Money Management

Wondering how long your retirement savings will last? Explore key strategies to make $1 million go the distance after 70. [[{“value”:”

You’ve done the hard part — you saved $1 million for retirement, and now it’s time to enjoy your golden years. But the big question looms: How long will that money last once you hit 70?

While $1 million seems like a lot, your lifestyle, spending habits, and the income you generate during retirement will ultimately determine how long it lasts. Let’s dive into the factors that can stretch or shrink your retirement nest egg and affect your budget.

The 4% rule: A starting point

The 4% rule is a popular guideline in retirement planning. It suggests that you can withdraw 4% of your portfolio each year during retirement and have a low likelihood of outliving your savings over 30 years.

So, if you have $1 million saved, the 4% rule says you can safely withdraw $40,000 in your first year of retirement, increasing that amount each year to keep pace with inflation.

It’s a helpful starting point, but the 4% rule isn’t perfect. It doesn’t consider factors like portfolio composition, taxes, or fees. Plus, not everyone’s retirement will last 30 years.

A 2019 study published in the BMJ found that 16% of men and 34% of women live to age 90, but the average life expectancy in the U.S. is closer to 77.5 years. So, while planning for a 30-year retirement is a good safety net, it’s important to remember that you may need less — or more –depending on your circumstances.

Ready to enjoy a tax break on investment contributions? Click here for a list of the best IRAs for your retirement savings.

Your location plays a role

Where you retire has a significant impact on how long $1 million will last. Retiring to a lower-cost area can stretch your money further, while living in an expensive city can greatly reduce your savings. Retirees in lower-cost states like Florida or Arizona spend around $50,220 per year, which fits nicely into the 4% rule’s budget.

But if you’re planning to retire in high-cost areas like New York or San Francisco, those annual expenses could easily double, significantly reducing the lifespan of your savings. Consider downsizing or moving to a more affordable location if you want to make that $1 million last longer.

Healthcare: The unpredictable factor

One of the biggest unknowns in retirement is healthcare costs. As you age, healthcare expenses tend to increase, and while Medicare can help, it doesn’t cover everything. Fidelity estimates that a 65-year-old couple retiring today will need about $315,000 just for healthcare costs in retirement — an amount that can quickly eat into your savings.

Medicare covers many basics, but you’ll still face premiums, deductibles, co-pays, and other out-of-pocket expenses. And if long-term care becomes necessary, the costs can skyrocket, which is why many retirees invest in long-term care insurance to protect their savings.

Diversifying income sources

The amount of income you generate during retirement will also impact how long your savings last. Social Security is a reliable income stream for most retirees. In 2024, the average Social Security benefit is about $1,862 per month, or $22,344 annually. That’s a helpful supplement to your savings, but it’s by no means enough to live on.

Other potential income sources could include a part-time job, which boosts your finances and improves your quality of life by keeping you active and social. Additionally, if you’re one of the lucky few retirees with a pension, that steady income can significantly affect how long your $1 million lasts.

Inflation: The silent savings killer

Inflation is an important factor that can erode the purchasing power of your retirement savings over time. Even with modest inflation rates of 2% to 3%, your $40,000 annual withdrawal from your $1 million nest egg won’t stretch as far in 10 or 15 years as it did in your first year of retirement.

Investing a portion of your portfolio in growth-oriented assets like stocks can help combat inflation. While stocks come with risks, they also offer the potential for returns that can outpace inflation, allowing your savings to grow and maintain their purchasing power.

Managing your portfolio and sequence risk

When planning for retirement, it’s crucial to balance risk and reward in your investment portfolio. Stocks offer the potential for higher returns but come with higher risks, while bonds and annuities offer more stability with lower returns. Finding a balance that suits your comfort level is key to ensuring your savings last.

One major risk retirees face is sequence risk, which refers to the danger of a market downturn early in your retirement. If you have a large portion of your portfolio in stocks, and the market crashes right when you retire, it can significantly reduce your cash flow for the rest of your life.

To mitigate this risk, shifting some of your investments to safer, lower-risk options as you approach retirement is a good idea. By diversifying your portfolio across different asset classes, you can create a mix that balances risk and return, further helping your $1 million stretch.

The bottom line

So, how long does $1 million last after you turn 70? It depends. If you follow the 4% rule, plan for healthcare costs, manage inflation, and diversify your investments, you’ll have a good shot at making it last for 20 to 30 years.

But life doesn’t always follow a set formula. Unexpected expenses, inflation spikes, or market downturns can affect how long your money lasts.

The key is to create a flexible plan that adapts to changes, balances risk, and includes multiple sources of income like Social Security or part-time work. With thoughtful planning, that $1 million can go a long way toward securing a comfortable and enjoyable retirement.

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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.
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Some personal finance moves are traps. Discover key mistakes financially savvy individuals avoid to stay ahead and secure their future. [[{“value”:”

Financial success isn’t just about knowing which stocks to buy or how much to put in your IRA; it’s also about understanding what traps to avoid. Financially savvy folks tend to sidestep many common pitfalls that can derail their financial goals — and no, I’m not talking about skipping the daily latte or forgoing the avocado toast.

If you’re looking for ways to improve your financial health, here are some key habits to steer clear of.

1. Carrying credit card debt

High-interest credit card debt can be an easy trap to fall into, especially if you’re struggling to make ends meet. Financially literate people know how easily debt can pile up when you’re paying 20% interest. That $100 purchase can turn into thousands in credit card debt over time.

Instead of carrying a balance, financially savvy people prioritize paying off their credit cards each month to avoid interest fees. Just like compound interest can snowball your savings, paying high interest can snowball your credit card debt. To stay on top of your finances, aim to only spend what you can pay off at the end of the month whenever possible.

Struggling with debt from credit cards and other loans? Check out the best debt consolidation loans that our experts recommend.

2. Storing savings in a traditional savings account

That checking and saving account you’ve had since you were a teen? It could be holding you back from reaching your financial goals. Traditional savings accounts don’t offer much in terms of savings. (My traditional savings account, for example, is currently offering 0.01% interest — which is why I don’t keep much in that account!)

Financially savvy people understand that high-yield savings accounts (HYSAs) are a better option for storing their emergency funds. While rates can vary, HYSAs tend to offer APYs between 4.00% and 5.00% these days. These accounts provide higher interest rates without putting your savings at risk of market fluctuations.

Looking for a better place to park your savings? Compare high-yield savings accounts with competitive rates.

3. Pulling from retirement savings too early

Dipping into retirement savings prematurely can be a costly mistake. In addition to paying penalties, pulling out money early derails your long-term growth.

Let’s assume your 401(k) earns an average annual return of 7%. If you leave that $10,000 in the account and let it grow for 20 years, it would grow to approximately $40,387.39 thanks to compound interest.

However, if you withdraw that $10,000 now, not only do you lose that potential growth, but you may also face early withdrawal penalties and taxes (which could be between 20% and 30%, depending on your tax rate), leaving you with only $7,000. So, in the long run, you could be sacrificing over $30,000 in potential retirement savings by pulling the money early.

Folks with financial know-how avoid this situation by pulling from emergency savings before considering withdrawing from their 401(k) or IRA. They know retirement savings are meant for the future, not for patching up short-term financial issues.

4. Not diversifying investments

Relying on a single source of income is risky — and so is relying on a single type of investment. Savvy investors know the importance of spreading their money across different asset classes, such as stocks, bonds, CDs, and even alternative investments vehicles like real estate. This diversification helps minimize risk and creates more opportunities for growth over time.

To reach your financial goals, don’t put all your eggs in one basket. While you should always keep your emergency fund safe and easily accessible (like in an HYSA), other investments can be in multiple types of funds. That might mean investing in stocks and mutual funds in your brokerage account or including options like CDs or bonds in your portfolio.

5. Neglecting their emergency fund

Emergencies happen, and when they do, financially literate people are ready for them. Whether it’s a sudden job loss, medical emergency, or just a broken dishwasher, they avoid credit card debt or taking out payday loans by tapping their emergency fund.

To keep your finances on track, aim to have three to six months’ worth of expenses set aside in a rainy day fund. It’s also a good idea to create buckets for expected expenses, like repairing or replacing home appliances, buying a new laptop, or pet medical expenses. This lets you easily cover expenses without tapping retirement accounts or racking up credit card debt.

Remember, we all start somewhere. The key to financial success is to stay focused, do your best, and go at your own pace. Making small, consistent steps with your personal finances leads to big results over 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.
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Looking to launch an e-commerce business? Learn how to stock your online storefront using platforms like Alibaba, eBay, and Craigslist. [[{“value”:”

I’ll begin with some background on e-commerce.

About a decade ago, I was a member of the board of an influential global think tank called the World Entrepreneurship Forum. We brought together entrepreneurs from all over the globe in order to share tips and tricks, ideas, and strategies.

It was exciting, but a bit disheartening too, as the barrier to entry for many of these entrepreneurs, especially the ones from the developing world, were numerous and onerous. Money issues, obtaining small business loans, and government regulations — it all added up.

But fortunately, since then, many countries have gotten the memo: International commerce generally, and e-commerce specifically, is good for business, good for the economy, and good for taxes.

As such, in many places, like here in the United States, an e-commerce business can be both unique and fairly simple to launch. For example, you could sell:

Mass manufactured productsCustomized niche productsHandmade productsDigital downloadsServices

The key is finding a product line that resonates with your target audience and sourcing the right products at the right prices to match. Once you do that, then it is simply a matter of marketing the heck out of that store. Market your business, then market it some more.

Alibaba: Your gateway to global product sourcing

Besides marketing your business, you’ll also need to find a good place to source the products you sell. One of the best places to source these products for your e-commerce business is Alibaba. If you don’t know it, Alibaba is a buyer’s paradise. Based in China, the behemoth of a company is a vast marketplace for just about anything you could want, and currently serves almost a billion active buyers worldwide yearly.

How big is Alibaba? According to Statista, “In 2022, Alibaba’s online retail properties took up almost a quarter of the global e-commerce market.” The platform connects you with millions of suppliers, particularly from China, offering everything from apparel to electronics at wholesale prices.

I recently attended Alibaba’s Co-Create event in Las Vegas and left impressed with how well Alibaba serves its small business customers. If you are looking to source products for your e-store, there are many options (and I list some below), but for my money, there are few better in the game these days than Alibaba.

Whether you are looking to purchase in bulk or you want to buy small quantities to test the market, Alibaba can match you with suppliers to fit your needs. Some of its key differentiators are:

Supplier ratings to ensure reliability.Trade assurance to protect your orders.Customizable options to create unique products for your brand.

Additionally, Alibaba provides educational resources and one-on-one assistance to help new business owners find the right suppliers and scale up effectively. It is truly a one-stop shop for e-commerce entrepreneurs.

Other creative sourcing options

Depending on your business’s niche and budget, you may want to source from a different supplier. Here are some additional supply chain options that may suit you and your circumstances better:

eBay, Amazon, Walmart.com: These American suppliers can help you locate wholesale, overstocked, bulk items, or second-hand products that you can flip for a profit.Garage sales, thrift stores, and estate sales: These local sales can be treasure troves for unique and vintage items. If you are skilled at spotting deals, you can turn low-cost purchases into valuable inventory.Craigslist and Facebook Marketplace: Peer-to-peer platforms like these are really great for sourcing cheap, used, second-hand items.

So no, unlike some of my friends from the World Entrepreneurship Forum who had a maze of regulations to get through before ever having the ability to buy or sell abroad, today, you have the world at your fingertips, literally. (By the way, if you need help setting up your e-commerce store, here are our recommendations for the best e-commerce software.)

And here’s the secret: I once had a client who owned a very successful antiques shop, where he sold his treasures both on and offline. When I asked Johnny how he did it and why he was so successful, he said, “It’s all in the buying, Stevie my boy, it’s all in the buying.”

Meaning: If you buy low, you can sell high.

Buy low.

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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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Amazon, Target, and Walmart. The Motley Fool has a disclosure policy.

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Mortgage rates aren’t likely to fall back down to 3% anytime soon. Read on to find out where they might be in the next year. [[{“value”:”

It wasn’t all that long ago that home buyers had access to some of the best mortgage rates in recent history, as rates fell to 3% and even lower during the COVID-19 pandemic.

Unfortunately, mortgage rates have spiked since then and are currently at about 6.50% for a 30-year mortgage. This has left many potential home buyers wishing they’d taken advantage of low rates when they had the chance and hoping they might soon return.

So, how likely is it that 3% rates will come back? Unfortunately, not very. Here’s why, and where rates are probably headed over the next year.

Why 3% rates won’t return any time soon

Mortgage interest rates fell to 3%, and even lower, during 2020 and 2021 because of a mix of economic factors. As the economy was reeling from the effects of the COVID-19 pandemic, people lost their jobs, businesses closed, and people moved their money into safer investments, like bonds.

These factors, along with aggressive rate cuts by the Federal Reserve, contributed to falling mortgage rates.

Since then, the economy has been growing and the Fed has raised rates. Unemployment is relatively low at 4.30%, and the U.S. gross domestic product (GDP) grew at a steady rate of 3% in the second quarter of this year.

If the economy were doing poorly, mortgage rates would likely fall. However, 3% rates aren’t on the horizon since the overall economy is mostly stable and growing.

Ultra-low mortgage rates may be a thing of the past, but that doesn’t mean you can’t find great rates. Click here to view the best mortgage lenders.

Mortgage rates are expected to fall over the next year

While 3% rates are a pipe dream for now, the good news is that most economists expect rates to come down over the next year. Predictions vary, but here are a few estimates of where rates could be by the end of 2025.

For comparison’s sake, let’s look at how much a rate change could affect monthly payments for a $350,000 house with a 20% down payment. Here’s how your mortgage payment would change if rates drop from their current level of 6.40% down to 5.55%.

You’d save about $151 per month (or more than $1,800 annually!) in this scenario if rates fall to the Wells Fargo estimate.

While these rates may not be exciting for potential home buyers who missed out on 3% rates, it’s worth noting that you may get better rates depending on your financial situation and credit score.

That’s why it pays to shop around for rates with the best mortgage lenders when you’re looking to buy a house. Some lenders may offer you a lower rate than others or include other perks like down payment assistance, closing cost assistance, or even temporary rate buydowns.

While there’s nothing you can do about bringing 3% mortgage rates back, you can compare rates from lenders and their potential incentives to see which one works best for you. I recently got a quote from one lender that was about 0.25% lower than another.

That might not seem like a lot, but consider that this small rate adjustment equals about $9,000 in savings over the life of a $350,000 loan. And all it took was a few extra minutes to get another quote.

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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.Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Chris Neiger 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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The business world runs on financing, but new businesses don’t have credit yet. That’s where your personal credit score makes an impact — see how here. [[{“value”:”

As much as we talk about the divorce rate in our country, the odds of your new business failing are actually higher than those for your marriage. Half of new businesses fail within the first five years and 65% are done by year 10 (your marriage only has a 41% chance to end in divorce).

If either ends, chances are it will be because of the same reason: finances, the No. 1 cause of both business failures and divorce.

No matter what industry you’re in, cash flow is the proverbial lifeblood of your business. Reliable financing keeps the wheels turning while your business edges towards profitability.

Most business owners will need some sort of credit

Some folks will have the personal income (or friends/family/investors) to bankroll a new business during the ugly duckling years. Others will need financing from the start.

If you need to finance your startup with a lump sum, such as renting retail or kitchen space, then you’re looking at small business loans. For things like inventory, you may end up with a credit line with a vendor.

At a minimum, most business owners are going to want a small business credit card. It keeps your regular business expenses separate from your personal expenses, and it’s a reliable, reusable way to cover those expenses for a few weeks during slow revenue periods. And as a literal bonus, the best small business credit cards earn rewards on your business purchases.

Creditors will want your personal guarantee

No matter what type of credit you rely on to start and build your business, the creditors are going to want some assurances you can pay them back. This will often mean either one of two things:

Collateral: Some small business loans will require collateral, such as equipment loans that are secured by the equipment purchased.A personal guarantee: The personal guarantee clause says you take personal financial responsibility for the debt and agree to repay it even if your business fails.

Point one only works if you have assets to back it up. Point two only works when you have a credit history to back it up.

Good personal credit can grease the wheels

When you apply for business credit, you’ll generally also be agreeing to a personal credit check. Creditors will check your personal credit reports to make sure you have a good history of paying back your debts.

If you have poor personal credit — or, sometimes just as damning, no personal credit — then you’re going to have a much harder time getting approved for new business financing.

On the other hand, if you do have good personal credit, you’ll have a much easier time getting approved for business loans, credit cards, and even business rentals. You’ll also be more likely to receive low interest rates and larger loan amounts.

The easiest way to improve your credit score

Although you generally need good personal credit to get approved, most business credit accounts won’t show up on your personal credit reports* after they’re open. So, business credit accounts won’t typically help you build your personal credit.

*Important: The exception is if you default on business credit that has a personal guarantee. In this case, the defaulted account can and will show up on — and cause a lot of damage to — your personal credit reports.

Instead, you’ll want at least one personal credit card that can help you build your personal credit score. If you’re having trouble getting approved, consider a secured credit card (which can be easier to get).

Using a credit card to build credit

Credit cards can be a good way to build credit when they’re paid in full every month. I suggest using the card to autopay a small monthly bill, such as a streaming service. Then, set your bank account to automatically pay the card off in full before its due date every month.

Paying your cards on time and in full every month will build a positive payment history. You should see improvements to your credit scores after about six months of building only positive payment history.

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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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Just because stocks seem expensive doesn’t mean they truly are. See why it’s still a good time to start investing. [[{“value”:”

The S&P 500 index, which is widely regarded as the benchmark index that best represents the strength or weakness of the U.S. stock market, recently hit a fresh all-time high. Over the past year alone, the S&P 500 has been up by more than 35% thanks to stronger-than-expected economic conditions, strong corporate earnings, slowing inflation, and the expectation of lower interest rates.

If you don’t currently invest in an individual retirement account, or IRA, it might seem like a bad time to start. After all, the central goal of investing is to buy low and sell high. Isn’t investing when the stock market is at an all-time high literally the exact opposite?

The short answer is that despite the market’s strong performance, it’s still a great time to start investing with an IRA. Let’s take a closer look at why it’s generally been the wrong move to avoid the stock market when it seems expensive to get started.

Don’t have an IRA yet? Check out our updated list of the top IRA accounts to see which could be the best fit for you.

A smart strategy when stocks are “expensive”

Notice I’m using the word “expensive” in quotes. I won’t get too technical, but just because the stock market — or any individual stock — is trading for an all-time high doesn’t necessarily mean it’s expensive. For example, many people thought the S&P 500 was expensive in 2015 after several years of sharply rebounding from the financial crisis, only to watch the index rise by another 74% over the next five years.

The point is that if you think stocks are expensive right now, you might be right or you might be wrong. But trying to time the market is a losing battle.

With this in mind, the best way to invest through an IRA right now could be to use a strategy called dollar-cost averaging. The simple explanation is this means investing equal dollar amounts at specific intervals in your favorite stocks, ETFs, or mutual funds. As a basic example, instead of investing $6,000 at a set point in the year in a S&P 500 index fund, maybe invest $500 in the same index fund at the beginning of each month.

By doing this, you’re mathematically guaranteeing yourself a favorable average price. Since you’re investing the same amount of money every time, you’ll buy more shares of the index fund when prices are low and you’ll buy fewer shares when prices are higher.

The bottom line

The key takeaway is that it’s never a bad time to open an IRA and start investing, even if stocks seem expensive. For one thing, opening and contributing to an IRA through your chosen broker gets you valuable tax benefits. And second, regardless of how expensive stocks look, it’s never been a bad time to put money in the market from a long-term perspective.

New to investing altogether? Review our list of the best online stock brokers for beginners to find one with low fees and user-friendly features.

As an example, arguably the worst possible time to invest in the past two decades was at the market’s 2007 peak before the financial crisis sent the S&P 500 plunging by more than 50%. If you had invested in a basic S&P 500 index fund at the exact wrong moment before the market crashed, you’d be sitting on a return of more than 420% today.

Think about that for a minute — if you had invested $10,000 at the absolute worst time before the biggest market crash of our lifetime, your investment would be worth more than $52,000 today.

Investing through an IRA is a great way to take advantage of the long-term compounding power of the stock market, regardless of what it’s doing today, tomorrow, or next month. Investing consistently through a tax-advantaged retirement account has been one of the most reliable ways to build long-term wealth throughout modern history.

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

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