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11 Numbers That Will Terrify You Into Saving For Retirement Right This Minute




It can be tough to save for retirement when it is still decades away. It’s apparently even tough for older workers who are on the verge of retirement. Living expenses can eat up paychecks, and saving takes a back burner to spending. But it leads to the quintessential fear of what having no money in our older years looks like: the elderly parent who must move in with an adult child, having to choose between food and prescription drugs because only one can be afforded.

Here are some numbers that should scare you into becoming a retirement saver right this very minute:


That’s the amount of money 21 percent of all adult Americans have saved for retirement, according to a recent survey. Not one dollar. Nothing, zero, zip. These adults vary in age, occupation, education and skill set; they come from all over the country, and they are of every ethnicity and race. What they all have in common is just this one thing: They haven’t saved a nickel for retirement.

Oh, and most of them work!

66 percent

Almost 66 percent of employed people between the ages of 21 and 32 have absolutely nothing saved for retirement. For working Latinos in that age bracket, that number jumps to 83 percent. The National Institute on Retirement Security says the reasons for this vary, but certainly include the usual suspects of student loan debt and high housing costs. Things are so tough that 40 percent of millennials are still living at home, real-estate listing site Trulia found in an analysis of 2015 U.S. Census data. It’s the largest percentage since 1940, almost an 80-year period.


Savings among baby boomers ― the generation with retirement nipping closest to its heels ― is in the danger zone. One in three boomers has $25,000 or less in retirement savings.


Fidelity says that by age 30, you should have one year’s worth of salary saved. The company bumps that to twice your salary by age 35, three times your salary by age 40, seven times at 55, and 10 times at 67.

So, if you are 67 and earning $100,000 a year, you should have $1 million saved. Pass the Kleenex time?

Here’s a reality check: Across all age groups, the average retirement savings is a mere $95,766, according to the Economic Policy Institute, proving that Americans just don’t save enough, regardless of their age.

How do you get back on course? If you’re not saving enough in your employer’s plan to get the full matching contribution, increase your contribution. If you don’t have access to a 401(k), start an IRA. Use a nifty calculator like this one that tells you what each big purchase you want to make will “cost” in terms of retirement years. And for inspiration, watch how your money would grow on a compound interest calculator.


One of the more widely used rules of thumb says that for every $1,000 in monthly income you will need in retirement, you should have $250,000 saved. Let’s say you estimate that you will need $4,000 a month to live on when you retire. Roughly speaking, means you need to save $1,000,000.

This rule assumes that your investments will generate an annualized real return of 4 percent per year. Stocks, over the long run, are expected to produce annualized returns of roughly 7 percent, and this rule allows for inflation to devalue the dollar at roughly 3 percent a year. If investments generate less or inflation busts out, all bets are off.


According to Economic Policy Institute data, the average retirement savings for families aged 50 to 55 is $124,831. For families aged 56 to 61, it’s $163,577. That’s far less than the recommended $1 million.

Your 50th birthday means you can legally begin making catch-up contributions to your employer’s 401(k) or your individual retirement account. Go hurry and catch up!

34 percent

Two-thirds of working millennials are offered retirement plans through their employers, but only 34 percent of them participate.

The National Institute of Retirement Security says the other 66 percent aren’t always eligible, despite working for a company that offers a plan. Employers usually require new employees to be with the organization for at least a year before allowing them into retirement plans. Millennials tend to jump from job to job, which hurts them when it comes to retirement savings. In 2014, more than half of millennials had spent a year or less with their current employers, according to NIRS.

One way around it is to set aside money each pay period until you’ve been with an employer for a year and then dump it into your new retirement account. That, or start an IRA. Not saving is not a good option, even if your company makes it harder to do.

5 percent

It’s recommended that millennials save 15 percent of their salary for retirement. Only 5 percent of them do.

The best way to save for retirement is through our jobs. By increasing employer matches and default contribution rates, employers can greatly assist all workers with early-in-career, lower-income savings. Remember, those early-in-career savings increase the value of a long-term account because of decades of compound interest.

20 years

You will need to replace 70 percent to 90 percent of your annual pre-retirement income through savings and Social Security. So, someone who was living on $63,000 a year before retirement would need $44,000 to $57,000 per year in retirement.

Plan for a 20-year retirement. Remember to adjust for inflation and consider Social Security’s uncertainties.

23 percent

Speaking of Social Security, heads up for a 23 percent reduction.

According to the latest projection, if nothing changes, the Social Security Trust Fund will only have enough revenue coming in to pay 77 percent of promised benefits beginning around 2034. If you were expecting to get $2,000 a month, your payout would shrink to $1,540. For younger workers today, that means more of your retirement will need to be funded through your savings ― so start saving ASAP.

And for older Americans, it could mean certain poverty. For 61 percent of elderly beneficiaries, Social Security provides the majority of their cash income. For 33 percent, it provides 90 percent or more of their monthly income. The average monthly retirement benefit was recently $1,368, or $16,416 per year. The overall maximum monthly Social Security benefit for those retiring at their full retirement age in 2017 is still just $2,687 ― or about $32,000 for the whole year.

81 percent

Ignorance is not bliss when you will probably need to fund a 20-year retirement, yet an Age Wave/Merrill Lynch report found that 81 percent of Americans have no idea how much money they will need for retirement. Granted, retirement savings amounts are based on a lot of assumptions about things you can’t predict in your future ― your health, where you live, etc. But that’s not an excuse for saving nothing.

Start somewhere and take ownership of at least setting a target amount as a goal. That, or cue up the theme song from “The Twilight Zone.”


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4 things kids need to know about money




(NC) Responsible spending includes knowing the difference between wants and needs. Back-to-school season, with added expenses and expectations around spending, is the perfect time to not only build your own budget for the year ahead, but also to introduce your own children to the concept of budgeting.

The experts at Capital One break down four basic things that every child should know about money, along with tips for bringing real-life examples into the conversation.

What money is. There’s no need for a full economic lesson,but knowing that money can be exchanged for goods and services, and that the government backs its value, is a great start.
How to earn money. Once your child understands what money is, use this foundational knowledge to connect the concepts of money and work. Start with the simple concept that people go to work in exchange for an income, and explain how it may take time (and work) to save for that new pair of sneakers or backpack. This can help kids develop patience and alleviate the pressure to purchase new items right away that might not be in your budget.
The many ways to pay. While there is a myriad of methods to pay for something in today’s digital age, you can start by explaining the difference between cash, debit and credit. When teaching your kids about credit, real examples help. For instance, if your child insists on a grocery store treat, offer to buy it for them as long as they pay you back from their allowance in a timely manner. If you need a refresher, tools like Capital One’s Credit Keeper can help you better understand your own credit score and the importance of that score to overall financial health.
How to build and follow a budget. This is where earning, spending, saving and sharing all come together. Build a budget that is realistic based on your income and spending needs and take advantage of banking apps to keep tabs on your spending in real-time. Have your kids think about how they might split their allowance into saving, spending and giving back to help them better understand money management.

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20 Percent Of Americans In Relationships Are Committing Financial Infidelity




Nearly 30 million Americans are hiding a checking, savings, or credit card account from their spouse or live in partner, according to a new survey from That’s roughly 1 in 5 that currently have a live in partner or a spouse.

Around 5 million people — or 3 percent — used to commit “financial infidelity,” but no longer do.

Of all the respondents, millennials were more likely than other age groups to hide financial information from their partner. While 15 percent of older generations hid accounts from their partner, 28 percent of millennials were financially dishonest.

Regionally, Americans living in the South and the West were more likely to financially “cheat” than those living in the Northeast and Midwest.

Insecurity about earning and spending could drive some of this infidelity, according to industry analyst Ted Rossman.

When it comes to millennials, witnessing divorce could have caused those aged 18-37 to try and squirrel away from Rossman calls a “freedom fund”.

“They’ve got this safety net,” Rossman said. They’re asking: “What if this relationship doesn’t work out?”

As bad as physical infidelity

More than half (55 percent) of those surveyed believed that financial infidelity was just as bad as physically cheating. That’s including some 20 percent who believed that financially cheating was worse.

But despite this, most didn’t find this to be a deal breaker.

Over 80 percent surveyed said they would be upset, but wouldn’t end the relationship. Only 2 percent of those asked would end the relationship if they discovered their spouse or partner was hiding $5,000 or more in credit card debt. That number however is highest among those lower middle class households ($30,000-$49,999 income bracket): Nearly 10 percent would break things off as a result.

Roughly 15 percent said they wouldn’t care at all. Studies do show however that money troubles is the leading cause of stress in a relationship.

That’s why, Rossman says, it’s important to share that information with your partner.

“Talking about money with your spouse isn’t always easy, but it has to be done,” he said. “You can still maintain some privacy over your finances, and even keep separate accounts if you and your spouse agree, but you need to get on the same page regarding your general direction, otherwise your financial union is doomed to fail.”

With credit card rates hovering at an average of 19.24 percent APR, hiding financial information from a partner could be financially devastating.

But, Rossman adds, it’s not just about the economic impact but also the erosion of trust.

“More than the dollars and cents is that trust factor,” he said. “I think losing that trust is so hard to regain. That could be a long lasting wedge.”

Kristin Myers is a reporter at Yahoo Finance. Follow her on Twitter.

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7 Examples Of Terrible Financial Advice We’ve Heard




Between television, radio, the internet and well-meaning but presumptuous friends and family, we’re inundated with unsolicited advice on a daily basis. And when it comes to money, there’s a ton of terrible advice out there. Even so-called experts can lead us astray sometimes.

Have you been duped? Here are a few examples of the worst money advice advisers, bloggers and other personal finance pros have heard.

1. Carry a balance to increase your credit score.

Ben Luthi, a money and travel writer, said that a friend once told him that his mortgage loan officer advised him to carry a balance on his credit card in order to improve his credit score. In fact, the loan officer recommended keeping the balance at around 50 percent of his credit limit.

“This is the absolute worst financial advice I’ve ever heard for several reasons,” Luthi said. For one, carrying a credit card balance doesn’t have any effect on your credit at all. “What it does do is ensure that you pay a high interest rate on your balance every month, neutralizing any other benefits you might get from the card,” Luthi explained. “Also, keeping a 50 percent credit utilization is a surefire way to hurt your credit score, not help it.”

Some credit experts recommend keeping your balance below 30 percent of the card limit, but even that’s not a hard-and-fast rule. Keeping your balance as low as possible and paying the bill on time each month is how you improve your score.

2. Avoid credit cards ― period.

Credit cards can be a slippery slope for some people; overspending can lead to a cycle of debt that’s tough to escape.

But avoiding credit cards on principle, something personal finance gurus like Dave Ramsey push hard, robs you of all their potential benefits.

“Credit cards are a good tool for building credit and earning rewards,” explained personal finance writer Kim Porter. “Plus, there are lots of ways to avoid debt, like using the card only for monthly bills, paying off the card every month and tracking your spending.”

If you struggle with debt, a credit card is probably not for you. At least not right now. But if you are on top of your finances and want to leverage debt in a strategic way, a credit card can help you do just that.

3. The mortgage you’re approved for is what you can afford.

“The worst financial advice I hear is to buy as much house as you can afford,” said R.J. Weiss, a certified financial planner who founded the blog The Ways to Wealth. He explained that most lenders use the 28/36 rule to determine how much you can afford to borrow: Up to 28 percent of your monthly gross income can go toward your home, as long as the payments don’t exceed 36 percent of your total monthly debt payments. For example, if you had a credit card, student loan and car loan payment that together totaled $640 a month, your mortgage payment should be no more than $360 (36 percent of $1,000 in total debt payments).

“What homeowners don’t realize is this rule was invented by banks to maximize their bottom line ― not the homeowner’s financial well-being,” Weiss said. “Banks have figured out that this is the largest amount of debt one can take on with a reasonable chance of paying it back, even if that means you have to forego saving for retirement, college or short-term goals.”

4. An expensive house is worth it because of the tax write-off.

Scott Vance, owner of, said a real estate agent told him when he was younger that it made sense to buy a more expensive house because he had the advantage of writing off the mortgage interest on his taxes.

But let’s stop and think about that for a moment. A deduction simply decreases your taxable income ― it’s not a dollar-for-dollar reduction of your tax bill. So committing to a larger mortgage payment to take a bigger tax deduction still means paying more in the long run. And if that high mortgage payment compromises your ability to keep up on other bills or save money, it’s definitely not worth it.

“Now, as a financial planner focusing on taxes, I see the folly in such advice,” he said, noting that he always advises his client to consider the source of advice before following it. ”Taking tax advice from a Realtor is … like taking medical procedure advice from your hairdresser.”

5. You need a six-month emergency fund.

One thing is true: You need an emergency fund. But when it comes to how much you should save in that fund, it’s different for each person. There’s no cookie-cutter answer that applies to everyone. And yet many experts claim that six months’ worth of expenses is exactly how much you should have socked away in a savings account.

“I work with a lot of Hollywood actors, and six months won’t cut it for these folks,” said Eric D. Matthews, CEO and wealth adviser at EDM Capital. “I also work with executives in the same industry where six months is overkill. You need to strike a balance for your work, industry and craft.”

If you have too little saved, a major financial blow can leave you in debt regardless. And if you set aside too much, you lose returns by leaving the money in a liquid, low-interest savings account. “The generic six months is a nice catch-all, but nowhere near the specific need of the individual’s unique situation… and aren’t we all unique?”

6. You should accept your entire student loan package.

Aside from a house, a college education is often one of the biggest purchases people make in their lifetimes. Often loans are needed to bridge the gap between college savings and that final tuition bill. But just because you’re offered a certain amount doesn’t mean you need to take it all.

“The worst financial advice I received was that I had to accept my entire student loan package and that I had no other options,” said Gina Zakaria, founder of The Frugal Convert. “It cost me a lot in student loan debt. Now I tell everyone that you never have to accept any part of a college financial package that you don’t want to accept.” There are always other options, she said.

7. Only invest in what you know.

Even the great Warren Buffett, considered by many to be the best investor of all time, gets it wrong sometimes. One of his most famous pieces of advice is to only invest in what you know, but that might not be the right guidance for the average investor.

In theory, it makes sense. After all, you don’t want to tie up your money in overly complicated investments you don’t understand. The problem is, most of us are not business experts, and it’s nearly impossible to have deep knowledge of hundreds of securities. “Diversification is key to a good portfolio, and investing in what you know leads to a very un-diversified portfolio,” said Britton Gregory, a certified financial planner and principal of Seaborn Financial. “Instead, invest in a well-diversified portfolio that includes many companies, even ones you’ve never heard of.”

That might mean enlisting the help of a professional, so make sure it’s one who has your best interests at heart.

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