Money Management

By your 50s, you should have some retirement savings. But is your balance as high as that of your peers? Read on to find out. 

You may be curious as to what other people in their 50s have saved for retirement. The average 50-something has a nest egg worth $110,900, according to Northwestern Mutual’s latest Planning & Progress Study.

Clearly, that’s not a negligible amount of money. But it’s also not a lot of money for retirement on a whole. So if you want to make sure your senior years are stress-free, it’s a balance you’ll definitely want to try to build on in the coming years.

You may want to try to ramp up

It’s hard to focus on retirement savings when life’s other bills, from car-related expenses to mortgage payments, eat up so much of your income. But the reality is that $110,900 isn’t a ton of money for retirement. You’ll want to make the most of the next 10 years or so to help ensure you can retire with more.

That may mean having to cut back on different expenses to ramp up your retirement plan contributions. And that could look like a lot of things. It could involve low-key, road trip-style vacations for the next several years instead of luxury ones. Or it could mean spending less money on your kids’ college tuition so you can bank more of it for yourself.

But let’s say you have $110,900 in retirement savings now and you want to end your career in 10 years. Let’s also assume you’re able to save $600 a month between now and then.

The stock market has, over the past 50 years, generated an average annual 10% return, as measured by the S&P 500. So if your portfolio delivers that same return, you’ll be looking at a total savings balance of around $402,000.

That could make for a comfortable retirement if you manage your savings well. And if you’re not super thrilled with that balance, you should know that delaying retirement by three years could mean amassing $559,000 instead, assuming that same $600 monthly contribution and 10% return during those extra three years.

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Of course, one thing to note about that 10% return is that it may be a bit aggressive for your pre-retirement years, since near-retirees are often advised to start shifting away from stocks and replacing them with safer investments, like bonds. But if you’re 10 years away from retirement and you shift toward safer assets within three years of that milestone, you might end up with a higher return some of those years, so 10% is not such an unreasonable figure to work with.

What if you don’t even have $110,900 saved for retirement yet?

It may be that your IRA or 401(k) has a lot less money than $110,900 at present. If that’s the case, and you don’t want to be cash-strapped in retirement, you should probably do two things:

Cut back on spending a lot in the coming years to save and invest as much as you can.Delay retirement so you can save more and leave your nest egg untouched a bit longer.

Let’s say you have $50,000 in retirement savings at age 55. If you’re willing to retire at age 70 and are able to sock away $800 a month for retirement savings purposes between now and then, you’ll end up with about $514,000, assuming an average annual 10% return on your investments.

Your 50s are a time to really buckle down on the retirement savings front — especially if you’re not so thrilled with the state of your nest egg. The good news is that you still have options, and you may have higher earnings that allow you to contribute more to your IRA or 401(k) than you’ve done in the past. Push yourself to do that for the sake of being able to retire comfortably.

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You may be inclined to steer clear of annual fee credit cards. Read on to see why that could be a mistake. 

It’s estimated that Americans pay about $120 billion a year in credit card interest and fees, according to the Consumer Financial Protection Bureau. And those fees can run the gamut from late fees to foreign transaction fees.

Another fee you might encounter in the course of getting a credit card is an annual fee. And the cost of an annual fee can vary quite a lot, depending on the card you have.

At first, the idea of paying an annual fee for a credit card might seem silly. Why should you pay for the privilege of being a cardholder when plenty of cards let you do that for free?

But actually, in many cases, it makes a lot of financial sense to get a credit card with an annual fee. So before you write off the idea, crunch the numbers.

When an annual fee can pay for itself

When you open a credit card with an annual fee, that fee may be waived for your first year as a cardholder. But from there, you can generally expect to be charged that fee once a year in the anniversary month of you opening your card. And also, many cards will charge you that fee your first year as well.

You might assume that an annual fee is a silly thing to pay. But here’s the thing about annual fee credit cards: They often offer more rewards, cash back, or other money-saving perks than no-fee cards.

This isn’t always the case, but often, it is. And so if you use your card enough, your annual fee can end up paying for itself.

Let’s say you’re looking at a travel rewards credit card with an annual fee of $95. That’s not a negligible amount of money. But what if that card also entitles you to a free checked bag on every domestic flight you take?

At Delta, you’ll pay $30 for your first checked bag. So if you take four flights on that airline and save $30 each time by not having to pay to check a bag, you’re ahead financially by paying $95 versus $120.

Now, let’s say you’re looking at a credit card with a $250 annual fee, but in exchange, you get a higher percentage of cash back in categories you spend in frequently, like gas and restaurants. It may be that you’re able to accrue $1,000 back in the course of a year, as opposed to just $500 with a no-fee card. So in this case, you’re spending $250 to get an extra $500 back, allowing you to come out ahead by $250.

There may be a better sign-up bonus, too

Not only might an annual fee credit card give you access to more cash back and better perks during the year, but you might also be eligible for a more generous sign-up bonus. For example, a card with a $250 fee might also give you an opportunity to score $400 cash back for meeting a certain spending requirement shortly after opening your card. That would allow you to make your money back and then some right off the bat.

Run the numbers carefully

Annual fee credit cards are not always a rip-off. Quite the contrary — they can often make a lot of financial sense. But before you sign up for one, run the numbers and make sure you’re likely to use your card enough to reap the benefits and make that fee worth it.

Let’s say a big perk of an annual fee credit card is savings on air travel, like free checked bags. If you don’t tend to travel a lot, that card may not be worth it. Similarly, a card that gives you 4% back on gas isn’t necessarily a great deal if you rarely drive.

But in many cases, annual fee cards are a good deal. So don’t immediately write off the idea of getting one.

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Have you saved as much for your senior years as the average person in their 40s? Read on to find out. 

Your 40s are an interesting time in the context of planning for retirement. At that point, you still have a good number of working years left. But you also don’t have that much time to ramp up your savings efforts if you haven’t really begun to fund an IRA or 401(k) plan.

Of course, one benefit of being in your 40s is that you may be at a point in your career where you’re earning a decent chunk of money. And while you no doubt still have mounting expenses, from mortgage loan payments to SAT tutors for your kids, you might have some wiggle room to finally start funding your nest egg consistently.

Now, you may be curious as to what other 40-somethings have saved for retirement. According to Northwestern Mutual’s latest Planning & Progress Study, the average 40-something has a nest egg worth $77,400.

Clearly, that’s not a small amount of money. But it’s also not a ton of money for retirement, either. So if your balance is comparable, you’ll want to keep building on it to help ensure that financial worries don’t wreck your retirement.

Good progress, but keep the momentum up

Let’s be clear. If you’re in your 40s with $77,400, you’ve done a good job of prioritizing your future. But you’ll need to keep funding your IRA or 401(k) plan to leave yourself with plenty of money to live on once your career wraps up.

The good news, though, is that you might easily have another 20 years or more in the workforce ahead of you. And if you save and invest consistently, you can grow that $77,400 into a much larger sum.

The stock market has, over the past half-century, delivered an average annual 10% return before inflation, as measured by the S&P 500 index’s performance. So let’s say you’re 45 with $77,400 in savings. Let’s also say you’re able to add another $400 a month to your savings, all the while investing that money in stocks for an average annual 10% return.

By age 67, you’re looking at a balance of about $973,000. That’s a nice sum of money to retire with. But you will need to keep funding your savings month after month, and at a decent rate, to get to that point.

What if you’re nowhere close to $77,400?

If you’re in your 40s and your IRA or 401(k) balance is a lot less than $77,400, you may be panicking. But don’t. Even if you have no money saved for retirement to date, there’s still time to build up a nice sum for your senior years — provided you start immediately.

Let’s say your nest egg has $0 in it, but you manage to save $400 a month for 22 years at an average annual 10% return. That’ll leave you with $343,000, which is actually more than what the average person in their 60s and 70s has saved for retirement, according to Northwestern Mutual.

But if that $343,000 balance doesn’t sound great, plan to give yourself more time to build wealth. If you’re 45, rather than plan to retire at 67, tell yourself you’ll work until age 70.

Contributing $400 a month to your savings for an extra three years and keeping that money invested at 10% a year that much longer will leave you with a balance of $472,000 rather than $343,000. That’s a huge difference.

All told, $77,400 is not some magic retirement savings number for 40-somethings. If it’s what you have and you keep building on it, you’re in good shape. If not, you still have the potential to amass a lot of wealth by the time your career comes to an end.

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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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Some credit cards charge an annual fee. Find out when you’re charged the annual fee on a credit card and how to figure out if this fee is worth it. 

For a first credit card, people usually stick to cards with no annual fee. After all, when your goal is to start building credit, it makes sense to keep extra charges to a minimum. And if your card doesn’t have an annual fee, you can keep it open free of charge as long as you want, which can be good for your credit score.

After you’ve established good credit, you may start considering credit cards with an annual fee. There are plenty of great no annual fee credit cards, but cards with annual fees tend to offer far more benefits.

If you decide to get a card with an annual fee, it helps to know when that fee is going to be charged. That way, you can plan for it financially the first year and every year thereafter.

When are you charged the annual fee on a credit card?

Most credit card companies charge the annual fee during the first statement period. The exact timing can vary depending on the card issuer, but the standard approach is within that first billing cycle. A statement period is approximately one month, so you can expect the annual fee to be due within the first month of opening a credit card.

That means the balance on your first credit card bill will include the annual fee. If you want to avoid interest charges, you’ll need to pay it in full by the due date. Paying your card’s full balance is a good habit to follow so that you never get charged credit card interest.

Note that some credit cards waive the annual fee for the first year. With these cards, you’ll see “$0 intro fee for the first year” (or something similar) in the annual fee section of its pricing and terms. In this case, the card issuer charges the annual fee during the statement period after the first 12 months.

Should you get a credit card with an annual fee?

Because credit cards with annual fees offer more benefits, they can be worth it for the right cardholder. The key is to figure out if you’ll get more value from the card than what it costs.

Here are some of the main advantages you get from top credit cards that have annual fees:

Higher rewards rates: Whether it’s cash back, points, or miles, rewards cards with annual fees tend to earn more than no annual fee cards.Bigger welcome offers: Cards with annual fees have the most valuable welcome bonuses.Spending credits: Some cards with annual fees have spending credits that save you money on certain types of purchases. For example, a travel card may have a $300 travel credit or a $250 spending credit covering airline fees.

Those are just a few examples. There are all kinds of credit card benefits out there. Other popular perks include access to airport lounges, free memberships to subscription services, and complimentary elite status with airlines and/or hotels.

If a particular credit card has caught your eye, take some time to review its features. Estimate how much money you’d save from its benefits to see if you’d come out ahead.

There are always ways to avoid an annual fee

Remember that you’re not locked into keeping a credit card. If you don’t want to pay the annual fee anymore, you have a few options:

Call the card issuer and ask to get the fee waived. Credit card issuers will sometimes waive your annual fee if you call and ask. Your card issuer probably won’t do this every year, but it’s worth a shot to see if you can get another year for free.Downgrade your credit card. Many credit cards can be downgraded to another card in the card issuer’s lineup. Contact the card issuer to see if you can downgrade to a no annual fee card.Cancel your credit card. You can cancel your credit card at any time by contacting the card issuer.

Asking for a fee waiver is a good place to start, especially if you like the card and just want to see if you can get out of the annual fee for a year. If that doesn’t work, downgrading the credit card or canceling can both be reasonable options.

Downgrading does have the advantage of keeping your credit card account open. That means you keep its account history on your credit file and its credit line available to you. But if you’d rather trim down your number of credit cards, then you may prefer to cancel.

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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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Auto insurance has gotten expensive. Read on for ways to save. 

Owning a car isn’t really a choice for a lot of people — it’s a necessity. But there are costs involved in owning a car that you really can’t avoid.

If you don’t maintain your car, for example, it might stop running. Or, you might end up having to spend a lot of money on repairs.

Similarly, if you don’t insure your car, you could run into trouble. Getting caught driving without auto insurance could mean facing expensive fines or even, in some cases, having your license suspended.

Plus, not having auto insurance could leave you in a dire financial spot if your car is damaged and you don’t have a policy to pick up the tab. You also risk being sued for damages if you drive without auto insurance, cause an accident, and wreck another car or injure the person in it.

As such, if you’re going to own a car, having auto insurance is a must. But a 2023 Policygenius survey reveals that 40% of insured drivers say they’re stressed about being able to afford car insurance.

When we break that down further, we learn that 55% of drivers aged 18 to 34 are stressed about the cost of auto insurance, and 24% say they’re “very stressed.” The good news, though, is that there are steps you can take to keep your car insurance costs down. Here are a few to look at.

1. Bundle your insurance policies

Own a home? If you’re getting homeowners insurance through one company and auto insurance through another, you may be making a costly mistake. Often, insurers offer discounts for having multiple policies, so it pays to see if that applies to you.

2. Do some rate shopping

You may have been offered a great rate on your auto insurance premiums when you first signed up. But that doesn’t mean your auto insurance company has the best rate to offer now. Do some digging to see what other companies are charging. A switch could save you a lot of money.

3. Drive safely

The more moving violations you have on your driving record, the more your auto insurer is likely to charge you. That’s because a less-than-stellar driving history indicates that you’re more of a risky person to insure. On the other hand, if you’re able to go for a year or more without a moving violation, your insurer might agree to lower your rate.

You might also manage to score a more affordable premium rate if you take a defensive driving course. Before you do, though, find out which types of courses count for this purpose. You don’t want to sit through a class that won’t result in any savings. Ask your insurer for program recommendations.

Auto insurance is an expense you can’t get out of when you own a car — but that doesn’t mean it needs to be a source of stress in your life. Take these steps to keep your insurance costs down so you can free up more money for the other expenses of car ownership, whether it’s auto loan payments, oil changes, or gas for your tank.

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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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