Money Management

Long-term care insurance can be important to protect against devastating loss. Find out if you should buy a policy if you’re in your 60s. [[{“value”:”

If you’re in your 60s, you’re probably looking forward to retirement and thinking about all of the wonderful things you’re going to do when you don’t have to work any more. But, while you’re planning all the fun ways you’ll spend your time (and money), you may also want to add buying long-term care insurance to your to-do list.

If you don’t have this type of coverage — or some other plan to pay for nursing home care in case you need it — you could end up emptying your bank account. Here’s why long-term care insurance could be a crucial purchase at this time in your life.

There’s a very real chance you’ll need nursing home care that won’t be paid for

If you’re trying to decide whether buying long-term care insurance is worth it, there’s one frightening statistic you need to know. Someone who is turning 65 today has a 70% chance of needing some kind of long-term care over the rest of their lifetime. On average, people end up needing this kind of care for around three years.

That’s a huge problem if you don’t have a plan to pay for this. The monthly median cost of a semi-private room in a nursing home is around $8,669 a month or $104,028 a year. Even if you have a pretty big brokerage account balance, bills like this will drain it quickly.

Now, you may be wondering why you’d have to pay for it. The reason is because Medicare and most private insurers only pay for inpatient nursing care under very specific circumstances such as when you need rehabilitation after an in-patient hospital stay. Most people go into nursing homes (or need home care) called custodial care because they need assistance with routine activities of daily living. This isn’t covered at all.

Long-term care insurance can be one of your best options for covering these costs

If you don’t want to deplete all you’ve worked for all your life, buying long-term care insurance helps ensure you don’t have to. A long-term care policy can cover some or all of the costs of a nursing home, allowing you to leave your money for a spouse or for your kids.

Long-term care policies get more expensive as you get older, so the best time for most people to purchase them is in their 50s or 60s. You’ll want to read and understand policy terms carefully, though, and shop around for the best plan to make sure it pays a reasonable daily rate for a nursing home and that you can get this care covered in most circumstances without having to jump through a ton of hoops.

Other options exist, such as working with a lawyer to find a way to protect assets and qualify for means-tested Medicaid (which covers nursing home care). But these estate-planning techniques won’t work for everyone and they can be more complicated than simply buying a long-term care policy.

So, while it may be worth a phone call to an estate-planning attorney to learn whether making a Medicaid plan is worth it for you, unless you have pretty substantial assets, you may want to start shopping around for long-term care coverage before it’s too late.

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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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There are certain financial traps that many older Americans have fallen into. Read on to see which ones to avoid. [[{“value”:”

The nice thing about getting older is that it often means getting wiser. But the moves older generations have made aren’t necessarily the most financially savvy ones out there. Here are some mistakes baby boomers have been known to make, and why you should avoid them.

1. Putting your kids’ college ahead of retirement savings

It’s natural to want the best for your kids, and to want them to make it through college without taking on loads of debt in the process. But many older people have already made the mistake of putting their kids’ college ahead of their personal needs.

In fact, a 2019 T. Rowe Price survey found that 53% of parents identified saving for college as a higher priority than saving for their own retirement. And needing money for college was among the most commonly cited reasons for taking a recent retirement account withdrawal.

Here’s the thing, though. It’s possible to borrow money for college. And while it may not be the most awesome way for your kids to start off young adulthood, the option exists.

Borrowing to fund your retirement could be a lot harder. You may have home equity you can borrow against in a pinch, but that’s not an ideal solution. So rather than put college ahead of retirement savings, prioritize your nest egg. Or try to rework your budget so there’s room to save for both.

2. Relying too much on Social Security

Many seniors today rely heavily on Social Security for retirement income. In fact, the Social Security Administration says that among recipients age 65 and older, 37% of men and 42% of women receive 50% or more of their income from Social Security.

But with an average monthly benefit of just $1,907, it’s not a ton of money to live on. And with the possibility of benefit cuts in the future, depending too much on Social Security could lead you to a bad place financially.

A better bet? Save independently for retirement so you have income to rely on outside of Social Security. If you contribute $400 a month to an individual retirement account (IRA) or 401(k) over 30 years, and your investments in that account give you a 10% annual return, which is consistent with the stock market’s average, you’ll end up with a nest egg worth about $790,000.

3. Underestimating senior healthcare costs

You might assume that your healthcare costs will rise a little in retirement. But you may be shocked to learn that last year, Fidelity estimated the cost of healthcare in retirement at $157,500 for someone retiring in 2023 at age 65.

Of course, there are many factors that will determine what senior healthcare costs end up amounting to for you. But it’s not a bad idea to assume the worst and save accordingly.

One thing it also makes sense to do is contribute to a health savings account (HSA) during your career and reserve those funds for retirement. The nice thing about HSAs is that they don’t force you to spend down your balance on a yearly basis, so you can hang onto that money for the future. In fact, another great thing about HSAs is that your investments get to grow tax-free, so it’s a good thing to leave your money alone for as long as possible.

The opportunity to learn from the mistakes of others is truly a gift. So do what you can to prioritize your retirement savings, have a realistic view of Social Security earnings, and get a firm handle on what healthcare will cost down the line, so you can save for it accordingly.

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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 no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Want to open a CD in 2024? Make sure you’re doing it for the right reasons. See which savers are a good fit to open a CD. [[{“value”:”

Savers who want to earn higher yields on their cash have been looking for ideas on how to open a certificate of deposit (CD). With interest rates still high, some of the best CDs are paying APYs of over 5.00% as of April 2024.

But is opening a CD really the right strategy for you? CDs aren’t the best fit for all investors, but there are a few situations where opening a certificate of deposit is the perfect move for your money. Let’s look at a few of the best reasons to open a CD this month.

1. You need steady income with the safety of FDIC insurance

CDs are not exciting high-growth investments — and they’re not supposed to be! CDs are safe and predictable. When you open a CD, you get a guaranteed rate of interest on your savings, and you get the protection of FDIC insurance. Even if the stock market tanks or your bank fails, your CD money will still be safe.

If you’re retired and need fixed income from your cash savings, opening a CD could be a good choice.

2. You’re saving for a near-term goal

CDs are not a good place to keep your emergency savings. If you might need that cash this month, this week, or today, you should keep that money in a liquid, immediately accessible bank account.

But if you have some cash savings that you know you’re not going to spend anytime soon, CDs can be a good place to park that money. Or if you’re saving money for a near-term financial goal in the next two or three years, like a wedding, a down payment on a house, or a dream vacation, a CD can also be a good choice to provide safety and a relatively high yield.

3. You believe that the Fed is about to cut interest rates

The Federal Reserve raised interest rates aggressively throughout 2022 to fight high inflation, and interest rates have stayed high ever since. As inflation has recently improved, the general consensus among experts is that the Fed is likely to cut interest rates in 2024.

No one knows for sure if or when this will happen. But if you manage to guess the Fed’s next move and time the market correctly (let’s say you believe the Fed will cut interest rates in June 2024), right now could be a great time to open a CD. Opening a CD right now could let you lock in a higher APY than you’d be able to get in a few months, after a potential future interest rate cut.

However, keep in mind that the future is not guaranteed. What if the Fed ends up not cutting interest rates anytime soon, or even raises interest rates? Open a CD because it’s the right fit for your investing goals, not because you “know” for a fact that interest rates are about to go down.

4. You want extra incentive to save money

The biggest downside to CDs is that they require you to lock up your money for a certain period of time, and they charge early withdrawal penalties. If you pull your money out of the CD before the term is up, you could lose most or all of the interest you’ve earned.

But for some people, locking up your money could be a good thing. If you struggle to save money, if you like the feeling of knowing that your money is committed to a CD and that you can’t take it out, if you need extra incentives and nudges to leave your money alone and not be tempted to spend it, then a CD’s early withdrawal penalties could be good for you. CDs are not immediate liquid cash like the funds in a savings account, but they have helpful guardrails that keep your money earning interest.

Bottom line

I’m not opening any CDs in 2024 because I want liquidity and flexibility for my cash savings. Most CDs aren’t the right fit for my goals. But CDs could be right for you if you want safe, reliable yields on your savings and you don’t mind the risk of an early withdrawal penalty. And if you want to lock in a high interest rate before possible Fed rate cuts, you might want to open a certificate of deposit as soon as possible.

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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 no surprise that shoppers stand to save money by shopping at Costco. Learn the five items from my first shop as a new member that I saved the most on. [[{“value”:”

To date, I’ve only made one shopping trip to Costco. But based on that one shopping trip, I’m convinced that my future with Costco will be a bright one.

My first shopping trip consisted of everything from clothing, refrigerated and frozen food items, pantry staples and snacks, to cleaning supplies and paper products. While a detailed price comparison showed that Costco provided savings on a majority of the items (but not all!) that I purchased, five items, in particular, provided me with the biggest discounts when compared to my regular grocery store.

My top five deals

The five Costco items that I found provided me the biggest discounts, in descending order, were:

13-gallon trash bagsLaundry detergent podsDishwasher tabsPecan halvesDryer sheets

Each of these products was Costco’s Kirkland Signature brand.

Doing the math

To determine my savings, I calculated the per-unit price of each item I purchased at Costco and compared that to the per-unit cost of the comparable store-brand item from my regular grocery store (Meijer).

To do this, you simply take the item’s price and divide by the number of units in the package. For example, for a 48-ounce jar of raw honey costing $12.99, you’d divide $12.99 by 48 to end up with $0.27 per unit (ounce).

Since Costco sells most items in bulk, you’ll have to do one more step to determine your total savings per item. Once you figure out your per-unit cost from your regular grocery store, you’ll have to multiply that by the number of units Costco provides. So, keeping our honey example, if I calculate I can get honey for $0.37 per ounce from my regular grocery store, I would multiply $0.37 times 48 to find out how much the same amount of honey would cost me there. In this case, my total is $17.76. So I save $4.77 by purchasing 48 ounces of honey from Costco.

While the raw honey at Costco is no doubt a good deal, it didn’t even crack my top five list. See how the above calculations work out for my top five deals:

If you total the final column in my table above, you’ll see that these five items alone saved me $78.53 from just one purchase. My Costco basic Gold Star membership cost me a one-time fee of $60 for an entire year. So, I’ve more than covered my yearly membership cost with just five items from my (much longer) receipt.

Be cautious with bulk buys

You’ll notice that these five items have something in common: they won’t expire or go bad anytime soon. If you go to Costco and load up on bulk food items that expire before your household can consume them, then no matter how good a deal you got, you stand to lose money by having to throw away the excess product.

Similarly, don’t buy a bunch of bulk items if you don’t have anywhere to store them. Attics, garages, basements, and large pantries or closets are great for huge packages of paper towels, toilet paper, etc, that take up a lot of space. But you need to be more careful if you lack those types of storage spaces in your home or if you’re buying items that require freezing or refrigeration.

Preparation is key

You’ll get the best value from your Costco buys if you head out prepared. Have a list of items you need, don’t succumb to impulse purchases, and have a plan for where you’ll store your items once you get them home.

There is undeniably a lot of value to be had by shopping at Costco, especially if you strategize your purchases. And reaping the savings that Costco products offer provides the opportunity to leave more cash in your checking account each month, and less need for trips to your regular grocery store.

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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 positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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It’s possible to do well in the stock market without really knowing how to invest. Read on to learn more. [[{“value”:”

I’ve been writing about investing for years. And I’ve also been an investor myself for, well, even longer than I’ve been writing about it. I’m happy to say that at this point, I know a thing or two about picking stocks.

But that wasn’t always the case. It took me a long time to learn how to research stocks and build up a diversified portfolio. So if you’re new to investing, know that gaining the knowledge you need can be a work in progress.

Meanwhile, if you’re starting off with limited knowledge, you may feel lost in the context of building a portfolio. And one thing you definitely do not want to do is add stocks to your brokerage account at random.

The good news, though, is that there’s an easy investing strategy you can employ even if you feel clueless about picking stocks. And it’s one that you can feel comfortable falling back on throughout your entire investing career should that come to be.

Why rack your brain when there’s an easy way out?

Even if you’re knowledgeable about picking stocks, it’s not always easy to make those purchases official. After all, it’s your money and savings on the line.

If you choose a bum stock, you risk losses. That’s a hard thing to come to grips with. That’s why you may want to take the pressure off and rely on a strategy that’s served investors well for years — investing in the broad market.

When we talk about the stock market’s performance, it’s usually measured in terms of how the S&P 500 index is doing. The S&P 500 is an index that’s comprised of the largest publicly traded companies. Funny enough, there are actually more than 500 stocks in the index. At last count, the number was 505. The reason for this discrepancy is that certain companies that are part of the index have different classes of stock issued.

But either way, when you invest in the S&P 500 index, you’re basically investing in the broad stock market. And that means you’re getting instant diversification and exposure to a host of quality companies.

Now, you may be thinking, “Great, so you’re telling me to go out and buy 500 — or 505 — different stocks?” But rest assured, I wouldn’t do that to you.

Thankfully, there’s a much easier way to invest in the S&P 500. It’s called buying shares of an S&P 500 ETF.

ETFs, or exchange-traded funds, allow you to buy a bunch of stocks with a single investment. ETFs aren’t limited to broad indexes like the S&P 500. You could, for example, buy into an ETF that focuses on a specific segment of the market, like a healthcare or energy ETF.

But the appeal of S&P 500 ETFs is that you’re getting such broad diversification that it can potentially lead to more confidence in your portfolio. For example, if you buy shares of an energy ETF and energy stocks tank, your portfolio is likely to lose value. If you buy shares of an S&P 500 ETF and the energy sector tanks, that won’t necessarily constitute the same hit.

How much wealth could an S&P 500 ETF lead to?

The S&P 500’s average annual return over the past 50 years has been 10%. So let’s say you invest $300 a month in an S&P 500 ETF over the next 40 years. If your portfolio gets that same return, you’ll be looking at about $1.6 million. That could easily serve as a nice retirement nest egg.

Of course, you don’t have to stick with S&P 500 ETFs as you grow your stock-picking knowledge. But they’re very much a solid investment to start with. And you may decide to keep shares of an S&P 500 ETF in your portfolio even once you become a stock-picking pro.

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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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Free money is out there and available to you if you’re willing to take it. Check out these three methods to find it. [[{“value”:”

Managing your personal finances can be difficult because it often feels like there’s not enough money to do everything you’re hoping to accomplish. But there is help out there that could give you just a little bit of extra cash to make certain tasks — like retirement saving — a little easier.

Unfortunately, many people end up passing up free money because they don’t realize it’s available to them or because they misunderstand the impact these free funds can have. In particular, here are three possible ways you may be passing up free money.

1. Not taking advantage of retirement tax breaks

There are tax breaks available for saving for retirement. This is true whether you have access to a workplace plan or not. If you have a 401(k) at work or you open an IRA with a brokerage firm of your choosing, you can deduct contributions in the year you make them. If you choose a Roth 401(k) or Roth IRA, contributions aren’t deductible but withdrawals are tax free in retirement.

The tax savings can be very substantial. The annual maximum 401(k) contribution for 2024 is $23,000 ($30,500 if you’re 50 or over and eligible for $7,500 in catch-up contributions). The maximum deductible IRA contribution limit is $7,000 for 2024 (plus an additional $1,000 catch-up contribution for those 50 and up).

If you are in the 22% tax bracket and you make a $7,000 IRA contribution, the government will allow you to avoid taxes on that $7,000 — which means you’d save $1,540 on your taxes. You could put $7,000 away for retirement but only reduce your taxable income by $5,460. If you do not take advantage of this opportunity, you are passing up $1,540 that the government is essentially giving you for free to encourage you to invest for your future.

2. Passing up your employer 401(k) match

The government may not be the only one who will give you free money for retirement. If you have a company 401(k), your employer may provide matching contributions. This is free money they give you when you invest in your workplace plan.

You’ll need to find out the rules for your employer match to see how much free money you can get. It’s common for 50% or 100% of your contributions to be matched up to a set percentage of salary, like 4% or 6%. If you make $50,000 and you can have up to 4% of your salary matched, then you could get as much as $2,000 in free money from your employer.

Over time, this free money could really add up to a small fortune. If you invested $2,000 a year and earned a 10% average annual return on it, you’d end up with $361,886.85 over 30 years. Just from those matching funds — not counting any contributions you personally made. That’s a lot of free money to pass up. Especially because, as mentioned above, you’ll also get the tax benefits of any 401(k) contributions you make.

3. Not using the right rewards card

Finally, if you don’t use the right credit card rewards card — or don’t use one at all — you could be passing up a free discount on everything you buy. If you charge $10,000 a year on your card and could earn 2% back on it but don’t, you’d be passing up $200 every year for no reason.

Of course, you do need to be sure you won’t carry a balance and owe interest — but if you can do that, then there’s no reason not to find a great rewards credit card to apply for. In fact, with many cards, you may be able to earn more — as much as 5% back in certain bonus categories — and get even more free cash.

You shouldn’t be passing up this free money. Search today for the right credit card to maximize your rewards, make sure you are signed up for your 401(k) and contribute enough to earn the match, and aim to invest as much as possible in your 401(k) or IRA to claim the tax breaks available to you. You could end up a whole lot richer if you do.

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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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