Could your grocery bill skyrocket due to new tech? Stock-Asso / Shutterstock.com
Advertising Disclosure: When you buy something by clicking links on our site, we may earn a small commission, but it never affects the products or services we recommend. On the surface, the change seems harmless enough: Kroger plans to introduce electronic shelving labels that will replace paper labels on its grocery shelves. But two U.S. senators — Elizabeth Warren (D-Mass.) and Bob Casey (D…
These valuable investments don’t always get the attention they deserve. Master of Stocks / Shutterstock.com
Investing in ourselves doesn’t need to involve money. In fact, many of the best retirement investments do not involve greenbacks at all. Instead, they are investments that make the fullest use of your time, allow you to spend precious moments with the people you love and enable you to focus on those things that make you happy. While monetary investments are important for retirement…
Curious as to how much money people are retiring with today? Read on to find out. [[{“value”:”
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Given that Social Security only pays the average retired worker about $23,000 a year, it’s important to have savings of your own to supplement that income.
Of course, contributing to an IRA or 401(k) isn’t easy — not when you have many other bills to cover that you can’t put off. But it’s essential to prioritize your long-term savings so you don’t wind up struggling financially once your career ends.
Now you may be curious to know how much money the typical American is bringing with them into retirement. And the Federal Reserve has some data there that you may find interesting.
Among Americans aged 65 to 74, the average retirement savings balance is $609,000. But the median retirement savings balance for people in that age group is only $200,000.
When you have a median that’s well below the average for a given data set, it usually indicates that a small percentage of people are pulling the average up. So while $609,000 does represent the average of all retirement plan balances the Federal Reserve accounted for, this data tells us that $200,000 is more indicative of what the typical senior actually has available to them.
What’s also interesting is that the median retirement savings balance among Americans 75 and older is $130,000. This tells us that some retirees may be spending their savings pretty quickly, given the fairly wide gap between $200,000 and $130,000.
Even though $200,000 is more representative of the typical older American’s nest egg, you’d probably rather kick off your senior years with $609,000 — or even more. And the good news is that with the right strategy, that may be more doable than you’d think.
The first thing you need to do to meet that goal is to start funding an IRA or 401(k) consistently from a young age. You may not be able to do so the year you start working. But if you’re able to begin contributing to one of these accounts by your late 20s, you’ll generally be in good shape.
Next, you’ll need to invest your savings in the stock market for strong returns. Over the past 50 years, the market’s average annual return has been 10%, which accounts for good years and bad. Scoring that same return in your IRA or 401(k) could lead to a large amount of wealth.
So let’s see what numbers we might be dealing with. Let’s assume you have a 40-year savings window and that your portfolio gives you a yearly 10% return during that time. Here’s the ending balance you’re looking at based on your monthly contribution.
These numbers show us that with the right approach, you can retire with far more money than the average older American today. So if you’ve yet to start funding your IRA or 401(k), let this serve as motivation to get moving. Your future self will thank you.
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With current step-up in basis rules, the most cost tax-efficient way to pass on your assets may be to kick the bucket. Learn more here. [[{“value”:”
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If you ask your accountant the most effective way to save on taxes, their answer might surprise you. One of the most powerful tax avoidance strategies, the so-called step-up in basis, doesn’t apply until after you die. What is the step-up in basis, and how could it save you big on taxes? Read on to find out.
In addition to the income taxes that most Americans are familiar with, capital gains on the sale of assets are a very common way that the government collects revenue from taxpayers. If you’ve sold stocks, bonds, mutual funds, real estate, or even a stamp collection, you’ve probably paid capital gains tax.
How much you owe in taxes when you sell an asset is directly related to how much you paid for the asset when you first bought it. This purchase price, known as basis, sets a “floor” on the value of the asset for future tax purposes.
Note: Other factors, such as material improvements to and depreciation of a property, also affect basis, but the purchase price is often the majority of the carried basis.
Basis is important, because when an asset is sold, capital gains taxes apply to the growth of the asset above this “floor.” Simply put, if you buy a share of stock for $50, and later sell that share for $60, you’ll pay capital gains tax on the $10 of appreciation, not the $60 sale price. Capital gains rates are lower than income tax rates, but can add up if the value of an asset has grown for years, or even decades.
One major provision of the tax code is known as the step-up in basis rule. With an estimated $116 billion impact on tax revenue over the next decade, the provision sometimes allows those with highly appreciated property to avoid capital gains tax entirely.
The idea is simple: when a taxpayer dies, the basis of an appreciated asset rises to the value of the asset on the date of death, or shortly thereafter. The step-up rule applies no matter what price the asset was originally purchased at.
If sold by an inheritor at that time, effectively no capital gains tax is ever collected on the elevated value of the asset. And for some taxpayers, that could save tens of thousands or even millions of dollars in taxes. If you or a family member have large investment gains, consider discussing the tax-saving superpower of the step-up in basis rule with a qualified tax preparer.
The power behind the step-up rule lies in the ability to pass on well-performing investments to one’s heirs. By automatically raising the “floor” of an asset’s taxable value, the rule broadly allows deceased taxpayers to pass on their gains without incurring tax liability. For this reason, many inter-generational givers choose to gift assets after they die instead of selling those assets, paying tax, and then gifting cash while living.
The step-up rule is not without controversy. In recent years, the provision has come under scrutiny due to its disproportionate effect on the ultra-wealthy. The rule only benefits those with highly appreciated assets, so does not apply equally to all taxpayers.
Prominent politicians, including President Biden, have proposed changes to the tax code that would reduce or eliminate the loophole. Approaches such as a wealth tax have gained traction in recent years, and may play a role in reshaping the tax code in future years. While no such changes have come into law yet, there appears to be an appetite for a change to the step-up rule in the future.
Capital gains tax is one of the pillars of the American tax code, and relies heavily on basis to determine how much of a sale is taxable. The code allows for a step-up in basis on inherited assets, which can negate thousands of dollars in capital gains tax for certain taxpayers. Congressional members and presidential candidates alike have expressed dislike for the rule, and change may be on the horizon.
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Wondering how your credit score stacks up to your fellow Americans’? Here’s what you need to know. [[{“value”:”
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Your credit score is something you may not think about on a daily or weekly basis. Usually, people are inclined to wonder about their credit scores when they’re gearing up to borrow money or apply for a new credit card.
But the reality is that the higher your credit score is, the more likely you are to get approved for a loan or credit card offer. And you might also snag a lower borrowing rate that makes your debt more affordable. So it’s a good idea to have a sense of what your credit score looks like and whether it needs a boost.
You may also be curious as to what the average American’s credit score looks like so you can see how yours compares. And to the end, here’s some data you might find helpful.
As of 2023, the average U.S. credit score was 715, says Experian, one of the three credit reporting bureaus. A score of 715 is considered “good” by Experian’s standards. However, a “very good” credit score is a 740 to 799, while a score of 800 up to a perfect 850 is “exceptional.”
This means that while there’s nothing wrong with having a credit score of 715, if that’s about what yours is, it could pay to work on boosting it. Doing so could mean opening up more borrowing options — and more affordable borrowing rates.
If your credit score is lower than or similar to the average American’s, then boosting it is a good idea. And even if it’s higher, it could still be beneficial to boost your score into the “very good” or “exceptional” range.
However, you should know that once your credit score gets to 800, there’s little sense in stressing yourself out to raise it further. Most consumers don’t have perfect credit, and you’re likely to have the same results if you’re applying for a loan with a score of 805 vs. 850.
But let’s get back to boosting your credit score. There are a few ways you can go about it, but the thing to focus on most is your payment history, since it carries more weight than any other factor in the course of calculating your credit score. Your payment history speaks to how timely you are with your bills. And so paying incoming bills on time could help your score improve tremendously.
Another way to raise your credit score is to keep your credit utilization low. Utilization is the amount of available credit you’re using at once. Keeping your credit card balances to 30% of your total credit limit or less is generally good for your score, so it pays to whittle down any existing balances you have. Ideally, though, you should aim to pay off your balances in full every month to avoid racking up interest.
Finally, make a point to check your credit report for mistakes every few months. You’re eligible for a free copy from each of the three credit bureaus on a weekly basis, though checking every week would mean going to a bit of an extreme. If you see a mistake that paints you in a negative light — for example, a late payment that was actually on time — correcting it could lead to a nice bump in your credit score.
It’s interesting to see what credit score the average American has. But even if yours is higher, it could still pay to work on raising it. And if it’s lower, don’t despair. With a bit of effort, you can work your way up toward a better credit score and enjoy the perks that come with it.
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Want to get more from your Costco membership? Whether you’re a new member or a seasoned shopper, these Costco tips can help you shop more like a pro. [[{“value”:”
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A Costco membership can be a solid investment. Taking advantage of members-only discounts when you shop can help you keep more money in your checking account.
If you’re exploring getting a membership or are a current member looking to get more value from your investment, you’re in the right place. I’ll share some tips to help you shop at Costco like a seasoned pro.
Reviewing your Costco membership benefits carefully at least once per year is a good idea. These perks can change over time, and sometimes, new perks are made available. To get the most out of your Costco membership, ensure you’re taking advantage of the benefits. You may be missing out on discounts or services that could add value to your life.
Costco has a Gold Star membership and an Executive membership. A Gold Star membership costs $60 per year (soon to be $65 in September) while an Executive membership costs $120 (soon to be $130 starting in September) annually.
Many Costco regulars invest in the retailer’s Executive membership because of the added perks. One notable perk is the ability to earn rewards when you shop.
You can earn 2% rewards when you make qualifying Costco purchases. The annual rewards cap is $1,000, but that will increase to $1,250 starting Sept. 1, 2024. If you shop at the retailer often or spend a significant amount there, consider upgrading your membership to get the best value.
Costco has a generous return policy. Most products can be returned for a full refund at any time if you’re unsatisfied with your purchase. This policy can give you greater confidence when trying new products. Keep in mind that some items, like electronics, have more limitations for returns.
Costco regulars are well aware of the retailer’s return policy. They don’t waste money on unused purchases. Instead, if they’re unhappy with a purchase, they make a return and get a refund. If you’re hoping to be a pro shopper, keep Costco’s return policy in mind while you shop.
Costco has a reputation for having reasonable prices. However, in addition to low everyday prices, the retailer also runs sales. You can save even more money by purchasing items that are on sale. Before you head to your local club, review current sales prices at Costco.com or Costco’s mobile app so you don’t miss a great deal.
Finally, take advantage of opportunities to earn rewards. There are other ways to earn rewards besides an Executive membership. Our No. 1 strategy to save money at Costco is to use a rewards credit card.
Using rewards credit cards to pay for your Costco purchases is a smart money move. You can earn cash back every time you shop. Cash back earnings help you maximize your savings. Check out our list of the best credit cards for Costco to learn how to earn cash back.
Now you know how to shop at Costco like a pro. If you’re ready to become a member, consider joining before Sept. 1, 2024, to lock in existing membership prices. You’ll save $5 to $10 if you join before the annual membership fees increase.
If you’re shopping with a debit card, you could be missing out on hundreds or even thousands of dollars each year. These versatile credit cards offer huge rewards everywhere, including Costco, and are rated the best cards of 2024 by our experts because they offer hefty sign-up bonuses and outstanding cash rewards. Plus, you’ll save on credit card interest because all of these recommendations include a competitive 0% interest period.
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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.Natasha Gabrielle 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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