to an understanding about how they will handle money and learn what benefits their coupledom may afford them.
Wedding season is in full swing, and along with all the beauty and joy that it can bring, it’s also important to keep in mind that with marriage comes a fair amount of financial decisions and plans to be made. To be sure these are not always the first things we think about, but given my career in finance, I can’t help but bring them front and center.
Whether you are already part of a “we” or are forging a new connection, you’ll need a strong financial foundation for a meaningful and sustainable future. It may not sound romantic at first, but if you’re on the verge of moving your relationship forward in a big way, these three steps can help you deepen one of the most important bonds a couple can share: your finances.
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Wedding Season: 3 Steps to Empower Your Finances as a New Couple
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How to Plan for Retirement When Only One Spouse Works
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In a traditional pension plan, a worker is typically entitled to a normal benefit, payable for their lifetime and equal to a percentage of their final pay, assuming they meet certain work and retirement age requirements. For instance, a plan might stipulate that a participant will receive 50% of their final pay for life, provided they work for 30 years and retire at age 65.
However, when the participant is married, federal law generally requires that the pension be paid as a qualified joint and survivor annuity (QJSA), unless the non-working spouse agrees to a different arrangement. A QJSA ensures that the pension continues to be paid to the surviving spouse after the participant's death, typically at a reduced rate.
For example, Joe, who retires at age 65 with a final pay of $100,000, may be entitled to a $50,000 annual benefit for his lifetime. If he chooses a QJSA with a 50% survivor benefit, he might receive $45,000 annually during his lifetime, with $22,500 continuing to his spouse, Mary, if he predeceases her. The couple may also opt for a larger survivor benefit, though this will further reduce the initial pension amount.
It's essential for both spouses to understand the implications of these choices. Selecting a QJSA may mean receiving a lower benefit during their joint lives, but it may help provide financial protection for the surviving spouse.
Pension decisions for married couples
Spousal IRAs: An important tool for non-working spouses
These days, it’s not uncommon for the spouse with the highest income potential to provide for the family financially while the other spouse stays home to manage the household.
Although this arrangement can work well for child-rearing or eldercare responsibilities in the short term, it can present long-term retirement income planning risk for the non-working spouse. To mitigate this risk, it’s crucial for both spouses to be informed and actively involved in retirement planning decisions.
Understanding spousal rights related to retirement planning is a key step in ensuring financial security for the non-working spouse.
When you're married but only one spouse works, leaving retirement planning to the working partner puts financial security at risk. A joint effort is vital.
NYSUT NOTE: Keeping a close eye on your finances is even more important when only one spouse is in the workforce. The NYSUT Member Benefits Corporation–endorsed Financial Counseling Program can advise on a wide range of topics from estate planning to basic budgeting. It's only $260 annually for a full-service plan with unbiased, objective insight.
The 6-to-1 grocery method provides structure to your grocery list, making shopping easier and more cost-effective. Next time you go to the supermarket, you’ll buy six vegetables, five fruits, four proteins, three starches, two sauces/spreads and one "fun" item as a treat.
“This makes grocery shopping way easier, way cheaper and you get in and out, so you’re not there all day long,” Chef Coleman says in a TikTok explaining the method.
Before you go to the store, you may want to have an idea of some meal concepts you plan on cooking in order to narrow down your choices, but the method itself is meant to provide flexibility.
You might choose to buy what’s on sale (even if it’s not the vegetables or meat you initially planned on purchasing) to further increase your savings. Maybe you need to opt for frozen veggies instead of fresh ones. Or maybe you have a large family and need to increase the quantity of food you buy. Overall, the method is supposed to be adapted to your personal preferences and needs.
Tom Jauncey, CEO at Nautilus Marketing told Kiplinger he saves $50 a week by using this method and recommends it for individuals who want to streamline grocery shopping while saving money.
Health.com provides a great example of what a 6-to-1 grocery list looks like and what meals you can make with those ingredients.
The 6-to-1 grocery method
Before your lovely offspring first sits behind the wheel of a car, you need to be certain they are covered on your auto insurance policy. Check with your insurance agent or broker, and be sure that is done properly. Most of the time, there will not be an additional cost to add a person who has a learner’s permit to an auto insurance policy — but check to be sure. Do a good job as the driving coach, and you’ll be rewarded handsomely when it comes time for your dude or dudette to drive off on their own. Or will you?
When the day comes that your little (but getting bigger) one has a driver’s license, you must make that call to your insurance company to let them know that, as Rafiki says in The Lion King, “It is time.” The reaction from your insurance company will be not much different from the initial reaction you had when you first started teaching your child the rules of the road — sheer terror. Can you blame them?
Before you hit the road
Wills and trusts are legal instruments tailored to pass your assets to your heirs in the ways that you wish. A will takes effect after you die, whereas a trust, with someone designated to oversee it, can manage your assets while you’re still living.
A will is often used as a cost-effective option for those with smaller estates. A trust is often implemented when one has a large estate, wants more control over asset distribution and values privacy. Trusts help to bypass probate — the court-supervised process for distributing your property. Probate is a public process that is costly and time-intensive due to professional and administrative expenses. Depending on the type of assets or items that you own, the court requires professionals to assess an accurate value and ensure that they’re being distributed properly to the rightful heirs.
Often, people choose family members to administer the estate, but that can be challenging, especially if they don’t understand tax laws and have the expertise to manage certain types of complex assets, real estate and retirement accounts. In some cases, the process often becomes more expensive and time-intensive.
Then there are the family dynamics to consider when you choose an executor. If family members don’t get along or disagree on how the estate is being handled, that may also add more time and expense — in addition to mental anguish. If you do go the professional route to administer the estate, you want to balance the cost of paying an estate expert versus having a family member navigate the different pieces.
Selecting the right person to administer the estate
Are You an Estate Planning Procrastinator? Where to Start
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Scoring a low mortgage rate is a top priority for many potential homebuyers, as owning a home has become increasingly more expensive over the last several years. Unfortunately, although mortgage rates fell significantly earlier this year — hitting their lowest level since February 2023 (6.09%) after the Fed's September rate cut — they've since crept back towards 7%. And according to Freddie Mac, they could still remain volatile following the Fed's anticipated rate cut this week.
High mortgage rates and home prices have long been pushing buyers out of the market and leading others to back out of deals. In June, as home prices hit an all-time high, 56,000 home purchases were canceled, equal to 15% of homes that went under contract, reports Redfin.
“I’m seeing some buyers pull out of the market because they can no longer afford a home loan,” Ralph DiBugnara, a senior vice president at Cardinal Financial, a national mortgage lender headquartered in Scottsdale, Ariz. said. “I’m also seeing a rise in the number of people who are getting cosigners, and I’m seeing a lot of buyers lowering their price range.”
According to Zillow, nearly one-quarter of listings (24.5%) received a price cut in June of this year as competition cooled and sellers looked to entice buyers. But a large swath of buyers are reassessing whether it's the right time for them to purchase a home. Many homebuyers are holding off on entering the market in case lower rates do materialise.
This makes sense because even a small change in mortgage rates can have a significant impact on how much homebuyers pay. To test that theory out, you can compare current mortgage rates with our tool, in partnership with Bankrate, below, or use our mortgage calculator to find your monthly payment.
Rates are high this year, but you can still score a low mortgage rate with these tips.
Five Ways to Shop for a Low Mortgage Rate
If you're looking to purchase a home in this market, taking these steps can help you score a low mortgage rate:
How to score a low mortgage rate
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Daniel Bortz
Contributing Writer, Kiplinger Personal Finance
Daniel Bortz is a freelance writer based in Arlington, Va. His work has been published by The New York Times, The Washington Post, Consumer Reports, Newsweek, and Money magazine, among others.
NYSUT NOTE: If you're trying to save even more money on your mortgage, the NYSUT Member Benefits Corporation-endorsed UnionDirect Mortgage Discount Program from Mid-Island Mortgage can save members up to $2,700. Whether you're looking for a new home or trying to lower your existing mortgage, this program may suit your needs.
Divorce is not easy, but you do not have to do it on your own. The divorce industry has stepped up to the plate with numerous legal, financial and emotional support structures to help empower those moving from coupledom to single life with the right legal advice and financial security.
Be sure to reach out to a divorce attorney who is highly recommended in your state as well as a Certified Divorce Financial Analyst™ to ensure that you understand all the legal and financial issues of your divorce.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
Hands down, the 529 plan is a great way to save for college. The tax benefits are key. With a 529 plan, you pay no annual taxes on the investment gains inside the account, plus distributions for qualified expenses like tuition, certain fees and qualified room-and-board expenses are tax-free.
A relatively new provision allows account owners to withdraw $10,000 a year per student for private primary or secondary education.
Each state administers its own plan, and you are free to use any state’s plan. However, some states offer a state-tax deduction if you are a resident and use its in-state plan. That’s the basics, there is much more to know, but today I want to focus on five ways parents can maximize their 529 plan.
The Time Horizon Is Not Freshman Year
Parents of teenagers often ask me if they should open a 529. They wonder if it makes sense given how close the child may be to needing the money for college. While there are a variety of factors to consider, I remind parents the time horizon for needing the money for college is not freshman year, but by senior year. So, for instance, a parent with a 13-year-old may think they have only four years till they’ll need the 529 money, when in reality the time horizon could be eight years, since not all the money is withdrawn in the freshman year. If that is the case, then yes, eight years may still be enough time to invest in a 529. (There may be some financial aid considerations.)
Having said that, I probably wouldn’t invest all the 529 money in equity mutual funds, given the time horizon is only eight years — that is too risky. But perhaps the tuition payment earmarked for the eighth year, or senior year, could be invested in a dividend-paying mutual fund or a balanced mutual fund, since that has the longest time horizon. I suggest consulting with a qualified financial adviser who can help ensure your investment mix is aligned properly with your risk tolerance and time horizon.
Make a List
NYSUT NOTE: Divorce can be complicated, but when you have the right team in place it can help simplify the process. The NYSUT Member Benefits Trust-endorsed Legal Service Plan is available to help provide legal assistance for many of the issues that may be affected by divorce. Provided by the law firm of Feldman, Kramer & Monaco, P.C., NYSUT members can get unlimited access to toll-free legal advice from a national network of lawyers. For more information or to enroll, click here.
2. Gross up the monthly amount to account for taxes
It’s likely that the majority of your retirement savings will be taxed in some shape or form. Roth IRAs and municipal bonds are notable exceptions.
If your monthly expenses are $10,000 and your effective tax rate (how many cents you lose on the dollar to taxes) is 20%, divide $10,000/0.8, to arrive at $12,500 per month. That’s the gross amount you’ll need every month to end up with $10,000 in your bank account to cover your expenses.
NYSUT NOTE: Getting a plan in place to manage your debt isn’t always easy. But with the help of the NYSUT Member Benefits Corporation-endorsed Cambridge Credit Counseling program, NYSUT members have the opportunity to work with a certified counselor on possible debt elimination options. With over 20 years of experience assisting consumers with debt, Cambridge can work with you to determine the most appropriate course of action for your specific debt situation. Get a better understanding of debt consolidation, student loan repayment options and more by visiting the website today.
NYSUT NOTE: Divorce can be complicated, but when you have the right team in place it can help simplify the process. The NYSUT Member Benefits Trust-endorsed Legal Service Plan is available to help provide legal assistance for many of the issues that may be affected by divorce. Provided by the law firm of Feldman, Kramer & Monaco, P.C., NYSUT members can get unlimited access to toll-free legal advice from a national network of lawyers. For more information or to enroll, click here.
When the Fed raises interest rates, rates on savings accounts usually rise in tandem. For this reason, when the Fed started its rate-hiking campaign in March 2022 to reduce high inflation, savings rates rapidly rose. However, when the Fed cuts rates, which it's expected to do again this week, this means savings rates will also take a cut.
But don't expect your savings rate to drop off right away. As of right now, some of the top-earning high-yield savings accounts and CD accounts still offer rates of well over 4% and 5%, and after a rate cut, these accounts should still offer competitive rates — just not as good as they once were.
For example, at the start of September, a Marcus by Goldman Sachs savings account had an APY of 4.40%. After the September 18 Fed meeting, where they announced a 50 bps (0.50%) cut, Marcus dropped its savings rate to 4.25%, and in mid-October, it dropped to 4.10%, per a Kiplinger staffer with the account. So while the Fed cut 0.50%, Marcus over that month period cut 0.30%.
But the Fed isn't expected to stop after two rate cuts — and your savings rates will continue dropping throughout the next couple of years. Most central bankers expect one quarter-point cut to the federal funds rate this week, four more in 2025 and another four in 2026.
Still, if you don't already have one, it's worth opening a high-yield savings account despite the next Fed meeting, so you can take advantage of high rates before they significantly fall. Even though rates are lower, there are still higher returns for your cash in high-yield savings accounts than sitting in an average checking or savings account.
Another option, which can help you avoid falling rates completely, is to open a CD account. Since the APY on a CD account is fixed, if you lock up your cash in one now, you won't have to worry about your APY going down until the CD matures. Just make sure you're comfortable with not being able to access your cash until the account matures.
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Experts say the Federal Reserve will cut interest rates again at the next Fed meeting. Here's what that means for savings rates.
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What a Fed Rate Cut Means for Savings
NYSUT NOTE: No matter your age, you can get valuable financial advice from the NYSUT Member Benefits Corporation–endorsed Financial Counseling Program. All NYSUT members are eligible to enroll and, with a full-service plan costing only $260 annually, unbiased advice is only a phone call or virtual consultation away.
NYSUT NOTE: Whether you want to take our advice on one of these international trips or opt for a domestic vacation, the NYSUT Member Benefits Corporation–endorsed Grand Circle Travel & Overseas Adventure Travel program offers special pricing on group tours for American travelers over 50 years old. You can save $150 per person on published tours simply by being an NYSUT member!
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How the Life Insurance Game Is Changing
Millennial consumers love customization. With so much information readily available, there is quite a bit you can do on your own if you choose to. And when you are ready and have questions or want a more guided experience, there is a financial professional who will be able to help. Whether by phone, by video, online or the good old-fashioned face-to-face meeting, a financial professional is always a great stop on this journey to be sure you have considered your needs and options. There are nuances to the features and benefits of life insurance, and an experienced professional can help you sort it all out. Among millennials who purchased life insurance in the pandemic, more than half used a live adviser, and 30% used both a live adviser and online elements in their purchase, according to Boston Consulting Group.
In addition to helping provide financial security for your loved ones in case you pass away, many life insurance policies now also offer optional riders (sometimes at additional cost) that can help address other concerns, like chronic illness or longevity risk.
Your move, millennials: Choose the method that works best for you. That may be an online-only purchase, using a live adviser, or some combination of the two. If you’re not sure where to turn for help, your employer may provide access to an adviser. It is also likely that friends or family members may have a referral for you. This is one of the most common ways advisers acquire new clients. Finally, many states have registration requirements and often have online directories of licensed financial professionals. Without a referral from someone you trust, it is a good rule of thumb to select two to three people to interview so that you can find the best person for you.
As millennials become more likely to purchase life insurance, insurers have evolved their offerings to create new products and innovations to meet their needs. That’s great news for first-time applicants who may find a much more painless process than expected.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About The Author
Salene Hitchcock-Gear, President of Prudential Individual Life Insurance
President of Prudential Individual Life Insurance, Prudential Financial
Salene Hitchcock-Gear represents Prudential as a director on the Women Presidents’ Organization Advisory Board and also serves on the board of trustees of the American College of Financial Services. In addition, Hitchcock-Gear has a bachelor’s degree from the University of Michigan, a Juris Doctor degree from New York University School of Law, as well as FINRA Series 7 and 24 securities licenses. She is a member of the New York State Bar Association.
Good news: You can have it your way!
NYSUT NOTE: The NYSUT Member Benefits Trust-endorsed WrapPlan® II Universal Life Insurance Plan underwritten by Transamerica Financial Life Insurance Company allows you to purchase life insurance coverage that increases as your term life coverage decreases or terminates. For more information on requirements and how it works, visit the NYSUT Member Benefits website today.
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Heading into retirement brings a slew of new topics to grapple with, and one of the most maddening may be Medicare. Figuring out when to enroll in Medicare and which parts to enroll in can be daunting even for the savviest retirees. There's Part A, Part B, Part D, Medigap plans, Medicare Advantage plans and so on.
And what is a doughnut hole, anyway? To help you wade into the waters of this complicated federal health insurance program for retirement-age Americans, here are 11 essential things you must know about Medicare.
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There’s Medicare Part A, Part B, Part D, Medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare—and much more.
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Medicare Basics: 11 Things You Need to Know
NYSUT NOTE: As interest rates continue to increase, there is no better time to address outstanding credit card debt. The NYSUT Member Benefits Corporation-endorsed Cam-bridge Credit Counseling program can help members get a better understanding of their debt consolidation and repayment options. NYSUT members are eligible for a free, no-obligation, debt and student loan consultation with one of Cambridge's certified counselors, who will help determine the most appropriate course of action for your spe-cific debt situation. To find out how to speak to a counselor, visit the website for more information.
NYSUT NOTE: As interest rates continue to increase, there is no better time to address outstanding credit card debt. The NYSUT Member Benefits Corporation-endorsed Cam-bridge Credit Counseling program can help members get a better understanding of their debt consolidation and repayment options. NYSUT members are eligible for a free, no-obligation, debt and student loan consultation with one of Cambridge's certified counselors, who will help determine the most appropriate course of action for your spe-cific debt situation. To find out how to speak to a counselor, visit the website for more information.
NYSUT NOTE: The NYSUT Member Benefits Trust-endorsed Level Term Life Insurance Plan — provided by Metropolitan Life Insurance Company — offers level term life insurance coverage for you or your spouse/certified domestic partner. Terms are available for 10-year, 15-year and 20-year periods. For more information on requirements and term details, visit the NYSUT Member Benefits website today.
NYSUT NOTE: As a NYSUT member, you have access to a national network of attorneys that deal with personal legal matters through the NYSUT Member Benefits Trust-endorsed Legal Service Plan. Provided by the law firm of Feldman, Kramer & Monaco, P.C., these experts offer legal assistance with everything from preparing crucial estate planning documents to dealing with traffic violations. For more information or to enroll click here.
What Not to Do When Planning Your Retirement
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People spend years, even decades, doing everything they can to save enough for retirement. The last thing you need is a costly mistake that could derail everything you’ve worked so hard to build. Your retirement could last 20 years or more, and you want to enjoy every moment.
Retirement planning doesn’t stop once you retire – you need to consistently check in on your investments and other retirement savings. You must understand what not to do in retirement in order to protect and preserve your nest egg and increase your chances of having a successful retirement.
Here are four mistakes to avoid.
Committing any of these four common mistakes can set you back in your golden years. Here's how to increase your chances of a successful retirement.
Every year, Medicare’s open enrollment period runs from Oct. 15 to Dec. 7. This is the time to enroll in or make changes to any Medicare or Medicare Advantage policies, although you may be restricted from making a change regarding a supplementary policy, or Medigap.
There is another open enrollment period only for people with Medicare Advantage plans, from Jan. 1 to March 31. During this January open enrollment, you can change from one Medicare Advantage plan to another or go back to original Medicare.
But while authorities urge an annual review of your coverage, you don’t have to do anything if you’re happy with what you have. If you want to maintain your current Medicare coverage, you do not need to re-enroll.
1. Open enrollment dates
While Part D plans can change the drugs they cover, and Medicare Advantage plans can change their provider networks as well as your costs and other provisions, fewer than one-third of enrollees are estimated to take advantage of open enrollment to compare plans and reevaluate their coverage.
Tim Smolen, director of the Washington State Health Insurance Assistance Programs (SHIP), which helps residents navigate Medicare, says beneficiaries consistently care about three things during open enrollment: access, what benefits are included in their plan, and cost.
That last issue is the toughest to gauge. “It's very difficult to forecast in the year ahead how much healthcare you're going to use,” he says.
2. Few people take advantage of open enrollment
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If you haven’t used it in the past year or so and don’t expect you’ll need it in the near future, it's probably safe to get rid of it, says Aaron Traub, the Dallas organizer.
6. Ask yourself the last time you used something
How to Declutter Your Home If You're Moving or Downsizing — 8 Tips to Avoid Overwhelm
Reach out to your family and ask them to go through any possessions they may have left behind. Then invite family members over for a “give and take” visit, suggests Darcy Speed. “Explain that you are looking to declutter and encourage them to choose their favorite items. The "giver" can share the story behind the keepsake, making it even more meaningful, and then it can be taken out of the home.”
You may think about keeping this stuff for your heirs, but keep in mind that “very rarely do your children have the same attachments to items that you have,” says Jil McDonald, an interior designer with Jil Sonia Interior Designs in Vancouver, Canada, who recently downsized significantly. “They want to create their own new memories.” Instead, discard the items, but “take pictures and videos to keep the memories alive,” suggests John Linden, a Los Angeles-based interior designer.
7. Involve your family
Finally, be sure that your old habits don’t return “Keep up with the organization,” says Linden. “Make sure to declutter on a regular basis, and be conscious of what new items you are bringing into your home.”
For Jakob Miller, in New York, “Decluttering was a challenging but rewarding task. Not only did it make my home more organized and functional, but it also gave me a sense of peace and clarity,” he says. “Just start small, take it one step at a time. And you'll be amazed at the results.”
8. Declutter on a regular basis
Three Major Estate Plan Mistakes to Avoid
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A complete and up-to-date estate plan can help ease your loved ones' worries and make things easier for them after you pass.
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Kiplinger is part of Future plc, an international media group and leading digital publisher
© 2024 Future US LLC
Kiplinger is part of Future plc, an international media group and leading digital publisher
© 2024 Future US LLC
An estate plan helps designate who will receive your assets in the event of your death. Despite many thinking an estate plan is only for the rich, everyone can benefit from having one. For the first time since 2020, the number of Americans who have a will has declined.
Why are so many choosing not to create one? Nearly 40% of people don't believe they have enough assets to leave anyone. But no matter how wealthy you are, you need a will to protect your loved ones.
While important, an estate plan can be a difficult document to create, leading to potential mistakes that can cost you or your loved ones a lot of money. Estate planning errors can drastically hurt the financial legacy you want to leave behind. Here are some of the big ones:
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Kiplinger is part of Future plc, an international media group and leading digital publisher
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Kiplinger is part of Future plc, an international media group and leading digital publisher
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How does Social Security work?
Despite the popularity of Social Security, the program can be complicated. It has so many twists that it’s hard for the average person to get their arms around it.
In a nutshell, Social Security replaces a portion of your pre-retirement income. The amount of your benefit depends on your lifetime earnings. To qualify for Social Security, you must have at least 40 “credits,” which you earn by working at least 10 years. Your benefit is based on your 35 highest-earning years.
That’s where things get complicated. Despite the many gains women have made in education and the workplace, the burden of childrearing and elder care still primarily falls on them. As a result, they are more likely to have gaps in their work history. According to the Brookings Institution, motherhood reduces women’s Social Security benefits by 16% for the first child and then an additional 2% for each subsequent child. Women’s average Social Security benefits are 80% that of men, the SSA says.
2. Start with easy wins
Gather all trash, clean the fridge and pantry and then collect and organize receipts and paperwork, which likely have minimal sentimental value. Next, “look for things that are out of place, like piles of books, clothes, shoes, small appliances,” says Diane Quintana. “Can you put these things away? If you can’t put them away, can you make room for them by decluttering where they would go?”
Then move on to other smaller areas. Consider tackling individual drawers before moving up to something slightly larger, such as a closet or a spare room, suggests Darcy Speed, who trains other organizers and home stagers at Ultimate Academy. “There are usually fewer decisions to be made regarding what to keep and what to donate,” she says.
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Seeking passion and purpose in retirement
An excellent place to start looking for your second act is by considering what you're passionate about and what drives you to give back. In fact, even seniors who need a steady income stream will also benefit from starting here.
For example, many retirees find fulfillment in teaching, such as a college professor instructing students in the field in which they spent their career. Others might consider retail positions involving their career, hobbies, or pursuits that they wished they had more time for while they were working full time. For example, Billy Ozzello, bass player for the 1980s-era band Survivor, now owns a guitar shop in Indiana.
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Erin Bendig
Personal Finance Writer
Erin pairs personal experience with research and is passionate about sharing personal finance advice with others. Previously, she was a freelancer focusing on the credit card side of finance, but has branched out since then to cover other aspects of personal finance. Erin is well-versed in traditional media with reporting, interviewing and research, as well as using graphic design and video and audio storytelling to share with her readers.
Vegetables
Frozen fajita veggie mix, spaghetti squash, frozen stir-fry veggies, sliced carrots, salad kit, cherry tomatoes
Fruits
Avocado, strawberries, blueberries, mandarin oranges, bananas
Proteins
Chicken breast, lean ground turkey, frozen shrimp, eggs
Starches
Whole grain tortillas, whole grain bread, rolled oats
Sauces
Pasta sauce, stir-fry sauce
Fun item
Ice cream
Using the above ingredients, you can make the following five meals.
Of course, you likely have other essentials on your list that aren't included in the method. For example, I burn through coffee beans so quickly that I usually grab a bag every other time I grocery shop. In cases like this, you don't have to sacrifice or eliminate these purchases entirely but rather incorporate them into the overall 6-to-1 plan. Think about what is essential and what you can get by without.
Not only can the method help you save money and eliminate impulse purchases, but it also reduces food waste, saves time, and makes it easier to eat healthy.
NYSUT NOTE: NYSUT members can receive special discounts on their car insurance through the Farmers Insurance Choice platform offered by Farmers GroupSelect. Whether you're trying to find coverage for your teen's new car or bundle your auto and home insurance, Farmers GroupSelect is endorsed by the NYSUT Member Benefits Corporation and offers a variety of insurance policies that could meet your needs.
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NYSUT NOTE: Already accumulate too much debt on your credit cards? Cambridge Credit Counseling (endorsed by the NYSUT Member Benefits Corporation) might be able to help. Typically, Cambridge's debt management clients have their credit card debt eliminated in an average of only 48 months. Sign up for a free consultation today.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Deborah W. Ellis
President, Ellis Wealth Planning
Deborah W. Ellis, CFP | Ellis Wealth Planning
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NYSUT NOTE: Long-tem care isn't exactly a fun topic, but it's a necessary one to have a working knowledge of. The NYSUT Members Benefits Trust-endorsed New York Long-Term Care Brokers provides access to long-term care planning specialists who can help you navigate these concerns and build a plan with your personal needs in mind.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Alex Diaz, MBA, CFP®
Financial Adviser, Harlow Wealth Management Inc.
Alex Diaz is a Financial Adviser at Harlow Wealth Management Inc., a federally registered investment adviser with the SEC. Registration with the SEC or any state does not imply that the adviser possesses a certain level of skill or training, or their approval or endorsement of any service provided by Harlow. He is a CERTIFIED FINANCIAL PLANNER™ with 14 years of experience in estate administration and financial planning. At Harlow, Diaz helps his clients identify and achieve their retirement goals, leveraging his diverse background in banking and financial services to create personalized, effective financial strategies.
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To qualify for the lowest rates on a conventional loan backed by Fannie Mae or Freddie Mac — the nation’s two largest mortgage buyers — you’ll need a 20% down payment, said Melissa Cohn, a regional vice president at William Raveis Mortgage, a national lender headquartered in Shelton, Conn. “The bigger your down payment, the better the rate,” Cohn said.
Need a little help piecing together a bigger down payment? DiBugnara recommended looking into national and local down payment assistance programs. You can research eligibility requirements for thousands of down payment assistance programs at DownPaymentResource.com.
1. Increase your down payment
Fannie Mae found that 36% of homebuyers in 2021 received only one mortgage quote. But you’re more likely to find a lower rate if you shop around.
Get quotes from at least three lenders. Local lenders and credit unions tend to offer lower mortgage rates than big banks. You can also shop at online lenders such as Rocket Mortgage. Because underwriting requirements can vary, different lenders can give varying quotes.
Borrowers who received two rate quotes during the high-interest months of October and November 2022 could have saved $600 annually, according to a 2023 study by Freddie Mac. Borrowers who received at least four rate quotes could have saved more than $1,200 annually, the study showed.
3. Shop around
ARMs — short for adjustable-rate mortgages — developed a bad reputation after the housing market crashed in 2008 because so many underqualified borrowers couldn’t keep up with their ARM payment increases. But today’s ARMs have more protections built in than pre-2008 ARMs and can be a good option for some buyers.
An adjustable-rate mortgage starts out at a lower interest rate than you would get with a fixed-rate mortgage. Then, after a specified period of time — usually three, five, seven or 10 years — the rate adjusts based on market indexes, though there are caps on how high-interest rates on ARMs can go.
“I like adjustable-rate mortgages when borrowers understand them,” DiBugnara says. “If you have an exit strategy, an ARM can be a great product.” For example, if you know that you’re going to sell your home in the next four years, getting a five-year ARM can save you thousands of dollars in interest.
The typical home buyer would save an average of $15,582 over five years — or about $260 per month — by taking out a five-year ARM rather than a 30-year-fixed-rate mortgage, according to a May 2022 Redfin report.
4. Consider an adjustable-rate mortgage
Qualified for a great interest rate? A mortgage rate lock allows you to lock it in for a set period — typically 30, 45 or 60 days — from the time you receive a conditional loan offer from a lender to when you close on a home.
Many lenders offer a free 60-day rate lock, but you usually have to request it, said Jacob Channel, senior economist at LendingTree. And there are a couple of caveats.
“If something about your financial status, like your income or credit score, changes before you close on a home, your rate can still change,” Channel said. “A lender can also change the terms of your loan if it finds that you’ve failed to disclose something, like additional debts.”
In today’s market, with 30-year mortgage rates fluctuating from week to week, Channel suggested buyers get a “float-down” rate lock. With this kind of lock, you can potentially get a lower rate than you initially locked in if interest rates fall, he said. Lenders often charge a fee of 0.5% to 1% of the total mortgage amount for a float-down lock
Keep in mind that the future is uncertain. “Nobody — not even financial experts or your lender — knows where rates will end up 30 to 60 days from now,” said Channel. “As a result, there will always be some risk in getting a rate lock.” But, he said, a rate lock can also pay for itself, especially in an environment where rates are rapidly rising.
5. Lock in the best rate
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Starting in March 2022, the Fed raised interest rates 11 times in an attempt to combat high inflation, which peaked at 9.1%. This brought the Federal Funds to a target range of 5.25% to 5.5%, the highest it had been in 23 years. When the Fed began holding rates steady, savings rates started to inch downward.
As inflation cools, the Fed will cut rates, and savings rates will drop even more.
The Fed's impact on savings rates
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Your Social Security ‘full retirement age’ (FRA), also known as normal retirement age, is the age you’re entitled to 100% of your earned Social Security benefits. FRA is 66 for beneficiaries born between 1943 and 1954. It gradually increases to 67 for beneficiaries born in 1960 or later. In terms of strategy, claiming Social Security before your FRA reduces your monthly benefit, while delaying benefits until age 70 increases your monthly benefit.
The Social Security Administration (SSA) defines your FRA based on your birth year and your lifetime earnings history. The SSA adjusts your actual earnings based on the 35 years when you earned the most money. If you worked fewer than 35 years, Social Security credits you with zero earnings for each year up to 35. Although you can start collecting Social Security at age 62, if you sign up before your full retirement age, you won't receive the full benefit you have earned.
Oddly enough, if you were born on the first day of a month, the SSA uses the previous month to figure your FRA. So, if you were born on March 1, the SSA considers you to have been born in the previous month (Feb). If you were born on January 1, the SSA bases your FRA on the previous year.
This is your FRA by birth year.
What is Full Retirement Age (FRA)?
If you hold off claiming your Social Security benefits beyond your FRA, your retirement benefit will continue to increase up until age 70. There is no incentive to delay claiming after age 70. All things considered, it pays to delay claiming your benefits, sometimes even beyond your FRA.
Delayed retirement age
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Average daily cost: $178
Average accommodation cost for one person: $64
Average daily meals cost: $73
Portugal is one of the best-value destinations in Europe. It's known for its seafood, wine, views, delicious custard tarts (pastéis de nata) and 300+ days of sunshine. Whether you head for vibrant Lisbon, to the sandy beaches of the south or for a wine and port tour in Porto, you’ll get a reasonably-priced vacation while enjoying the sights and sounds that this friendly southern European country has to offer.
Portugal is also on our list of the 10 Safest Countries to Visit and Best Countries to Retire 2024.
10. Portugal
About the Author
Quincy Williamson
Editor, Newsletters, Kiplinger.com
Quincy is the digital producer at Kiplinger. He joined Kiplinger in May 2021. Before, he worked at Agora Financial - Paradigm Press and was a contributing writer for several other online media publications. In his current role at Kiplinger, Quincy produces several newsletters, including Kiplinger Today, Investing Weekly, Tax Tips, Kiplinger’s Special Report, and Closing Bell. At the same time, he writes numerous articles every month. When he’s not working, he’s taking his dogs for a walk or fishing.
NYSUT NOTE: Curious about a 529 plan? The Financial Counseling Program, endorsed by the NYSUT Member Benefits Corporation, can help you determine if it's right for you or if there's an even better plan you could be taking advantage of. With assistance on debt management, retirement planning and asset allocation, this program is valuable, no matter where you are in your financial journey.
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The LIMRA study showed about 3 of 4 Americans overestimate the true cost of a basic term life insurance policy.
The cost of life insurance for a healthy 30-year-old male is around $158 per year for a term policy. Term life insurance is a cost-effective way to have the death benefit protection you need for a period of time and can be a perfect starting point.
The truth is you can get more from your life insurance policy than what you pay for it. The value in these types of policies goes beyond what your heirs receive when you die. In addition to the death benefit, permanent life insurance can have the ability to grow cash value, an optional chronic illness benefit and more.
Opportunity #1: Life insurance is more affordable than you think.
You can buy policies that have potential to grow tax-deferred cash value, and you may be able to take tax-free loans and withdrawals* and use the money any way you choose. You could pay for things like a wedding, a down payment on a home or supplement your retirement income using cash value in the policy.
There are times when you might choose to use cash value from a life insurance policy as income. The advantage is that you will generally pay no income taxes or penalties on what you withdraw, there are no age requirements, and there are no required minimum distributions (RMDs). You can also use the death benefit for yourself if you’re chronically or terminally ill.
Opportunity #3: You can access some life insurance benefits while you’re still alive.
Life insurance can help maintain your family’s lifestyle and dreams. If you were to die unexpectedly, the livelihood of your family could be at risk. There are expenses related to housing, food, clothing, college, etc., that will not die with you.
Life insurance can also help reduce estate taxes for you and your beneficiaries. Your estate tax burden may not seem problematic today, but if your assets are positioned well, they will grow, and your future estate could be affected by tax laws.
Another important factor to consider: Life insurance can be a great way to protect and potentially enhance your legacy. It can give your surviving spouse or other dependents income when you’re gone. When you die, your surviving spouse or other dependents will likely still need income, and a generally tax-free death benefit** could provide that.
Opportunity #4: Life insurance offers financial protection for your loved ones.
I’d encourage you to use your conversations about life insurance as a springboard to talk to your family about the broader topic of financial planning, as well.
Here are a few steps to consider when starting these conversations with family members at any age:
Make it personal. Ask your family members what they think about saving for a big purchase or how they feel about money and spending. If you have a family vacation or event coming up, consider using that as the focus. Encourage open-ended questions that prompt thoughtful discussions.
You might also share your own experiences with money, including mistakes and successes. How did you learn about the importance of saving? This can help demystify financial topics and show that it’s OK to talk about money openly.
Keep it fun. There’s no reason you can’t have a little fun during these conversations. You can use games, apps and books to make learning about finances enjoyable and engaging. For example, some online platforms like SplashLearn offer interactive money games, and financial literacy apps can be helpful.
Stick with it. Money doesn’t need to be a taboo topic. By starting these conversations early and continuing them throughout life, you can ensure that every family member is informed, prepared and confident about their financial decisions.
When your family members understand what it takes to manage money, they can make more informed decisions. These decisions span everything from what to buy or not to buy all the way through whether they’re financially ready to retire. One of the gifts you can give them is the confidence to make these decisions.
I hope Life Insurance Awareness Month encourages you to break the silence and make talking about life insurance, and finances, a normal part of our family members’ lives. They’ll be better off as a result.
Expanding the conversation
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Homeowners insurance provides coverage for your possessions based on a certain percentage of your home’s insurance value — 75% is typical. So if your home is insured for $200,000, you’ll also likely have up to $150,000 of coverage for your possessions.
It's important to note, homeowners insurance policies usually have lower limits for certain kinds of items — such as $2,000 or $3,000 for all of your jewelry, for example. If you have any particularly valuable possessions — such as jewelry, artwork or special collections — you may want to get extra coverage for those items.
What is covered when you buy homeowners insurance?
You’ll also need to choose the deductible amount. One good way to lower premium costs is to choose a deductible of at least $1,000. That will reduce your premium and discourage you from filing small claims that could get you dropped by the insurer or cost you a claims-free discount. Just be sure to keep enough money in your emergency fund to cover the deductible, in case you need to file a claim.
How do you choose a deductible?
It may make sense to use the same accounting firm to prepare your personal tax returns and the fiduciary tax returns for any trust related to your personal tax liability. Many trust companies have an arrangement with a CPA firm that will result in faster and cheaper preparation fees.
Tip 14
NYSUT NOTE: Building your estate plan can be complicated but it is a vital step in your retirement planning. Which is why enlisting help from a legal expert may be a good idea. NYSUT members are eligible to enroll in the NYSUT Member Benefits Trust-endorsed Legal Service Plan. This plan — provided by the law firm of Feldman, Kramer & Monaco, P.C. — offers expert advice on personal legal issues, including preparation of crucial estate planning documents. Visit the member website to ensure you and your loved ones are covered.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Timothy Barrett, Trust Counsel
Timothy Barrett is a senior vice president and trust counsel with Argent Trust Company. Timothy is a graduate of the Louis D. Brandeis School of Law, 2016 Bingham Fellow, a board member of the Metro Louisville Estate Planning Council, and is a member of the Louisville, Kentucky and Indiana Bar Associations, and the University of Kentucky Estate Planning Institute Program Planning Committee.
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Many people procrastinate about estate planning. It’s easy to understand why; after all, it’s difficult facing our mortality, and deciding and documenting what we’re leaving behind to our loved ones can get complicated.
But without a suitable estate plan in place, sorting out your financial picture after you pass could create complications for your beneficiaries. There are numerous pitfalls with insufficient estate planning. To help avoid them, here are some key aspects you should address to ensure your plan is solid.
Choosing between a will and a trust
What to Do and How to Know When You Can Retire
There is a lot to this if done correctly, and at some point you’re probably going to want some professional help, but there are a few things you can do to get moving in the right direction.
Kiplinger is part of Future plc, an international media group and leading digital publisher
© 2024 Future US LLC
Kiplinger is part of Future plc, an international media group and leading digital publisher
© 2024 Future US LLC
NYSUT NOTE: Do you have personal debt or money concerns that you need help managing? NYSUT members are able to enroll in the NYSUT Member Benefits Corporation-endorsed Cambridge Credit Counseling program. This program has been assisting consumers with eliminating debt for more than 20 years, and NYSUT members are eligible to receive a free, no-obligation, debt consultation with one of Cambridge's certified counselors. These counselors can help you better understand your situation, help you set financial goals, determine your budget and more, to help you get out of debt in a fraction of the time. Visit the member website for more information.
Deciding what kind of fence to build around your retirement home is a personal decision. There are benefits and drawbacks to every LTC option, and what’s right for one person may not work for another.
While it’s important to be proactive, buying LTC insurance or life insurance at a young age could get very expensive after years of paying premiums. On the other hand, waiting to purchase a policy could put you at risk of paying high premiums because of any health problems you may have developed in your 50s and 60s.
It’s important to meet with a trusted financial adviser who can help you determine the right time to buy and what type of protection your family needs. No two situations are alike, but an adviser can help you weigh the pros and cons specific to your assets, family history, medical history, tax plan and beneficiary needs. I recommend working with a professional who has the experience and industry knowledge needed to keep you and your loved ones safe from the potential burden of LTC.
Emergency cash on hand is important, too
“While building an emergency fund or savings account is always an important step in being prepared for financial emergencies, it’s equally important to have emergency cash on hand. Consider keeping a small amount of cash locked in a safe at home where it is protected. Another important step is being proactive. Do you have a high amount of debt that is holding you back? Build a strategy to pay it off and commit to putting any extra funds into your savings account. For example, let’s say you commit 10% of your paycheck toward paying down your debt, and as it starts to decrease, you can start to put more money toward saving for an unexpected emergency.”
— Tony Drake, a Building Wealth contributor
“It always pays to be prepared, and daresay even a little paranoid about unexpected changes that life may bring. I would advocate running through some hypothetical scenarios in your head to bring some peace of mind that you can adjust to major unexpected events in life. If you have to deal with a job loss, it’s good to have an inventory of your best professional contacts that you can network with and may be able to provide introductions to new employers. You might want to research and keep track of top employers in your area that would be your first targets should you need to look for new work. Similarly, in addition to having an emergency fund, preparing for unexpected financial issues might mean keeping separate assets earmarked for paying off large bills like a home repair or medical bill. It might not warrant keeping extra cash on hand, but alternatively you might set up a lending facility like a HELOC (home equity line of credit) or credit line at your bank that is available should you need to borrow at a reasonable interest rate vs scrambling with high interest rate loans. In short, going through the thought exercises ahead of time for issues you may encounter and being prepared with solutions beforehand will save a lot of heartburn and money down the road.”
— Shane W. Cummings, a Building Wealth contributor
Kiplinger is part of Future plc, an international media group and leading digital publisher
© 2024 Future US LLC
The benefits of financial fasting
Financial fasting can be a reset button — not only for your finances, but for your values, sense of purpose and even your relationships. Here are a few ways that limiting your spending can change your financial well-being for the better.
1. Pay down debt faster.
The most obvious benefit of financial fasting is that it frees up cash flow fairly quickly. But that doesn’t mean that you should simply spend all that money once you break your financial fast. Consider using that moment as an opportunity to pay down debt at an accelerated rate — especially high-interest obligations like credit card debt and car loans.
2. Break the cycle of senseless spending.
We spend for different reasons. Some people lavish their grandkids with expensive gifts, while others continually chase the latest fashion trends, no matter the cost. The problem is, many people don’t recognize why they’re purchasing certain things — and that the reasons for buying them may fall apart under scrutiny.
Buying possessions, for instance, tends to provide happiness for only a short period time, but a meaningful experience can be more rewarding over the long term.
Because financial fasting pushes the pause button on spending, it can make you think longer about why you wanted to buy something in the first place.
In time, you’ll become more adept at fulfilling those needs without spending, or realize when those impulses are not needs at all. For example, if you want to spend time with your significant other, a walk along the beach or in a park may be a better, expense-free way to do that, vs going to the movies.
3. Align your purchase decisions with your values.
Financial fasting is also an opportunity to bring your spending in line with your own personal values. Growing up, many Baby Boomers like me just went to work. We put our heads down. Spending wasn’t necessarily connected to purpose or passion but providing for ourselves or others.
This can be a time to take a page from younger generations and think about the impact of your purchase decisions. If you are passionate about social awareness and responsibility, consider the many items you purchase from large companies. Should you redirect those dollars to other businesses that may have a greater impact on your local community?
As you come out of a financial fast, you’ll find yourself at a crossroads, asking: Do I continue spending the way I have in the past, or try to be the change I want to see in the world?
4. Create a space to reconnect in our relationships.
Some instinctually feel that in order to do something, you need to spend something. But when it comes to our relationships, quality time is what matters most. Some types of spending can disconnect you from those important connections, instead of creating space for you to engage with your loved ones in a meaningful way.
For example, some leisure activities — like attending plays, visiting theme parks or going to concerts — don’t actually require people to talk to each other. And costly gifts are hardly a substitute for personal connection. Unfortunately, many of our spending habits, while well-meaning and born out of kindness, fail to deepen our relationships.
Planning free activities, on the other hand, requires you to creatively collaborate with your family members and friends, fostering a sense of spontaneity and adventure. And many of the activities that don’t involve spending require us to remain in the moment, listen to others respectfully and appreciate their presence.
NYSUT NOTE: Planning and managing your finances can be a lengthy, complicated process, which can often require professional help. That’s where the NYSUT Member Benefits Corporation-endorsed Financial Counseling Program comes in. NYSUT members have access to a team of Certified Financial Planners® that can offer unbiased advice for your specific financial situation. And it’s all fee-based, which means no commissions from mutual funds, brokerage firms, insurance companies or any other third party, just unbiased advice from a financial expert. Enroll today by visiting the member website.
Once you’ve incorporated financial fasting into your daily life, you’ll realize how much the world has to offer outside of indiscriminate spending. It can help refocus your financial priorities, reel in addictive spending habits and even inspire you to financially support causes you believe in.
The difficulties associated with financial fasting are not unsubstantial — but the joys it can bring to your life, and those around you, are well worth the effort.
Kiplinger is part of Future plc, an international media group and leading digital publisher
© 2024 Future US LLC
Kiplinger is part of Future plc, an international media group and leading digital publisher
© 2024 Future US LLC
3. Assess your income sources and expenses.
Creating a budget for a multidecade retirement is not practical. Prices change, unforeseen expenses arise, and life takes unpredictable turns. However, there needs to be a general calculation to determine if you can afford a particular lifestyle.
This computation doesn’t need to involve anything fancy. Start by listing all your income sources such as Social Security, pension and portfolio or rental income. Next, tally your living expenses, like food, rent, taxes and transportation costs.
Make sure to also factor in any other costs associated with living the retirement you envision, including travel or hobbies. Finally, ask yourself two questions:
• Does my income exceed my expenses?
• Can I afford to live this lifestyle for the rest of my life?
If the answer to either of these questions is “no,” then changes must be made. You can consider working longer, even part time, moving to a cheaper locale or adjusting your retirement lifestyle.
As I have repeatedly pointed out, this is just a back-of-the-envelope framework. Here are a few of the major things that could throw it off:
5. Consider Medicare and Medigap deadlines.
A safe withdrawal rate is the percentage that retirees can withdraw from their accounts each year without running out of money before reaching the end of their lives. This is a key aspect in determining how long you can maintain your lifestyle. A popular guideline is the 4% rule, which suggests that an individual can withdraw 4% of their total portfolio value annually to sustain their lifestyle without running out of money.
One important factor when determining your safe withdrawal rate is your legacy goal and how it impacts your retirement goals. Your legacy goal involves estate planning and how much money you’d like to leave to your children or charity. This objective will directly impact how much money you can withdraw each year from your nest egg.
6. Plan for long-term care needs.
Long-term care involves needing assistance with the "activities of daily living," which include bathing, dressing, grooming, using the toilet, eating and moving around. These services are not covered by Medicare and can be prohibitively expensive. It is difficult to predict how much or what type of long-term care a person might need, but the best time to think about long-term care is well before you need it so you can consider all your options.
The main strategies for paying for long-term care are self-funding, insurance or Medicaid planning. Each one of these approaches has myriad considerations and should be discussed with a professional who can help assess which option is the most suitable for your needs.
8. Plan to retire TO something, not FROM something.
Being frustrated at work or trying to get away from a difficult boss are not good reasons to retire. Situations at work change daily, and bosses come and go. Making an emotionally charged decision to stop working can be devastating if not thought through fully.
The reason to retire is because one has the burning desire to pursue other interests, goals and lifestyle choices. These new pursuits should be clearly defined and laid out. Not knowing what activities and challenges you’d like to engage in when you retire may lead to boredom and more rapid mental deterioration.
Kiplinger is part of Future plc, an international media group and leading digital publisher
© 2024 Future US LLC
Liability
Liability coverage, required by law in most states, is the foundation of car insurance policies. It’s designed to protect you financially if you’re found at fault in an accident and cause injury or property damage to others. Liability coverage encompasses two components: bodily injury liability coverage and property damage liability coverage.
Bodily injury (BI) liability covers injuries that you cause to someone else. Generally, it pays for the other person’s medical bills, recovery costs, and lost wages.
Property damage (PD) liability covers the cost of repairing or replacing another person’s property that you damaged. Typically, this covers damage to another driver’s vehicle, but it can also cover damage to fences, lamp posts, telephone poles, buildings, or other structures your car hits.
Medical payments
If you or your passengers are injured in an accident, medical payments (MedPay) coverage helps pay for healthcare costs associated with injuries, such as hospital visits, surgery, X-rays, and more. MedPay coverage is required in some states.
Part C is commonly called Medicare Advantage. Beneficiaries are covered for Parts A and B through private insurers instead of traditional government-administered Medicare. Most Advantage plans include prescription drug coverage. For 2024, the average monthly premium is $18.50.
Medicare Part C
Kiplinger is part of Future plc, an international media group and leading digital publisher
© 2024 Future US LLC
Kiplinger is part of Future plc, an international media group and leading digital publisher
© 2024 Future US LLC
How Do 529 Plans Work?
As you may know, a 529 plan is a state-sponsored, tax-advantaged college savings investment plan. When you enroll in a 529 plan, the money you invest grows on a tax deferred basis. When you withdraw from the 529 plan and use the money to pay for qualified education expenses, those withdrawals are tax free.
529 plans are designed to encourage saving for college and typically cover qualified education-related expenses like tuition, fees, books, computers, and other supplies. Certain room and board expenses are usually considered to be “qualified expenses.” But sometimes, whether 529 college savings can be used to pay for the cost of room and board will depend on whether those costs exceed certain amounts.
Additionally, 529 plan funds can generally be used to pay tuition for professional and trade schools and up to $10,000 per student, per year, can be used to pay for K-12 private school tuition. In any case, keep in mind that each 529 plans may have its own specific rules regarding what particular expenses are considered to be "qualified expenses."
How Late Can I Contribute to a 529 Plan?
How Much Can I Contribute to a College 529 Plan in 2023?
529 college savings plans do not have set individual annual contribution limits like 401(k) plans do. Instead, annual, and aggregate, contribution limits for 529 plans vary by state.
It’s also important to keep in mind that contributions to your 529 plan are treated as gifts for federal income tax purposes. In 2023, under the gift tax exclusion rules, you can contribute up to $17,000 tax free per donor. However, gifts over $17,000 must be reported on a federal gift tax return. That doesn’t necessarily mean that you will be subject to tax on your gift though, because the lifetime federal gift tax exemption amount is quite high.
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Do You Get a Tax Break for Contributing to a 529 Plan?
A 529 plan doesn’t offer a federal income tax benefit because 529 plans are sponsored by states. As a result, the contributions to your 529 plan are not tax deductible on your federal tax return. But some states offer a state tax credit or state tax deduction for 529 college savings plan contributions that are made in your home state.
And, as previously mentioned, your 529 plan funds grow tax free and withdrawals of 529 college savings account funds that are spent on qualified expenses, are also tax free.
But remember: if you withdraw 529 plan funds and don’t use that money for qualified education-related expenses, you could face a 10% federal income tax penalty.
Property Damage and Loss
As you know, homeowners insurance will cover the expenses (minus deductibles) to replace, repair or even rebuild your home, exterior structures and belongings in the event of a natural or man-made disaster. For example, if a hailstorm destroys your roof, homeowners insurance should cover the costs to replace or repair your roof. Similarly, homeowners insurance will help you rebuild if fire engulfs your house, detached garage or shed.
When you experience this type of catastrophe, you still need a place to stay while your home is being repaired or rebuilt. Homeowners insurance will cover the costs of your alternative living arrangements during that time. Additionally, homeowners insurance is there if your home is burglarized. Your homeowners policy helps to replace any valuables that are stolen.
It’s important to thoroughly examine which events your policy will cover and look for any gaps that might exist within your coverage. This is especially true in our current market. With recent price increases in real estate, it’s possible that the property replacement value on your homeowners policy won’t cover the increase to your property’s current value.
Personal Liability
As a homeowner, you’re responsible for what takes place on your property. Unfortunately, that means you could be held liable if someone tripped and fell on your porch steps, causing personal injury. The good news is homeowners insurance provides you with liability coverage for such unfortunate occasions. The personal liability portion of your homeowners policy helps to cover their medical and legal expenses. Therefore, you want to understand exactly how much of those expenses your policy covers. If the neighbor breaks their ankle in some fantastical way and requires multiple surgeries to repair it, the expenses could add up very quickly. In such a scenario, you’re not just looking at medical expenses. More than likely, you’re going to be faced with legal expenses for a litigation that, at bare minimum, seeks to replace lost earnings.
These fees could very easily get out of control. So, you must know exactly how much your policy will pay in an event like this. Being proactive with your review could help you identify where you need to supplement your personal liability coverage.
Finally, you must make sure you have enough liability protection to cover medical and/or legal expenses that could arise due to accidents in your home. You don’t want to owe anything out of your own pocket. Therefore, if your policy provides $100,000 to $300,000 in liability coverage, it may be wise to purchase $300,000 to $500,000 of protection. These expenses compound and can quickly get out of control. It’s much better to pay a little more on your insurance premiums than to find yourself footing the bulk of someone’s medical and legal bills because they exceeded your policy’s personal liability coverage.
Additionally, if you’re operating your business within your home, you may need to add a rider to your homeowners policy that will protect you if there’s an accident that happens while someone’s at your home for business purposes.
I know that life is busy. Conducting an annual review of your homeowners insurance policy might not be high on your list of priorities right now, but it should be. Oftentimes, it’s very easy to develop a sense of comfortability in doing things the way we’ve always done them. However, just because you bought a good policy from a decent insurance agent doesn’t mean it’s still the best one for you.
I review my own homeowners policy annually. Specifically, I look at my home's current value compared to the replacement value coverage I have on it. Likewise, I look at the value of my personal belongings compared to the replacement value coverage I have on them. As the value of my home and my belongings increases, I want to make sure my homeowners policy increases to cover it.
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© 2024 Future US LLC
2. Age matters in deciding when to retire
Retirement isn’t solely about savings; age matters, too. For penalty-free withdrawals from traditional retirement accounts, you need to be at least 59 ½. However, the rule of 55 allows those leaving their job at 55 or older to withdraw from their current employer’s plan without penalties.
Given most retirees describe Social Security as a major income source, it's vital to plan this aspect of your retirement thoughtfully. The full retirement age is 67 for those born after 1960. By delaying until 70, you boost your benefit, though you’ll have to lean on other funds in the meantime. Starting claims early at 62 reduces your benefit, but you’ll get more checks over time.
If you’re lucky enough to receive a pension, keep in mind it might also be curtailed if age and service requirements aren't met.
Kiplinger is part of Future plc, an international media group and leading digital publisher
© 2024 Future US LLC
About the Author
Chad Rixse
Chad Rixse, CRPS®, is the Director of Financial Planning and a Wealth Advisor at Forefront, a privately-owned financial services firm.
NYSUT NOTE: Do you have personal debt or money concerns that you need help managing? NYSUT members are able to enroll in the NYSUT Member Benefits Corporation-endorsed Cambridge Credit Counseling program. This program has been assisting consumers with eliminating debt for more than 20 years, and NYSUT members are eligible to receive a free, no-obligation, debt consultation with one of Cambridge's certified counselors. These counselors can help you better understand your situation, help you set financial goals, determine your budget and more, to help you get out of debt in a fraction of the time. Visit the member website for more information.
Kiplinger is part of Future plc, an international media group and leading digital publisher
© 2024 Future US LLC
When the Federal Reserve reduced its benchmark short-term interest rate by half a percentage point in September and then by another quarter percentage point in early November, it signaled that it’s shifting into a rate-cutting mode after a series of hikes that started in March 2022 to combat inflation.
That’s reason to celebrate if you have high-interest debt or expect to buy a home or car in the near future. But if you’re a risk-averse investor who has enjoyed earning 5% or more on your savings accounts, you probably aren’t joining in the festivities.
Rates on bank savings accounts and certificates of deposit (CDs) were starting to decline even before the Fed’s recent rate cuts and are likely to fall more in the months to come. Kiplinger expects the Fed to cut short-term interest rates an additional quarter percentage point at its December meeting and to continue cutting rates into 2026.
While many banks will lower rates on savings accounts — if they haven’t already — it may still be possible to find savings accounts that are paying decent yields, says Yuval Dan Bar-Or, a finance professor at the Johns Hopkins Carey Business School. New online banks may continue to offer competitive rates on high-yield savings accounts to attract customers, he says.
The downside is that banks can lower rates on savings accounts at any time. Investing in a CD will lock in the current rate until the CD’s term ends. But opening a CD makes sense only if you know you won’t need the money before the CD matures, because you’ll usually pay a penalty on an early withdrawal.
If you plan to buy a house or send a child to college next year, investing in a one-year CD could make sense, says Ted Rossman, senior industry analyst for Bankrate. If you want to lock in interest rates over a period of years while also having access to some of your savings, consider building a CD ladder. With this strategy, you spread your cash among CDs of varying maturities — one-, two-, three- and five-year CDs, for example. As the CDs mature, you can cash out or reinvest in another CD, depending on prevailing interest rates.
Kiplinger is part of Future plc, an international media group and leading digital publisher
© 2024 Future US LLC
The CMS hopes to end sales incentives in 2025 for Medicare Advantage and Part D plans. Salespeople sometimes get incentives, such as hefty bonuses, when they enroll Medicare beneficiaries into private insurers’ Medicare Advantage plans, Medigap or Part D prescription drug plans. The coming rule change is meant to disincentivize steering people to insurance plans to earn perks and not serve the best interests of Medicare beneficiaries.
The new rule prohibits offering incentives to salespeople to enroll people and limits compensation to fixed caps. The new rule also says it will stop brokers and agents from receiving “administrative fees” above Medicare’s fixed compensation caps. In most states, that cap has been $611 for new Medicare Advantage signups and $306 for renewals. Part D plans have had lower caps: $100 for initial enrollment and $50 for renewals.
In 2025, the government will increase the compensation for initial enrollments in Medicare Advantage and Part D plans by $100, which much higher than the proposed increase of $31. CMS believes this increase will provide agents and brokers with sufficient compensation, eliminate the current variability in payments and improve the predictability of compensation for agents and brokers.
3. A crackdown on agents and brokers who sell 3 types of Medicare policies
The best time to claim your Social Security benefits depends on you, your current situation, your future needs, if your married, single, have children and more.
If you’re approaching retirement, or you’ve retired but haven’t yet filed for Social Security, you’ve no doubt heard about the advantages of waiting until age 70 to claim your benefits. Although you can file for benefits as early as age 62, your monthly payout can be as much as 30% lower than the amount you’ll receive if you wait until your full retirement age (FRA). (For people born in 1960 or later, FRA is 67). Your annual cost-of-living adjustment will be lower, too, because the COLA is based on the amount of your benefit.
If you delay starting benefits until after you reach full retirement age, you’ll receive an 8% delayed-retirement credit for each year you postpone claiming benefits from that age until age 70. Workers who reach full retirement age at 67, for example, would receive a 24% increase in benefits by waiting until age 70 to file. (Social Security provides a "quick calculator" you can use to estimate your benefits based on the year you plan to retire.)
Yet despite those advantages, less than 10% of retirees wait until age 70 to claim benefits, and about 30% claim them at 62, according to the Congressional Research Service.
1. It's all about the timing
In some cases, individuals don’t have the luxury of waiting until full retirement age — let alone until age 70 — to file for benefits. Although 68% of workers expect to retire at age 65 or older, in reality, only 31% of retirees managed to work that long, according to research by J.P. Morgan Asset Management.
Among those who retired earlier than planned, over one-third cited health problems or disabilities, 31% cited corporate downsizing, and 16% said they retired early to take care of a spouse or other family member. When that happens, claiming Social Security — even with the haircut — can provide much-needed financial stability, says Ashton Lawrence, a certified financial planner in Greenville, S.C. “It’s crucial to balance short-term financial needs with the long-term benefits of delayed claiming.”
Other retirees file for Social Security as early as 62 because they don’t expect to live long enough to benefit by waiting. Niv Persaud, a CFP with Transition Planning & Guidance in Atlanta, says one of her clients is in remission after a cancer diagnosis and doesn’t have a family history of longevity. Although she understood that waiting until age 70 would increase the size of her benefits, “given her ongoing health issues and family history, she preferred claiming her benefit early,” Persaud says.
2. File now or wait until later?
The break-even point is the age at which the value of claiming larger benefits for a shorter period — starting at age 70, for example — outweighs the benefits of claiming a smaller payout for a longer period — say, by starting at age 62.
Estimates of break-even points vary, but an analysis by J.P. Morgan Asset Management recommends claiming benefits as early as 62 if you don’t expect to live past 77. If you expect to live beyond 77, postpone benefits until at least your full retirement age, and if you expect to live beyond age 81, consider waiting until age 70 to file for benefits.
Most Americans will live past age 77, and many will live into their 80s or beyond. According to the Social Security Administration, a 62-year-old man has a 71% chance of living to at least age 77 and a 58% chance of living to age 81; a 62-year-old woman has an 80% chance of living to at least 77 and a 69% chance of living to 81.
"Even if your parents died in their fifties or sixties, advances in diagnosis and treatment of common diseases, along with differences in lifestyle, could enable you to live much longer than they did," Persaud says.
3. The break-even point in claiming Social Security
Federal withholding tax from Social Security
As mentioned, one way to avoid tax surprises is to have federal income taxes withheld from your Social Security payments.
Estimated tax payments on Social Security income
If you prefer not to have taxes deducted from your monthly Social Security payments, you can make quarterly estimated tax payments to the IRS. That can help you avoid underpayment penalties since the U.S. tax system operates on a "pay-as-you-go" basis. That means the IRS expects you to pay a portion of your income as soon as you earn it.
A certified, not-for-profit credit counselor can work with a consumer to help craft a debt management plan. But that’s not all — they can also provide services for improving credit scores and better managing personal finance, such as creating effective budgets or sitting down to review credit reports and offering tips for raising scores. Most nonprofit credit counseling services are available at no charge; lists of certified counselors can be found at www.NFCC.org or www.ConsumerCredit.com.
2. Work with nonprofit credit counselors.
The first, and perhaps biggest mistake you can make with estate planning is not doing it. After you pass, those closest to you are left dealing with the shock and grief, and you don’t want to burden them with added financial issues. Having an estate plan in place can give them peace of mind and provide clear guidance for handling your affairs.
If creating an estate plan is on your to-do list, don’t procrastinate! Many people think they have plenty of time to create one — someone who is 35 years old may think they have decades to get things in order, but delaying can create extra risk for your family. The truth is, no matter your age, anything can happen. If you pass away and you still have young children, who will be their legal guardian? Without a will or an estate plan, you are putting your children’s future at risk. What if you pass away unexpectedly? Or what happens if you become incapacitated and no one is assigned to make medical decisions on your behalf?
None of us wants to think about our mortality, but procrastinating on your estate plan could create more headaches for your loved ones.
1. Not having an estate plan
NYSUT NOTE: A convenient and easy way to build your balances is by placing your funds in higher-earning savings accounts, like the ones offered through Synchrony Bank. Endorsed by the NYSUT Member Benefits Corporation, this bank offers competitive interest rates on CDs, making sure your ladder's rungs keep you climbing. With convenient and easy transfers, you can start small, but save big.
People who choose to keep traditional Medicare may also enroll in a supplemental Medigap plan from a private insurer to cover costs like copays. Traditional Medicare, when not paired with Medigap, does not have a limit on out-of-pocket expenses in a year.
Medigap policies, which cannot be paired with Medicare Advantage plans, have standardized benefits. Most states offer 10 types of Medigap policies, but premiums vary by insurer. You can compare costs, benefits and availability on Medicare’s website.
If you have a Medicare Advantage plan, you may switch to traditional Medicare, but you may have trouble getting a Medigap policy. Some states offer more protections than others, but, in general, your first time enrolling in Medicare is your best opportunity to get a Medigap policy.
3. Limits on Medigap changes
These plans have a monthly cost, in addition to the Part B premium, that varies depending on the plan. The plans frequently include prescription drug coverage and limits on annual out-of-pocket costs for covered services.
They also may offer extras not included by traditional Medicare, such as dental, hearing and vision coverage and gym memberships. They are able to do this because they manage costs, partly by limiting beneficiaries to in-network providers. During open enrollment, experts recommend checking to make sure your preferred providers remain in the network for your plan.
Three in 10 beneficiaries in Medicare Advantage plans said they did not use any of their plan’s supplemental benefits in the past year, according to a study by The Commonwealth Fund. The study also found evidence that Medicare Advantage plans were more likely to burden patients with the need to obtain prior approvals, so check plan requirements carefully.
Starting in 2025, Medicare Advantage plans will be required to send policyholders a personalized “Mid-Year Enrollee Notification of Unused Supplemental Benefits” in July. It will list all supplemental benefits the person hasn’t used, the scope and out-of-pocket cost for claiming each one, instructions on how to access the benefits and a customer service number to call for more information.
4. Medicare Advantage differences
These plans have been criticized in recent years for their aggressive marketing tactics. Some beneficiaries have reported having good experiences with their Advantage plans until they get sick and find themselves fighting for coverage.
In 2023 and 2024, the government agency managing Medicare issued new rules to protect seniors against these aggressive marketing practices. These rules prohibit ads that omit the plan name or use Medicare logos to imply that their messaging is from the government.
In 2025, the Centers for Medicare & Medicaid Services hopes to end sales incentives for Medicare Advantage and Part D plans. Salespeople sometimes get incentives, such as hefty bonuses, when they enroll Medicare beneficiaries into private insurers’ Medicare Advantage plans, Medigap or Part D prescription drug plans. The coming rule change is meant to disincentivize steering people to insurance plans to earn perks and not serve the best interests of Medicare beneficiaries.
5. Medicare Advantage issues
Beneficiaries of traditional Medicare pay a standard monthly rate of $174.70 for Medicare Part B in 2024, an increase of $9.80 from $164.90 in 2023. The annual deductible for all Medicare Part B beneficiaries is $240 in 2024, an increase of $14 from the annual deductible of $226 in 2023. This rate applies to individuals with incomes less than $103,000, with income-related monthly adjustments applying at various levels to people who make more.
The Medicare Part A inpatient hospital deductible that beneficiaries pay if admitted to the hospital is $1,632 in 2024, an increase of $32 from $1,600 in 2023. Beneficiaries are required to pay a coinsurance amount of $408 per day for the 61st through 90th day of a hospitalization in a benefit period, compared to $400 a day in 2023, and $816 per day for lifetime reserve days, up from $800 a day in 2023.
For beneficiaries in skilled nursing facilities, the daily coinsurance for days 21 through 100 of extended care services in a benefit period is $204 in 2024; this was $200 in 2023.
Average premiums, benefits and plan choices for Medicare Advantage and the Medicare Part D prescription drug program remained stable in 2024, according to the Center for Medicare and Medicaid Services.
The average monthly plan premium for Medicare Advantage plans, which includes Medicare Advantage-prescription drug plans, is $18.50 in 2024, which is an increase of $0.64 from last year. Most enrollees who kept their plans experienced little or no premium increase for 2024, with nearly 75% of beneficiaries not seeing any premium increase.
In 2024, the out-of-pocket limit for Medicare Advantage plans may not exceed $8,850 for in-network services and $13,300 for in-network and out-of-network services combined. These out-of-pocket limits apply to Part A and B services only, and do not apply to Part D spending.
Medicare premiums for 2025 haven't been announced yet, but they are typically announced shortly before open enrollment begins. However, there is some information we know about Part D: In 2025, Medicare beneficiaries will pay no more than $2,000 out of pocket for prescription drugs covered under Part D. Part D enrollees will also have the option of spreading out their out-of-pocket costs over the year rather than face high out-of-pocket costs in any given month. This new rule applies only to medications covered by your Part D plan and does not apply to out-of-pocket spending on Medicare Part B drugs.
6. Medicare premiums
People with higher income are charged higher Part B and D premiums — the income-related monthly adjustment amount, or IRMAA. In 2023, a single person with an income between $97,000 and $123,000 was charged $230.80 a month for Part B, compared to premiums of $164.90 for people who earned less. In 2024, people who make between $103,000 and $129,000 pay an extra $69.90 a month, for a total of $244.60.
Your income for IRMAA purposes is calculated based on income two years before the plan year.
Medicare will determine the 2025 IRMAA charge in the fourth quarter of 2024. That is why your IRMAA determination is based on 2023 filing status and income — it's the last data point Medicare can obtain from the IRS to determine the 2025 IRMAA charge.
7. Watch out for IRMAA
You can appeal your IRMAA if your income is significantly lower now than two years ago due to a life-changing event, such as retirement, divorce or death of a spouse, or if you think the government made a mistake. Beyond that, the only way to avoid the surcharge is to have less modified adjusted gross income (MAGI), which includes all taxable income from work and investments, as well as the taxable portion of your Social Security.
Unfortunately, most popular deductions, such as charitable donations and mortgage interest, do not reduce your MAGI. However, withdrawals from Roth IRAs don’t count toward your MAGI. If you’re still working, you can contribute more toward tax-deferred retirement accounts to lower your income. Another option is to delay starting Social Security.
8. Avoiding the surcharge
In general, you initially enroll in Medicare within three months before and three months after turning 65. Failing to do so can result in financial penalties, increasing your premiums for the rest of your life.
However, there are exceptions, including many people who receive health insurance through their employer or through their spouse’s job, as long as the workplace has 20 or more employees. Be sure to check with your employer about how it handles your group health coverage at age 65.
Be warned of the “COBRA trap” — insurance you may receive after you leave your job does not eliminate the requirement that you apply for Medicare at age 65.
If you miss the Medicare annual open enrollment deadline, there are still some ways you can salvage your status.
9. When do you have to enroll in Medicare?
The choices can seem overwhelming, and the marketing can be confusing and misleading. Fortunately, each state has unbiased experts who can walk you through the different plans and help you make sure your plans are the best for your needs.
State Health Insurance Assistance Programs can be found through www.shiphelp.org or by calling 877-839-2675. You can also call Medicare directly at 1-800-MEDICARE (1-800-633-4227) 24 hours a day during open enrollment, including weekends, for assistance.
10. Help is available
Medicare Advantage plans often tout the coverage that they provide and traditional Medicare doesn't — dental, vision, hearing and fitness benefits. Most Medicare Advantage plans offer at least one supplemental benefit, and the median number provided is 23, according to the Centers for Medicare & Medicaid Services (CMS).
Three in 10 beneficiaries in Medicare Advantage plans said they did not use any of their plan’s supplemental benefits in the past year, according to a study by The Commonwealth Fund. The study also found evidence that Medicare Advantage plans were more likely to burden patients with the need to obtain prior approvals, so check plan requirements carefully.
Starting in 2025, Medicare Advantage plans will be required to send policyholders a personalized “Mid-Year Enrollee Notification of Unused Supplemental Benefits” in July. It will list all supplemental benefits the person hasn’t used, the scope and out-of-pocket cost for claiming each one, instructions on how to access the benefits and a customer service number to call for more information.
2. A new midyear notification to Medicare Advantage policyholders
Even if you’ve decided that delaying benefits until age 70 is in your best interest, covering expenses in the interim can be a challenge. But if you’re married, there’s a strategy you can use to bridge the gap. Consider having the lower-earning spouse file for benefits at full retirement age, or even as early as 62 if necessary. Use the lower-earning spouse’s benefits, along with income from other sources, to pay expenses while the higher earner’s benefits — which will get the biggest boost from delayed-retirement credits — continue to grow until the higher earner turns 70.
Marguerita Cheng, a CFP with Blue Ocean Global Wealth in Potomac, Md., worked with a married couple who wanted to provide financial assistance to an aging parent and a disabled sibling. They elected to have the wife, who was the lower earner, file for benefits before she reaches full retirement age, while the husband will wait to file for benefits until at least his full retirement age or possibly age 70, she says. "Having access to funds they can use to help family members provides them with peace of mind," Cheng says.
This strategy could also enable married couples to get the most out of their survivor benefits. A surviving spouse who has reached full retirement age is eligible for up to 100% of the deceased spouse’s benefit or, if the deceased spouse had not yet filed for benefits, 100% of the amount the deceased spouse would have received had he or she filed. For that reason, it may make sense for the higher earner to delay benefits until age 70, even if he or she doesn’t expect to live past 81, in order to preserve the maximum benefit for the surviving spouse.
While having the higher earner wait until age 70 to apply for Social Security will increase survivor benefits, it won’t affect spousal benefits, which allow the lower-earning spouse to receive benefits based on the higher earner’s work record. The most a spouse can receive in spousal benefits is 50% of the higher earner’s primary insurance amount, which is the amount that spouse is entitled to at full retirement age.
4. Strategies for couples
If you’re a widow or widower, you can file for survivor benefits as early as age 60, but you must have been married to the deceased for at least nine months at the time of death. If you choose to take survivor benefits this early, it will be reduced by about 29%.
A surviving spouse can collect 100% of your late spouse’s benefit if you have reached full retirement age. Keep in mind that the full retirement age for survivor benefits is different than for retirement and spousal benefits — it is 66 and 2 months for people born in 1957, 66 and 4 months for those born in 1958, and gradually increases to 67 over the next several years.
"If your own benefit will be less than the survivor’s benefit, a better strategy is to file for your own benefits at age 62 and switch to survivor benefits when you reach full retirement age, which is when those benefits reach their maximum," says Michelle Gessner, a CFP with Gessner Wealth Strategies in Houston. (Survivor benefits aren’t eligible for delayed retirement credits, so there’s no upside to waiting until age 70.)
“Taking your own benefit at 62 doesn’t preclude the survivor’s benefit from growing in the background, which is typically not the case with other benefits offered through Social Security,” Gessner says. "Conversely, if your own benefit will be larger, you could claim survivor benefits as early as 60 and allow your own benefits — which are eligible for delayed credits — to grow until you reach age 70, at which point you could switch to your own benefits."
If you’re divorced, you’re also eligible for survivor benefits as early as age 60 — or as early as 50 if you have a disability — if the marriage lasted at least 10 years and you didn’t remarry before age 60. (If you remarry after you turn 60, it won’t affect survivor benefits.) As is the case with surviving widows and widowers who aren’t divorced, you can file for your own benefits early and allow your survivor benefits to grow, or vice versa.
5. Strategies for surviving spouses
If you’re eligible for Social Security and have minor children, they may also be eligible for benefits, but only if you’re receiving benefits. Your child (or children) must be younger than 18 (or 19 if still in high school). Unless a child is disabled, benefits will stop when your child turns 18 — or, if your child is in high school, benefits will last until they graduate or two months after they turn 19, whichever comes first.
Dependent grandchildren are also eligible for benefits. Minor children can receive up to half of the amount the parent will receive at full retirement age. In the case of multiple children, Social Security caps the amount a family can receive at 150% to 188% of the parent’s FRA benefit.
Benefits paid to a minor child won’t reduce the amount you’re eligible to receive when you file. However, if you start benefits early — at age 62, for example — so that your children will receive payments, your benefits will still be permanently reduced. "For that reason," Lawrence says, "you should weigh your family’s immediate financial needs against the increase in your benefits you’d receive by filing later."
6. Strategies for parents of minor children
While preserving survivor benefits is an important consideration for married retirees, it’s not an issue for singles. If you don’t need the income, it still makes sense to wait until you reach full retirement age to file, but waiting until age 70 may be less compelling.
One of Persaud’s single clients decided to claim at age 67 after learning that she would receive only about $100 a month in additional benefits if she wanted until age 70. Filing for benefits helped alleviate stress about her finances, “and $100 wasn’t going to make or break her,” Persaud says.
If you have chronic health problems that could affect longevity, claiming benefits at full retirement age, or even earlier, will provide you with income to enjoy the time you have left.
If you’re divorced, you can still receive benefits based on your ex-spouse’s earnings instead of your own, as long as you were married at least 10 years, you’re 62 or older, and you’re currently unmarried. As with a regular spousal benefit, you can get up to 50% of an ex-spouse’s benefit, but that benefit will be reduced if you claim before your full retirement age.
Taking a benefit on your ex-spouse’s record has no effect on his or her benefit or the benefit of your ex’s current spouse. If your ex qualifies for benefits but has yet to apply, you can still start collecting Social Security based on the ex’s record, though you must have been divorced for at least two years.
7. Strategies for singles
Although Social Security represents a significant and reliable slice of your retirement income, you may have other financial resources, such as IRAs and 403(b) plans, taxable brokerage accounts, and, if you’re lucky, a defined-benefit pension plan. With that in mind, reviewing Social Security as a component of your overall retirement portfolio can help you determine the optimal time to file for benefits.
For example, if you’re forced to retire in a year that your portfolio has dropped 15% to 20% — and you don’t have other sources of income — filing for Social Security could enable you to avoid taking withdrawals that would lock in those losses, says Andrew Herzog, a CFP with the Watchman Group in Plano, Texas. "Though filing early will reduce your benefits, it could also provide enough time for your portfolio to recover before you need to take withdrawals."
Another factor to consider is the projected returns for your portfolio and the types of investments you own. For example, filing for Social Security before age 70 could enable you to postpone converting an annuity into a guaranteed income stream, which would result in a higher rate of return, Lawrence says.
Some retirees believe returns on their portfolios could outperform the return they’ll receive by delaying Social Security — especially if they reinvest their benefits. However, Social Security’s annual COLA, combined with the guaranteed 8% annual return for delayed-retirement benefits, is a high hurdle to overcome.
Outperforming that return would require an aggressive investment strategy and a high tolerance for risk, according to a recent paper by Wade Pfau and Steve Parrish in the Journal of Financial Planning. Even then, the authors conclude that based on historical data, it’s uncommon for investment returns to beat the implied benefit of delaying Social Security for long-lived retirees.
Finally, if you’re determined to leave a legacy, filing for benefits before age 70, or even full retirement age, could reduce the amount you’ll need to withdraw from your savings, thus increasing the amount you’ll be able to leave to your heirs. Filing for Social Security “isn’t always about maximizing benefits,” Cheng says. “The decision to claim Social Security is as much a personal decision as a financial one.”
8. Social Security and your investments
Getting a handle on the basics of Medicare can help protect your health — and your nest egg — in retirement, so making the right choices during Medicare open enrollment is arguably one of the most important financial decisions you can make.
Open enrollment runs from Oct. 15 to Dec. 7 each year. You can tell by the advertisements that inundate the airwaves and your mailbox. You’re likely even already getting unsolicited calls and emails. All kinds of health insurance brokers and companies want to dazzle you with their offerings.
First, let’s review the basics. As most retirees know, Medicare has several parts. Part A, which is offered at no cost, generally covers hospitalizations. Part B covers outpatient medical care. Part D is prescription drug coverage provided by private insurers.
Medicare Advantage is the umbrella term for plans offered by private insurers regulated by Medicare to replace parts B and D. Medigap plans, also offered by private companies, are supplemental plans that cover copays and coinsurance charges imposed under Medicare Part B. While some people assume that Medicare will cover all their healthcare costs, experts warn there are things Medicare won't cover.
A 65-year-old retiring in 2024 could expect to spend an average of $165,000 in healthcare and medical expenses throughout retirement, according to data from Fidelity Investments. This highlights the importance of reviewing your Medicare plan choices during open enrollment each year to ensure you have the best coverage to meet your needs.
2. Few people take advantage of open enrollment
While Part D plans can change the drugs they cover, and Medicare Advantage plans can change their provider networks as well as your costs and other provisions, fewer than one-third of enrollees are estimated to take advantage of open enrollment to compare plans and reevaluate their coverage.
Tim Smolen, director of the Washington State Health Insurance Assistance Programs (SHIP), which helps residents navigate Medicare, says beneficiaries consistently care about three things during open enrollment: access, what benefits are included in their plan, and cost.
That last issue is the toughest to gauge. “It's very difficult to forecast in the year ahead how much healthcare you're going to use,” he says.
3. Limits on Medigap changes
People who choose to keep traditional Medicare may also enroll in a supplemental Medigap plan from a private insurer to cover costs like copays. Traditional Medicare, when not paired with Medigap, does not have a limit on out-of-pocket expenses in a year.
Medigap policies, which cannot be paired with Medicare Advantage plans, have standardized benefits. Most states offer 10 types of Medigap policies, but premiums vary by insurer. You can compare costs, benefits and availability on Medicare’s website.
If you have a Medicare Advantage plan, you may switch to traditional Medicare, but you may have trouble getting a Medigap policy. Some states offer more protections than others, but, in general, your first time enrolling in Medicare is your best opportunity to get a Medigap policy.
4. Medicare Advantage differences
These plans have a monthly cost, in addition to the Part B premium, that varies depending on the plan. The plans frequently include prescription drug coverage and limits on annual out-of-pocket costs for covered services.
They also may offer extras not included by traditional Medicare, such as dental, hearing and vision coverage and gym memberships. They are able to do this because they manage costs, partly by limiting beneficiaries to in-network providers. During open enrollment, experts recommend checking to make sure your preferred providers remain in the network for your plan.
Three in 10 beneficiaries in Medicare Advantage plans said they did not use any of their plan’s supplemental benefits in the past year, according to a study by The Commonwealth Fund. The study also found evidence that Medicare Advantage plans were more likely to burden patients with the need to obtain prior approvals, so check plan requirements carefully.
Starting in 2025, Medicare Advantage plans will be required to send policyholders a personalized “Mid-Year Enrollee Notification of Unused Supplemental Benefits” in July. It will list all supplemental benefits the person hasn’t used, the scope and out-of-pocket cost for claiming each one, instructions on how to access the benefits and a customer service number to call for more information.
5. Medicare Advantage issues
These plans have been criticized in recent years for their aggressive marketing tactics. Some beneficiaries have reported having good experiences with their Advantage plans until they get sick and find themselves fighting for coverage.
In 2023 and 2024, the government agency managing Medicare issued new rules to protect seniors against these aggressive marketing practices. These rules prohibit ads that omit the plan name or use Medicare logos to imply that their messaging is from the government.
In 2025, the Centers for Medicare & Medicaid Services hopes to end sales incentives for Medicare Advantage and Part D plans. Salespeople sometimes get incentives, such as hefty bonuses, when they enroll Medicare beneficiaries into private insurers’ Medicare Advantage plans, Medigap or Part D prescription drug plans. The coming rule change is meant to disincentivize steering people to insurance plans to earn perks and not serve the best interests of Medicare beneficiaries.
6. Medicare premiums
Beneficiaries of traditional Medicare pay a standard monthly rate of $174.70 for Medicare Part B in 2024, an increase of $9.80 from $164.90 in 2023. The annual deductible for all Medicare Part B beneficiaries is $240 in 2024, an increase of $14 from the annual deductible of $226 in 2023. This rate applies to individuals with incomes less than $103,000, with income-related monthly adjustments applying at various levels to people who make more.
The Medicare Part A inpatient hospital deductible that beneficiaries pay if admitted to the hospital is $1,632 in 2024, an increase of $32 from $1,600 in 2023. Beneficiaries are required to pay a coinsurance amount of $408 per day for the 61st through 90th day of a hospitalization in a benefit period, compared to $400 a day in 2023, and $816 per day for lifetime reserve days, up from $800 a day in 2023.
For beneficiaries in skilled nursing facilities, the daily coinsurance for days 21 through 100 of extended care services in a benefit period is $204 in 2024; this was $200 in 2023.
Average premiums, benefits and plan choices for Medicare Advantage and the Medicare Part D prescription drug program remained stable in 2024, according to the Center for Medicare and Medicaid Services.
The average monthly plan premium for Medicare Advantage plans, which includes Medicare Advantage-prescription drug plans, is $18.50 in 2024, which is an increase of $0.64 from last year. Most enrollees who kept their plans experienced little or no premium increase for 2024, with nearly 75% of beneficiaries not seeing any premium increase.
In 2024, the out-of-pocket limit for Medicare Advantage plans may not exceed $8,850 for in-network services and $13,300 for in-network and out-of-network services combined. These out-of-pocket limits apply to Part A and B services only, and do not apply to Part D spending.
Medicare premiums for 2025 haven't been announced yet, but they are typically announced shortly before open enrollment begins. However, there is some information we know about Part D: In 2025, Medicare beneficiaries will pay no more than $2,000 out of pocket for prescription drugs covered under Part D. Part D enrollees will also have the option of spreading out their out-of-pocket costs over the year rather than face high out-of-pocket costs in any given month. This new rule applies only to medications covered by your Part D plan and does not apply to out-of-pocket spending on Medicare Part B drugs.
7. Watch out for IRMAA
People with higher income are charged higher Part B and D premiums — the income-related monthly adjustment amount, or IRMAA. In 2023, a single person with an income between $97,000 and $123,000 was charged $230.80 a month for Part B, compared to premiums of $164.90 for people who earned less. In 2024, people who make between $103,000 and $129,000 pay an extra $69.90 a month, for a total of $244.60.
Your income for IRMAA purposes is calculated based on income two years before the plan year.
Medicare will determine the 2025 IRMAA charge in the fourth quarter of 2024. That is why your IRMAA determination is based on 2023 filing status and income — it's the last data point Medicare can obtain from the IRS to determine the 2025 IRMAA charge.
8. Avoiding the surcharge
You can appeal your IRMAA if your income is significantly lower now than two years ago due to a life-changing event, such as retirement, divorce or death of a spouse, or if you think the government made a mistake. Beyond that, the only way to avoid the surcharge is to have less modified adjusted gross income (MAGI), which includes all taxable income from work and investments, as well as the taxable portion of your Social Security.
Unfortunately, most popular deductions, such as charitable donations and mortgage interest, do not reduce your MAGI. However, withdrawals from Roth IRAs don’t count toward your MAGI. If you’re still working, you can contribute more toward tax-deferred retirement accounts to lower your income. Another option is to delay starting Social Security.
9. When do you have to enroll in Medicare?
In general, you initially enroll in Medicare within three months before and three months after turning 65. Failing to do so can result in financial penalties, increasing your premiums for the rest of your life.
However, there are exceptions, including many people who receive health insurance through their employer or through their spouse’s job, as long as the workplace has 20 or more employees. Be sure to check with your employer about how it handles your group health coverage at age 65.
Be warned of the “COBRA trap” — insurance you may receive after you leave your job does not eliminate the requirement that you apply for Medicare at age 65.
If you miss the Medicare annual open enrollment deadline, there are still some ways you can salvage your status.
1. New $2,000 annual cap on out-of-pocket prescription costs
Beginning in 2025, people with Part D plans won’t have to pay more than $2,000 in out-of-pocket costs, thanks to a provision in the Inflation Reduction Act of 2022. The $2,000 cap will be indexed to the growth in per capita Part D costs, so it may rise each year after 2025. Part D enrollees will also have the option of spreading out their out-of-pocket costs over the year rather than face high out-of-pocket costs in any given month.
This new rule applies only to medications covered by your Part D plan and does not apply to out-of-pocket spending on Medicare Part B drugs. Part B drugs are usually vaccinations, injections a doctor administers, and some outpatient prescription drugs.
If you are enrolled or looking to enroll in Medicare Part D plans in 2025, review your choices carefully by using the Medicare Plan Finder. You can compare different plans and see whether the prescriptions you take will be covered.
This change to Medicare prescription drug coverage may cause problems for some people who delay enrolling in Medicare because they are covered by employer health insurance.
2. A new midyear notification to Medicare Advantage policyholders
Medicare Advantage plans often tout the coverage that they provide and traditional Medicare doesn't — dental, vision, hearing and fitness benefits. Most Medicare Advantage plans offer at least one supplemental benefit, and the median number provided is 23, according to the Centers for Medicare & Medicaid Services (CMS).
Three in 10 beneficiaries in Medicare Advantage plans said they did not use any of their plan’s supplemental benefits in the past year, according to a study by The Commonwealth Fund. The study also found evidence that Medicare Advantage plans were more likely to burden patients with the need to obtain prior approvals, so check plan requirements carefully.
Starting in 2025, Medicare Advantage plans will be required to send policyholders a personalized “Mid-Year Enrollee Notification of Unused Supplemental Benefits” in July. It will list all supplemental benefits the person hasn’t used, the scope and out-of-pocket cost for claiming each one, instructions on how to access the benefits and a customer service number to call for more information.
How to Qualify for Social Security Spousal Benefits
Whether you’re currently married or divorced determines how you can qualify for spousal benefits.
Married
You can qualify for spousal benefits if you meet all these requirements:
3. The break-even point in claiming Social Security
The break-even point is the age at which the value of claiming larger benefits for a shorter period — starting at age 70, for example — outweighs the benefits of claiming a smaller payout for a longer period — say, by starting at age 62.
Estimates of break-even points vary, but an analysis by J.P. Morgan Asset Management recommends claiming benefits as early as 62 if you don’t expect to live past 77. If you expect to live beyond 77, postpone benefits until at least your full retirement age, and if you expect to live beyond age 81, consider waiting until age 70 to file for benefits.
Most Americans will live past age 77, and many will live into their 80s or beyond. According to the Social Security Administration, a 62-year-old man has a 71% chance of living to at least age 77 and a 58% chance of living to age 81; a 62-year-old woman has an 80% chance of living to at least 77 and a 69% chance of living to 81.
"Even if your parents died in their fifties or sixties, advances in diagnosis and treatment of common diseases, along with differences in lifestyle, could enable you to live much longer than they did," Persaud says.
4. Strategies for couples
Even if you’ve decided that delaying benefits until age 70 is in your best interest, covering expenses in the interim can be a challenge. But if you’re married, there’s a strategy you can use to bridge the gap. Consider having the lower-earning spouse file for benefits at full retirement age, or even as early as 62 if necessary. Use the lower-earning spouse’s benefits, along with income from other sources, to pay expenses while the higher earner’s benefits — which will get the biggest boost from delayed-retirement credits — continue to grow until the higher earner turns 70.
Marguerita Cheng, a CFP with Blue Ocean Global Wealth in Potomac, Md., worked with a married couple who wanted to provide financial assistance to an aging parent and a disabled sibling. They elected to have the wife, who was the lower earner, file for benefits before she reaches full retirement age, while the husband will wait to file for benefits until at least his full retirement age or possibly age 70, she says. "Having access to funds they can use to help family members provides them with peace of mind," Cheng says.
This strategy could also enable married couples to get the most out of their survivor benefits. A surviving spouse who has reached full retirement age is eligible for up to 100% of the deceased spouse’s benefit or, if the deceased spouse had not yet filed for benefits, 100% of the amount the deceased spouse would have received had he or she filed. For that reason, it may make sense for the higher earner to delay benefits until age 70, even if he or she doesn’t expect to live past 81, in order to preserve the maximum benefit for the surviving spouse.
While having the higher earner wait until age 70 to apply for Social Security will increase survivor benefits, it won’t affect spousal benefits, which allow the lower-earning spouse to receive benefits based on the higher earner’s work record. The most a spouse can receive in spousal benefits is 50% of the higher earner’s primary insurance amount, which is the amount that spouse is entitled to at full retirement age.
5. Strategies for surviving spouses
If you’re a widow or widower, you can file for survivor benefits as early as age 60, but you must have been married to the deceased for at least nine months at the time of death. If you choose to take survivor benefits this early, it will be reduced by about 29%.
A surviving spouse can collect 100% of your late spouse’s benefit if you have reached full retirement age. Keep in mind that the full retirement age for survivor benefits is different than for retirement and spousal benefits — it is 66 and 2 months for people born in 1957, 66 and 4 months for those born in 1958, and gradually increases to 67 over the next several years.
"If your own benefit will be less than the survivor’s benefit, a better strategy is to file for your own benefits at age 62 and switch to survivor benefits when you reach full retirement age, which is when those benefits reach their maximum," says Michelle Gessner, a CFP with Gessner Wealth Strategies in Houston. (Survivor benefits aren’t eligible for delayed retirement credits, so there’s no upside to waiting until age 70.)
“Taking your own benefit at 62 doesn’t preclude the survivor’s benefit from growing in the background, which is typically not the case with other benefits offered through Social Security,” Gessner says. "Conversely, if your own benefit will be larger, you could claim survivor benefits as early as 60 and allow your own benefits — which are eligible for delayed credits — to grow until you reach age 70, at which point you could switch to your own benefits."
If you’re divorced, you’re also eligible for survivor benefits as early as age 60 — or as early as 50 if you have a disability — if the marriage lasted at least 10 years and you didn’t remarry before age 60. (If you remarry after you turn 60, it won’t affect survivor benefits.) As is the case with surviving widows and widowers who aren’t divorced, you can file for your own benefits early and allow your survivor benefits to grow, or vice versa.
6. Strategies for parents of minor children
If you’re eligible for Social Security and have minor children, they may also be eligible for benefits, but only if you’re receiving benefits. Your child (or children) must be younger than 18 (or 19 if still in high school). Unless a child is disabled, benefits will stop when your child turns 18 — or, if your child is in high school, benefits will last until they graduate or two months after they turn 19, whichever comes first.
Dependent grandchildren are also eligible for benefits. Minor children can receive up to half of the amount the parent will receive at full retirement age. In the case of multiple children, Social Security caps the amount a family can receive at 150% to 188% of the parent’s FRA benefit.
Benefits paid to a minor child won’t reduce the amount you’re eligible to receive when you file. However, if you start benefits early — at age 62, for example — so that your children will receive payments, your benefits will still be permanently reduced. "For that reason," Lawrence says, "you should weigh your family’s immediate financial needs against the increase in your benefits you’d receive by filing later."
7. Strategies for singles
While preserving survivor benefits is an important consideration for married retirees, it’s not an issue for singles. If you don’t need the income, it still makes sense to wait until you reach full retirement age to file, but waiting until age 70 may be less compelling.
One of Persaud’s single clients decided to claim at age 67 after learning that she would receive only about $100 a month in additional benefits if she wanted until age 70. Filing for benefits helped alleviate stress about her finances, “and $100 wasn’t going to make or break her,” Persaud says.
If you have chronic health problems that could affect longevity, claiming benefits at full retirement age, or even earlier, will provide you with income to enjoy the time you have left.
If you’re divorced, you can still receive benefits based on your ex-spouse’s earnings instead of your own, as long as you were married at least 10 years, you’re 62 or older, and you’re currently unmarried. As with a regular spousal benefit, you can get up to 50% of an ex-spouse’s benefit, but that benefit will be reduced if you claim before your full retirement age.
Taking a benefit on your ex-spouse’s record has no effect on his or her benefit or the benefit of your ex’s current spouse. If your ex qualifies for benefits but has yet to apply, you can still start collecting Social Security based on the ex’s record, though you must have been divorced for at least two years.
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The outlook for credit card debt. The average credit card interest rate dropped from 20.78% to 20.65% after the Fed cut rates in September, according to Bankrate. If you’re making minimum payments on your balance, that decline will barely move the needle on your monthly payment, Rossman says. Even if the Fed eventually cuts short-term rates by a total of 2.5 percentage points, as some analysts expect, the average credit card interest rate would likely remain above 18%. “That’s still very high-cost debt,” he says.
On the upside, rate cuts could lead credit card issuers to improve their balance-transfer deals, Rossman says. With a balance-transfer card, you can often take advantage of a 0% interest rate for a certain period — as long as 21 months. That could shave hundreds or even thousands of dollars from your interest payments, enough to offset a balance transfer fee of 3% to 5%. But this strategy makes sense only if you’re able to pay off the debt before the 0% window expires. After that, the rate on the remaining balance typically jumps into the double digits.
If you have a lot of home equity, another option is to take out a home equity line of credit to pay off your high-interest debt. Rates on HELOCs averaged 8.37% in October, according to Bankrate, and will likely fall in the months to come. Keep in mind, though, that if you’re unable to pay off your HELOC, you could lose your home, Rossman says. He recommends exploring balance-transfer deals before borrowing against your home.
Car loans. Interest rates on loans for new and used cars are also influenced by the Fed’s rate adjustments, but it could be several weeks or even months before consumers see a noticeable decline, says Jonathan Smoke, chief economist for Cox Automotive, a research firm. Delinquencies on auto loans were significantly higher at the end of 2023 than they were before the pandemic, according to the Federal Reserve. That has compelled lenders to charge higher rates to offset the risk that borrowers will default on their loans, Smoke says. If the Fed continues to cut rates through 2025, they could decline to 2019 levels, when interest rates for new-car loans averaged 7.5% to 8% and used-car loan rates averaged 10% to 10.5%.
In the interim, it pays to shop around. Get a loan preapproval from your credit union or bank so you can compare it with rates offered by the dealership.
Mortgage rates. Rates on 30-year mortgages were falling even before the Fed rate cuts, averaging 6.12% in early October, down from 7.49% a year earlier, according to Freddie Mac. However, those rates track the 10-year Treasury note, which is influenced by the projected direction of short-term interest rates over the next 10 years, says Kara Ng, senior economist for real estate website Zillow.
Although the recent decline in rates will help lower monthly payments on new loans, there are 31% fewer homes on the market than there were before the pandemic, Ng says. That has kept home prices elevated in many parts of the country. If you put off buying a home in hopes of a continued decline in mortgage rates, says Ng, you may be disappointed. There’s no guarantee mortgage rates will continue to fall, and Ng says that a return to the 3% rates homebuyers enjoyed in 2021 is unlikely. “Serious buyers should be ready to move if the right house turns up and it’s within their budget,” she says. “You can always refinance down the line if rates drop much further.”
About the Author
Sandra Block
Senior Editor, Kiplinger Personal Finance
Sandra Block, senior editor for Kiplinger Personal Finance magazine, has covered personal finance for more than 20 years. In her current role at Kiplinger, she covers retirement, taxes and a range of other personal finance issues. She also edits the Ahead section of Kiplinger Personal Finance magazine and contributes to Kiplinger.com and Kiplinger Retirement Report.
NYSUT NOTE: Do you have personal debt or money concerns that you need help managing? NYSUT members are able to enroll in the NYSUT Member Benefits Corporation-endorsed Cambridge Credit Counseling program. This program has been assisting consumers with eliminating debt for more than 20 years, and NYSUT members are eligible to receive a free, no-obligation, debt consultation with one of Cambridge's certified counselors. These counselors can help you better understand your situation, help you set financial goals, determine your budget and more, to help you get out of debt in a fraction of the time. Visit the member website for more information.
1. Underestimating health care costs
The cost of health care continues to rise. On average, retirees may need $165,000 in after-tax money to cover health care costs. When you estimate how much you will spend on healthcare in retirement, you must factor in your health, the history of your family and your expected lifespan.
As people continue to live longer, they will have a greater “longevity risk” — in other words, the financial burden of paying for a longer life. According to a YouGov survey, the average Millennial expects to retire at age 59, which means they will likely have to pay for 20, 30 or even 40 years of retirement expenses. In addition, living longer tends to lead to more healthcare expenses. As you get older, it can cost hundreds of thousands of dollars to cover the cost of prescriptions, Medicare premiums and out-of-pocket expenses. Many people are unaware of longevity risk, which is why I talk to clients regularly about how they can lower their risk.
Have you thought about long-term care? On average, 70% of those over age 65 will need some kind of long-term care service or support during their life. Long-term care is not covered by Medicare and can get expensive. If you want to avoid running out of money, it’s important to have a plan that addresses both healthcare spending and long-term care expenses.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Tony Drake, CFP®, Investment Advisor Representative
Founder & CEO, Drake and Associates
Tony Drake is a CERTIFIED FINANCIAL PLANNER™ and the founder and CEO of Drake & Associates in Waukesha, Wis. Tony is an Investment Adviser Representative and has helped clients prepare for retirement for more than a decade. He specializes in asset preservation, retirement planning and tax strategies. Tony hosts "The Retirement Ready Show" on WTMJ Radio each week and is featured regularly on TV stations in Milwaukee. Tony has been quoted in several national publications, including Forbes, The Wall Street Journal, USA Today, US News & World Report and Buzzfeed.
The 60/30/10 rule
A flexible alternative to the traditional 50/30/20 rule is the 60/30/10 rule, which allocates 60% for essential expenses, 30% for discretionary spending and the final 10% for savings or paying down debt. This new model works better for a growing number of individuals who spend a higher portion of their monthly income on necessities.
And that number is growing. The number of cost-burdened (when a household has a cost ratio of over 30%) renter-occupied households was 20.1 million in 2021, according to the U.S. Census Bureau. That marks an increase of around 1 million households since 2019. Approximately 31% of all households are spending 30% or more of their income on housing alone, according to USAFacts.
However, since only 10% is budgeted towards savings or paying down debt with this rule, individuals should be more mindful of their discretionary spending, looking for additional savings opportunities where they can.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Erin Bendig
Personal Finance Writer
Erin pairs personal experience with research and is passionate about sharing personal finance advice with others. Previously, she was a freelancer focusing on the credit card side of finance, but has branched out since then to cover other aspects of personal finance. Erin is well-versed in traditional media with reporting, interviewing and research, as well as using graphic design and video and audio storytelling to share with her readers.
Another common estate planning mistake I see is when people try to do everything on their own. Estate plans that contain mistakes can cause many complications after you pass. No matter the size of your estate, there are still assets to be passed on to your family.
Working with an expert, such as a financial adviser, who has the skills to put together and manage estate plans, can help avoid those errors. An adviser can educate you on what documents you need in your plan such as wills, powers of attorney and health care directives.
A financial adviser can help you inventory your assets and help ensure they are going to the right person. Your adviser can help you review all of your various retirement accounts and designate the exact amount you want to go to each of your beneficiaries.
2. Not asking for help with your estate plan
Establishing an estate plan is an important step, but you can’t simply set it and forget it. Many life events will require you to take another look at it. Maybe you were divorced years ago, but your living will still lists your ex-spouse as the one entrusted to make your healthcare decisions.
What if you got remarried after your divorce? Have you changed the beneficiary of your 401(k) to your new spouse? You don’t want to pass away and subject your current spouse in legal battles with your ex.
The rule of thumb is if you get divorced or remarried, everything in your plan that has a beneficiary designation needs to be reviewed or changed.
It is not only a major life event like a divorce that may require changes to your estate plan. Failing to review and revise your estate plan after the birth of a child, the death of your primary beneficiary, starting a new business or buying a home can lead to big consequences, potentially distributing your assets to the wrong person.
At the end of the day, no matter how rich you are or how many assets you have, you need to have an estate plan. If you are among the many Americans who do not have one, now is the time to create one. A financial adviser can help you organize a plan to ensure your assets are appropriately allocated and your family is taken care of.
3. Forgetting to regularly update your estate plan
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Jay Dorso
Financial Educator and President, Quality Senior Benefits, LLC
Jay Dorso has more than 25 years of experience in the financial industry. At Quality Senior Benefits, Jay specializes in helping seniors with every area of retirement planning. From Medicare plans to insurance and long-term care, Jay helps set his clients up for success in retirement. Quality Senior Benefits is an independent firm that offers a wide range of insurance and financial services products.
NYSUT NOTE: You rarely know if you'll need long-term care until the moment it becomes necessary. Prepare for that possibility with NYSUT Member Benefits Trust–endorsed long-term care insurance from New York Long-Term Care Brokers. This nationally recognized insurance intermediary can help you find a long-term care plan customized with your needs in mind.
Something I tell my clients that they can do now to help their future selves is to consider saving money in an HSA. A health savings account is a tax-advantaged savings option that can be used for qualifying healthcare expenses. While it can cover current healthcare costs, the balance of your HSA carries over every year and can also be used for future costs.
2. Overspending
As you enter a new stage of your life in retirement, it may take time to get used to the newfound free time and flexibility you have, making it easier to overspend. It’s common for many people to look at their retirement savings and think it looks like a healthy amount, but you need to remember that this money is meant to last for quite some time. You will likely spend more early in retirement because you will want to do the things you've been dreaming about like taking trips, completing a home renovation or indulging in expensive hobbies.
The exact amount you will need to retire depends on your lifestyle, which changes from person to person. A common rule of thumb is to have 10 times your salary saved by the time you turn 67. The sooner you start saving, the better!
To help reduce your chances of overspending in retirement, create two budgets — one for essential needs, like bills, and the other for fun expenses like trips.
3. Taking Social Security benefits too early
Claiming Social Security too early is one of the most common mistakes we see. Even though 62 is the earliest age to claim your benefits, your monthly check can be reduced permanently by as much as 30% if you decide to take it at that time. Just because you can start applying for your benefits three months prior to your 62nd birthday doesn’t mean you should.
If your budget can handle it, I recommend waiting until your full retirement age to start claiming your benefits. Full retirement age is 66 to 67, depending on when you were born. There's a big bonus for delaying your claim even further. Your benefit will grow by as much as 8% per year from your full retirement age through age 70.
4. Miscalculating your required minimum distributions
Planning for your required minimum distributions (RMDs) is extremely important to your retirement success. The amount you must withdraw from your account is based on your account balances from the previous year, and the amount you have to withdraw increases every year as you age. Forgetting to satisfy your RMDs can result in a tax penalty.
Be strategic about which accounts you take your distributions from. You don’t have to take distributions from every account subject to RMDs; you only need to satisfy your total RMD amount. If you have certain accounts that are more aggressive and need time in the market to see gains, you could leave those alone. Instead, consider withdrawals from your other accounts to allow your more aggressive investments to grow. This strategy can help lower your risk of selling at a loss if the market is down while still fulfilling your RMDs.
Your plan for how you will spend your retirement is just as important as the plan leading up to it. Seeking advice from a financial adviser can help you stay on track now and years into retirement.
NYSUT NOTE: Get help with retirement planning from an expert. The NYSUT Member Benefits Corporation–endorsed Financial Counseling Program can provide fee-based professional financial counseling. Whether you're a young person looking ahead to retirement or an older person ready to enjoy your golden years, this program provides unbiased advice that helps you make the most of your retirement.
Meal 1:
Whole grain chicken tacos with frozen bell peppers seasoned with taco seasoning from your pantry
Meal 2:
Spaghetti squash Bolognese with lean ground turkey and pasta sauce
Meal 3:
Shrimp stir-fry with shrimp, frozen stir-fry veggies, and stir-fry sauce
Meal 4:
Avocado toast on whole grain bread with over easy eggs and blueberries on the side
Meal 5:
Protein oatmeal made with rolled oats cooked with egg whites for additional protein and topped with strawberries and bananas
If you’ve been driving long enough, you will be able to relate to the fact that a great deal of driving is muscle memory. How many times have you gotten to your destination only to realize you don’t even remember the drive there? Where did the time go? Who was actually driving the car — you know, using the turn signal, checking to be certain you (mostly) obey the speed limit, driving defensively, all that good stuff? It just happened on — sorry for the pun — autopilot. The more you drive, the more it tends to occur without your conscious thought. You don’t have to think about how much pressure to apply to the gas pedal, when to put your foot on the brake, how much distance to keep between you and the car in front of you and the like.
That kind of muscle memory developed over a long period of time and a lot of hours behind the wheel. And that experience, my friend, is something that, putting it frankly, your kid ain’t got.
One of the major factors used to establish the cost of auto insurance is the level of experience you have propelling your two to three tons of machine at 70 miles per hour. That lack of experience means the risk of something going wrong is higher for a new driver than it will likely ever be again in the future. The most inexperienced a driver will be is the first day they wave ta-ta to you and drive away. Let that sink in.
Your insurance company knows this all too well, and they have the data to prove that new drivers have more accidents than experienced drivers do, all other things remaining the same. New drivers get more speeding tickets and more stop-sign violations, and that makes total sense. The DMV granting them the right to drive does not also give them decades of driving experience. There are no shortcuts. So here is what you can do.
Driving experience is all about muscle memory
Spend as much time instructing your new driver as you can before they get a license. Don’t assume they will learn at school or through osmosis. Teach them. As my father told me when I was 15, “I’m going to make you drive every time we’re in the car, because I know once you get your license, I won’t have any ability to teach you.” He knew that the time to learn is with the permit and to let those hours add up. They are like dog-year hours. They really make a difference.
And yes, you’re going to have to pay a higher premium with your insurance company. As you should. A new driver has a higher chance of causing damage, so the price to insure them will reflect that. But check for discounts for new drivers, such as a good student discount and a defensive driving discount. And don’t put them in an expensive car. The insurance company will calculate its exposure financially, so a new Tesla will require a higher premium than a decade-old Toyota.
So do what you can and remember to always ask your agent or broker specifically what discounts or options are available for a new driver. Many insurers have creative ways and options they have found to lower the risk of the typical new driver, and the premium will reflect that — you just have to ask.
What you can do to soften the blow
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Karl Susman, CPCU, LUTCF, CIC, CSFP, CFS, CPIA, AAI-M, PLCS
President, Susman Insurance Agency; President, Expert Witness Professionals; Radio Talk Show Host, Insurance Hour
Karl Susman is an insurance agency owner, insurance expert witness in state, federal and criminal courts, and radio talk show host. For more than 30 years, Karl has helped consumers understand the complex world of insurance. He provides actionable advice and distills complex insurance concepts into understandable options. He appears regularly in the media, offering commentary and analysis of insurance industry news, and advises lawmakers on legislation, programs and policies. He contributes to the American Bar Association Insurance Regulation quarterly newsletter, helping its readers better utilize insurance products and services.
NYSUT NOTE: Want to better understand the differences between a will and a trust? Get expert legal advice and access to a national network of attorneys with the NYSUT Member Benefits Trust–endorsed Legal Service Plan. With this plan, NYSUT members can get help on everything from estate planning to dealing with traffic violations.
You want to create the smallest possible tax burden for your heirs. Without an estate plan for tax considerations, your heirs could get hit hard.
Wills do not avoid estate taxes. Also known as the “death tax,” the federal estate tax is a tax that’s levied on a person’s inherited assets. The federal estate tax ranges from rates of 18% to 40% but generally only applied to assets over $13.61 million in 2024 (for 2025 the estate tax exemption rises to $13.99 million for individuals and $27.98 million for married couples). Some states also levy an estate tax. An estate’s value may determine whether it’s exempt from the state tax or not, and those thresholds vary from state to state.
Here are some ways to lower your heirs’ tax burden:
Understanding tax considerations and reducing the burden on heirs
A life insurance plan may remove tax consequences for your heirs. The death benefit, whether it’s with a term or whole life policy, is generally not subject to income taxes unless the beneficiaries receive payouts in installments.
A living trust typically will include language that may maximize the estate tax exemptions available in the state they reside in. Most states have estate tax thresholds that are much lower than the federal threshold — Oregon’s exemption, for example, is just $1 million. A properly designed trust may be an important tool in helping ensure that the allowable exemptions are fully maximized, potentially saving heirs a substantial sum.
Gifting your heirs annually while you’re still alive may be the most direct way to minimize inheritance tax. For 2024, the annual gift tax exclusion is $18,000, which generally means a person can give up to $18,000 to as many people as he or she wants without having to pay any taxes on the gifts. For example, a grandparent could give $18,000 to each of their 10 grandchildren this year with no gift tax implications. In 2025, the exclusion rises to $19,000, with married couples effectively being able to double this amount to $38,000 per recipient.
Converting retirement accounts to Roth accounts could make sense. Heirs may pay tax on any inherited retirement benefits if they are in a 401(k) or individual retirement account (IRA). But if they inherit a Roth 401(k) or Roth IRA, they will not have to pay taxes on them. If you have retirement funds that you won’t need, you may want to consider a Roth conversion to help reduce the tax burden on the assets your heirs inherit.
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Statistics show that well over half of seniors will at some point need long-term care. Planning for that possibility with long-term care insurance may be important in terms of preserving assets for your heirs. Even if you believe you have enough retirement assets to pay for your long-term care, consider the scenario if you, your spouse or both of you develop a long-term care need. What if you don’t have some type of LTC insurance? Imagine working all your life to accumulate assets, then falling ill and spending everything you’ve earned on care, leaving significantly less or nothing to your heirs.
Think of all the time people spend planning for a vacation or buying a house or car. But ultimately estate planning is more important than all of those. Take the time to get your affairs in order and shield your loved ones from undue stress. Having a solid, comprehensive estate plan in place may give you peace of mind and could make the passing of your wealth, property and other assets to your loved ones smoother.
Long-term care
Generally, consumers need a FICO score of 760 or higher to be eligible for the lowest mortgage rates on a conforming loan, said John Ulzheimer, a credit expert and author of "The Smart Consumer’s Guide to Good Credit". Raising your credit score by 20 points can potentially save you thousands on your mortgage, as shown in this data from MyFICO.
You may be able to get a free credit score estimate through your bank or credit card issuer, or from a website such as Credit Sesame or Credit Karma — or use MyFICO’s credit score estimator tool. If your credit score needs a boost, there are steps you can take to give it a quick lift. However, your best strategy will depend on why your score is lagging.
“Paying down some of your credit card debts can yield a higher FICO score in as little as two weeks,” said Ulzheimer, pointing out that your credit utilization ratio — the amount you owe on your credit cards, divided by your card limits — makes up a significant percentage of your FICO score.
A good rule of thumb: Keep your credit utilization ratio below 30%.
It’s also a good idea to check for errors on your credit report. With identity theft at an all-time high, “make sure all the information on your report actually belongs to you,” said Ulzheimer. “Someone could have opened a credit card in your name and run up a significant amount of debt.”
2. Raise your credit score
A spousal IRA is another valuable tool for a non-working spouse. Even without their own earned income, the non-working spouse can contribute to an IRA, provided the couple files a joint tax return. Over time, consistent contributions to a spousal IRA can grow into a significant source of retirement income, helping to ensure financial independence.
For example, in 2024, Mary (age 45) and Mike (age 50) file a joint federal income tax return. Mary earns $100,000, while Mike stays home to care for ill parents. Mary can contribute $7,000 to her IRA (or Roth IRA), and Mike can also contribute up to $8,000 to his IRA, thanks to the spousal IRA rules. Since Mike is at least 50 years old, he is allowed the catch-up provision above the traditional IRA contribution limit.
If you file a joint federal income tax return, your contribution eligibility is based on your combined modified adjusted gross income (MAGI), allowing a non-working spouse to contribute to a traditional IRA or Roth IRA even without personal earnings, if the combined MAGI falls within the allowable income thresholds. In 2024, for married couples filing jointly, you can contribute the full $7,000 if your MAGI is below $230,000. If your MAGI is between $230,000 and $240,000, your ability to contribute or deduct is gradually reduced. If either spouse is over 50, they can contribute an additional $1,000 as a catch-up contribution, bringing the total to $8,000.
While everyone hopes for a lasting marriage, it's essential for both parties to consider how retirement assets will be divided in the event of divorce, especially for a spouse with little or no retirement savings. Under federal law, retirement plan benefits generally cannot be assigned to someone other than the participant, except through a qualified domestic relations order (QDRO). This legal document allows a non-working spouse to claim a portion of the participant's retirement benefits in the event of divorce.
For instance, a QDRO could allocate a portion of a 401(k) or pension plan to the non-working spouse. Given the complexities of dividing retirement benefits in divorce, particularly with defined benefit plans, it’s crucial to consult with an experienced attorney who can draft a QDRO that addresses important aspects like survivor benefits and plan subsidies during or after divorce proceedings.
Qualified domestic relations orders (QDROs)
To help ensure that your non-working spouse is financially secure in retirement, consider taking the following steps:
Review pension plan options together. Sit down as a couple and thoroughly review the pension plan options, particularly the Qualified Joint and Survivor Annuity (QJSA). Ensure both spouses understand the implications of each option and choose the one that best secures the non-working spouse’s financial future.
Establish a spousal IRA. If you’re a non-working spouse, make sure to establish and contribute to a spousal IRA (traditional or Roth, if you qualify). Even small, regular contributions can grow over time and provide an important source of retirement income, enhancing your financial independence.
Create a QDRO in the event of divorce. If divorce is a possibility, ensure that you work with an experienced attorney to draft a QDRO. This legal document will protect your rights to your spouse’s retirement benefits and ensure you receive your fair share.
Consult a financial adviser. Engage a financial adviser who will provide personalized advice and navigate complex decisions, such as pension selections, spousal IRAs and retirement income strategies.
Stay informed and involved. Regularly review your family’s financial situation, retirement accounts and plans. Attend meetings with financial advisers together to ensure both spouses are equally informed about the decisions being made. Being proactive and involved will help everyone feel secure and prepared for the future.
This could be one of the most important financial decisions you will make as a couple, and ensuring that both spouses are informed is essential for a comfortable and stress-free retirement.
How to ensure retirement income for a non-working spouse
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
MaryJane LeCroy, CFP®
Managing Director, Senior Wealth Advisor, Linscomb Wealth
With over 23 years of experience in the wealth management industry, MaryJane’s areas of expertise include financial planning, investment strategy, portfolio management, retirement planning, tax planning and estate planning. MaryJane serves as a member of the Linscomb Wealth Executive Team and Chairwoman of LW’s Wealth Management Committee. She is also a member of Financial Planning Association of Georgia and Houston. MaryJane resides in the Atlanta metro area with her husband and son. She enjoys traveling and beach time with her family and friends.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Erin Bendig
Personal Finance Writer
Erin pairs personal experience with research and is passionate about sharing personal finance advice with others. Previously, she was a freelancer focusing on the credit card side of finance, but has branched out since then to cover other aspects of personal finance. Erin is well-versed in traditional media with reporting, interviewing and research, as well as using graphic design and video and audio storytelling to share with her readers.
NYSUT NOTE: Increasing your savings is vital to securing your future. The NYSUT Member Benefits Corporation–endorsed Synchrony Bank offers extremely competitive interest rates through its savings program. It's convenient, easy to use and offers you a path to building your balances in higher-earning accounts.
Full retirement age based on birth year
You can claim Social Security as early as age 62. But if you claim benefits early, you will see a reduction in your benefit amount.
Reduction in your benefit for early retirement
How much you receive in monthly benefits depends on the age you begin receiving Social Security. Putting off filing for benefits as long as possible will maximize your monthly payments. However, when you start claiming benefits is up to you and will depend on any number of circumstances, such as if you decide to continue working past the age of 62.
If you experience an unexpected health emergency or you don't expect to live a long life, you may decide to claim benefits early. On the other hand, if you have resources like a pension, investment portfolio, or other sources of income, you might feel you can be flexible about when to take Social Security benefits. However, if you need your benefits to make ends meet, you may have fewer options.
At what age should you start receiving benefits?
FRA is the age you can start receiving your full retirement benefit amount. If you were born from 1943 to 1954, your FRA is age 66. The FRA gradually increases if you were born from 1955 to 1960, until it reaches 67. If you were born in 1960 or later, your full retirement benefits are payable to you at age 67. Use our Social Security Full Retirement Age calculator to sort it out.
Full Retirement Age (FRA)
You can begin taking Social Security retirement benefits as early as age 62. However, taking benefits before your full retirement age will mean a permanent reduction in your payments — as much as 25% to 30%, depending on your full retirement age. And, despite what you may think, your payment will not automatically increase to 100% of your full retirement benefit when you reach full retirement age.
However, Social Security gives you 12 months from the date you applied for retirement benefits to cancel your initial claim if you change your mind. That way, you can refile when you reach full retirement age and get your full benefit amount. However, you will have to repay any money Social Security has paid you. Also, if you continue working but claim benefits early, your monthly payment might be cut further, depending on your income. However, the reduction is not permanent.
Early retirement age
The survey by Nationwide Financial also revealed that few people know all of the details of how Social Security works, with almost half of Americans having an incorrect view about how claiming benefits early (or late) will impact their monthly benefit.
Other key insights from the survey
Of those not currently receiving Social Security benefits, two in five are unsure how much their future monthly payment will be.
Many of those surveyed aren’t sure at what age to expect their retirement savings to run out.
Less than half of those surveyed agree that they expect their Social Security benefits will be enough to cover their basic needs in retirement.
When thinking about retirement, nearly two-thirds plan to use or are using their full Social Security benefit for their monthly expenses.
A third (34%) of adults not currently receiving Social Security benefits (but who plan to) intend on filing for benefits early and continuing to work.
More than three in five who pay to work with a financial professional report that they receive advice about how and when to file for benefits.
Those age 60-65 expect to draw Social Security at an average age of 65.
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Kathryn Pomroy
Contributor
For the past 18+ years, Kathryn has highlighted the humanity in personal finance by shaping stories that identify the opportunities and obstacles in managing a person's finances. All the same, she’ll jump on other equally important topics if needed. Kathryn graduated with a degree in Journalism and lives in Duluth, Minnesota. She joined Kiplinger in 2023 as a contributor.
Average daily cost: $144
Average accommodation cost for one person: $88
Average daily meals cost: $38
Only a two-hour flight from Miami and less than four hours from New York City, Americans are frequent visitors to this sunny, year-round Caribbean destination.
Spanish-speaking Dominican Republic makes up half of the second-largest island in the Caribbean (Hispaniola), and French-speaking Haiti makes up the western half. With white sand beaches, lagoons, and rainforests, there’s plenty to explore while enjoying the natural beauty of the country.
9. Dominican Republic
Average daily cost: $133
Average accommodation cost for one person: $59
Average daily meals cost: $41
Despite being the size of West Virginia, Costa Rica is a land of abundance and adventure. The quiet Central American country has miles of coastline on both the Pacific and Caribbean oceans, and with jungle lodges, rainforest treks, volcanoes and cloud forests, it boasts some of the most diverse ecosystems on the planet. With fresh food and fruit in abundance, you can truly enjoy the “pura vida.”
One study even named Costa Rica as the best country to retire in 2024.
8. Costa Rica
Average daily cost: $126
Average accommodation cost for one person: $43
Average daily meals cost: $42
America’s neighbor Mexico is home to Mexico City, the fifth largest city in the world. Not only does Mexico have several urban oases, but the North American country is also known for its beautiful beaches that are regularly listed as some of the best in the world. From ancient jungle ruins to iconic buildings, you’ll find pretty much everything you could want on a vacation — and for a good price.
7. Mexico
Average daily cost: $124
Average accommodation cost for one person: $50
Average daily meals cost: $31
Turkey is one of the most visited countries in the world but remains an underrated tourist destination. Straddling Europe and Asia, Turkey is a fabulous melting pot of cultures that can be seen in everything from architecture to cuisine.
There's an assortment of choices for visitors — from mountain ranges to beach-littered coasts, to the sprawling colorful metropolis of Istanbul, Turkey has everything. Despite the devastating earthquakes that hit the country in 2023, many tourist destinations in the west (hundreds of miles from the affected areas) are open and actively welcoming visitors.
6. Turkey
Average daily cost: $108
Average accommodation cost for one person: $50
Average daily meals cost: $36
One of the best reasons to visit South Africa, of course, is to go on a safari. The country is one of the world's best places to see the Big Five (elephant, buffalo, rhino, lion and leopard) and has several national parks and game reserves to explore. But that's not all the country has to offer. While in South Africa, make sure to walk among the wildflowers of Namaqua, hike up Table Mountain, go whale-watching or spend a day relaxing on the beach.
5. South Africa
Average daily cost: $102
Average accommodation cost for one person: $39
Average daily meals cost: $30
Flights to this South Asian country can be expensive, but other costs make up for it. Known for its tropical beaches, jungle temples, Buddha statues and delicious restaurants and street markets in the bustling city of Bangkok, it's no wonder Thailand is the second most visited country in Southeast Asia.
4. Thailand
Average daily cost: $72
Average accommodation cost for one person: $32
Average daily meals cost: $27
Indonesia is home to Bali — often at the top of the rankings when it comes to the best place to visit in the world. But there’s more to this paradise of a country than Instagram-worthy views. With over 17,000 islands, Indonesia is the world’s largest island country boasting stunning beaches, volcanoes, jungles, orangutan colonies, giant Komodo dragons and vast mountain ranges. The best of all? Your money goes very far here.
3. Indonesia
Average daily cost: $61
Average accommodation cost for one person: $29
Average daily meals cost: $14
Vietnam is a beautiful country with culturally rich cities and diverse landscapes to explore. There's a never-ending list of things to do while in this Southeast Asian country, like eating the best banh mi in Ho Chi Minh City, exploring the bustling streets of Hanoi's Old Quarter, visiting the world's largest cave at Phong Nha-Ke Bang National Park or taking a tour of Ha Long Bay. In Vietnam, you'll have the experience of a lifetime without going broke.
2. Vietnam
Average daily cost: $18
Average accommodation cost for one person: $5.68
Average daily meals cost: $9.10
Laos is a landlocked country in Southeast Asia, but it still manages to have over 4,000 islands. From the islands of the Mekong Delta to the stunning waterfalls of the interior, Laos is one of the few countries in the world that hasn’t lost its natural beauty to sprawling development. And yet, there's more than enough to tempt the most jaded traveler — from cookery schools for food lovers to climbing, caving and jungle treks for thrill-seekers and temples galore for those more culturally inclined.
1. Laos
529 plans allow a contributor to prepay a beneficiary's qualified higher education expenses at an eligible educational institution or to contribute to an account for paying those expenses. The main benefit? While 529 contributions have to be made with after-federal-tax money, the contributions grow free from federal or state tax.
But there are two additional benefits that 529s have gained fairly recently that make them increasingly attractive savings vehicles.
The first benefit is the ability to roll over unused funds from your 529 plan to a Roth IRA, thanks to changes made to the Internal Revenue Code by the SECURE 2.0 Act. By rolling over unused funds from a 529 account into a Roth IRA, individuals will now be able to avoid income tax and tax penalties that occur when withdrawing funds for non-education expenses. But there are limitations.
The other benefit? It’s what’s referred to as the “grandparent loophole.” The new streamlined FAFSA (which starts with the 2024–25 award year) recently made changes to how distributions are treated, giving grandparents a positive advantage. On the 2024-25 FAFSA, students are no longer required to report cash gifts from a grandparent or contributions from a grandparent-owned 529 savings plan. Because of this, grandparents can now use a 529 plan to fund a grandchild’s education without impacting their grandchild's financial aid eligibility.
529 plans and why they’re so popular
The main reason to invest in a 529 plan is because of its advantageous tax deferral and growth strategies. But additional benefits, like the ability to superfund a 529 (avoid paying gift taxes on large, one-time contributions to a 529 plan through 5-year gift tax averaging), tax-free rollovers to Roth IRAs and contributions from grandparents no longer counting against financial aid eligibility, have made 529 plans even more appealing in recent years.
Bottom line
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Erin Bendig
Personal Finance Writer
Erin pairs personal experience with research and is passionate about sharing personal finance advice with others. Previously, she was a freelancer focusing on the credit card side of finance, but has branched out since then to cover other aspects of personal finance. Erin is well-versed in traditional media with reporting, interviewing and research, as well as using graphic design and video and audio storytelling to share with her readers.
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Today’s life insurance applications are digital and easy to fill out on your own, or with the help of your financial professional. The underwriting interview is typically simple and quick. Many times, a link to the interview can be sent to you when your application is received. You can complete the interview at your own pace on a laptop, tablet or smartphone.
And if you’re healthy, detailed medical questions or screenings may not be necessary. If additional medical information is needed, it can often be obtained electronically. If you’ve ever been turned down for life insurance for a health condition, it’s worth trying again, as more people are insurable than ever before.
Opportunity #2: It’s simple to buy life insurance.
*Outstanding loans and withdrawals will reduce policy cash values and the death benefit and may have tax consequences.
**IRC $101(1)(a) for death benefit proceeds typically received income tax free and IRC $101(g).
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Kevin Brayton, MBA
Head of Business Growth & Market Expansion, Prudential Individual Life Insurance, Prudential Financial, Inc.
Kevin Brayton is the head of Business Growth & Market Expansion for Prudential Individual Life Insurance. Kevin is responsible for the overall strategic vision for the company’s distribution, sales and business development efforts. In this role, he is accountable for the firm’s distribution model, maximizing sales by expanding reach and creating synergies across channels. Kevin has nearly 30 years of experience in the insurance and financial services industry. He began his career with Merrill Lynch and later moved to Phoenix Life, where he managed life marketing and national accounts. Kevin then joined NFP to lead the firm’s business development efforts and recruiting. Upon joining Prudential, Kevin served as Vice President, Independent Sales & Distribution, and helped to create and grow the independent distribution platform.
Homeowners insurance offers a wide range of protection, but it’s a good idea to get familiar with what it generally doesn’t cover. Damage resulting from neglect, mold, pest infestations, or lack of regular maintenance is commonly excluded.
For example, if you live in a flood-prone area, adding flood insurance may be wise, as standard policies rarely cover flood-related damage. Similarly, in regions prone to earthquakes, consider purchasing earthquake coverage, either as a rider to your policy or as a separate stand alone plan.
Being aware of exclusions allows you to plan for any additional coverage you may need, giving you greater peace of mind.
What is not covered when you buy homeowners insurance?
Once you have an estimate on how much coverage you'll need, you should then begin comparing quotes. Start by getting a price quote from the company that handles your auto insurance — some providers give a discount on your auto and home insurance if you have both policies with the same company.
Also, if you have an auto insurance agent, find out whether they work for one company or are an independent agent who works with several companies. An independent agent can give you price quotes from several insurers. On the other hand, you may also want to contact a few big insurers separately, such as State Farm, which doesn’t sell through independent agents.
And if you have any military connection in your family, it’s worthwhile to contact USAA, too (see USAA’s page for a list of who is eligible). If you don’t have an independent agent, you can find one in your area through the Independent Agents and Brokers of America agent search.
However, before you settle on an insurance company, check out the insurer’s complaint record through the National Association of Insurance Commissioners Consumer Information Source. Saving a few dollars in premiums can backfire if your insurer ends up hassling you about claims.
How do you get a quote on homeowners insurance?
NYSUT NOTE: Need a quote on homeowner's insurance? Endorsed by the NYSUT Member Benefits Corporation, members can get competitive prices for stand-alone coverage from the Farmers Insurance Choice platform offered by Farmers GroupSelect. Even better, you can get multi-policy discounts. Bundle home and auto or get specialty insurance for your boat, snowmobile or recreational vehicle!
When you move into your new home, it’s the perfect time to conduct an inventory, which will streamline the claims process if you have to file a claim in the future. Take photos or a video of every room, keep receipts for valuable items, and keep a copy of the file somewhere away from home so it’s easy to access if needed.
Should you conduct an inventory when you first move in?
If you’re concerned about flooding, which isn’t covered by homeowners insurance, go to www.floodsmart.gov to see the home’s risk of flooding and get prices for flood coverage through the National Flood Insurance Program.
You can buy flood insurance through most homeowners insurance agents. Your mortgage company may require flood coverage if you live in a high-risk area, but it can be worthwhile to get the coverage even if it’s not required in some areas of the country.
Should you get flood insurance?
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Kimberly Lankford
Contributing Editor, Kiplinger Personal Finance
As the "Ask Kim" columnist for Kiplinger Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.
Income is generally defined by its function: providing consumption and saving opportunities.
I’ve always maintained that credit cards are not an alternative source of income.
While having credit available on a credit card does offer a way to provide ourselves with consumption, it does not offer us a saving opportunity. Much the opposite, in fact, most of the time.
Under certain conditions, credit can offer us a way to leverage our money. If we use our credit cards to make purchases, we will have a clean and easy paper trail of what we’ve purchased and when. Credit cards also offer many perks as incentives compared to other payment methods.
Credit doesn't provide an opportunity to save
That said, there are only two ways to use credit cards to your advantage:
If you pay your card off in full before the end of the billing cycle each month, you will receive your rewards and incentives. It can be easier to pay one monthly bill than to account for each expense.
Often, credit cards provide promotional offers of no interest or fees on purchases within a specific time if you pay the monthly minimum payments.
Both options are available, but you must understand the specific terms and conditions precisely. Once you exceed these parameters, the interest, fees and penalties are costly because interest is calculated continuously and compounded. Paying the total amount doesn’t eliminate the average daily balance calculations, so it can take several months, with no additional charges, to clear your account.
How to use credit cards to your advantage
Thinking that having credit available means you have another source of income, as my friend’s son had done, is misguided. Income is earned a) in exchange for labor or services, b) from selling goods or property or c) as profit from investing.
Credit is not income.
Just because you have the credit available doesn’t mean you have the income to pay the debt, and the bank lowering your limit doesn’t mean they are stealing from you.
Credit cards are not an alternative source of income.
Credit is not income
Estate Planning During a Pandemic
The first, and perhaps biggest mistake you can make with estate planning is not doing it. After you pass, those closest to you are left dealing with the shock and grief, and you don’t want to burden them with added financial issues. Having an estate plan in place can give them peace of mind and provide clear guidance for handling your affairs.
If creating an estate plan is on your to-do list, don’t procrastinate! Many people think they have plenty of time to create one — someone who is 35 years old may think they have decades to get things in order, but delaying can create extra risk for your family. The truth is, no matter your age, anything can happen. If you pass away and you still have young children, who will be their legal guardian? Without a will or an estate plan, you are putting your children’s future at risk. What if you pass away unexpectedly? Or what happens if you become incapacitated and no one is assigned to make medical decisions on your behalf?
None of us wants to think about our mortality, but procrastinating on your estate plan could create more headaches for your loved ones.
1. Not having an estate plan
Another common estate planning mistake I see is when people try to do everything on their own. Estate plans that contain mistakes can cause many complications after you pass. No matter the size of your estate, there are still assets to be passed on to your family.
Working with an expert, such as a financial adviser, who has the skills to put together and manage estate plans, can help avoid those errors. An adviser can educate you on what documents you need in your plan such as wills, powers of attorney and health care directives.
A financial adviser can help you inventory your assets and help ensure they are going to the right person. Your adviser can help you review all of your various retirement accounts and designate the exact amount you want to go to each of your beneficiaries.
2. Not asking for help with your estate plan
Another common estate planning mistake I see is when people try to do everything on their own. Estate plans that contain mistakes can cause many complications after you pass. No matter the size of your estate, there are still assets to be passed on to your family.
Working with an expert, such as a financial adviser, who has the skills to put together and manage estate plans, can help avoid those errors. An adviser can educate you on what documents you need in your plan such as wills, powers of attorney and health care directives.
A financial adviser can help you inventory your assets and help ensure they are going to the right person. Your adviser can help you review all of your various retirement accounts and designate the exact amount you want to go to each of your beneficiaries.
When the Federal Reserve reduced its benchmark short-term interest rate by half a percentage point in September and then by another quarter percentage point in early November, it signaled that it’s shifting into a rate-cutting mode after a series of hikes that started in March 2022 to combat inflation.
That’s reason to celebrate if you have high-interest debt or expect to buy a home or car in the near future. But if you’re a risk-averse investor who has enjoyed earning 5% or more on your savings accounts, you probably aren’t joining in the festivities.
Rates on bank savings accounts and certificates of deposit (CDs) were starting to decline even before the Fed’s recent rate cuts and are likely to fall more in the months to come. Kiplinger expects the Fed to cut short-term interest rates an additional quarter percentage point at its December meeting and to continue cutting rates into 2026.
While many banks will lower rates on savings accounts — if they haven’t already — it may still be possible to find savings accounts that are paying decent yields, says Yuval Dan Bar-Or, a finance professor at the Johns Hopkins Carey Business School. New online banks may continue to offer competitive rates on high-yield savings accounts to attract customers, he says.
The downside is that banks can lower rates on savings accounts at any time. Investing in a CD will lock in the current rate until the CD’s term ends. But opening a CD makes sense only if you know you won’t need the money before the CD matures, because you’ll usually pay a penalty on an early withdrawal.
If you plan to buy a house or send a child to college next year, investing in a one-year CD could make sense, says Ted Rossman, senior industry analyst for Bankrate. If you want to lock in interest rates over a period of years while also having access to some of your savings, consider building a CD ladder. With this strategy, you spread your cash among CDs of varying maturities — one-, two-, three- and five-year CDs, for example. As the CDs mature, you can cash out or reinvest in another CD, depending on prevailing interest rates.
NYSUT NOTE: If you need something more customized, NYSUT Member Benefits endorses a Financial Counseling Program with bespoke financial planning advice. This expert guidance can be helpful whether you're just getting started saving for retirement or trying to get a handle on your spending. This program is available for only $260 a year, but the advice is invaluable.
The outlook for credit card debt. The average credit card interest rate dropped from 20.78% to 20.65% after the Fed cut rates in September, according to Bankrate. If you’re making minimum payments on your balance, that decline will barely move the needle on your monthly payment, Rossman says. Even if the Fed eventually cuts short-term rates by a total of 2.5 percentage points, as some analysts expect, the average credit card interest rate would likely remain above 18%. “That’s still very high-cost debt,” he says.
On the upside, rate cuts could lead credit card issuers to improve their balance-transfer deals, Rossman says. With a balance-transfer card, you can often take advantage of a 0% interest rate for a certain period — as long as 21 months. That could shave hundreds or even thousands of dollars from your interest payments, enough to offset a balance transfer fee of 3% to 5%. But this strategy makes sense only if you’re able to pay off the debt before the 0% window expires. After that, the rate on the remaining balance typically jumps into the double digits.
If you have a lot of home equity, another option is to take out a home equity line of credit to pay off your high-interest debt. Rates on HELOCs averaged 8.37% in October, according to Bankrate, and will likely fall in the months to come. Keep in mind, though, that if you’re unable to pay off your HELOC, you could lose your home, Rossman says. He recommends exploring balance-transfer deals before borrowing against your home.
Car loans. Interest rates on loans for new and used cars are also influenced by the Fed’s rate adjustments, but it could be several weeks or even months before consumers see a noticeable decline, says Jonathan Smoke, chief economist for Cox Automotive, a research firm. Delinquencies on auto loans were significantly higher at the end of 2023 than they were before the pandemic, according to the Federal Reserve. That has compelled lenders to charge higher rates to offset the risk that borrowers will default on their loans, Smoke says. If the Fed continues to cut rates through 2025, they could decline to 2019 levels, when interest rates for new-car loans averaged 7.5% to 8% and used-car loan rates averaged 10% to 10.5%.
In the interim, it pays to shop around. Get a loan preapproval from your credit union or bank so you can compare it with rates offered by the dealership.
Mortgage rates. Rates on 30-year mortgages were falling even before the Fed rate cuts, averaging 6.12% in early October, down from 7.49% a year earlier, according to Freddie Mac. However, those rates track the 10-year Treasury note, which is influenced by the projected direction of short-term interest rates over the next 10 years, says Kara Ng, senior economist for real estate website Zillow.
Although the recent decline in rates will help lower monthly payments on new loans, there are 31% fewer homes on the market than there were before the pandemic, Ng says. That has kept home prices elevated in many parts of the country. If you put off buying a home in hopes of a continued decline in mortgage rates, says Ng, you may be disappointed. There’s no guarantee mortgage rates will continue to fall, and Ng says that a return to the 3% rates homebuyers enjoyed in 2021 is unlikely. “Serious buyers should be ready to move if the right house turns up and it’s within their budget,” she says. “You can always refinance down the line if rates drop much further.”
About the Author
Sandra Block
Senior Editor, Kiplinger Personal Finance
Sandra Block, senior editor for Kiplinger Personal Finance magazine, has covered personal finance for more than 20 years. In her current role at Kiplinger, she covers retirement, taxes and a range of other personal finance issues. She also edits the Ahead section of Kiplinger Personal Finance magazine and contributes to Kiplinger.com and Kiplinger Retirement Report.
NYSUT NOTE: A convenient and easy way to build your balances is by placing your funds in higher-earning savings accounts, like the ones offered through Synchrony Bank. Endorsed by the NYSUT Member Benefits Corporation, this bank offers competitive interest rates on CDs, making sure your ladder's rungs keep you climbing. With convenient and easy transfers, you can start small, but save big.
The cost of health care continues to rise. On average, retirees may need $165,000 in after-tax money to cover health care costs. When you estimate how much you will spend on healthcare in retirement, you must factor in your health, the history of your family and your expected lifespan.
As people continue to live longer, they will have a greater “longevity risk” — in other words, the financial burden of paying for a longer life. According to a YouGov survey, the average Millennial expects to retire at age 59, which means they will likely have to pay for 20, 30 or even 40 years of retirement expenses. In addition, living longer tends to lead to more healthcare expenses. As you get older, it can cost hundreds of thousands of dollars to cover the cost of prescriptions, Medicare premiums and out-of-pocket expenses. Many people are unaware of longevity risk, which is why I talk to clients regularly about how they can lower their risk.
Have you thought about long-term care? On average, 70% of those over age 65 will need some kind of long-term care service or support during their life. Long-term care is not covered by Medicare and can get expensive. If you want to avoid running out of money, it’s important to have a plan that addresses both healthcare spending and long-term care expenses.
1. Underestimating health care costs
The cost of health care continues to rise. On average, retirees may need $165,000 in after-tax money to cover health care costs. When you estimate how much you will spend on healthcare in retirement, you must factor in your health, the history of your family and your expected lifespan.
As people continue to live longer, they will have a greater “longevity risk” — in other words, the financial burden of paying for a longer life. According to a YouGov survey, the average Millennial expects to retire at age 59, which means they will likely have to pay for 20, 30 or even 40 years of retirement expenses. In addition, living longer tends to lead to more healthcare expenses. As you get older, it can cost hundreds of thousands of dollars to cover the cost of prescriptions, Medicare premiums and out-of-pocket expenses. Many people are unaware of longevity risk, which is why I talk to clients regularly about how they can lower their risk.
Have you thought about long-term care? On average, 70% of those over age 65 will need some kind of long-term care service or support during their life. Long-term care is not covered by Medicare and can get expensive. If you want to avoid running out of money, it’s important to have a plan that addresses both healthcare spending and long-term care expenses.
2. Overspending
As you enter a new stage of your life in retirement, it may take time to get used to the newfound free time and flexibility you have, making it easier to overspend. It’s common for many people to look at their retirement savings and think it looks like a healthy amount, but you need to remember that this money is meant to last for quite some time. You will likely spend more early in retirement because you will want to do the things you've been dreaming about like taking trips, completing a home renovation or indulging in expensive hobbies.
The exact amount you will need to retire depends on your lifestyle, which changes from person to person. A common rule of thumb is to have 10 times your salary saved by the time you turn 67. The sooner you start saving, the better!
To help reduce your chances of overspending in retirement, create two budgets — one for essential needs, like bills, and the other for fun expenses like trips.
3. Taking Social Security benefits too early
Claiming Social Security too early is one of the most common mistakes we see. Even though 62 is the earliest age to claim your benefits, your monthly check can be reduced permanently by as much as 30% if you decide to take it at that time. Just because you can start applying for your benefits three months prior to your 62nd birthday doesn’t mean you should.
If your budget can handle it, I recommend waiting until your full retirement age to start claiming your benefits. Full retirement age is 66 to 67, depending on when you were born. There's a big bonus for delaying your claim even further. Your benefit will grow by as much as 8% per year from your full retirement age through age 70.
NYSUT NOTE: You rarely know if you'll need long-term care until the moment it becomes necessary. Prepare for that possibility with NYSUT Member Benefits Trust–endorsed long-term care insurance from New York Long-Term Care Brokers. This nationally recognized insurance intermediary can help you find a long-term care plan customized with your needs in mind.
The 6-to-1 grocery method provides structure to your grocery list, making shopping easier and more cost-effective. Next time you go to the supermarket, you’ll buy six vegetables, five fruits, four proteins, three starches, two sauces/spreads and one "fun" item as a treat.
“This makes grocery shopping way easier, way cheaper and you get in and out, so you’re not there all day long,” Chef Coleman says in a TikTok explaining the method.
Before you go to the store, you may want to have an idea of some meal concepts you plan on cooking in order to narrow down your choices, but the method itself is meant to provide flexibility.
You might choose to buy what’s on sale (even if it’s not the vegetables or meat you initially planned on purchasing) to further increase your savings. Maybe you need to opt for frozen veggies instead of fresh ones. Or maybe you have a large family and need to increase the quantity of food you buy. Overall, the method is supposed to be adapted to your personal preferences and needs.
Tom Jauncey, CEO at Nautilus Marketing told Kiplinger he saves $50 a week by using this method and recommends it for individuals who want to streamline grocery shopping while saving money.
Health.com provides a great example of what a 6-to-1 grocery list looks like and what meals you can make with those ingredients.
What Is a 529 Plan?
Driving experience is all about muscle memory
If you’ve been driving long enough, you will be able to relate to the fact that a great deal of driving is muscle memory. How many times have you gotten to your destination only to realize you don’t even remember the drive there? Where did the time go? Who was actually driving the car — you know, using the turn signal, checking to be certain you (mostly) obey the speed limit, driving defensively, all that good stuff? It just happened on — sorry for the pun — autopilot. The more you drive, the more it tends to occur without your conscious thought. You don’t have to think about how much pressure to apply to the gas pedal, when to put your foot on the brake, how much distance to keep between you and the car in front of you and the like.
That kind of muscle memory developed over a long period of time and a lot of hours behind the wheel. And that experience, my friend, is something that, putting it frankly, your kid ain’t got.
One of the major factors used to establish the cost of auto insurance is the level of experience you have propelling your two to three tons of machine at 70 miles per hour. That lack of experience means the risk of something going wrong is higher for a new driver than it will likely ever be again in the future. The most inexperienced a driver will be is the first day they wave ta-ta to you and drive away. Let that sink in.
Your insurance company knows this all too well, and they have the data to prove that new drivers have more accidents than experienced drivers do, all other things remaining the same. New drivers get more speeding tickets and more stop-sign violations, and that makes total sense. The DMV granting them the right to drive does not also give them decades of driving experience. There are no shortcuts. So here is what you can do.
My friend’s son has started several successful businesses and worked in various fields, but as an entrepreneur, his income can be cyclical, sporadic and, at times, volatile. He’d called in a rare panic, blurting out information he usually wouldn’t share so freely and confessing that $15,000 had been stolen from one of his accounts.
My friend is nothing else if not a very protective mother bear; she doesn’t necessarily become involved in her son’s escapades, but because he seldom shared this type of information with her, she became concerned. She wanted to know what was going on, and eventually, he shared the story in painstaking detail.
As it turned out, even though he had maxed out all his credit cards while in between business ventures, he’d put together a plan to go to Europe and said he kept an account with $15,000 that was now gone.
When my friend asked how this money had been stolen, he told her it had been taken directly from his account without any warning or explanation.
She asked if the bank was applying it to his credit card debt.
He said that wasn’t possible because the credit card debt had been through a different bank.
She wondered if there was a paper trail proving the bank took the money without his authorization. If so, he could request it be returned to his account.
She kept asking questions until he specified which account and bank the money had disappeared from. The answer took her by surprise because she didn’t even know he had accounts with that bank.
She dug deeper and soon discovered that no, in fact, he did not have a checking or savings account with that bank.
But he did have a credit card. And that card had $15,000 of available credit — the money he’d been “saving” for his trip.
What had happened was not that the bank had stolen his money. When all his other cards were maxed out, his credit score had gone down, so the bank lowered his credit limit. That wasn’t his money, and it hadn’t been stolen; it had never been his to begin with.
No, he insisted. That was his money. He was saving that credit as his only source of income.
But what is income?
Credit doesn't provide an opportunity to save
Income is generally defined by its function: providing consumption and saving opportunities.
I’ve always maintained that credit cards are not an alternative source of income.
While having credit available on a credit card does offer a way to provide ourselves with consumption, it does not offer us a saving opportunity. Much the opposite, in fact, most of the time.
Under certain conditions, credit can offer us a way to leverage our money. If we use our credit cards to make purchases, we will have a clean and easy paper trail of what we’ve purchased and when. Credit cards also offer many perks as incentives compared to other payment methods.
How to use credit cards to your advantage
That said, there are only two ways to use credit cards to your advantage:
If you pay your card off in full before the end of the billing cycle each month, you will receive your rewards and incentives. It can be easier to pay one monthly bill than to account for each expense.
Often, credit cards provide promotional offers of no interest or fees on purchases within a specific time if you pay the monthly minimum payments.
Both options are available, but you must understand the specific terms and conditions precisely. Once you exceed these parameters, the interest, fees and penalties are costly because interest is calculated continuously and compounded. Paying the total amount doesn’t eliminate the average daily balance calculations, so it can take several months, with no additional charges, to clear your account.
NYSUT NOTE: Getting your finances in order is not always a simple task, which is why establishing a strategy to manage and eliminate your debt is an important first step. NYSUT members have help from the NYSUT Member Benefits Corporation-endorsed Cambridge Credit Counseling program. Whether it’s paying off student loans, learning tips for creating and sticking to a budget, or paying down personal debt, Cambridge certified counselors can help you set financial goals to help you get out of debt in a fraction of the time. Visit the member website to get your free, no-obligation, debt consultation today.
Selecting the right person to administer the estate
Often, people choose family members to administer the estate, but that can be challenging, especially if they don’t understand tax laws and have the expertise to manage certain types of complex assets, real estate and retirement accounts. In some cases, the process often becomes more expensive and time-intensive.
Then there are the family dynamics to consider when you choose an executor. If family members don’t get along or disagree on how the estate is being handled, that may also add more time and expense — in addition to mental anguish. If you do go the professional route to administer the estate, you want to balance the cost of paying an estate expert versus having a family member navigate the different pieces.
You want to create the smallest possible tax burden for your heirs. Without an estate plan for tax considerations, your heirs could get hit hard.
Wills do not avoid estate taxes. Also known as the “death tax,” the federal estate tax is a tax that’s levied on a person’s inherited assets. The federal estate tax ranges from rates of 18% to 40% but generally only applied to assets over $13.61 million in 2024 (for 2025 the estate tax exemption rises to $13.99 million for individuals and $27.98 million for married couples). Some states also levy an estate tax. An estate’s value may determine whether it’s exempt from the state tax or not, and those thresholds vary from state to state.
Here are some ways to lower your heirs’ tax burden:
A life insurance plan may remove tax consequences for your heirs. The death benefit, whether it’s with a term or whole life policy, is generally not subject to income taxes unless the beneficiaries receive payouts in installments.
A living trust typically will include language that may maximize the estate tax exemptions available in the state they reside in. Most states have estate tax thresholds that are much lower than the federal threshold — Oregon’s exemption, for example, is just $1 million. A properly designed trust may be an important tool in helping ensure that the allowable exemptions are fully maximized, potentially saving heirs a substantial sum.
Gifting your heirs annually while you’re still alive may be the most direct way to minimize inheritance tax. For 2024, the annual gift tax exclusion is $18,000, which generally means a person can give up to $18,000 to as many people as he or she wants without having to pay any taxes on the gifts. For example, a grandparent could give $18,000 to each of their 10 grandchildren this year with no gift tax implications. In 2025, the exclusion rises to $19,000, with married couples effectively being able to double this amount to $38,000 per recipient.
Converting retirement accounts to Roth accounts could make sense. Heirs may pay tax on any inherited retirement benefits if they are in a 401(k) or individual retirement account (IRA). But if they inherit a Roth 401(k) or Roth IRA, they will not have to pay taxes on them. If you have retirement funds that you won’t need, you may want to consider a Roth conversion to help reduce the tax burden on the assets your heirs inherit.
Understanding tax considerations and reducing the burden on heirs
You want to create the smallest possible tax burden for your heirs. Without an estate plan for tax considerations, your heirs could get hit hard.
Wills do not avoid estate taxes. Also known as the “death tax,” the federal estate tax is a tax that’s levied on a person’s inherited assets. The federal estate tax ranges from rates of 18% to 40% but generally only applied to assets over $13.61 million in 2024 (for 2025 the estate tax exemption rises to $13.99 million for individuals and $27.98 million for married couples). Some states also levy an estate tax. An estate’s value may determine whether it’s exempt from the state tax or not, and those thresholds vary from state to state.
Here are some ways to lower your heirs’ tax burden:
How to score a low mortgage rate
If you're looking to purchase a home in this market, taking these steps can help you score a low mortgage rate:
1. Increase your down payment
To qualify for the lowest rates on a conventional loan backed by Fannie Mae or Freddie Mac — the nation’s two largest mortgage buyers — you’ll need a 20% down payment, said Melissa Cohn, a regional vice president at William Raveis Mortgage, a national lender headquartered in Shelton, Conn. “The bigger your down payment, the better the rate,” Cohn said.
Need a little help piecing together a bigger down payment? DiBugnara recommended looking into national and local down payment assistance programs. You can research eligibility requirements for thousands of down payment assistance programs at DownPaymentResource.com.
Spousal IRAs: An important tool for non-working spouses
A spousal IRA is another valuable tool for a non-working spouse. Even without their own earned income, the non-working spouse can contribute to an IRA, provided the couple files a joint tax return. Over time, consistent contributions to a spousal IRA can grow into a significant source of retirement income, helping to ensure financial independence.
For example, in 2024, Mary (age 45) and Mike (age 50) file a joint federal income tax return. Mary earns $100,000, while Mike stays home to care for ill parents. Mary can contribute $7,000 to her IRA (or Roth IRA), and Mike can also contribute up to $8,000 to his IRA, thanks to the spousal IRA rules. Since Mike is at least 50 years old, he is allowed the catch-up provision above the traditional IRA contribution limit.
If you file a joint federal income tax return, your contribution eligibility is based on your combined modified adjusted gross income (MAGI), allowing a non-working spouse to contribute to a traditional IRA or Roth IRA even without personal earnings, if the combined MAGI falls within the allowable income thresholds. In 2024, for married couples filing jointly, you can contribute the full $7,000 if your MAGI is below $230,000. If your MAGI is between $230,000 and $240,000, your ability to contribute or deduct is gradually reduced. If either spouse is over 50, they can contribute an additional $1,000 as a catch-up contribution, bringing the total to $8,000.
Qualified domestic relations orders (QDROs)
While everyone hopes for a lasting marriage, it's essential for both parties to consider how retirement assets will be divided in the event of divorce, especially for a spouse with little or no retirement savings. Under federal law, retirement plan benefits generally cannot be assigned to someone other than the participant, except through a qualified domestic relations order (QDRO). This legal document allows a non-working spouse to claim a portion of the participant's retirement benefits in the event of divorce.
For instance, a QDRO could allocate a portion of a 401(k) or pension plan to the non-working spouse. Given the complexities of dividing retirement benefits in divorce, particularly with defined benefit plans, it’s crucial to consult with an experienced attorney who can draft a QDRO that addresses important aspects like survivor benefits and plan subsidies during or after divorce proceedings.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Daniel Bortz
Contributing Writer, Kiplinger Personal Finance
Daniel Bortz is a freelance writer based in Arlington, Va. His work has been published by The New York Times, The Washington Post, Consumer Reports, Newsweek, and Money magazine, among others.
NYSUT NOTE: Keeping a close eye on your finances is even more important when only one spouse is in the workforce. The NYSUT Member Benefits Corporation–endorsed Financial Counseling Program can advise on a wide range of topics from estate planning to basic budgeting. It's only $260 annually for a full-service plan with unbiased, objective insight.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
MaryJane LeCroy, CFP®
Managing Director, Senior Wealth Advisor, Linscomb Wealth
With over 23 years of experience in the wealth management industry, MaryJane’s areas of expertise include financial planning, investment strategy, portfolio management, retirement planning, tax planning and estate planning. MaryJane serves as a member of the Linscomb Wealth Executive Team and Chairwoman of LW’s Wealth Management Committee. She is also a member of Financial Planning Association of Georgia and Houston. MaryJane resides in the Atlanta metro area with her husband and son. She enjoys traveling and beach time with her family and friends.
Reduction in your benefit for early retirement
You can claim Social Security as early as age 62. But if you claim benefits early, you will see a reduction in your benefit amount.
At what age should you start receiving benefits?
How much you receive in monthly benefits depends on the age you begin receiving Social Security. Putting off filing for benefits as long as possible will maximize your monthly payments. However, when you start claiming benefits is up to you and will depend on any number of circumstances, such as if you decide to continue working past the age of 62.
If you experience an unexpected health emergency or you don't expect to live a long life, you may decide to claim benefits early. On the other hand, if you have resources like a pension, investment portfolio, or other sources of income, you might feel you can be flexible about when to take Social Security benefits. However, if you need your benefits to make ends meet, you may have fewer options.
Full Retirement Age (FRA)
FRA is the age you can start receiving your full retirement benefit amount. If you were born from 1943 to 1954, your FRA is age 66. The FRA gradually increases if you were born from 1955 to 1960, until it reaches 67. If you were born in 1960 or later, your full retirement benefits are payable to you at age 67. Use our Social Security Full Retirement Age calculator to sort it out.
Early retirement age
You can begin taking Social Security retirement benefits as early as age 62. However, taking benefits before your full retirement age will mean a permanent reduction in your payments — as much as 25% to 30%, depending on your full retirement age. And, despite what you may think, your payment will not automatically increase to 100% of your full retirement benefit when you reach full retirement age.
However, Social Security gives you 12 months from the date you applied for retirement benefits to cancel your initial claim if you change your mind. That way, you can refile when you reach full retirement age and get your full benefit amount. However, you will have to repay any money Social Security has paid you. Also, if you continue working but claim benefits early, your monthly payment might be cut further, depending on your income. However, the reduction is not permanent.
Delayed retirement age
If you hold off claiming your Social Security benefits beyond your FRA, your retirement benefit will continue to increase up until age 70. There is no incentive to delay claiming after age 70. All things considered, it pays to delay claiming your benefits, sometimes even beyond your FRA.
The survey by Nationwide Financial also revealed that few people know all of the details of how Social Security works, with almost half of Americans having an incorrect view about how claiming benefits early (or late) will impact their monthly benefit.
Of those not currently receiving Social Security benefits, two in five are unsure how much their future monthly payment will be.
Many of those surveyed aren’t sure at what age to expect their retirement savings to run out.
Less than half of those surveyed agree that they expect their Social Security benefits will be enough to cover their basic needs in retirement.
When thinking about retirement, nearly two-thirds plan to use or are using their full Social Security benefit for their monthly expenses.
A third (34%) of adults not currently receiving Social Security benefits (but who plan to) intend on filing for benefits early and continuing to work.
More than three in five who pay to work with a financial professional report that they receive advice about how and when to file for benefits.
Those age 60-65 expect to draw Social Security at an average age of 65.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Daniel Bortz
Contributing Writer, Kiplinger Personal Finance
Daniel Bortz is a freelance writer based in Arlington, Va. His work has been published by The New York Times, The Washington Post, Consumer Reports, Newsweek, and Money magazine, among others.
8. Costa Rica
Average daily cost: $133
Average accommodation cost for one person: $59
Average daily meals cost: $41
Despite being the size of West Virginia, Costa Rica is a land of abundance and adventure. The quiet Central American country has miles of coastline on both the Pacific and Caribbean oceans, and with jungle lodges, rainforest treks, volcanoes and cloud forests, it boasts some of the most diverse ecosystems on the planet. With fresh food and fruit in abundance, you can truly enjoy the “pura vida.”
One study even named Costa Rica as the best country to retire in 2024.
7. Mexico
Average daily cost: $126
Average accommodation cost for one person: $43
Average daily meals cost: $42
America’s neighbor Mexico is home to Mexico City, the fifth largest city in the world. Not only does Mexico have several urban oases, but the North American country is also known for its beautiful beaches that are regularly listed as some of the best in the world. From ancient jungle ruins to iconic buildings, you’ll find pretty much everything you could want on a vacation — and for a good price.
6. Turkey
Average daily cost: $124
Average accommodation cost for one person: $50
Average daily meals cost: $31
Turkey is one of the most visited countries in the world but remains an underrated tourist destination. Straddling Europe and Asia, Turkey is a fabulous melting pot of cultures that can be seen in everything from architecture to cuisine.
There's an assortment of choices for visitors — from mountain ranges to beach-littered coasts, to the sprawling colorful metropolis of Istanbul, Turkey has everything. Despite the devastating earthquakes that hit the country in 2023, many tourist destinations in the west (hundreds of miles from the affected areas) are open and actively welcoming visitors.
5. South Africa
Average daily cost: $108
Average accommodation cost for one person: $50
Average daily meals cost: $36
One of the best reasons to visit South Africa, of course, is to go on a safari. The country is one of the world's best places to see the Big Five (elephant, buffalo, rhino, lion and leopard) and has several national parks and game reserves to explore. But that's not all the country has to offer. While in South Africa, make sure to walk among the wildflowers of Namaqua, hike up Table Mountain, go whale-watching or spend a day relaxing on the beach.
4. Thailand
Average daily cost: $102
Average accommodation cost for one person: $39
Average daily meals cost: $30
Flights to this South Asian country can be expensive, but other costs make up for it. Known for its tropical beaches, jungle temples, Buddha statues and delicious restaurants and street markets in the bustling city of Bangkok, it's no wonder Thailand is the second most visited country in Southeast Asia.
3. Indonesia
Average daily cost: $72
Average accommodation cost for one person: $32
Average daily meals cost: $27
Indonesia is home to Bali — often at the top of the rankings when it comes to the best place to visit in the world. But there’s more to this paradise of a country than Instagram-worthy views. With over 17,000 islands, Indonesia is the world’s largest island country boasting stunning beaches, volcanoes, jungles, orangutan colonies, giant Komodo dragons and vast mountain ranges. The best of all? Your money goes very far here.
2. Vietnam
Average daily cost: $61
Average accommodation cost for one person: $29
Average daily meals cost: $14
Vietnam is a beautiful country with culturally rich cities and diverse landscapes to explore. There's a never-ending list of things to do while in this Southeast Asian country, like eating the best banh mi in Ho Chi Minh City, exploring the bustling streets of Hanoi's Old Quarter, visiting the world's largest cave at Phong Nha-Ke Bang National Park or taking a tour of Ha Long Bay. In Vietnam, you'll have the experience of a lifetime without going broke.
Recently, 529 plans hit a new milestone with over half a trillion dollars being saved in plans across the country. Why are 529 plans so popular?
More families have been taking advantage of 529 plans than ever, with the number of new accounts opened rising each year. And thanks to this surge in popularity, 529s have just hit a new milestone.
Savings in 529 plans across the country have surpassed half a trillion dollars for the first time, according to the College Savings Plans Network (CSPN), a network of the National Association of State Treasurers. Over $508 billion has been invested across 16.8 million open 529 accounts nationally, with the average size of each account increasing from $13,188 in 2009 to $30,295 in 2024.
529 plans are powerful tools that can help you tackle rising education costs. So if you’re looking to save for your child or grandchild’s future college expenses, opening a 529 plan could be the best way to do so, given the plan's favorable tax treatment and the rising cost of a college education.
Mary Morris, Chair of the College Savings Plans Network and CEO of Invest529 says she finds it “encouraging” to see families increasingly recognize “the importance of postsecondary education and that 529 plans exist to help them make that a reality.”
Here’s what you need to know about 529 savings plans and why they’re more popular now than ever.
529 plans and why they’re so popular
529 plans allow a contributor to prepay a beneficiary's qualified higher education expenses at an eligible educational institution or to contribute to an account for paying those expenses. The main benefit? While 529 contributions have to be made with after-federal-tax money, the contributions grow free from federal or state tax.
But there are two additional benefits that 529s have gained fairly recently that make them increasingly attractive savings vehicles.
The first benefit is the ability to roll over unused funds from your 529 plan to a Roth IRA, thanks to changes made to the Internal Revenue Code by the SECURE 2.0 Act. By rolling over unused funds from a 529 account into a Roth IRA, individuals will now be able to avoid income tax and tax penalties that occur when withdrawing funds for non-education expenses. But there are limitations.
The other benefit? It’s what’s referred to as the “grandparent loophole.” The new streamlined FAFSA (which starts with the 2024–25 award year) recently made changes to how distributions are treated, giving grandparents a positive advantage. On the 2024-25 FAFSA, students are no longer required to report cash gifts from a grandparent or contributions from a grandparent-owned 529 savings plan. Because of this, grandparents can now use a 529 plan to fund a grandchild’s education without impacting their grandchild's financial aid eligibility.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Erin Bendig
Personal Finance Writer
Erin pairs personal experience with research and is passionate about sharing personal finance advice with others. Previously, she was a freelancer focusing on the credit card side of finance, but has branched out since then to cover other aspects of personal finance. Erin is well-versed in traditional media with reporting, interviewing and research, as well as using graphic design and video and audio storytelling to share with her readers.
See if you can relate to this … You have contributed to a 401(k), 403(b) or other employer-sponsored account at work, maybe you’re paying extra on the mortgage or have already paid it off, you keep cash on hand for those unexpected expenses or upcoming big-ticket purchases and you often wish there was a way to pay less in taxes.
You have worked for 30 or 40 years and are at or approaching Social Security eligibility and are now looking at when to take Social Security to maximize your benefits.
Sound familiar? Now, here’s what often comes next … You look at the account statements and begin to wonder whether the investments you have are the right ones to own for where you are in life. You begin weighing your options for making withdrawals from your retirement accounts. You aren’t sure exactly how this is done, and you’re nervous about the risk of a stock market pullback and the possibility of running out of money. And then it happens, you begin searching the internet for answers. (That may even be how you ended up here!) After a lot of searching and reading you realize that there are just too many opinions to choose from, and you resort to simply eliminating options that you’re not as familiar with or have heard negative things about. Then you take what’s left and try to put together a coherent strategy while continuing a search to find information that supports what you have contrived.
This is an all-too-common situation. Maybe this is exactly where you are or perhaps it describes something similar, but either way, you wouldn’t be reading this far into the article without some truth to what I am describing.
Regardless of the details, what you do next is critical to your long-term success. The decisions you make will determine the trajectory of your financial future, and it’s imperative to have a good plan to follow.
Opportunity #1: Life insurance is more affordable than you think.
The LIMRA study showed about 3 of 4 Americans overestimate the true cost of a basic term life insurance policy.
The cost of life insurance for a healthy 30-year-old male is around $158 per year for a term policy. Term life insurance is a cost-effective way to have the death benefit protection you need for a period of time and can be a perfect starting point.
The truth is you can get more from your life insurance policy than what you pay for it. The value in these types of policies goes beyond what your heirs receive when you die. In addition to the death benefit, permanent life insurance can have the ability to grow cash value, an optional chronic illness benefit and more.
Opportunity #2: It’s simple to buy life insurance.
Today’s life insurance applications are digital and easy to fill out on your own, or with the help of your financial professional. The underwriting interview is typically simple and quick. Many times, a link to the interview can be sent to you when your application is received. You can complete the interview at your own pace on a laptop, tablet or smartphone.
And if you’re healthy, detailed medical questions or screenings may not be necessary. If additional medical information is needed, it can often be obtained electronically. If you’ve ever been turned down for life insurance for a health condition, it’s worth trying again, as more people are insurable than ever before.
Opportunity #3: You can access some life insurance benefits while you’re still alive.
You can buy policies that have potential to grow tax-deferred cash value, and you may be able to take tax-free loans and withdrawals* and use the money any way you choose. You could pay for things like a wedding, a down payment on a home or supplement your retirement income using cash value in the policy.
There are times when you might choose to use cash value from a life insurance policy as income. The advantage is that you will generally pay no income taxes or penalties on what you withdraw, there are no age requirements, and there are no required minimum distributions (RMDs). You can also use the death benefit for yourself if you’re chronically or terminally ill.
Opportunity #4: Life insurance offers financial protection for your loved ones.
Life insurance can help maintain your family’s lifestyle and dreams. If you were to die unexpectedly, the livelihood of your family could be at risk. There are expenses related to housing, food, clothing, college, etc., that will not die with you.
Life insurance can also help reduce estate taxes for you and your beneficiaries. Your estate tax burden may not seem problematic today, but if your assets are positioned well, they will grow, and your future estate could be affected by tax laws.
Another important factor to consider: Life insurance can be a great way to protect and potentially enhance your legacy. It can give your surviving spouse or other dependents income when you’re gone. When you die, your surviving spouse or other dependents will likely still need income, and a generally tax-free death benefit** could provide that.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Erin Bendig
Personal Finance Writer
Erin pairs personal experience with research and is passionate about sharing personal finance advice with others. Previously, she was a freelancer focusing on the credit card side of finance, but has branched out since then to cover other aspects of personal finance. Erin is well-versed in traditional media with reporting, interviewing and research, as well as using graphic design and video and audio storytelling to share with her readers.
Planning to buy homeowners insurance for the first time? Here's what you need to know and how to get started.
Are you buying a home? Congratulations. That's a huge milestone. With it comes the need to protect this new asset for the years ahead. How to protect it? You'll need homeowners insurance.
Unfortunately, home insurance rates are high. Rates have increased 11.5% since 2022 and now cost $2,728 per year, or $227 per month on average, according to MarketWatch. So you'll want to shop around to ensure you get the best price.
But before you can start comparing quotes, you’ll need to decide how much and what type of coverage to get. A home’s insurance value is based on the cost to rebuild the house, not the market value.
You can get an estimate of the home’s rebuilding cost at AccuCoverage.com, which asks many questions about the house's size, building materials and additional details. It then uses the same building-cost database that insurers use. Or you can work with an agent or the insurer to come up with an estimate.
Here's what you need to know about buying homeowners insurance.
What is covered when you buy homeowners insurance?
Homeowners insurance provides coverage for your possessions based on a certain percentage of your home’s insurance value — 75% is typical. So if your home is insured for $200,000, you’ll also likely have up to $150,000 of coverage for your possessions.
It's important to note, homeowners insurance policies usually have lower limits for certain kinds of items — such as $2,000 or $3,000 for all of your jewelry, for example. If you have any particularly valuable possessions — such as jewelry, artwork or special collections — you may want to get extra coverage for those items.
What is not covered when you buy homeowners insurance?
Homeowners insurance offers a wide range of protection, but it’s a good idea to get familiar with what it generally doesn’t cover. Damage resulting from neglect, mold, pest infestations, or lack of regular maintenance is commonly excluded.
For example, if you live in a flood-prone area, adding flood insurance may be wise, as standard policies rarely cover flood-related damage. Similarly, in regions prone to earthquakes, consider purchasing earthquake coverage, either as a rider to your policy or as a separate stand alone plan.
Being aware of exclusions allows you to plan for any additional coverage you may need, giving you greater peace of mind.
How do you get a quote on homeowners insurance?
Once you have an estimate on how much coverage you'll need, you should then begin comparing quotes. Start by getting a price quote from the company that handles your auto insurance — some providers give a discount on your auto and home insurance if you have both policies with the same company.
Also, if you have an auto insurance agent, find out whether they work for one company or are an independent agent who works with several companies. An independent agent can give you price quotes from several insurers. On the other hand, you may also want to contact a few big insurers separately, such as State Farm, which doesn’t sell through independent agents.
And if you have any military connection in your family, it’s worthwhile to contact USAA, too (see USAA’s page for a list of who is eligible). If you don’t have an independent agent, you can find one in your area through the Independent Agents and Brokers of America agent search.
However, before you settle on an insurance company, check out the insurer’s complaint record through the National Association of Insurance Commissioners Consumer Information Source. Saving a few dollars in premiums can backfire if your insurer ends up hassling you about claims.
How do you choose a deductible?
Once you have an estimate on how much coverage you'll need, you should then begin comparing quotes. Start by getting a price quote from the company that handles your auto insurance — some providers give a discount on your auto and home insurance if you have both policies with the same company.
Also, if you have an auto insurance agent, find out whether they work for one company or are an independent agent who works with several companies. An independent agent can give you price quotes from several insurers. On the other hand, you may also want to contact a few big insurers separately, such as State Farm, which doesn’t sell through independent agents.
And if you have any military connection in your family, it’s worthwhile to contact USAA, too (see USAA’s page for a list of who is eligible). If you don’t have an independent agent, you can find one in your area through the Independent Agents and Brokers of America agent search.
However, before you settle on an insurance company, check out the insurer’s complaint record through the National Association of Insurance Commissioners Consumer Information Source. Saving a few dollars in premiums can backfire if your insurer ends up hassling you about claims.
Should you get flood insurance?
If you’re concerned about flooding, which isn’t covered by homeowners insurance, go to www.floodsmart.gov to see the home’s risk of flooding and get prices for flood coverage through the National Flood Insurance Program.
You can buy flood insurance through most homeowners insurance agents. Your mortgage company may require flood coverage if you live in a high-risk area, but it can be worthwhile to get the coverage even if it’s not required in some areas of the country.