RSS Feed

Archives

  • Categories

    • Celebrate Financial Literacy Month with a Checklist for the Decades

    April 24th, 2013

    9 Check ListApril is Financial Literacy month, and it’s a good reminder that financial literacy is a lifelong process. There are different financial needs you face at different stages of your life.

    Get into the habit of saving as early as possible. Your 20s is a great decade to learn about investing, to enroll in your company’s benefit plan (and contribute at least enough to get any company match!), to open up a savings account, and to open a personal retirement account like an IRA. Also, start working to pay down your debt. You may have taken out loans for your education, or to buy a car, and you may have racked up some credit card debt too. Even though your 20s is pretty young, paying down your debt should be a goal you start working on as early as possible.

    Your 30s are a great age to ramp up investing in your retirement. Hopefully you’ll be in a better financial situation than you were in your 20s and so you can start saving more money. Increase the amount you invest and contribute to your 401(k) and IRA. Shoot for contributing 10% of your paycheck.

    In your 40s, look into ways you can increase your retirement savings. There may be ways to save more that you don’t know about, so ask around. Consider hiring a financial planning professional if you are concerned that you are not on the right track.

    When you turn 50 you are eligible for IRA catch-up contributions. This means that you are able to contribute more money to your IRA than you were before, to help you save for retirement. Make sure to take advantage of this if you can.  Also, think about what insurance you might need in the future. Look into long-term care insurance. Generally, the younger you are when you enroll, the lower the premium will be.

    During your 60s, finalize your retirement strategy. Make sure you understand what your Social Security benefit will be at various ages and factor this into your decision on when to retire. If you cannot afford to retire, consider your options for continuing to work, even if on a reduced schedule. Remember, if you hold off on retiring, the higher your Social Security benefit will be when you do retire. And  don’t forget to apply for Medicare three months before you turn 65.

    Once you turn 70, your Social Security benefit can no longer increase, so start collecting it if you haven’t already. Also, if you have a traditional IRA that you have not taken withdrawals from yet, you must start taking money out after age 70 and a half. Otherwise, you may get hit with a big tax penalty. Required minimum distributions may also be required for other defined contribution plans like 401(k) plans. This is also the time to evaluate whether your income needs are being met. If they are not, you should review your options and try and find ways to reduce your living expenses.

    All of this information and more can be found on WISER’s checklist, Financial To-Dos for the Decades. This is great resource for yourself and for your friends and family in any stage of life.

    Keep in mind, it is important to know what to focus on now so that when you retire you are financially secure and can enjoy the decades to come!

    Posted in Finanical Literacy Month | Comments »

    Not your grandmother’s savings bonds: purchasing savings bonds electronically

    March 1st, 2013

    As highlighted in our last blog, savings bonds are still a great way to save. But how you purchase them is changing. Starting last year, the sale of paper bonds—the kind you used to be able to walk into a bank and purchase—were discontinued. You now have to purchase them electronically through the Treasury. This can take some know-how to get set up, and we’re here to help.

    The U.S. Treasury’s Bureau of the Public Debt (soon to be renamed Bureau of the Fiscal Services) operates an online account system in which U.S. citizens can invest in savings bonds, as well as marketable securities. The website is www.treasurydirect.gov. Outside of purchasing a savings bond through your tax filing, it is now the only way to purchase bonds. It can be a bit confusing, and the Bureau is planning an upgrade, but to help you now, here are some tips for setting up an account. Below is a picture of the home page, with a red arrow showing the link to “open an account.”

    Before you start, you need to have ready:

    • An e-mail account, and be able to access it during the sign-up process. You will be sent your account number and one time passcode in separate e-mails after you complete the initial application.

    • Your bank account number and the bank’s routing number—the money you use to purchase the bonds will be transferred from that account.

     

    Purchasing Savings Bonds once you’ve set up a Treasury Direct account

    Below is another screen shot of the home page with an arrow showing where you log in to your account.

    You will have to log into your account using the one-time passcode sent to you via e-mail.  If you are using your own computer and want to register it, check the box below where you enter the passcode, otherwise you will have to get a new passcode e-mailed to you every time you access your account.

    Once you have done that, you have to enter the password you created in the set-up process. You will then be taken to the Account Summary page; Click on the BuyDirect tab at the top of the page.

    There will be an assortment of Securities and Bonds listed; to purchase an I Bond, click Series I – an accrual-type security with a combination interest rate of a fixed and an inflation rate.

    You can set up automatic purchases (the “set and forget” kind of savings plan that is a sure way to build a nest egg) in the Purchase Frequency section.

    Happy Saving!

                           

    Posted in America Saves Week, I Bonds | Comments »

    U.S. Savings Bonds: Still a Great Way to Save

    February 27th, 2013

    This week is America Saves Week, a national effort to focus on the importance of savings. As grandmother would say, “it is not how much you make that matters, it is how much you save.”

    One of the most “American” ways to build savings is through U.S. Savings Bonds. But most people think of them as old-fashioned—the birthday gift you got from your grandmother (and as a 10 year old, you thought booooring!) U.S. Bonds, however, are still a very good way to save, and the way you can purchase them is changing.

    An easy way to buy bonds now is from your tax refund. Using IRS form 8888, you can “split your refund” and use part or all of it to buy a U.S. I Bond. The I Bond is issued at face value, unlike other bonds you may remember. A $100 bond costs $100, and interest is added to that amount. Its rate is reset based on the inflation rate. This feature– interest adjusted based on inflation–is something financial money managers seek for high-dollar portfolios for a reason: while inflation has been low recently, it is an economic fact of life and it will eat away at your savings.

    The current I-bond rate (in effect until April 30, 2013) is 1.76%–try finding a CD at that rate! Plus, you can buy one for as little as $50. There are no fees, they are guaranteed, and if you need money for an emergency, you can cash it out after a year.

    To bring attention to this opportune time to buy a bond, there is a national sweepstakes being held called “Save Your Refund.” Through a very simple on-line application, if you buy a savings bond through your tax filing, you can enter a weekly drawing for $250 (five winners a week) AND be included in the $25,000 grand prize drawing on April 19, 2013. This makes buying a bond not only smart, but fun. Check it out at www.saveyourrefund.com 

    When you purchase a bond via your tax filing, a paper bond will be mailed to you. This is now the ONLY way to get a paper bond because in January 2012, the U.S. Treasury stopped issuing them. This means the old-fashioned savings plan has gone electronic, and you must create an account on TreasuryDirect.com to buy bonds. It is not as easy as walking into the bank to get a savings bond, but in our next post, we’ll walk you through how to become a saver via TreasuryDirect.

    Posted in America Saves Week, I Bonds | Comments »

    America Saves Week: Set a Goal. Make a Plan. Save Automatically.

    February 25th, 2013

    America Saves Week 2013

    This year’s America Saves Week motto is Set a Goal. Make a Plan. Save Automatically. These are important steps in building yourself a secure retirement.

    Set a Goal.

    In our Winter 2012 Newsletter, we reported that the Employee Benefit Research Institute (EBRI) found that 42% of workers determine their retirement goal by guessing. And while some people might feel that knowing ‘the number’ is too scary, it turns out, figuring it out may make you more confident. According to EBRI’s research, workers who have done the math are far more confident about achieving their goal than those who haven’t. There are lots of online tools to help you set your goal.  To start, get help figuring out what kind of saver you are by taking this Retirement Personality Profiler quiz. Then read our article about online financial calculators and use them to help determine your retirement goal. You may need some help in figuring out some important retirement information, such as how long you are likely to live. This is a central question to retirement planning because you don’t want to outlive your money. Try taking the following longevity calculator Living to 100. Additionally, you may wondering what the impact on your take home pay will be if you increase your contribution to your 401(k) plan. Use this payroll deduction calculator to find out.

    Make a Plan.

    Once you have your retirement goal, it’s time to make a plan for how you will achieve it. Part of this plan is knowing that you will have financial setbacks in life and you need to be prepared for those by setting up an emergency fund. Your emergency fund should equal three to six months of your expenses (rent, food, transportation), and will allow you to pay for unexpected costs that arise, such as needing to fix your car, having to pay for an unexpected health problem or suddenly losing your job. Keeping that in mind, start saving for retirement as soon as possible. To begin, you should be participating in a retirement savings account.  If your employer has a company retirement plan–like a 401(k)—sign up if you haven’t already.  Make sure you are contributing enough to receive the maximum amount of any company match, if not more.  If you do not have a company plan, or you want to open other retirement accounts, look into a traditional IRA or Roth IRA. Find out the rules regarding these accounts. Total annual IRA contributions for 2013 are capped at $5,500 (or $6,500 for people 50 and older). If you are able to contribute the maximum and have money left over, invest it. If you are not able to contribute the maximum, don’t worry! Contribute what you can and it will add up.

    Save Automatically.

    It is best to save automatically so that you don’t spend that money elsewhere. Have a certain amount of money automatically taken out of your paycheck or bank account every month and put into your retirement savings accounts. Many employers allow you to divide your paycheck into different accounts through direct deposit. Take advantage by putting part of your pay into a savings account. If you get paid in cash, take a small amount to the bank to deposit into a savings account each week. Another quick way to immediately start saving is to have your tax refund automatically put into a savings bond. Visit the IRS website for information on how to set that up. You can also use this time to see what other tax credits you might be eligible for. For example, learn about the Federal Saver’s Tax Credit and Earned Income Tax Credit to see if you qualify.  And be sure to check WISER’s blogs later this week for more information about saving with savings bonds.

    Posted in America Saves Week | Comments »

    WISER Ways to Say “I Love You”

    February 14th, 2013

    There are many ways to show someone you love them. This Valentine’s Day, get creative and show some WISER love by making a few smart financial decisions that will benefit you and your loved ones.

    First, know everything there is to know about your love nest. Every home should have an organized file on hand with all of your important financial documents. Our Factsheet, Financial Documents: What to Keep and Where, can help you get organized.

    Also, this is a great opportunity to become aware of your significant other’s employee-sponsored or other retirement plans and assets. You never know if and when you may need this information down the road. Here are some retirement plan basics to keep in mind in this process. If you are an adult who is caring for or may eventually care for an aging parent, try to have some of these same conversations sooner rather than later.

    Next, look more closely at what you and your spouse or partner are each spending your money on and see if there are ways to save more for the future. Use this fact sheet to help you keep track of your spending. If you are single, saving more money for your future is also one of the best ways to care for yourself. Websites like choosetosave.org also have great tips and tools.

    Another important way to say “I love you” is by making sure that you have the right insurances. Take stock of any insurance you have, and think about what your insurance needs are for the time being and what they might become in the future to make sure you and your loved ones are protected. Use our WISER Woman’s Guide to Insurance to get you started.

    Finally, to all the grandparents out there, don’t let your love for your grandchildren leave you broke! Grandparents often want to be able to buy their grandchildren nice presents and help them out with life’s expenses, such as a good education, weddings, etc. Especially during bad economies, grandparents may often feel a duty to step in and help younger generations who are being hit hard by the economic downturn. However, often these decisions can leave grandparents financial worse-off.*

    Instead of taking on these steep financial responsibilities that can leave you financially vulnerable (or buying lots of toys for kids at ages where they are more interested in the boxes the toys come in!), try to find other ways to help your grandkids. For example,  you can set up an online account for your grandkids and purchase savings bonds. You can purchase savings bonds for as little as $25 and they accrue interest for up to 30 years. This way you don’t have to invest so much money upfront, but in the long run the payoff can be substantial and will certainly be a welcome asset down the road for your grandchildren. To learn more and set up an account, visit www.TreasuryDirect.gov.

    Making financially wise decisions may not be as romantic as flowers or chocolates, but these are caring actions that are filled with love, and perfect for Valentine’s Day!

    *A 2011 MetLife report found that grandparent spending on child-specific items increased dramatically between 1999 and 2009. In 2009, households ages 55 or older spent $7.6 billion on infant food, equipment and clothing, toys, games, and tricycles, a 71% increase since 1999. They also spent $2.43 billion on primary and secondary school tuition and supplies, almost three times more than was spent in 1999.

     

    Posted in Tips, Uncategorized | Comments »

    « Older Entries

    WISER

    About Us

    WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

    Read More