Money Management

Can an $800,000 nest egg carry you throughout retirement? Read on to find out. [[{“value”:”

Retiring without personal savings could mean having to live on Social Security alone. And since the average senior today only collects about $23,000 a year, you may find that retirement is far from enjoyable if you don’t have savings to fall back on.

Americans aged 65 to 74 years old had a median retirement savings balance of $200,000 as of 2022, according to the Federal Reserve. So if you were to retire with $800,000 in savings, you’d have about four times as much as the typical senior in that age range.

But is an $800,000 savings balance actually enough? It depends.

What do you want retirement to look like?

Whether an $800,000 nest egg is able to last through retirement or not depends on what you want to do with your senior years. If you expect that time to be filled with overseas travel and you intend to hang onto a larger home with a high property tax bill, then you may find that $800,000 falls short. But if you plan to live modestly but comfortably, then $800,000 may be more than enough.

For context, if we apply the 4% rule to an $800,000 nest egg, it gives you $32,000 a year. That rule, if you’re not familiar with it, is generally recognized by financial experts, since it commonly allows retirement accounts to last for 30 years. And it’s easy to follow — just withdraw 4% of your savings your first year of retirement, and then adjust future withdrawals for inflation if needed.

If you’re looking at $32,000 a year from savings and another $23,000 from Social Security, all told, that’s a $55,000 annual income, which isn’t too shabby — especially if your home is paid off by the time you retire and your ongoing expenses are relatively low. But ultimately, you’ll need to think about how you want your retirement to look to determine whether $800,000 is enough money or not.

How to get to $800,000 in retirement savings

If you’re an average earner, you might assume that an $800,000 retirement nest egg is out of reach. But actually, with the right strategy, it’s a sum you may be able to save with relative ease. To do that, though, you need to do two things: start saving from an early age and invest your money in stocks for solid growth.

Over the past 50 years, the S&P 500 has rewarded investors with an average annual 10% return, accounting for years when the market did well and years when it most certainly didn’t. If you invest $250 a month for retirement over a 35-year period, and your portfolio delivers a 10% yearly return during that window, you’re looking at a balance of just over $800,000. Really.

What kind of investment account should you use?

You have options for your retirement investments. A traditional brokerage account is one of them. Using one of these accounts means you’re not subject to any restrictions. You can contribute as much money as you want each year, and you can withdraw your money whenever you feel like it.

An individual retirement account (IRA), on the other hand, comes with contribution limits that change every year (currently, they’re $7,000 for savers under age 50 and $8,000 for those 50 and over). IRAs also subject you to a 10% penalty for taking withdrawals before age 59 1/2 (though there are a few exceptions).

But with an IRA, your money goes in on a tax-free basis. So if you contribute $250 a month to an IRA, or $3,000 a year, that’s $3,000 of income you aren’t paying taxes on. And investment gains in your IRA also aren’t taxed yearly as they would be in a traditional brokerage account. Rather, those gains are tax-deferred. You only pay taxes on gains when you take withdrawals in retirement.

For these reasons, an IRA could be the best place to house your retirement savings, whether you’re aiming for an $800,000 nest egg or a different amount. Click here for a list of the best places to open an IRA.

And then, spend some time figuring out what you want your retirement to look like so you can decide whether it pays to aim for somewhere in the ballpark of $800,000 in savings or a higher or lower number.

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You might assume that you don’t need a credit score if you never plan to borrow money. But read on to see why being credit invisible might hurt you. [[{“value”:”

Your credit score plays a huge role in your ability to borrow money, whether in the form of a credit card, mortgage, or auto loan. A higher credit score indicates that you’re good at managing your debts and paying on time. But when lenders see a lower credit score, they often shy away from approving applicants, since a lower score could be associated with a history of late payments and carrying too much debt on a whole.

But what if you don’t have a credit score at all? If so, you’re not alone. As of 2022, an estimated 45 million Americans did not have a credit score, according to the U.S. Government Accountability Office.

Now you might assume that being without a credit score is no big deal if you have no plans to borrow money. But there’s more to the story than that.

Why you still need a credit score, even if you can’t stand being in debt

Some people hate the idea of being in debt and will go to great lengths to avoid it. Although it’s difficult to buy a home in cash as opposed to financing one with a mortgage, it technically can be done. And you can pay for all your bills and other monthly expenses with cash, debit, or check instead of having to swipe a credit card.

If you’re of the mindset that all debt is bad and that you’d rather live a debt-free life, then you may not be motivated to establish a credit history and get a credit score. But not having a credit score might hurt you in more ways than expected.

For one thing, without a credit score, you may have a hard time getting approved to rent a home. A landlord generally won’t just take your word for it that you’re good at paying on time.

Also, if you don’t have a credit score, you may need to make a deposit (or a larger one) when you sign up for utility services. And you might struggle to get onto a cellphone service contract, too.

Finally, in many states, insurance companies can take credit scores into account when setting premium rates. Applicants without a credit score risk paying higher premiums for products like homeowners, auto, and life insurance.

How to get yourself a credit score

Not having a credit score at all could end up being a problem for you. So it pays to take steps to establish a credit score, even if you don’t intend to use it to borrow money.

One route is to get added as an authorized user on a family member’s credit card account. But that’s not an option for everyone.

In that case, it could pay to apply for a credit card, put a small recurring charge on it, and pay that bill on time and in full every month. You could do this with a regular credit card, or with a secured credit card where you put down a deposit that serves as your credit limit. If you don’t have a credit score, you may need to start with a secured credit card before you’re approved for a traditional one.

Of course, you may also want to remind yourself that debt isn’t automatically a bad thing. Credit cards tend to get a bad rap because they’re notorious for charging large amounts of interest. But you don’t pay interest on credit card balances you pay off in full every month.

If you’ve managed to get by without a credit score and without borrowing money, chances are, you’re good at managing your paycheck. That makes a credit card a potentially less risky prospect for you.

Plus, there are benefits to using a credit card. Aside from building a credit history and establishing a score for yourself, you can get rewarded in the form of cash back on your purchases. Click here for a list of the best cash back credit cards.

There are people who manage to function without a credit score. But there are pitfalls you might encounter if you have no credit history whatsoever. So it pays to try to establish a credit score for yourself — even if you opt not to borrow any money once you have one.

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You should have a savings account open at all times, even when interest rates are downright terrible. Read on to see why. [[{“value”:”

Savings accounts have had a pretty good run over the past couple of years. But if you check out the interest rate on your savings account today compared to a few months ago, you’ll find that it’s probably lower.

The Federal Reserve lowered its benchmark interest rate by half a percentage point in mid-September. And that rate cut was only the first of several the Fed is likely to make in the coming year.

Because of that, savings accounts interest rates are apt to fall. You may feel like pulling your money out of a savings account in light of that, but that could be a huge mistake.

You always need a savings account

Although savings accounts are generally paying less interest now than they were over the summer, plenty are still offering APYs of 4% or higher.

If you’re not happy with the interest you’re earning on your savings, it pays to shop around. Click here for a list of the top savings accounts today.

But even if savings account rates fall to 2%-3% next year, or even lower (which has certainly been the case in the past), it still makes sense to keep some money in a savings account.

A savings account is one of the only places you can earn interest on your money without restrictions. You can deposit as much money as you want, and you can withdraw as much as you want at any time without an early withdrawal penalty like a CD imposes.

For this reason, a savings account is the best place to house your emergency fund. And everyone needs an emergency fund.

Without one, you could wind up deep in credit card debt due to an unplanned expense like a home repair, or due to a period of unemployment. That could wreck your finances.

Keep the right amount of money in a savings account

Even though interest rates have fallen and are expected to continue doing so, you should not cash out your savings account. Rather, leave yourself with a complete emergency fund at all times. For most people, that means having at least three months’ worth of essential bills in the bank.

With interest rates on the decline, you also don’t want to overfund your savings account. So if you have more than three months’ worth of expenses in savings, you may want to withdraw the remainder and put it elsewhere. Since the best CD rates are still strong, now’s a good time to open one before rates drop even more.

Or, if you’re looking at money you don’t expect to need or use for a good seven years or more, invest it in a brokerage account instead. Historically, the stock market has delivered much higher returns over time than savings accounts and CDs.

In fact, if you have $3,000 in savings beyond what you need for emergency fund purposes, investing it at a 10% average yearly return could leave you with a little over $20,000 after 20 years. That 10% annual return is consistent with the S&P 500’s average over the past 50 years.

But remember, your goal in keeping money in a savings account isn’t to snag the best possible return. It’s to have a safe place for the money you might need in a pinch. So while you should absolutely shop around for the best savings account rate possible, you should also keep your money in one of those accounts at all times — even if interest rates reach the point where you’re earning pennies on your emergency fund.

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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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Do you owe more or less on your credit cards than the average consumer? Read on to find out. [[{“value”:”

If it seems like you can’t manage to break the cycle of credit card debt, you’re not alone. TransUnion reports that as of the second quarter of 2024, the average credit card balance was $6,329. That’s a pretty notable increase from a year prior, when the average credit card balance was $5,947.

Of course, the problem with credit card debt is that it can be expensive. That’s because credit cards are notorious for charging large amounts of interest.

In fact, let’s say you owe $6,329 on your credit cards, and you’re being charged 20% interest on those balances. If it takes you 24 months to pay them off, you’re looking at spending $1,402 on interest.

But an extra $1,402 could do a world of good for your finances if you were able to keep that money instead. It could help pad your emergency fund or help you save up for a more reliable car, for example. So it’s important to try to shed your credit card debt as quickly as possible.

One good way to rid yourself of credit card debt sooner is to take on a side hustle. If you’re carrying credit card debt, chances are, it’s because your regular paycheck from work is only enough to make your minimum monthly payments. But if you’re able to earn extra money from a second gig, you can use it to chip away at your credit card balances and whittle them down.

But you should also know that consolidating your credit card debt could help you pay it off sooner. And here are two options to consider in that regard.

1. A balance transfer

With a balance transfer, you’re not shedding your credit card debt right away. Instead, you’re moving your balances onto a single credit card so you only have one monthly payment to make. But that’s not the only benefit.

Many balance transfer credit cards come with a 0% introductory interest rate. And not having to pay interest on your balance for what could be a year or more could be your ticket to busting out of debt for good.

Now you’ll need to pay attention to balance transfer fees, which could eat away at your savings. But if you read the fine print, you may find an offer that looks good to you. Click here for a list of the best balance transfer credit cards.

2. A personal loan

Unlike a balance transfer, a personal loan won’t give you a period of no interest on your debt. Rather, when you sign a personal loan, you commit to a preset interest rate on the amount you borrow.

The benefit of a personal loan, though, is that you’re generally looking at a lower interest rate — and often a much lower one — on your debt than what the typical credit card charges. And also, with a balance transfer offer, you run the risk of accruing interest at a rapid pace once your introductory rate period comes to an end. But with a personal loan, your interest rate is locked in.

So for example, say you find a balance transfer offer with a 12-month 0% introductory rate. That’s a good deal in theory. But if you don’t fully pay off your balance in 12 months, you might then get hit with a 26% interest rate on the remaining amount you owe.

On the other hand, if you sign a personal loan at 8% and get five years to pay it off, you don’t have to worry about your interest rate rising above 8%. So with a personal loan, you might get more peace of mind. Click here for a list of the best personal loan lenders.

Whether your credit card balance is higher than the average consumer’s, lower, or similar, it pays to try to reduce it to $0 as quickly as you can. And to that end, earning extra money with a side hustle and consolidating your debt via personal loan or balance transfer could be your ticket to getting out of credit card debt for good.

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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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Ready to shop for all the winter essentials you need? You can save money by purchasing must-have items from Sam’s Club. Don’t miss these Sam’s Club deals. [[{“value”:”

I’m writing this after taking a walk surrounded by falling orange and red leaves. But winter will be here before we know it. Now is the perfect time to shop for winter essentials to prepare for the colder weather.

Shopping at a warehouse club retailer like Sam’s Club is a great way to prepare for winter without draining your bank account balance. You don’t have to overspend to prepare for the upcoming season. Here are a few Sam’s Club deals to get you winter ready.

1. Member’s Mark Kids Hat and Glove Set: $10.98

If you’ve dug through your bins of winter clothes and can’t find matching gloves for your kiddos, have no fear. Sam’s Club sells a Member’s Mark Kids Hat and Glove Set for $10.98. This set features a beanie-style hat and gloves. Multiple patterns are available in small, medium, and large sizes. With this purchase, you can ensure your kids will be warm and cozy this winter.

2. Eddie Bauer Women’s Walla Snow Boots: $43.86

A quality pair of winter boots can improve your comfort and safety. You can buy a pair of Eddie Bauer Women’s Walla Snow Boots for $43.86 at your local club.

These stylish water-repellent winter boots are available in gray and black. Is this a good deal? You could easily spend $100-plus on similar boots when shopping directly with Eddie Bauer. Purchasing your boots from Sam’s Club can be a win for your wallet.

Want to save even more money? Maximize your savings by earning cash back rewards. By swiping a cash back credit card at checkout, it’s easy to boost your savings by earning rewards. Click here to review our list of the best cash back credit cards with big rewards.

3. Excel Snow & Ice Melt: $20.96

If you don’t maintain the entryways to your home during the winter, you or your loved ones could fall and get hurt. Purchasing snow and ice melt now is an excellent way to prepare before the winter season begins. You can pick up a 50-pound Excel Snow and Ice Melt bucket at Sam’s Club for $20.96. This well-rated item is an affordable must-have for the cold weather season.

4. Member’s Mark 60-inch by 70-inch Plush Throw: $12.98

It’s a good idea to have extra blankets around the house — especially during the cooler months. Why not create a more welcoming and cozy space to relax this winter? Sam’s Club sells affordable blankets in various styles.

One popular deal is the Member’s Mark Plush Throw. This 60-inch by 70-inch blanket comes in multiple designs. It’s the perfect cozy addition for your spare bedroom or living room space. Even better, it’ll only cost you $12.98.

5. Isotoner Women’s Classic Comfort Hoodback Slippers: $12.98

This is a good time of year to replace your worn-out slippers. You can feel extra comfy all winter with a new pair purchased from Sam’s Club. One Sam’s Club deal you may want to shop is the Isotoner Women’s Classic Comfort Hoodback Slippers. These adorable memory foam slippers are available in multiple styles and cost $12.98.

Sam’s Club can help you save money

If you’re a Sam’s Club member, use your membership perks. Shopping deals like this can help you prepare for the upcoming season without overworking your favorite credit card. To stay alert to current deals, download the Sam’s Club mobile app.

Finally, it’s wise to look for opportunities to earn rewards when you shop. Using a rewards credit card to pay for your Sam’s Club purchases is an easy way to earn valuable rewards. Explore our list of the best rewards credit cards to find your ideal rewards card.

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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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Can you really retire comfortably by saving only $10 a day? You sure can. Read on to see how. [[{“value”:”

Americans think it’ll take $1.46 million to retire comfortably, according to a recent survey by Northwestern Mutual. You may be inclined to look at a number like that and laugh — not because it’s too large, but because you might assume you’ll never get there.

But if you’ve got $10 a day to save and invest for retirement, then you may be well on your way to amassing a $1.46 million nest egg or larger.

Can you really retire by saving $10 a day?

The idea of saving roughly $1.5 million might seem daunting. And that’s understandable, because that’s an extremely large number.

So don’t focus on that large number. Instead, focus on a daily goal. And a reasonable one to aim for may be $10 a day, or roughly $300 a month.

You might think that won’t get you very far. But if you save $10 a day over a long period and invest your money in stocks, you may be amazed at how much money you end up with.

The S&P 500’s average annual return over the past 50 years is 10%. That accounts for periods when the market soared, and periods when stock values tumbled.

If you invest $10 a day, or $300 a month, over a 40-year period, and you put that money into a stock portfolio that gives you a 10% yearly return, then you’re looking at a balance of almost $1.6 million. That’s a little more than the $1.46 million Americans seem to think is the magic retirement savings number.

How to find the best home for your retirement savings

You could save for retirement in a top-rated brokerage account. That way, you get a lot of freedom. You can contribute as much money as you want each year to that account, and you can withdraw your money at any age and for any reason.

But wth an IRA, or individual retirement account, you’re subject to certain restrictions. First, there’s a limit as to how much money you can contribute every year. Right now, you can put in up to $7,000 if you’re under 50, or $8,000 if you’re 50 or older.

If you’re planning to save $10 a day for retirement, these limits aren’t an issue. The bigger issue may be that with an IRA, you face a 10% penalty for taking withdrawals before age 59 1/2 (though there are a few exceptions, such as being able to remove up to $10,000 penalty-free to buy your first home).

But the benefit of using an IRA for retirement savings is getting a huge tax break on the money that goes into it. If you’re contributing $300 a month, or $3,600 a year, that’s income you aren’t paying taxes on. You’re also not paying taxes on investment gains in an IRA year after year. Rather, gains are tax-deferred until you take withdrawals during retirement.

For these reasons, it pays to consider opening an IRA for your retirement savings. Click here for a list of the best places to open an IRA, and then start funding that account with $10 a day immediately.

You can also pool your $10 a day into a $300 monthly contribution, but some IRAs will allow you to set up an automatic $10 daily transfer. The more time you give that $10 a day to grow, the more likely you are to be pleasantly surprised by your results.

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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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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