Money Management

You don’t want to spend down your IRA too quickly. Read on to see how to establish a safe withdrawal strategy. 

Some people enter retirement with no personal savings whatsoever. Seniors in that boat often rely heavily on Social Security and end up struggling financially for it.

But if you’re coming into retirement with a sizable IRA balance, it means you’re in better shape than someone with no savings. That doesn’t mean you don’t need to be careful about managing your money, though.

Your IRA might serve as a nice source of retirement income. But you also want that money — at least some of it — to last throughout your retirement. If you deplete your savings at any point, you could end up quite cash-strapped when you’re older and more vulnerable to things like medical expenses.

A recent Allianz survey found that 61% of Americans are more worried about running out of money in retirement than actually dying. Yikes.

The good news is that you can set yourself up to avoid that fate by managing your IRA withdrawals strategically. And that means being very careful from the get-go.

Withdraw funds with care

In many ways, managing your IRA during your first year of retirement can be tricky. That’s because retirement is new to you, and you may not quite have a handle on what your total spending entails.

Now it used to be the rule of thumb that withdrawing 4% of your savings your first year of retirement was a good idea. But many financial experts now think a 4% withdrawal rate is too aggressive, and that 2% or 3% is more appropriate. This would mean taking $20,000 or $30,000 out of your IRA your first year of retirement if you’re starting off with a balance of $1 million.

But rather than relying on these general guidelines, a better bet is to think about your specific needs. First, consider your expenses. It may be that you have two more years on your mortgage loan to pay it off. In that case, you might take a larger withdrawal your first year of retirement, but remove less money from your savings in future years once your home is yours outright.

Next, consider your other income sources. In addition to Social Security, you may be entitled to a payout from your employer. Maybe you accepted an early retirement package that’s left you with a small sum of money. Or maybe you were able to get paid out on unused vacation days. If you have extra funds, you could consider leaving your IRA alone during your first year of retirement — or at least withdrawing less.

Finally, think about your retirement goals. Maybe you have a few big trips on your bucket list, and doing them at a younger age is preferable. If that’s the case, you may decide to take a larger IRA withdrawal your first year of retirement and then scale back in future years, when you may not be traveling as much.

Put plenty of thought into your decision

It’s great to be in a position where you tap an IRA to pay your retirement expenses. But before you start withdrawing money from that account, take the time to come up with a game plan so you’re less likely to deplete your nest egg in your lifetime.

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New to Costco? Here are some important things you ought to be aware of. 

Shopping at Costco is a great way to save money on everything from food to apparel to paper goods. But if you’re new to Costco shopping, it’s important to get the inside scoop so you can reap even more savings. Here are a few insider tricks you should know about.

1. You may actually be getting a name brand when you buy Kirkland products

Kirkland is Costco’s signature brand, and you’ll find it on a wide range of products. You may be hesitant to buy Kirkland-branded food despite the lower price point and ensuing credit card bill. But actually, Kirkland products offer a lot of value. And in some cases, you may not be compromising on your preferred brand at all.

It’s a lesser-known fact that some Kirkland items are produced by major brands you’re more than familiar with. Some Kirkland coffee, for example, is made by Starbucks — and it says so on the package. So before you write off Kirkland products, give them a chance — or at least do some research to see which ones are secretly made by the brands you already love.

2. Items ending in $0.97 are are being offered at even more of a discount

Costco is known for its generally low prices. But it pays to look out for items that end in $0.97. When you see a product with a price tag ending in $0.97, it signifies that it’s been marked down from its regular price, allowing you to enjoy even more savings.

3. You can buy gift cards at a discounted rate

Costco sells a variety of gift cards. But one thing you may not have realized is that you can often buy gift cards for less than face value.

As an example, right now, Costco is selling $100 worth of California Pizza Kitchen gift cards for just $69.99. If that’s a restaurant you tend to frequent, then that’s a deal you may want to jump on.

4. You don’t need to clip coupons to benefit from sales

If you’re a Costco member, you’ll generally get a coupon book in the mail highlighting the items that are on sale each month. But don’t worry if you don’t remember to clip those coupons or bring your deal book with you. Costco will give you the discounted price at checkout either way, so there’s no need to stress or do any extra work.

5. You can return almost anything

Costco is known to be extremely reasonable with its return policy. This means that if you buy a food product that doesn’t meet your expectations, you can generally return it for a full refund — even if it’s been partially consumed.

In fact, Costco will take most items back without any hassle whatsoever. But there are exceptions. For electronics, you only get 90 days to make a return. And you can’t return alcohol or cigarettes purchased at Costco under any circumstance.

If you’re going to pay for a Costco membership, you might as well make the most of it. Keep these Costco secrets in mind so you can reap the most savings and enjoy the most benefits.

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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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An estimated 67% of adults worldwide are financially illiterate. This bank is trying to turn those statistics around. Read on for the details. 

OneUnited, the largest Black-owned bank in the U.S., is on a mission to end financial illiteracy. Consider this: It is estimated that 67% of the world’s adult population is financially illiterate, meaning they lack an understanding of basic financial concepts. There’s a danger in not understanding finances. Not only does financial illiteracy make it easier to take advantage of a person, but it also prevents that person from building wealth using basic financial strategies.

OneUnited continually rolls out new, innovative financial education programs for its customers and the community to enjoy, but working with adults is not enough. Bank leaders want to reach community members while they’re young and open to new ideas. Ideally, these children will grow in financial confidence and move into adulthood as savvy wealth builders.

A contest and a partnership

This month, as our nation commemorates the emancipation of enslaved people, OneUnited is sponsoring the 13th annual “I Got Bank” National Financial Literacy Contest. Each year, students from across the U.S. between the ages of 8 and 12 read a financial literacy book of their choice and either write a 250-word essay about what they learned or create an art project that illustrates how they might apply what they’ve learned in their daily lives. The bank chooses 10 winners and awards each a $1,000 savings account at OneUnited Bank.

What sets this year’s contest apart is that OneUnited has partnered with Visa and Marvel Comics to present material in a new way and get kids excited about personal finances. To that end, Marvel has created a one-of-a-kind Black Panther comic book called “Investing in Each Other!” Not only is “Investing in Each Other!” visually stunning, but it also manages to introduce financial concepts while holding off the bad guys. Making it even more special, Ant-Man, The Wasp, and The Incredible Hulk all make guest appearances.

OneUnited is offering this custom edition comic book at its branches in Boston, Miami, Los Angeles, and Compton on a first come, first served basis. And every child who submits their contest entry online can access a free digital version of the Black Panther comic book. In addition to the comic book, children who enter the contest will also receive a free e-book called I Got Bank. I Got Bank is a children’s book by OneUnited Bank President Teri Williams.

“We are excited to collaborate with Marvel Comics and Visa to promote financial literacy,” Williams said. “Our contest, free e-book, and now this new comic book make it easy for families to teach their children how to save and make financial literacy a core value in the Black community.”

Bridging a gap

Historically, children of color have had less access to basic financial education. Whether a child reads to themselves or an adult enjoys the comic book with them, “Investing in Each Other!” takes another step toward bridging the financial education gap. The story seamlessly integrates concepts like saving money, investing for the future, the value of supporting small businesses, and the fundamental value of giving back.

Just as children’s favorites like The Giving Tree and The Most Magnificent Thing entertain while gently sharing hard-earned wisdom, “Investing in Each Other!” blends financial insight with a story exciting enough to keep children hooked.

In a perfect world, we would have all moved into adulthood with enough financial insight to avoid some of our big mistakes. OneUnited may not be able to reach every child in the U.S., but those who are reached are far more likely to go out into the world with the financial confidence to change their lives.

For more information about the “I Got Bank” National Financial Literacy Contest, visit www.oneunited.com/book.

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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.Dana George has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Visa. The Motley Fool has a disclosure policy.

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Prince Harry and Meghan Markle won’t continue their $20 million deal with Spotify. Find out how every freelancer can handle losing a major contract. 

What happened

Spotify won’t continue the $20 million podcasting deal it signed with Prince Harry and Meghan Markle in 2020. According to Variety, the streaming giant and the couple’s production company, Archewell Audio, will end their partnership. “Spotify and Archewell Audio have mutually agreed to part ways and are proud of the series we made together,” the companies said.

So what

Life is very different for the majority of independent workers who don’t happen to be part of the royal family. If you’re a freelancer, a $20 million deal is almost certainly a pipe dream. And the idea of letting it slip through your fingertips is likely unimaginable. But while the dollar value is different, most freelancers will lose a big contractor at some point. How you handle it could be the difference between failure and success.

Now what

It isn’t clear why Spotify’s deal with the celebrity couple fell through. Variety quoted one source that said Prince Harry and Markle weren’t keen on their exclusive Spotify distribution, while another said Spotify had hoped the couple would make more content. They’ve produced one show — Markle’s Archetypes — for Spotify in nearly three years.

Depending on which scenario is accurate, one lesson freelancers might take from this is to always deliver on your promises. And try to agree on clear deliverables from the outset to avoid disappointment. Another lesson might be that sometimes it’s OK to drop a client if your expectations no longer align.

More widely, losing a big contract can be a blow. It’s important to stay positive and not to burn any bridges. Here are some ways to not only cope but also bounce back.

Understand why you’re parting ways: If you’re able to politely ask your client for feedback, it could help you in the future. Try to be objective. Sometimes a client will stop using a freelancer because of internal issues. But if it’s due to your rates or the quality of your service, that’s something you need to address.Reassess your budget: Work out where you stand financially and how your reduced income will impact your bottom line. You might need to make some temporary cutbacks to keep your bank account balance in the black.Hustle for new work: The good news about losing a big job is that you’ll have extra time to dedicate to job hunting. Dust off your portfolio and resume and hit the freelance sites. It can also be worth touching base with old clients and letting them know you’re available.Use your emergency savings if necessary: In an ideal world, you’ll have some cash in your emergency fund for exactly this type of situation. If you need to tap your savings account to cover essential bills, do so. Just remember you’ll have to top it up again when you’re working more.

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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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