Money Management

There’s no perfect number to answer this question. Read on for guidelines to help you gauge your progress. [[{“value”:”

While you don’t need to continually monitor your retirement savings progress — especially in a hands-off investment account like a 401(k) — it’s a good idea to check in every so often to get an idea of where you stand. But how much is enough, especially if you’re still a couple decades or more from retirement age?

Let’s look at one guideline that you can use to decide whether you’re making good retirement savings progress at age 40, and what you can do if you’ve fallen behind.

How much should you have saved for retirement by age 40?

There’s no certain dollar amount that the average person should aim for. After all, someone with a $50,000 annual income likely has different retirement savings needs than someone who makes $200,000.

Fidelity offers some income-based retirement savings guidelines for various ages that we can turn to. According to Fidelity, the typical 40-year-old should aim to have three times their salary saved for retirement. In other words, if you have a $100,000 salary and have $300,000 in your 401(k) or other retirement accounts, you’re on the right track.

Do you need to save more for retirement? Click here for our updated list of the best places to open an IRA.

If you’re curious, Fidelity also says that you should aim for:

Six times your salary in retirement savings by 50Eight times your salary in retirement savings by 6010 times your salary in retirement savings by the time you retire

Also, Fidelity’s guidelines are for total retirement savings, not just what you have in a 401(k) or employer-sponsored retirement plan. In other words, if you have money in a standard (taxable) brokerage account that you plan to use toward retirement, or if you save money in an IRA, that can be considered retirement savings for the purposes of these savings targets.

Not a perfect rule of thumb

It’s important to point out that Fidelity’s retirement savings targets are based on the average American who aims to retire at age 67. The ideal savings for you could be higher or lower depending on your plans and financial situation.

For example, those who have pension plans at work instead of 401(k)s or other retirement plans might not have a ton of cash saved for retirement, even though they’re on track to have a sufficient income stream after they leave the workforce. Or, if you plan to retire significantly earlier or later than age 67, you might want to set your savings targets accordingly.

To be clear, Fidelity’s savings targets are certainly good guidelines for the average American. But it’s important to take your personal situation into account as well.

Are you behind?

If you don’t quite have three times your salary saved right now, don’t panic. The good news is that at age 40, you still have about 25 years until you reach the typical retirement age, so there’s time to catch up. Consider increasing your 401(k) contribution rate if you participate in an employer’s retirement plan, or you could choose to contribute to a traditional or Roth IRA instead.

Whatever you decide, the point is that there’s still quite a bit of time on your side, and the long-term compounding power that comes with it. The “three times your income” suggestion should be used as an indicator of whether your savings plan is on track or if you need to prioritize retirement savings a little 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.Matt Frankel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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Certain Costco habits could be hurting your finances. Here’s how to break the cycle. [[{“value”:”

Millions of people happily pay an annual membership fee to join Costco. You might more than make up the $65 you spend on a Gold Star membership or the $130 for an Executive membership by saving more money on groceries and household essentials all year long.

But falling into the wrong habits at Costco could end up costing you money instead of letting you free up more cash to pad your savings account. Here are three changes to your Costco shopping worth considering.

1. Shop during the week instead of on weekends

It’s easy to see why Saturdays and Sundays are popular times to shop at Costco. Many people don’t work over the weekends, and it’s harder to fit a Costco run in during the workday or after work when you’re exhausted.

But shopping at Costco on the weekends generally means hitting the store when it’s the most crowded. And if those crowds get to your head, you might make poor choices — and understandably so.

Say you’re used to shopping on Saturday afternoons, when it’s tough to work your way through the aisles and the checkout lines are always long. You might rush through your shopping, throwing products into your cart at rapid speed to move the process along. In doing so, though, you might pick up items that don’t have the farthest expiration date because you didn’t look, leading to wasted food and money.

A smarter move? Try to find ways to make it to Costco during the week. That could mean hitting the store during your lunch break if the logistics work out, or heading there on your way home from work. You may find that if you’re able to shop when the store is less packed, you can make better decisions.

2. Shop in person instead of online

The crowds at Costco may be enough to push you to do your shopping online instead of in person. But while that may be more convenient, you should know that ordering from Costco.com negates some of the savings you might enjoy as a Costco member.

Costco marks up the prices of its online inventory to account for the cost of shipping and handling. You might notice that many items on Costco.com ship for free, but you’re actually paying those costs in a less obvious way.

For example, Costco.com lists the cost of a 30-count of Kirkland toilet paper rolls at $23.49. In-store prices can vary by location, but you may be looking at a price of $20.99 or $21.99 if you buy the same item at your local store.

And while paying a few dollars extra for a single item isn’t such a big deal, imagine you keep overpaying by $1 here or $2 there across 12 items per month. Suddenly, your monthly Costco bills are $12 to $24 higher. On a yearly basis, that’s an extra $144 to $288.

Instead of shopping at Costco.com all the time, try to find ways to visit the warehouse. And if the crowds are an issue, play around with different weekday times to see when the store is the least packed. You may even be able to ask staff at your local store if they have data on foot traffic to help you plan your shopping runs.

3. Be more selective about the items you purchase in bulk

Buying groceries at Costco could save you a lot of money — especially if you swipe the right credit card for extra rewards. Check out this list of the best credit cards for Costco members. But if you’re not careful, you may end up losing money in the form of food waste.

Think about the bulk items you buy from Costco regularly. Now ask yourself: How often do I end up tossing some of my stash?

If you realize you commonly don’t finish your spinach or salad mixes before they wilt, then it may be time to compare the bulk price at Costco to the price for a smaller quantity at your regular grocery store. And you may find that spending less, but getting less at your local supermarket, is a better deal.

In addition to being more selective about the bulk items you buy, you can also see if a local friend or neighbor is willing to split the cost of certain purchases with you. Perhaps Costco has such a great price on strawberries that it’s worth it to buy them in bulk and throw some out compared to paying up at your local grocery store. But before you resign yourself to throwing out one-third of your carton, see if you can get someone to go in on those weekly purchases so you both benefit.

A few changes to your Costco habits could put extra cash in your pocket. Aim to avoid the store on weekends and limit the number of orders you place online. And be careful about bulk perishables, so you don’t end up throwing your money away.

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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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There are times when credit card companies will pause payments, but these typically require financial hardships. Read on to learn about your options. [[{“value”:”

Credit cards can seem like the simplest, fastest solutions for dealing with unexpected expenses. But over time, they can quickly turn from an asset to a liability.

If you find yourself having difficulty making the minimum payments on your credit cards, you’re not alone. In fact, 9.1% of credit card balances fell into delinquency over the past year, according to the Federal Reserve Bank of New York.

If you’re in that position, there are a couple of options you may have to pause those payments and buy yourself some breathing room.

Credit card forbearance

Some credit card companies offer forbearance programs, which can pause your payments, potentially without hurting your credit (though this depends on how the creditor reports it to credit agencies). Often, these are limited to a 90-day period.

These programs may also be able to waive late fees or even temporarily lower your interest rate — but the availability and relief options will depend on your creditor. So it’s possible that your balance may grow during this time.

Qualifying for forbearance may be dependent on financial hardship. For example, if you’ve recently suffered a job loss and can provide documentation of that, your request for forbearance may be approved. The best first step to understanding your options here is to call your credit card company.

Bankruptcy

If you’re filing for bankruptcy, it’s typically advised that you stop making your credit card payments. However, this is a radical option, as bankruptcy has a major impact on your credit for the next seven to 10 years, and it can result in having your cards canceled.

That’s why bankruptcy is generally only reserved for those who are having serious financial difficulties. That can include trouble making credit card payments as well as paying for basic necessities.

It also costs money to file bankruptcy and see a credit counselor from an approved provider. You may also want to consult an attorney, which can have its own costs. If you want to go this route, however, there are two filing options you may want to consider.

What about debt settlement?

Debt settlement programs typically involve a private company contacting your various creditors to negotiate your debt with them. During this time, however, the debt settlement company may require you to start setting aside cash in an account to be paid if the settlement is successful.

There are a few other drawbacks you should be aware of here:

You typically have to pay the debt settlement company to do this for you.Settlement is not guaranteed, and it would result in a lump sum payment requirement, at best.Your credit card company can sue you if you stop making payments while a debt settlement company is attempting to negotiate.Any successful settlement could be taxed as income.

In other words, it can be extremely risky to go this route. If you’re in a precarious financial position, it’s a good idea to contact a qualified credit counselor to understand your options.

Going forward

Once you’re headed back toward a better financial position, it may be tempting to cancel some of your credit cards to avoid having the option to go into more debt. But you should be cautious here; canceling cards can have a negative impact on your credit because it could mean any remaining debt you have becomes a larger proportion of your available credit. It can also shorten your credit history.

It can be a long process to build good credit. But when you need it, a high credit score can help you make positive steps toward big financial goals and save you money on interest when you take out loans.

It can also help you access other financial resources, like balance transfer cards, which can help you save money on debt in the future. (Check out our list of the best balance transfer cards to learn more about this option.)

That said, if you know that having an extra card open is going to have a negative impact on your finances, canceling it may be the right call. Just know the potential consequences of that so you can take other steps to ensure you won’t be closing yourself off from other financial opportunities.

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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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Falling CD rates aren’t totally bad news. Read on for the upside of lower CD rates. [[{“value”:”

Earlier this year, finding a 5% certificate of deposit (CD) was pretty easy. But now, 5% CDs are harder to come by. And as the Federal Reserve continues with its anticipated interest rate cuts, we’re likely to see CDs start to pay less and less.

At first, that might seem like a bad thing. But here’s why you shouldn’t be too disappointed by the fact that CD rates are on the downswing.

1. CD rates are still pretty darn good

It’s true that 5% CDs have gotten harder to come by. But that doesn’t mean you can’t get a decent CD rate today.

Quite the contrary — if you shop around, you might lock in a 12-month CD at 4.5% instead of 5%. For a $5,000 deposit, you’re talking about earning $225 in interest instead of $250. And yes, it is a bit of a bummer to lose out on $25. But it’s also not so terrible.

Plus, if you research the best CD issuers, you may be able to find one that pays better than 4.5%. Click here for a list of the best CD rates available now.

2. Lower CD rates mean lower borrowing rates

CD rates are falling because the Federal Reserve is cutting its benchmark interest rate, and banks are following suit. But that means that in the coming months, you’re likely to be looking at a lower interest rate on your next loan, whether it’s a mortgage, an auto loan, or a personal loan.

Of course, if you want to lock in an affordable loan rate, you shouldn’t just wait for the Fed to keep cutting rates. You should also work on boosting your credit score, which you can do by paying bills on time and reducing outstanding balances on your credit cards.

But all told, you might benefit financially from the Fed’s rate cuts by paying less interest the next time you borrow money. And that interest savings could more than make up for the slightly lower CD rate you end up with.

3. A CD may not be the best place for your money anyway

The fact that CD rates are falling may not affect you if a CD isn’t the best place to park your cash anyway. For example, if you have money you have earmarked for your emergency fund, then you should absolutely not put it into a CD.

There can be steep penalties for withdrawing money early from a CD. For this reason, your emergency fund needs to sit in a savings account, where you can remove money at any time without having to worry about penalties.

The good news is that savings accounts are still paying pretty nicely today, even as rates are starting to fall. Click here for a list of the best savings accounts and rates available now.

If you have cash you don’t expect to need or use for many years, consider investing your money rather than committing it to a CD. Over the past 50 years, the S&P 500 has averaged an annual return of 10%. That beats CDs by a long shot.

In fact, if you put $5,000 into a stock portfolio today and leave it alone for 20 years, it could end up being worth around $33,000 if your portfolio pays you 10% a year during that time. Even if you’re somehow able to get 4.5% out of CDs during that same time frame (which is highly unlikely), that only gives you about $12,000.

It’s natural to be bummed initially about falling CD rates. But if you dig deeper, you may realize there’s actually no reason to be all that disappointed.

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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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Getting your credit score to 800 could do your finances a world of good. Read on to see why. [[{“value”:”

Your credit score is a number you may not think about until it’s time to apply for a new loan or credit card. But you should know that once your score reaches 800, your options for borrowing are likely to increase.

Experian, one of the three big consumer credit reporting bureaus, calls a credit score of 800 or above exceptional. If you can get your score to that level, here are three benefits you might enjoy.

1. Cheaper insurance

Insurers consider several different factors when determining their premium rates. But one surprising factor that may go into the equation is your credit score.

And if you’re thinking that doesn’t make sense, that’s understandable. It’s one thing for a lender to check your credit score to see if you’re likely to repay a debt. It’s another thing for a homeowners or auto insurance company to check your credit when you’re not asking to borrow money, but rather, spend money on a product/service.

But like it or not, insurers are known to take credit scores into account when calculating the rates they want to offer. Studies have found a correlation between higher credit scores and safer driving habits. Consumers with credit scores of 800 or above may end up paying less for insurance.

2. Less expensive move-in costs

Some landlords require a large amount of money when you sign a lease. That could mean paying your first month’s rent, last month’s rent, and a security deposit. But if you’re an applicant with a credit score of 800 or higher, a landlord may be willing to accept less money from you upfront.

They may, for example, waive the requirement to put down your last month’s rent and only ask for your first month of rent and a security deposit. That puts less of a strain on your finances. And if you’re looking at expensive moving costs, it’s even more helpful to not have to part with as much money upfront.

3. Access to a better cellphone and monthly plan

Upgrading a cellphone can be expensive. The good news is that many carriers will allow you to finance a cellphone purchase. But to get a good rate, you’ll generally need good credit, so that’s where a score of 800 or higher can help.

Plus, it’s common to undergo a credit check if you’re signing up for a monthly cellphone plan. With a credit score of 800 or more, qualifying shouldn’t be a problem — whereas if your score is much lower, you may be limited to prepaid service.

How to get your credit score to 800 or above

Boosting your credit score to 800 or above could improve your financial picture. And one of the best ways to do that is to pay all bills on time every month.

Another helpful move is to reduce your current credit card debt. The lower your total balance relative to your spending limit across your various cards, the more your credit score could improve.

Plus, paying down credit card debt could save you a lot of money on interest. So it pays to go that route even if your credit score is already in great shape.

Doing a balance transfer could make your credit card debt easier to whittle down, so click here for a list of the best balance transfer cards.

Finally, aim to check your credit report for errors once a month. You’re entitled to a free copy from each of the three reporting bureaus — Experian, Equifax, and TransUnion — every week, but once a month is usually enough to check for errors.

What you should specifically do is rotate so that each month, you’re pulling a report from a different bureau. It’s important to do this because it’s not a guarantee that all three of your reports will have the same information.

Alternatively, you can check all three credit reports every three months for mistakes. If you see one that’s likely to pull down your credit score, like a late payment you made on time, reporting it at once could help minimize the damage and/or help your score improve.

A credit score of 800 or higher could benefit your finances in more ways than one. It pays to try to reach that point, even if it takes time.

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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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Unexpected factors like credit score dips and increased mileage can raise car insurance premiums. Learn what to do to keep your rates low. [[{“value”:”

When it comes to car insurance coverage, most people know that things like making a claim or getting a speeding ticket can impact your rates. But what about less-obvious causes?

Sometimes, even careful drivers can face rate increases caused by unexpected factors. Here are a few sneaky triggers that can increase your car insurance premiums — and what to do about them.

1. Credit score dips

Your credit score doesn’t just impact the interest rate you’ll pay for a loan; insurance companies in most states use it, too. A dip in your credit score can indicate you’re more likely to file a claim, which could lead to higher premiums. If your credit score takes a hit, it might be worth checking your policy to see if your rates went up.

Monitor your credit score to help keep your insurance rates low. Avoid late payments and pay off credit card balances every month.

Looking for cheaper car insurance coverage? See how much you can save by buying a policy from the cheapest car insurance companies.

2. Gaps in your insurance coverage

You might think gaps in your insurance coverage aren’t a huge deal — especially if you’re not driving. However, insurers might see gaps as risky behavior, and it can cost you money. Even if you don’t own a car or aren’t driving, consider maintaining a non-owner policy to help avoid higher rates down the road.

3. A different zip code

Real estate is all about location, location, location, but it matters for car insurance, too. Relocating to a new area can have a huge impact on your rates because insurers look at stats like crime rates, the average number of accidents, and natural disasters when considering rates. Moving to a state with no-fault insurance laws, which don’t assign blame in an accident, can also cause your rates to soar.

Before you move, consider the insurance costs in your new area. This will help you decide on the right location or at least prepare for the jump in rates. You can also shop around for insurance rates to lock in lower premiums.

4. Estimated mileage changes

The RTO (return-to-office) mandate at your job might cost more than you think. The amount you drive also impacts your insurance rates. If you’re returning to the office after working from home for years or have just started taking more road trips, your insurer might increase your premium to cover the additional risk.

Make sure to keep your insurance company updated about how much you drive, and shop around if rates seem high. If you’re driving less these days, let your insurer know! You may see a slight decrease in your premiums.

Ready to shop around? Compare your options and find the best car insurance rates.

5. Changes in your marital status

Who knew a ring on your finger could impact your car insurance rates? Your marital status can affect your car insurance premiums. Insurers tend to see married couples as less risky drivers, so if you’re recently divorced or separated, you might see a spike in your rate.

On the flip side, getting married can lead to a drop in your premium, especially if you and your spouse decide to bundle your policies. Insurance companies usually offer discounts for multi-policy or multi-car households, which can reduce costs.

Car insurance premiums are influenced by more than you think. Being aware of these hidden triggers can help you avoid unexpected rate hikes. And remember, the best way to lower your premiums is to shop around and compare rates regularly.

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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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