Stop waiting and wishing — it’s time to book that bucket-list vacation. Sergii Figurnyi / Shutterstock.com
A European vacation may be a bucket-list dream for some. Maybe it’s finally time to marvel at the Eiffel Tower, tour Rome’s historic Colosseum or just spend a few nights making new friends in a Dublin pub. But when it comes time to finally commit to a overseas trip, budget is an important consideration. Some cities are simply cheaper to visit than others. Fortunately…
Make sure your AC runs as efficiently as possible if you want to stay cool and save money this summer. antoniodiaz / Shutterstock.com
Record heat is pushing air conditioners harder than they were designed for and leaving people sweating. The impulse, of course, is to crank down the temperature on the air conditioner. But that not only cranks up your utility bills, it also puts a strain on HVAC systems, which are not built for extreme demands. “[T]hese extreme temperatures present a significant challenge to AC systems…
Some can be had for free, and others are of dubious value. Krakenimages.com / Shutterstock.com
Homeownership certainly comes with a lot of unavoidable if sometimes unexpected expenses, from property taxes and insurance to repairs. But there are many home-related costs we don’t necessarily need to pay for — and other things we’re not sure are worth it. Following are some costs you might be on the fence about, and why we think you should avoid them.
Retirement is probably not too far into the distance. Here’s what financial planners say you should have saved by now.
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You should have five to six times your annual income saved by age 50, according to most financial planners. So, if you earn $75,000 per year, this means you should ideally have $375,000 to $450,000 set aside in savings accounts, retirement accounts, brokerage accounts, and other liquid assets.
Of course, like most topics in personal finance, there’s not a perfect rule for everyone. However, this is a good starting point to help you determine whether you’re on track for a financially secure retirement or not. Let’s take a look at why you might need more or less than this guideline, and what you can do if you’ve fallen behind.
As I mentioned, the “five to six times your income” rule isn’t perfect for every 50-year-old. You might need more or less in savings than the average American for numerous reasons.
One major factor is your retirement goals. If you want to retire at age 55, you should probably have more than five times your salary saved before you’re 50, especially if you have ambitious plans to travel after you retire.
Other streams of income can also play a big role. For example, if your job has a pension plan, and you’ll get monthly payments equal to a substantial portion of your income after you retire, your savings needs will naturally be lower than someone planning to rely exclusively on retirement savings.
If you own many assets other than a savings account, it can also play a role. As a personal example, I own investment properties and have substantial equity in them, so this is a factor when determining how much I’ll need to retire comfortably.
The good news is that most people who are turning 50 are still 10-20 years away from retiring, so there’s time to have a big impact.
The obvious answer is that if you don’t have enough in savings at 50, it’s time to start prioritizing retirement savings. The best places to set aside money are tax-advantaged retirement accounts such as IRAs, or employer-sponsored retirement plans like 401(k)s, where your money is free to grow and compound on a tax-deferred basis. All retirement accounts have special rules (known as catch-up contributions) that allow account owners 50 and older to set aside more money each year than younger savers.
If you’re having a tough time finding enough money to contribute to your savings, it might be a smart idea to take a closer look at your budget and try to identify opportunities to cut expenses. One of my favorite exercises is going through the last couple of bank and credit card statements and highlighting any purchase you didn’t need to make.
The point isn’t to shame you for spending money you didn’t need to spend, or even to get you to stop all unnecessary spending, but you might be surprised where you could cut back. As a personal example, a few years ago I did this and couldn’t believe how much my family spent on dining out. I even identified a couple of costly subscriptions I wasn’t using.
The bottom line is that you still have time to get back on track by making budgeting, saving, and investing priorities. Seemingly small amounts of additional savings now could make a big difference in your quality of life after you retire.
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Paying to be a member of Sam’s Club? Read on to see how it can benefit you as a parent.
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Raising children is expensive. Even if you do your best to keep your costs down, you might inevitably find that money is tight regardless. But a Sam’s Club membership can help you stretch your budget so you don’t have to skimp on essentials.
Now, you may already be aware that buying groceries and household staples at Sam’s Club can result in a nice amount of savings. But if you’re a parent, you may want to make these specific moves that really allow you to maximize your membership.
Kids love their snacks. You can even argue that kids need their snacks since their little bellies tend to empty pretty quickly. Plus, it’s common for teachers to request that parents send a daily snack to school for younger kids who need the mid-day fuel.
Sam’s Club can come to your rescue with its bulk snack offerings. A variety pack of Nabisco cookie and cracker pouches, for example, costs just $13.98 online, or $0.35 per pouch. And you might find an even lower price at your local warehouse club store.
Retailers tend to mark down the price of clothing as the season it’s made for comes to an end. So in late August or early September, you might find tank tops and swimsuits on sale. And in March or April, you might find winter jackets and accessories at an even lower price. Make sure to visit your local Sam’s Club after the season so you can stock up on children’s clothing for that same season the following year.
Hosting birthday parties for your kids can be a pricey endeavor. But you can save money on cake or cupcakes by visiting your local Sam’s Club bakery. A half-sheet chocolate chip cookie cake might cost you as little as $18.98, while a 30-pack of cupcakes might cost you as little as $15.98.
Travel can get expensive for families, especially if you have multiple children whose costs you need to cover. That’s why it pays to use Sam’s Club travel services. Not only can you score discounts on airfare and lodging, but you can snag tickets to popular theme parks like Disney World at a discounted rate.
Cheering on your favorite team is a great way to bond as a family. But taking kids out to the ballgame isn’t the same low-cost prospect it may have been back in the day. Sam’s Club offers discounted tickets to sporting events that include baseball games, football games, and hockey match-ups. And if you’re tired of holiday clutter, you may want to consider getting tickets to a sporting event over exchanging physical gifts this year.
It’s not easy to raise a family, especially given living costs today. That’s why it pays to do what you can to put your Sam’s Club membership to good use. These moves could save you a bundle on kid-related costs so you’re able to tend to your children’s needs and make memories with fewer financial worries.
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Roth IRAs have income limits. Here’s how to tell if you make too much money to take advantage of this retirement account.
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A Roth IRA can be a great retirement account. You can open one at any brokerage firm that offers them. And while you will not get a tax deduction for investing in one in the year you contribute to it, you get to take tax-free withdrawals during your retirement. Unlike most other tax-advantaged retirement plans, you also don’t have to take required minimum distributions (RMDs) so you can make withdrawals when you want — instead of when the government says you must.
Unfortunately, not everyone can invest in a Roth IRA. If you’re thinking of putting your money into this kind of retirement plan, there’s one big thing that could stop you. Here’s what it is.
The big factor that could prevent you from making Roth IRA contributions is your income. Specifically, it’s your modified adjusted gross income (MAGI), which is calculated by:
Determining your adjusted gross income (AGI): That’s your total income minus adjustments such as alimony payments, half of self-employment taxes, retirement account contributions, health insurance premiums, HSA contributions, student loan interest deductions, and educator expenses. Adding back certain deductions you claim: You’ll need to add back certain deductions including deductions for taxable Social Security payments, loan interest, tuition and fees, partnership or passive income losses, rental losses, excluded adoption expenses, excluded foreign income, half of self-employment tax, and retirement account contributions.
Healthcare.gov actually has a really good simple explainer that shows you exactly what income counts when determining your MAGI that you can use to figure yours out. You can also use an online calculator since MAGI doesn’t actually appear on your tax return.
You can calculate your MAGI and then check the table below to see if you’re eligible to make a Roth IRA contribution based on your income and tax-filing status. The table is accurate for 2023, and during the 2023 year, the annual contribution limit for a Roth IRA is $6,500 or $7,500 if you are 50 or older and eligible for catch-up contributions.
If you make too much money to contribute to a Roth IRA, that’s a huge disappointment if you were hoping to take advantage of this account. But you still have several good options for retirement savings including the following:
Contribute to a workplace 401(k): This will provide an upfront tax break instead of a tax break in retirement. But, you can earn an employer match if your company offers one and there’s no income limits to contribute. Contribute to a workplace Roth 401(k): A growing number of employers offer Roth 401(k)s so you can defer your tax benefits to retirement. Starting in 2024, Roth 401(k)s also won’t be subject to required minimum distribution rules. Contribute to a traditional IRA: If neither you nor your spouse have access to a retirement plan at work, there are no income limits for traditional IRA contributions. You will have to claim your deduction in the year you contribute, though, rather than deferring it until the future. Contribution to self-employed IRA plans: If you work for yourself, you may be able to contribute to a SEP-IRA or a Simple IRA, which are not subject to the same income limits as traditional or Roth IRAs. These will also provide you with a tax break now, not in retirement, but they at least provide a tax-advantaged plan when you may not have many other options.
You may also have the option to do a backdoor Roth contribution, which means contributing to a traditional IRA and then immediately converting it to a Roth IRA. This could have tax implications, although you can usually avoid this issue if you immediately convert the money as soon as you contribute it.
If you make too much to contribute to a Roth, the important thing is not to give up. Explore these other retirement plans or consider talking to a tax professional about whether a backdoor Roth IRA could work for you.
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