Money Management

Costco has pharmacies available for members and non-members. Check out the reasons why it’s a good idea to buy prescriptions at Costco Pharmacy. 

When people need to fill prescriptions, they often default to one of the big pharmacy chains, such as Walgreens or CVS. You may have an alternative, and possibly better, option — your local Costco pharmacy or Costco.com. If you haven’t tried getting your medications there yet, here are the best reasons to buy your prescriptions at Costco Pharmacy.

1. It has some of the lowest prices on prescriptions

Costco’s known for its low prices, and that includes low prices on prescriptions. In fact, a 2018 analysis by Consumer Reports found that Costco Pharmacy had some of the cheapest prices compared to other drugstores.

Consumer Reports had secret shoppers call more than 150 drugstores to compare prices for five commonly prescribed generic drugs. At Walgreens, these five drugs cost a total of $752. At CVS, they were even more expensive, at $928. Costco offered those same five drugs for just $105. It’s worth comparing prices at Costco to your current pharmacy to see if making a change could be better for your finances.

2. You don’t need a Costco membership

Most of Costco’s services are off limits if you’re not a member. That’s not the case with its pharmacy, which is open to non-members. Even without a Costco membership, you can fill your prescriptions at its in-warehouse pharmacies and online.

3. Get your prescriptions delivered to your door

One of the only disadvantages of Costco as a pharmacy is the fact that it has far fewer locations than the competition. For example, if we compare Costco and Walgreens, there are over 580 Costco stores in the United States, compared to well over 9,000 Walgreens locations.

But you don’t need to go into Costco to fill your prescription. You can also place orders online for delivery by mail anywhere in the United States. Standard USPS shipping is free and gets your order delivered in six to 14 days. If you need it more quickly, Costco offers two-day and three-day shipping options with UPS for an additional delivery charge.

4. You can pick up pet medications, too

If you’re a dog or cat owner, you can also get your pet’s prescriptions at Costco. With any current prescription, just bring it to your local Costco pharmacy to have it transferred over from your veterinarian. With new prescriptions, you can have your vet call Costco, fax it over, or write it for you.

5. Save more by joining the Costco Member Prescription Program

If you’re either uninsured or your insurance doesn’t cover all your prescriptions, the Costco Member Prescription Program could be a big help. It allows you to get lower prices on your prescriptions, with estimated savings of 2% to 40%. It’s available to Costco members for no additional charge.

Your eligible dependents with no prescription insurance can also join. And Costco even allows you to list your pet as an eligible dependent for savings on their medications, too.

6. Make orders easier with the auto refill program

To make it easier to keep your prescriptions on schedule, Costco offers an auto refill reminder program. You can set up the prescriptions you want to automatically refill online on Costco’s website. You must have a valid credit card on file to use the auto refill service. If you shop at Costco often, getting the Costco Anywhere Visa® Card by Citi is a good choice.

Costco will send you an email before refills are processed in its system to comply with state and federal regulations. You have 72 hours to provide positive confirmation. Once you do, your prescription will be filled.

For deciding where to buy your prescriptions, the most important factors are price and convenience. Costco excels in both areas. It offers reasonable prices, especially compared to the competition. It’s also a breeze to order your prescriptions online or at a Costco pharmacy and get them delivered. And while most of Costco’s benefits are for members only, anyone can take advantage of shopping at Costco Pharmacy.

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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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Visa. The Motley Fool has a disclosure policy.

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There are a variety of ways that Americans save for retirement. See the most popular options and find out which ones are worth using for your own nest egg. 

Saving for retirement is an important financial habit. Most people don’t want to work forever. Even for those who do, it’s still good to have money saved in case that’s not an option.

While saving for retirement is what’s most important, how you save also makes a big difference. The right type of retirement account could help you save more consistently, pay less in taxes, and end up with a much larger nest egg.

Recent research by The Motley Fool looked at the most common ways Americans save for retirement. If you’re trying to figure out how to save, here are the most popular methods, the percentage of non-retirees who use each one, and which ones to consider for your own use.

1. 401(k), 403(b), defined contribution pension: 55%

The most popular way to save for retirement is with a defined contribution pension. People normally do this with a 401(k) plan offered by their employer. A similar type of plan, a 403(b), is available to employees of public schools and some nonprofit organizations.

This is one of the best ways to build your retirement savings. If you have the option of setting up a 401(k) with your employer, you should. There are a few valuable benefits to 401(k)s:

They make saving easy and automatic. Decide how much you want to set aside for your 401(k) account, and contributions come directly out of your paycheck.They help you save on taxes. With a traditional 401(k), contributions are tax-deductible. Another option is a Roth 401(k), where contributions aren’t tax-deductible, but withdrawals are tax-free.Many employers match contributions up to a certain amount. A company match on a 401(k) helps you save more than you could on your own.

2. Savings not in retirement accounts: 52%

Over half of non-retirees save in non-retirement accounts. It makes sense why so many people save this way, as it’s somewhat of a default option. If you aren’t sure where to put your retirement fund, you can just leave it in your savings for the time being.

However, that doesn’t make it a good option. You don’t save anything on taxes, like you do with other retirement accounts. And if you have your money in a savings account, it won’t have nearly as much growth potential as it would if you invested it.

3. IRA: 36%

IRA is short for “individual retirement account.” It’s an account people can open themselves with most online stock brokers. You can then use it to invest, and you save on taxes. There are two types of IRAs:

Traditional IRAs let you deduct contributions on your income taxesRoth IRAs don’t, but they allow you to make tax-free withdrawals

Because of the tax savings these accounts offer, they’re another smart way to save for retirement. They work well in addition to a 401(k), so consider opening one even if you’re already saving for retirement through work.

4. Defined benefit pension: 32%

Nearly one-third of non-retirees use defined benefit pensions. This is a retirement plan offered by an employer. Upon retirement, the employee receives either fixed monthly payments or a lump-sum payment.

A defined benefit pension can be a good choice if your employer offers it. A pension with fixed monthly payments, in particular, gives you stability in the form of predictable income during retirement.

Other ways to save for retirement

The methods above are the ones used by a large portion of non-retirees. There were also 13% who had other retirement savings, as well as 10% who saved through a business or real estate.

Alternative options like these are fine to supplement your retirement savings, but they generally shouldn’t be your only form of saving. For most people, the safest approach is sticking to tried-and-true methods, such as 401(k)s and IRAs.

To recap, if your employer offers a 401(k) or defined benefit pension, start there. Make sure you contribute enough to max out any 401(k) match your employer offers. If you have money left over, invest it through an IRA or a Roth IRA. And if you reach the contribution limits on 401(k)s and IRAs, you can continue to invest through brokerage accounts.

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Despite a volatile stock market and high interest rates, financial guru Suze Orman says that real estate is a relatively safe investment. Here’s why. 

There is no doubt that the COVID-19 pandemic has shaken up the economy, leaving many investors feeling cautious and uncertain. However, according to personal finance guru Suze Orman, there is one investment that remains “relatively safe” — and that is real estate. Orman compared the differences between the 2008 financial crisis to today’s housing market in a recent podcast episode.

Inventory is slim

According to Orman, one of the main reasons real estate is relatively safe right now is the unusually slim inventory. Inventory refers to the number of properties available for sale or lease. In 2007, there were 4 million homes in inventory.

Today, there are only 980,000 homes in inventory. However, 43% are under contract, leaving only 560,000 active listings. This means there are about 3.5 million fewer homes available than there were in 2007.

Inventory is slim due to several reasons. Shutdowns and delays due to the pandemic impacted construction, leading to fewer new homes on the market. Inventory is also low because many homeowners took advantage of the record low interest rates in 2020 and 2021.

Demand is high

On top of the limited supply, Orman highlighted that demand has increased significantly. The population has grown by 30 million people since 2007. With more people fighting for 3.5 million fewer homes than what was present in 2007, competition is fierce.

On top of that, the pandemic caused a lot of people to reevaluate their living situations, leading to an increase in demand for single-family homes with more space. Another reason for low inventory is the rise in investors who have purchased single-family homes for rental purposes.

In 2021, investors bought 24% of all single-family homes, representing a significant increase from the 15%-16% per year they bought since 2012. This imbalance between supply and demand has caused prices to rise by 40% since the pandemic, making real estate a potentially booming investment.

Real estate can be a particularly sound investment when supply is limited and demand is high. This is because high demand typically drives up the price of real estate, while limited supply ensures the property is unique and therefore valuable.

Home equity and high interest rates

Orman also highlighted the difference in equity compared to 2007. Currently, homeowners have an average of 58% equity in their homes. During 2007 and 2008, many homeowners had no equity in their homes as they were purchasing interest-only mortgages with no money down. This significant difference in the current real estate landscape makes real estate much more safe than it was in 2008.

During the pandemic, interest rates on mortgages were as low as 2% to 3%. Many homeowners were able to lock in these historically low rates. Since then, rates have skyrocketed to 6.5% to 7%, inflating monthly mortgage payments by $1,000 for a house worth $500,000.

Homeowners who have benefited from low mortgage rates are hesitant to put their homes up for sale due to the increased rates. In addition, investors and home buyers are also less likely to purchase homes since a mortgage is much more expensive. Orman believes that rates are unlikely to drop any time soon, so those who own a home have an advantage they are less willing to give up.

The combination of limited inventory and high demand after the pandemic has created a perfect storm that has sent real estate values soaring. With so few properties on the market, there simply isn’t enough supply to meet demand. This has caused bidding wars and driven up prices, making it more difficult for some buyers to find a home within their budget. As a result, according to Orman, those who own real estate right now own an asset with long-term benefits and that remains a relatively safe investment.

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A special dividend could be a nice windfall for you. Read on to learn more. 

Many investors hold dividend-paying stocks in their brokerage accounts because in addition to share price appreciation, they get to make money in the form of dividend income. When a company pays a dividend, what it’s doing is sharing some of its profits with stockholders rather than keeping all of the money itself.

Normally, dividends are paid on a quarterly basis. But sometimes, a company will pay a special dividend. And that can be a very good thing, though there are consequences to be aware of.

Why do companies pay special dividends?

A big reason companies pay dividends in the first place is to keep investors happy. When a company finds itself with excess cash on its hands, it may decide to share it with stockholders in the form of a special dividend. Also, in some cases, a company that doesn’t pay dividends at all might opt to pay a special dividend.

As an example, Costco is a company that generally pays a steady dividend. But it’s also paid a special dividend four times over the past decade or so, the most recent of which was distributed in late 2020.

What do special dividends mean for investors?

A special dividend might seem like a nice windfall — and to a degree, it is. As an investor, you suddenly have extra money on your hands. And as is the case with regular dividends, there’s the option to invest your special dividend and grow that payday into an even larger sum.

But sometimes, paying a special dividend can backfire on the companies that uphold this practice. When a company pays a special dividend, sometimes, investors take it as a sign that the business has no better use for the money and isn’t interested in expanding. That could, in turn, lead to a lower stock price.

Another thing you should know is that dividend payments are considered income. This holds true whether you get a special dividend payment or a regular one. And dividend income is subject to taxes, so that’s something you’ll need to account for. You should also know that you’ll be taxed on your dividend income whether you choose to reinvest that money or not.

Now, the good news is that most dividends are considered qualifying dividends. And those are taxed at a more favorable rate than short-term capital gains and ordinary income.

If you’re single earning less than $44,625, you actually won’t pay taxes on qualified dividends at all. And if your income is between $44,625 and $492,300, you’ll only pay 15%. Even those with incomes above $492,300 only pay 20% on qualified dividend income.

All told, you can think of a special dividend as a one-time reward for being an investor. But know what to expect from a tax perspective, and think carefully before rushing to cash that dividend out. Reinvesting that dividend into the company that paid it, or into another stock or ETF, could be your ticket to growing a lot of wealth without having to pump more of your own money into your brokerage account.

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

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If you’ve overfunded your 529 plan, you have options. Read on to learn more. 

Given the ever-growing cost of college, many parents are eager to do what they can to save in advance so they’re able to cover the bulk of their children’s expenses. If that’s a goal of yours, you may be inclined to sock money away in a 529 plan.

A 529 plan offers the benefit of tax-free investment gains, whereas with a regular brokerage account, investment gains are subject to taxes. You can also take tax-free 529 plan withdrawals to pay for education. And it doesn’t just have to be college. You can tap a 529 plan without penalty to cover the cost of private school for, say, elementary or high school.

But what if you land in the fortunate position of having too much money in your 529 plan? It may be that your child has opted for a less expensive college, so now you have a remaining balance you don’t need for their education.

When you have extra money in a 529 plan, you need to be careful to avoid penalties. But there are options for putting that money to good use.

When penalties apply

There’s no tax break to be had on the money you put into a 529 plan. Because of this, if you take a 529 plan withdrawal for non-education purposes, you’ll only be penalized on the gains portion of your account, not your principal contributions.

Let’s say you contribute $40,000 to a 529 plan and your money grows to $60,000 by the time your child is ready for college. Let’s then say your child opts out of college completely, leaving you with $60,000 you’re not sure what to do with. If you withdraw all of that money for expenses not related to education, you’ll only be taxed and penalized on $20,000, which represents your gains portion.

Alternatives for your extra money

One good thing about 529 plans is that they allow you to change your beneficiary without penalty. So let’s say you have a daughter who’s no longer interested in college, but you’ve decided that you want to go back to school to get a master’s degree. You can designate yourself as the beneficiary of that plan and use the funds to pay for your own schooling.

You should also know that starting in 2024, leftover funds in a 529 plan can be rolled into a Roth IRA without penalty, provided you’re not moving over more than $35,000 per beneficiary. This means that instead of having to spend that money randomly, it can be saved and reserved for retirement instead.

Many people struggle to fund a 529 plan enough to cover the cost of college or other educational expenses. So if you have too much money in your 529 plan, consider yourself lucky to a large degree. However, you don’t want those funds to go to waste, and it’s best to avoid withdrawal penalties if possible. So if you end up with a lingering 529 plan balance and you’re not sure what to do with it, read up on your options or consult an accountant or financial advisor for further guidance.

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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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If you struggle to prioritize your savings goals, you’re not alone. Find out how some employers are helping staff save more money. 

Having extra money in a savings account is an excellent way to prepare financially for the unexpected. For many people, it can take a long time to reach their savings goals due to prioritizing must-pay expenses. But some companies are offering a new employee perk to help. If your employer provides a benefit like this, it could motivate you to increase your savings contributions.

Some employers are offering to match savings contributions

You’ve probably heard of employers offering a 401(k) match as an employee benefit. If an employer offers this, it will typically match employee contributions up to a certain percentage. This benefit makes it easier for workers to increase their retirement account contributions.

Investing for retirement is important, but building an emergency fund is also essential. After all, life is full of twists and turns, so you never know when you’ll need money for an unexpected expense. Having a solid emergency fund can help you avoid credit card debt.

Some companies are finding new ways to incentivize their workers with unique employee perks. Similar to matching retirement contributions, some employers now offer a savings account match to help their workers boost their savings. This benefit could motivate more people to prioritize saving.

These companies are helping their workers save more

At this time, employer savings matches are a rare find. But that’s not to say it won’t be a more common occurrence in the future. You may wonder what brands are offering this perk. Levi Strauss & Co. is one company that provides this benefit to its workers and has been doing so since 2015.

The clothing brand now partners with the BlackRock Emergency Savings Initiative to match employee savings contributions and has over 1,250 employees participating. But this isn’t the only company helping its employees focus on saving. Other companies that partner with the BlackRock Emergency Savings Initiative include BestBuy, AutoNation, and ADP.

This new law could help more workers save for emergencies

The SECURE 2.0 Act became law at the end of last year. This legislation includes provisions that could make it easier for employees to prepare for retirement. But the law could also encourage more workers to save for emergencies. Beginning in 2024, employers will have the option to set up emergency savings accounts for workers. They can automatically sign employees up and defer up to 3% of their salary to the account. Workers can opt out if they choose.

Employees can make after-tax contributions to their accounts. While employers can’t contribute money directly to the savings accounts, they can make matching contributions to their employees’ retirement accounts throughout the year. Employees can only contribute up to $2,500 to their savings account (or a lower amount set by the employer).

If an employer offers this and a worker defers $2,500 from their paycheck to put into their savings account, their employer can offer a dollar-for-dollar match by contributing up to $2,500 to the employee’s retirement account. Each year, the first four withdrawals from the savings account are penalty-fee. When workers move on to a new job, they can cash out their emergency savings account or roll it over into a Roth IRA.

This law could help more workers prioritize savings while allowing them to take advantage of a retirement contribution boost. Since saving for emergencies and retirement are crucial personal finance goals, this benefit could be a win for many workers planning financially for the future.

How to boost your savings without help from your employer

You can still prioritize your savings goals if your employer doesn’t offer a savings match. For workers who are trying to increase their savings account balance, this strategy may help. Setting up automatic transfers from your checking account to your savings account can ensure you don’t forget to save regularly. You can easily do this through your bank.

Even if you only save a few dollars each week, your account balance will grow over time when you make regular contributions. Stashing your savings in a high-yield savings account is recommended because you can get an extra boost by earning interest. Don’t neglect your emergency savings, even if you can only afford to start with a small savings goal.

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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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