Money Management

The more you save, the less likely you are to run out of money later in life. Read on to learn more. [[{“value”:”

Since women have traditionally earned less money than men have, it’s not particularly shocking to learn that they have less retirement confidence than men do. That’s according to a late 2023 report by Northwestern Mutual. However, women’s biggest retirement concerns align closely with those of men. And for 45% of women, outliving savings is a major source of stress.

If you’re worried about running out of money in retirement, you should know that the more savings you start off with, the less likely you may be to end up depleting your cash reserves. So with that in mind, it’s important to commit to saving for retirement from the beginning of your career through the end of it.

There’s strength in higher numbers

Let’s get one thing out of the way. Unfortunately, no single savings target guarantees you won’t run out of money in retirement. The risk of depleting your nest egg will hinge largely on how well (or not) you manage your savings once you’re retired.

If you withdraw from your nest egg at random rather than crunch numbers and establish a safe withdrawal rate, then you might deplete a $2 million individual retirement account (IRA) faster than another person uses up a $500,000 savings balance.

But generally speaking, it’s fair to say that if you enter retirement with $2 million, you have a greater chance of not running out of money than someone with just one-fourth of that amount. So it’s in your best interest to try to save as much as possible.

Slow and steady could yield great results

One challenge women might have in particular with retirement savings is finding the money to sock away. As mentioned, women tend to be paid less than men, which can make it harder to save. But if you want to retire with a nice pile of money, you really need to do two things:

Save for retirement regularly throughout your careerInvest your savings in the stock market for strong returns

Many people don’t start saving for retirement until they’re well into their 30s or 40s — sometimes beyond. But if you want to build up a nice nest egg, a much better bet is to start contributing to a retirement account in your 20s, once you’re earning a steady paycheck.

What’s more, while investing in stocks does carry risk, and you’re certainly not guaranteed to make money in stocks, history has shown that people who stick with the stock market for decades have a tendency to make money — and sometimes, lots of it.

The stock market’s average annual return over the past 50 years has been 10%. If you’re able to snag a return like that in your portfolio, then you may find that modest monthly contributions to a retirement plan go a long way over time.

Let’s say you’re able to get that 10% return in your IRA or 401(k), and you contribute $400 a month between ages 25 and 65. After 40 years, you’ll have a balance of over $2.1 million. And while there’s always a chance of a sum that large running out on you in retirement, if you’re careful with your withdrawals, there’s an even stronger chance that your money will last as long as you need it to.

It’s natural to worry about outliving your savings in retirement. But the more money you bring in, the less of a concern that might be.

At the same time, though, plan to sit down with a financial advisor ahead of retirement to establish a smart withdrawal plan for your savings based on factors like market conditions and how your nest egg is invested. That could give you even more confidence in your ability to avoid depleting your savings in your lifetime.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has positions in Target. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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It’s easy to miss out on free money if you don’t know it’s there. Here are a few places it could be hidden. [[{“value”:”

Every once in a while, I see an article about how people find all kinds of unclaimed money. (This government site tells you how to find out if you have any unclaimed money out there.) And it got me thinking. What other ways are people essentially just missing out on free money because they don’t know about it?

As it turns out, it could be a lot. Here are just a few ways I’ve known folks to miss out on free money.

1. Health insurance rebates/points systems

Many health insurance plans will have a variety of programs designed to encourage desirable behavior. For instance, your insurer may offer a points program that rewards your preventive care, such as getting physicals or exercising.

Another common part of insurance plans is rebates for gym or fitness memberships. While you may have to jump through some hoops (receipt submissions, etc.), it could be worth the time and effort if the value is there.

2. Tax credits and/or government programs

There are a surprising number of ways you can get free money from the government, be it the federal folks or your local municipalities. For instance, there are all sorts of tax credits you may not even know you qualify for. (This goes double for homeowners and business owners.)

The best stuff tends to be local, though. Your village, town, city, county, or even state could have all sorts of useful — and valuable — programs that could help you accomplish your goals. This may be anything from credits for home repairs to grants to start a business or charity.

A lot of these programs can be uncovered online these days; even smaller towns should have some sort of basic website. If you have a specific need in mind, it may also be worth calling (or visiting) your local offices.

3. Shopping portals and cash back apps

You can find a ton of third-party websites and mobile apps that will save you money on most things you buy. For example, cash back apps offer you rebates for scanning your shopping receipts after buying items from partner brands.

Similarly, most credit card issuers have partner offers or shopping portals that will give you cash back for making specific purchases. These are a little easier, since you don’t need to scan receipts, just add the offer to your card and then use that card to pay.

4. New account welcome bonuses

Any time you open a new account for, well, anything, you should look for a bonus or promo. And I really mean anything. The majority of businesses are driven by the need to acquire new customers, so you can often make them pay for the privilege.

From a personal finance perspective, this could mean everything from a new bank account to a new credit card. In fact, credit card welcome bonuses have helped me travel for free for years. And I rarely open a new bank account without getting some sort of cash back.

But apply this to other areas of your life, too. New shopping account with a retailer? Look for a discount code. First-time delivery from a meal kit? Get your free meals, friend.

5. Credit card purchase rewards

Anything I can pay for by credit card, I do. And I’ve optimized my rewards credit cards such that I earn a minimum of 3% (but often more) back rewards on pretty much all of those expenses.

In other words, if you’re not using credit card rewards, you’re missing out on easy money.

You don’t need to complicate things to the extent that I have, of course. A single 2% flat-rate cash back rewards card could earn you a ton of rewards — especially compared to earning no rewards at all.

(Just make sure you pay off your balance in full every month to avoid interest fees.)

6. High-yield savings accounts

We all love the big multinational conglomerate banks because they have branches — and ATMs — on every corner. They’re convenient, the apps are nice, and we’ve been banking there for years. Why change now?

Because your interest rate is probably terrible, that’s why.

If you have your money in a regular savings account with a 0.47% APY (yup, that’s the national average, folks), you’re losing so much money to inflation. And you’re definitely not making any money.

Did you know you can find high-yield savings accounts right now with 5% APYs? Sure, they’re generally online-only banks, but when was the last time you actually went to the bank about your savings account?

You can keep your checking account where it is. But if you have any kind of significant savings — or even insignificant savings, we’re talking about 10 times higher rates — consider moving it to a high-yield account. Your net worth will thank you.

7. Employer matches/perks

A surprising number of people aren’t taking full advantage of all the perks that come with their job. Perhaps the most common example is employer retirement matches.

Many companies will match some portion of your retirement contributions (usually as a percentage). So, at the very least, be sure you’re contributing at least that much to avoid leaving money on the table.

However, IRA matches may be just a part of your perks and benefits. Large corporations, for instance, tend to have a variety of employee programs that could get you anything from tuition reimbursement to discounts with partner companies to rebates on your gym membership.

It could pay off to spend some time exploring your company’s employee portal/app and/or talk with HR about the resources available.

No penny left behind

Few budgets are so perfect they can’t benefit from more money. So why leave any behind? Ideally, this list helps you find some of the extra money and savings you could be overlooking in your everyday life.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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It’s important to be prepared for a layoff at all times. Read on for ways to boost your emergency savings. [[{“value”:”

The tough thing about layoffs — aside from the loss of people’s paychecks — is that they’re not always performance based. You can be the most loyal, dedicated, and well-liked employee, but if budget cuts come down the pike, your job could still land on the chopping block.

You need to be ready for a layoff at all times. And that means having a solid emergency fund — ideally, enough money to cover at least three full months of essential expenses.

After all, it might take you a good 90 days to go from being laid off to being gainfully employed. So it’s important to have savings you can use to pay your bills during a period where you’re forced to go without a paycheck.

But recent Quicken data finds that 48% of Americans don’t have enough money in the bank to last three months if they were to lose their source of income. If you’re part of that statistic, it’s imperative that you do what you can to build some cash reserves. Here’s how.

1. Do a spending audit and start making cuts

If you’re ordering takeout three times a week and paying for three different streaming services, but you’re also fully set with emergency savings and are on track to meet your other financial goals, then carry on. But if you don’t have enough savings to get through a three-month period of unemployment, then it’s time to do a review of your spending and look at making cuts.

This doesn’t mean you can reasonably be expected to stop paying for anything fun or convenient. But if you’re currently in the habit of using rideshare services four times a week, you may want to cut back to two and take the bus to save money those other two times. And if you buy a $5 coffee seven days a week, you may want to make that speciality latte a once-a-week thing.

2. Boost your income with a side gig

Spending cuts might help free up money for your emergency fund. But at the same time, it could be a great idea to pick up some gig work and use the extra earnings to boost your savings.

Think about your schedule. Are you free nights and weekends only, or are you available for early morning employment? If so, you may, for example, find a steady gig helping a working parent in your building or on your block get their kids off to school in the morning before you start your day. You may be surprised, in fact, at how easy it is to squeeze gig work into your schedule. Great gig platforms like Upwork and TaskRabbit may also help you find freelance work.

3. Bank your tax refund

As of March 29, the average tax refund issued by the IRS was $3,050. If you’re getting a similar refund and are low on savings, it pays to put all of that cash into the bank.

Sure, you may have had it earmarked for a vacation or a down payment on a new car. But before you use that money for something you can technically do without or put off, consider how important it is to have those funds available in case you find yourself out of a job.

Of course, if you’re starting off with truly no savings, your tax refund may not even be enough to complete your emergency fund. But it may be a good start. If you put a $3,000 refund into savings, which is the equivalent of a month of essential bills, and you lose your job three weeks later, you’ll at least be covered for your first 30 days without an income.

Unfortunately, layoffs can happen at any time. Be prepared so a layoff doesn’t drive you into serious debt and upend your finances for years to come.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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No one wants to run out of money during retirement. Check out the best hacks you can use to get the most out of your retirement savings. [[{“value”:”

Your retirement savings should ideally last the rest of your life. Unfortunately, that’s not the case for many Americans. A surprising 40.6% of U.S. households with a head of household between 35 and 64 are projected to run out of money in retirement, according to 2019 research by the Employee Benefit Research Institute.

The amount you save for retirement is an important part of avoiding this. But it also helps to know how to make your retirement savings last longer. It could be the difference between running out of money and having a comfortable retirement.

1. Consider downsizing or cutting back on expenses

Retirement is a big transition, and it can also be the perfect time to adjust your spending. Since you don’t need to be close to your job anymore, you could move to a smaller home or a more affordable area. Some retirees even move abroad, where their retirement dollars go further and the healthcare is often much cheaper.

If you’d prefer less drastic options, look for expenses you can reduce or cut now that you’re retired. Maybe you and your spouse could go from two cars to one. Or you could use your extra time to cook more meals at home and spend less at restaurants.

2. Delay taking Social Security

One of the more important decisions you’ll make during retirement is when to start receiving Social Security benefits. You can do so as early as 62, but you’ll receive a reduced benefit amount.

To receive the largest benefit amount, you need to wait until full retirement age. That depends on the year you were born. For those born in 1960 or later, full retirement age is 67. Anyone in that group who starts getting Social Security at 62 will receive 30% less.

Waiting until full retirement age has its pros and cons. But if you want to be prepared for a long retirement, it’s likely better to wait as long as you can for a larger benefit amount.

3. Plan ahead to minimize taxes

If you have your savings spread across multiple types of accounts, consider the tax implications before making withdrawals. With traditional 401(k)s and individual retirement accounts (IRAs), you’ll pay income taxes on your withdrawals. With Roth 401(k)s and Roth IRAs, withdrawals are tax-free.

Let’s say you’re planning to wait a few years before receiving Social Security, which will raise your taxable income. It makes sense to withdraw from traditional accounts first, while your income will be lower. When your taxable income is higher because of Social Security, then you can tap into your Roth accounts for tax-free funds.

4. Pay for expenses with a rewards card

Rewards credit cards are an easy way to save money — if you pay them off every month. If you carry a balance, then you’ll be charged interest. You have to be careful not to overspend, but if you’re just paying your regular bills, it’s better to use a card that earns rewards than one that doesn’t.

The most popular type of rewards card is cash back credit cards. These are the most straightforward option. If you pay $2,000 in bills per month on a card that earns 2%, you’ll earn $40 cash back. That adds up to $480 in savings per year.

5. Keep money invested in the stock market

As people get closer to retirement, they normally shift more of their money from stocks into bonds. The stock market is volatile, sometimes rising or falling by over 20% within a year. Bonds are fixed-income securities, so they’re a much more stable investment.

However, you shouldn’t abandon stocks entirely, as they offer much greater growth potential. The stock market’s average return is about 10% per year over the long run. Bonds normally return about 5% to 6% per year.

A popular investment strategy for retirees is an even split between stocks and bonds. This depends on your risk tolerance and how much money you have saved. If you have plenty of retirement savings and want to prioritize maintaining it, then you may go more bond-heavy. Even if you do, it’s still a good idea to continue investing in stocks, too.

There are plenty of smart ways to stretch your retirement savings. By following a few of them, you could save thousands every year and ensure your savings lasts as long as you need.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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