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Money Management

You’re Probably Underestimating How Much You’ll Make in Retirement

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 Pre-retirees tend to underestimate future Social Security benefits by nearly $2,000. Dragana Gordic / Shutterstock.com

Older adults today face a host of challenges when it comes to financing their retirements — and now, new data suggests some miscalculate how much money they’ll receive from Social Security. A paper authored by researchers at the American Enterprise Institute and George Mason University found that a significant number of pre-retirees underestimate their future annual Social Security income by…

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Dave Ramsey Said There Are Only 2 Situations Where You Should Borrow From Your 401(k). Is He Right?

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Don’t borrow from your 401(k) without reading this. 

Image source: Getty Images

A 401(k) is one of the best ways to save for retirement if you are offered this account by your employer. While you don’t get to choose your brokerage firm like with an IRA, you get benefits such as having your contributions withdrawn directly from your paycheck. And many companies offer an employer match, which means your employer deposits money to match some of the contributions you make.

Another potential benefit of a 401(k) is that often, you are able to borrow from your retirement account without penalty if you need the money.

But while 401(k) loans are available, finance guru Dave Ramsey warns against taking advantage of them. In fact, Ramsey has explained there are only two situations where borrowing against a 401(k) could make sense. Here’s what they are.

Ramsey said these are the only circumstances when you should borrow against your 401(k)

According to Ramsey, it is a good idea to borrow from your 401(k) only if you would face very serious financial consequences for not doing so. And he identified two situations when the consequences would be dire enough to justify taking money from your retirement account.

“Unless you’re facing bankruptcy or foreclosure, never ever ever borrow from your 401(k) to pay off your debt,” Ramsey warned. “I repeat — never borrow from your 401(k)! Not only will you get hit with penalties, fees and taxes on your withdrawal, but you’re also stealing from your own future. And I know y’all know better than that!”

Bankruptcy and foreclosure are among the most drastic financial moves you could make. With a bankruptcy, you’d have the remaining balance of your debt wiped out but would have a record of the bankruptcy filing on your credit report for as long as a decade. A foreclosure would also stay on your credit record for a long time, and would also result in losing your house.

Should you listen to Ramsey?

Whether you should listen to Ramsey or not depends on your situation.

First, if you are facing either bankruptcy or foreclosure, it would generally be worth borrowing from a 401(k) if you could avoid these dire consequences permanently by doing so. However, make sure your 401(k) loan isn’t just delaying the inevitable.

Your 401(k) is actually protected in a bankruptcy filing, so you wouldn’t want to raid the account to pay off some of your debt and then end up having to file for bankruptcy anyway. Likewise, you wouldn’t want to drain your retirement funds to avoid foreclosure for a few months if you were just going to end up losing your house anyway because you’d still be unable to pay your mortgage over the long term.

As for other situations, Ramsey is generally correct that you don’t want to take money out of your retirement account. While a 401(k) loan doesn’t result in penalties if you pay it back on time, there’s a risk you could end up with a tax penalty if you can’t repay your loan as promised. And you could face fees and the loss of the returns your investment would have earned if you borrow the money from your account.

So, for most people, listening to Ramsey about this issue makes good sense. Don’t borrow money from a 401(k) unless you really, truly need it and doing so would help you permanently avoid financial disaster.

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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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This Product Sold at Trader Joe’s, Costco, and Aldi Has Been Recalled

By Money Management No Comments

You don’t want to eat it and risk getting sick. 

Image source: Getty Images

You’ll often hear that buying groceries at the supermarket is more economical than purchasing prepared meals. And if you tend to shop at affordable grocers like Trader Joe’s, Aldi, and Costco, you might rack up an even lower credit card tab in the process.

But even when you shop at a grocery store with a great reputation, you never know when something you buy might end up subject to a recall. Such is the case right now with frozen organic strawberries sold at Costco, Trader Joe’s, and Aldi, among other stores. So if you have these in your freezer, you absolutely shouldn’t consume them.

A major health risk

The aforementioned frozen strawberries have been linked to cases of hepatitis A in Washington State. Hepatitis A attacks the liver, and symptoms can include nausea, vomiting, and abdominal pain. To put it another way, it’s not something you want to get. So if you’re sitting on strawberries you think might be contaminated, toss them.

Will you get your money back?

The great thing about shopping at grocery stores that pride themselves on solid customer service is that in situations like this, you don’t have to worry about losing money. Trader Joe’s issued a statement on its website. It noted that while no illnesses have been reported to date in association with the products it sold, “If you purchased any Organic Tropical Fruit Blend, please do not eat it. We urge you to discard the product or return it to any Trader Joe’s for a full refund.”

Meanwhile, Costco will commonly take back any product you’re not satisfied with. It could be something as serious as a spoilage issue or as minor as a taste issue (meaning, you don’t like the taste). So rest assured that you can get refunded in full from Costco (which made a specific point to tell customers that they won’t be out money for potentially contaminated strawberries).

Aldi, too, is taking the matter seriously. And it, too, says that customers will be eligible for a full refund for their frozen strawberry purchases.

It pays to shop at stores with a great reputation

This isn’t the first time a given grocery product has been recalled due to health concerns, and it certainly will not be the last. But this incident highlights the importance of choosing your grocers carefully.

Some grocers are more quick to issue refunds than others. Now in this sort of extreme situation, you can pretty much bank on any supermarket to give you your money back when the product you’ve purchased has the potential to give you hepatitis. But still, consumers who shop at Trader Joe’s, Costco, and Aldi can generally rest assured that these retailers are really good about issuing refunds even in less extreme scenarios.

These days, a lot of people are racking up debt and raiding their savings accounts just to pay for groceries. Shopping at Trader Joe’s, Costco, and Aldi might not only result in great customer service, but also, lower grocery bills as a whole.

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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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9 Ways to Screw Up a Job Search When You’re 50 or Older

By Money Management No Comments

 Finding a job in your 50s or 60s can be hard. Raise the odds of success by avoiding these mistakes. Kues / Shutterstock.com

Millions of Americans are job hunting during their 50s, 60s and beyond. Some of these seniors are looking for a job because they love to work. Others are sending out resumes for reasons ranging from pink slips to financial need. Seniors can be attractive job candidates. Many potential employers value older workers for their experience and work ethic, and for the stability they bring to the…

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7 Reasons Americans Seniors Stay Frugal in Retirement

By Money Management No Comments

 Many folks do not abandon their penny-pinching ways after they stop working. Roman Samborskyi / Shutterstock.com

Retirement is supposed to be the time to spend down all that you have saved over a lifetime. But it appears that someone forgot to let today’s seniors in on the secret. Among retirees, 34% say they plan to spend down only a small portion of their assets in their golden years, and another 8% plan to spend down none of their assets. But there is a method to what some might characterize as their…

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This A-List Actor Bought a Home Through Craigslist. Here’s How

By Money Management No Comments

Should you use Craigslist to buy or sell your next house? 

Image source: Getty Images

If you’re like most people, you probably don’t associate Craigslist with high-end real estate. After all, the platform is more commonly used for selling books or furniture than it is for buying multi-million dollar homes. However, an A-List actor recently used Craigslist to purchase a luxurious home. Here’s how he pulled it off and why his success story could be an inspiration to others looking to get a mortgage.

The actor’s proactive approach

YouTube personality and real estate investor Graham Stephan stated that the two most expensive properties he has sold were not through traditional channels, but through Craigslist. One was $5.5 million dollars, and according to Stephan it’s now worth $15 million dollars. The second was $8 million dollars, and he sold it to an A-list actor.

That actor was Orlando Bloom. When asked why a celebrity would be looking for a home on Craigslist, Stephan clarified that he had worked out a lease deal for someone who works very closely with Bloom, and it was done through Craigslist. Two years later, that same individual came back to him and introduced Stephan to Bloom, and the rest is history!

When the actor was searching for his dream home, he didn’t limit himself to conventional methods of searching, such as going through a real estate agent or using online listing services. He asked around for advice, and when a close associate told him about meeting Stephan through Craigslist, the actor followed suit.

Opportunities found in unlikely places

Some people have realized that there are properties and real estate opportunities available on Craigslist that aren’t listed anywhere else. Purchasing a house through Craigslist can also potentially save buyers money on agent fees and commissions. Sellers on Craigslist may be more willing to negotiate than agents, since they don’t have any incentive to increase their profits (other than their asking price). This means that both buyers and sellers may be able to get better deals than they would otherwise find through traditional channels.

What to keep in mind when using Craigslist to buy property

It’s important to do your due diligence and research before making any decisions. Not all sellers on Craigslist are legitimate, so always proceed with caution when dealing with someone online who isn’t verified or wasn’t recommended by someone you trust. It’s also important to make sure that all paperwork is handled properly so everything is done legally and above board.

A-list actors aren’t the only ones who can benefit from buying property through Craigslist; anyone looking for a great deal on their next home should consider looking at alternative channels. By doing their research and taking proper precautions, prospective buyers can take advantage of the potential savings and opportunities they may not have found otherwise. With some effort and determination, anyone could end up buying their dream home, just like this Orlando Bloom.

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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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