Money Management

Being a senior doesn’t mean you shouldn’t join Costco. Read on to see how a membership can benefit you. [[{“value”:”

Many people decide to join Costco when their families start to grow and they’re feeding perpetually hungry kids. As a senior, you may not be in the same boat. If you have kids, perhaps they left the nest years ago, and you’re now living solo or with a partner.

But that doesn’t mean you can’t benefit from a Costco membership. Here are a few reasons why joining as a senior makes financial sense.

1. Low-cost medication and supplements

Healthcare and medication can be a huge expense for seniors. One benefit of being a Costco member is getting access to affordable medications through the company’s pharmacies.

Now, you don’t have to be a Costco member to fill prescriptions at its pharmacies. But you typically do need a paid membership to buy vitamins and supplements in bulk. Many seniors are advised to take these to aid with things like joint pain and bone strength. And loading up at Costco could result in major savings.

2. Access to travel services

Seniors who are retired may have more free time to travel than working folks. And it could pay to join Costco to get access to the company’s travel deals alone.

Costco offers a host of vacation packages, and some of those destinations may be ones you’ve always wanted to visit. The nice thing about using Costco to book travel is that you might get more than a lower credit card tab — you might also get the help of a travel specialist who can help you choose the right trip based on your needs.

3. Free tech support for electronics

Being a senior doesn’t automatically mean you’re not tech-savvy. But some seniors struggle with today’s newfangled technology.

Buying electronics at Costco means you get access to free tech support. So if you’re lost trying to figure out your new phone or TV, Costco’s got you covered. Plus, Costco extends a manufacturer warranty for up to two years when you buy electronics there.

4. Low-cost household staples

Many seniors find that money is tight since they’re retired and are no longer earning a paycheck. The upside of joining Costco is getting access to bulk household supplies. The result? Big savings and a means of stretching your IRA or 401(k) balance.

Of course, you can also save money by buying groceries in bulk at Costco. But as a senior, you may not have enough people in your household to use them up before they go bad. The good thing about household staples like tissues, toilet paper, and cleaning supplies is that you’re not up against a ticking clock.

5. Affordable gas

Another benefit of being a Costco member is getting access to lower-cost gas. As a senior, you may no longer have a job to commute to. But that doesn’t mean you’re not still driving all over town.

In fact, if you’re retired, you may do your fair share of driving to places like parks and trails to stay active and busy. Filling up at Costco could be much easier on your wallet.

There’s much to be gained by getting a Costco membership when you’re older. Unfortunately, though, Costco doesn’t offer senior discounts. You’ll need to prepare to pay $60 for a basic membership or $120 for an Executive membership. You may find, however, that the savings you enjoy can more than make up for those costs.

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

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

“}]] Read More 

The average 50-something has more than half a million dollars in retirement savings, but will it be enough? Keep reading to learn more. [[{“value”:”

I won’t keep you in suspense. According to the latest edition of Vanguard’s “How America Saves” report, which is one of the most often-cited sources of 401(k) data, the average participant in a defined contribution plan in the 45-54 age group has $142,069 in their account.

Two big caveats

There are a couple of caveats to keep in mind here. First, the average of $142,069 is significantly higher than the median 401(k) balance for this age group of $48,301. I’ll spare you a math lesson, but generally when the average of a set of data is significantly higher than the median, it is being skewed by the larger figures. This means that half of all participants in the 45-54 age group with a Vanguard 401(k) or similar retirement plan have less than $48,301 in their account, while half have more.

Second, and most significant, these are participants’ retirement plans with their current employers. Some may have rolled former employers’ retirement accounts into their current plan, but many have not. Some have additional retirement savings in their IRAs or other brokerage accounts. So, it’s fair to say that in many cases, these aren’t the only retirement savings. Even Vanguard’s report clarifies that “current DC (defined contribution) plan balances often do not reflect lifetime savings and are only a partial measure of retirement preparedness for most participants.” Defined contribution plans are 401(k)s and similar accounts.

A bigger-picture number

With that last caveat in mind, let’s look at how much total retirement savings 50-year-olds have. Empower publishes data from its Empower Personal Dashboard, which allows investors to link to retirement plans they might have with former employers in addition to their current one.

As you might expect, the number is significantly larger. The average total 401(k) balance for someone in their 50s is $558,740, with a median of $247,338.

How is the average 50-year-old doing?

Most retirement planners agree that Americans should anticipate needing about 80% of their pre-retirement income to maintain the same standard of living after they leave the workforce. In other words, if you make $100,000 per year, you’d need about $80,000 in annual income for a comfortable retirement.

Of course, this is just a guideline, and everyone’s situation is different. But it’s a good rule of thumb.

This doesn’t all need to come from your retirement savings. You’ll most likely have Social Security income, and the average retired worker gets about $23,000 per year from it. You can get an estimate of what your Social Security benefits could be, based on your actual work record. You’ll need to create an account with the Social Security Administration if you don’t already have one. If you have any pensions or annuities, that will help as well.

For retirement savings, the general rule is that you can sustainably withdraw 4% of your savings in your first year of retirement and increase your withdrawals with inflation in subsequent years. With the average $558,740 in retirement savings among the 50-something age group, this translates into about $22,350 in annual 401(k) withdrawals.

Of course, the average 50-something is still several years away from retirement, so this isn’t necessarily their final retirement savings balance. But keep these income assumptions in mind when asking yourself, “Do I have enough?”

The bottom line

When you’re 50 and still a decade or more from retirement, it’s a great time to check in with yourself to see where you stand financially. And it isn’t just about whether you have more or less than the average — it’s about whether you’re on track to produce enough retirement income to achieve the level of financial freedom in retirement that you want.

The good news is that there is still time if you’re a little behind. The 401(k) contribution limit in 2024 is $23,000 and savers 50 and older also get a $7,500 catch-up contribution, for a total maximum of $30,500. So, if you decide to get aggressive with your 401(k) savings in your 50s, you can have a big impact by the time you are ready to retire.

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

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.

“}]] Read More 

What difference will the Capital One-Discover merger make for your wallet? See what one credit card expert thinks could happen next. [[{“value”:”

Credit card customers have likely seen the recent news about Capital One buying Discover®, but what does this big deal really mean for people like you? Based on industry trend analysis and reports from experts, there are many reasons to hope that the Capital One-Discover merger could ultimately be good news for credit card customers.

By owning Discover’s payment network, Capital One has a chance to create interesting new rewards credit card products, and even negotiate better deals with Visa and Mastercard. This merger is not just good news for Capital One; it could be good for the entire credit card industry by creating more competition against the biggest payment networks (Visa and Mastercard).

We interviewed Eric Cohen, CEO of Merchant Advocate and an expert on credit cards and merchant services, to see what kinds of fun new credit card offers might arise. It’s still in the early days of the Capital One-Discover merger, but there are several possibilities for how credit cards could change. Let’s look at a few.

1. Better deals from Visa and Mastercard

One of the big questions around the Capital One-Discover merger is: How will Capital One use its newly purchased Discover payment network? Capital One currently uses Visa and Mastercard to process payments on its credit and debit cards. But by owning Discover’s network, Capital One could have some new flexibility. The bank could keep processing some payments with Visa and Mastercard. Or it could go in a new direction.

“Capital One may plan to offer Discover as a competitive network to Visa and Mastercard,” Eric Cohen said. “Another option is that Capital One stops issuing cards with Visa and Mastercard and pushes Discover as their primary network. What we do know for sure is that if the deal goes through, Capital One will become one of the largest issuers in the U.S. The hope for credit card customers is that more competition among the networks will ease some of the financial burden of processing fees on merchants, but that will depend on what approach Capital One takes.”

Capital One has already announced that it plans to move all debit card payments to its newly acquired Discover payment network. The future of Capital One’s credit card processing relationships with Visa and Mastercard remains to be seen. But if Visa and Mastercard end up negotiating a better deal with Capital One to keep Capital One’s credit cards on their payment networks, it could lead to better rewards or new products for Capital One and Discover credit card customers.

2. Creative new merchant rewards and special offers

When it announced the deal to buy Discover, Capital One strongly emphasized that it wants to use the Discover payment network to collaborate more closely with merchants. No one knows exactly what this looks like for future product launches, but Capital One could start to offer more specific customer loyalty programs, creative incentive programs, special offers, and other win-win deals for credit card customers and merchants (retailers, restaurants, e-commerce sites, airlines, and more).

What if you could get more personalized, helpful discounts from your favorite merchants, or get better reward points for shopping frequently at your favorite brands? Capital One might soon have the ability to get more creative on all of those fronts. Cohen believes the Capital One-Discover merger could also lead Capital One to offer new higher-end luxury credit cards — and some merchants will pay higher credit card processing fees to make that card possible.

“Capital One currently offers some great programs, so it is likely that they will use this opportunity to bolster the perks offered on their credit cards and target new customers through these benefits,” Cohen said. “They could choose to mirror similar Visa and Mastercard offerings, or even strengthen the perks on Discover cards to push consumers to increase usage. In this scenario, Capital One owns Discover, whereby they could also choose to increase interchange rates to pay for more enticing rewards, which would make Discover more expensive for merchants to accept, potentially expanding their portfolio into the luxury card brand arena.”

Bottom line

No one knows for sure if the Capital One-Discover merger will happen, because it still has to go through regulatory approval by the Federal Trade Commission (FTC). But if the deal goes through, it could bring massive changes to the credit card industry. Many of these changes could ultimately be good for credit card customers, by creating more competition and unlocking innovation for interesting rewards credit cards.

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool has positions in and recommends Mastercard, Target, and Visa. The Motley Fool recommends Discover Financial Services and recommends the following options: long January 2025 $370 calls on Mastercard and short January 2025 $380 calls on Mastercard. The Motley Fool has a disclosure policy.

“}]] Read More 

Getting ready to file California state income taxes? Keep reading to learn about crucial California tax laws — and potentially save money. [[{“value”:”

Filing your California state income tax return doesn’t have to be stressful. If you plan ahead and make sure you understand a few basic differences between California and federal income taxes, you’ll be more likely to have a happy tax season.

Let’s look at a few high-level tax laws and state income tax rules that California taxpayers need to know.

1. California Tax Rate Schedules (California tax brackets)

Before you fill out your California tax return, it’s often a good idea to take a look at the California Tax Rate Schedules.

As of 2023, the highest California marginal income tax rate is 12.30%. But unless you make lots of money, you won’t have to pay that much. For single filers, the top California tax rate doesn’t apply until you have a taxable income of more than $698,271.

For example, a single person in California with taxable income of $100,000 in 2023 would be in the 9.30% California tax bracket. A married couple filing jointly with $120,000 of taxable income would be in the 8.00% tax bracket.

You can calculate your 2023 California income tax at the California Franchise Tax Board (FTB) website. Here is an example calculation based on the 2023 California Tax Rate Schedules:

John is a single filer with a taxable income of $150,000 for 2023. This puts him in the 9.30% California tax bracket. The total tax that John owes for 2023 is calculated this way:

$3,009.40 + 9.30% of the amount over $68,350

So let’s do the math:

$150,000 – $68,350 = $81,650$81,650 x 0.093 = $7,593.45$7,593.45 + $3,009.40 = $10,602.85, rounded up to $10,603

John’s total California income tax for 2023 is $10,603. This is about 7.1% of John’s taxable income. Ideally, he had enough money withheld from his paychecks so he can get a refund when he files taxes.

2. Which California tax breaks are different from the IRS

It’s important to note that not every IRS tax break is going to count on your California income taxes. California doesn’t have all the same tax laws as the federal government.

Here are a few deductions that are different in California, compared to what you’d expect from your federal taxes.

Lower standard deduction

The California standard deduction is significantly lower than the IRS. For example, single filers in California have a state income tax standard deduction of $5,363 for 2023, compared to $13,850 for federal taxes.

No deduction for health savings accounts (HSAs)

If you put money into a health savings account (HSA), you can deduct that full amount for federal tax purposes. But California doesn’t allow this HSA deduction. It’s still good to get that federal tax break, but it won’t save you money on California taxes.

No deduction for local taxes (property taxes)

Federal taxpayers are allowed to deduct (if they itemize) up to $10,000 of state and local taxes, including real estate taxes or property taxes. This is called the “SALT deduction,” and it’s a popular federal tax break for homeowners who can itemize deductions. But California doesn’t allow any deduction for state, local, or property taxes.

Higher limit for deducting home mortgage interest

You can’t deduct your property taxes in California, but if you own a home with a million-dollar mortgage, you can deduct your mortgage interest. California allows deductions for home mortgage interest on purchases up to $1 million, while the federal limit is only $750,000.

3. California tax-filing deadlines

The deadline for filing California state income tax returns for the 2023 tax year is April 15, 2024. But if you need more time, don’t worry: the state gives everyone an automatic deadline extension of six months (until Oct. 15, 2024) to file your state tax return. (Isn’t that such a laid-back, open-minded, stereotypically “California-style” thing to do?)

But remember: that automatic six-month deadline extension is only for filing your California tax return. If you didn’t have enough California income tax withheld from your paychecks or you owe additional state income tax for 2023 for any reason, your tax bill must be paid by April 15, 2024, regardless of when you file. Paying on time will help you avoid extra fees and penalties.

Bottom line

California doesn’t offer all of the same deductions that you can get on your federal income taxes. Make sure you understand the general landscape of which deductions you can take, what to expect, and how much tax you’ll owe based on your income. Along with the limitations of its tax laws, California offers some tax breaks that are more generous than the feds, and a built-in six month filing deadline extension.

The best tax software can help you make the most of your California state tax return. Higher-income Californians with more complex tax situations might want to hire professional tax help.

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

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.

“}]] Read More 

Some of the expenses you consider emergencies may be costs you can plan for quite easily. Read on to learn more. [[{“value”:”

I recently got a frantic call from a friend that went something along the lines of, “Oh no, I just realized my camp tuition balance is due today and now I’m going to have to raid my savings and go back down to $0.”

I’m extremely sympathetic to people who fall victim to surprise expenses. And I know how frustrating and potentially damaging to your personal finances it can be to have a sudden bill pop up out of the blue.

But that conversation with my friend annoyed me for one big reason: My friend should have realized her camp tuition needed to be paid in full because she was told in advance that that would be the case. And instead of pulling the money from her savings account, she should’ve been setting separate funds aside.

In fact, in my experience, I tend to hear the following things referred to as emergency expenses. But in my humble opinion, they’re anything but.

1. Quarterly property taxes

Some people pay a larger amount to their mortgage loan servicers every month, and in exchange, their property taxes are taken care of. But others, like me, may opt to pay those taxes on their own.

Property taxes usually come due on a quarterly basis when you’re paying them directly. And if that’s something you’ve signed up to do, then your property tax bill should not, at any point in time, constitute an emergency expense.

Where I live — and I would have to assume that this is the case in most places — you get a single bill once a year listing your four upcoming property tax due dates. What I do when I get that notice is mark those dates on my calendar and then make sure I’m budgeting for those quarterly taxes as I need to.

2. Annual insurance premiums

If you pay for homeowners or life insurance once a year, it’s easy to see how you might forget that a payment is coming up. But again, payments of that nature really shouldn’t be a surprise or cause you to raid your savings.

Set up a budget that includes a monthly allocation toward insurance policies you pay for once a year. Or set up a separate savings account and transfer money into it monthly so you’re able to pay those bills rather than tap the cash you have earmarked for emergencies.

3. Home repairs

Sudden home repairs can absolutely fall into the category of an emergency expense. But home repairs that you’ve had lots of time to prepare for should not.

Let’s say you’re buying a home and are told that the air conditioning system probably only has another year or two left. What you should then do is research the cost of a replacement unit and start setting funds aside on a monthly basis to make that fix. If you ignore that information, save nothing for a new air conditioner in the following 12 to 24 months, and then suddenly end up with a huge bill on your hands, you can’t exactly say you weren’t warned.

Don’t set yourself up to keep raiding your emergency fund

Neglecting to plan for different expenses could lead to a scenario where your emergency fund runs dry. And that’s not what you want.

SecureSave says that 63% of Americans today can’t cover an unplanned $500 expense from their savings. And in some cases, that may be due to people constantly raiding their cash reserves for expenses they could have anticipated.

A better bet going forward is to make a list of all of your bills so you know to account for those you don’t pay monthly. Also, assess your home, car, and health to determine if any large bills in those categories are likely to arise. Doing so should help you better manage your paycheck so you’re not forced to deplete your savings and leave yourself without money for a true emergency.

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

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.

“}]] Read More