Money Management

Your credit score is a big part of your financial picture, even when you’re no longer working. Read on to see why not to neglect your credit score in retirement. [[{“value”:”

In 2023, the average consumer credit score was 715, says Experian. That falls into the category of “good.”

But if you’re retired, you may not even know what your credit score looks like anymore. And that’s actually a big mistake.

You might think your credit score doesn’t matter now that your career has come to an end. But letting your credit score drop during retirement could end up being disastrous.

Why your credit score still matters

It’s easy to see why you may not care about your credit score all that much in retirement. By then, you may own your home outright, making it so you don’t need a mortgage, and you may not be interested in taking on any new debt.

But you can’t assume that you’ll never need to borrow money in the course of retirement. And if you let your credit score fall to the point where it’s no longer “good,” you might struggle to get approved to borrow.

Let’s say you end up needing to make home repairs. You may be denied a home equity loan or personal loan if your credit score is in the dumps.

Also, you never know when you may want a new credit card. As a retiree, you may have plenty of opportunities to travel. And the right travel rewards credit card could save you money in different ways, whether it’s giving you access to perks like free checked bags or making it easy to rack up bonus reward points for your next adventure. But you may not qualify for the credit cards you want if your credit score isn’t in good shape.

Furthermore, let’s say you own your home mortgage free but grow tired of having to maintain it and deal with surprise repairs. You may decide you’d prefer to rent a home in retirement so you’re able to more accurately predict what housing will cost you. But if your credit score isn’t strong, you may not get approved for a rental.

How to keep your credit score in good shape

If you’re starting off retirement with decent credit, then a few smart habits could help you maintain a good score and keep your borrowing options open. For one thing, pay all your bills on time. This is a good practice in general, but it can help you avoid a situation where delinquencies go on your credit report, thereby dragging your score down.

Also aim to keep your credit card balances relatively low compared to your spending limit on them. Ideally, you should never carry a balance that’s more than 30% of your total credit limit. Of course, this is a good thing to do from a money management perspective, regardless of the credit score impact.

Finally, keep checking your credit report for mistakes. This is a good move to make once every three to four months, and it won’t cost you a dime. You can go to annualcreditreport.com to get a copy of your report.

You might think your credit score doesn’t matter once you’re retired. But it might matter more than you’d expect.

So aim to preserve your credit score if it’s good to begin with. And if not, being timely with bills and whittling down credit card debt could do the trick of helping your score rise over time.

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Many people are loving today’s CD rates. But read on to see why they’re not as awesome as you might think. [[{“value”:”

A lot of people I know are happy with today’s CD rates. And I totally get it. Who wouldn’t want a chance to score a virtually risk-free 5% return on a pile of cash?

But while higher CD rates might seem like a good thing, there’s a flipside everyone needs to acknowledge. And it’s important to be very careful when opening a new CD because of that flipside.

Why higher CD rates are a problem

Banking higher-ups didn’t just wake up one morning and say, “Hey, let’s throw savers a bone and raise CD rates so everyone can earn more on their money.” What happened is that the Federal Reserve spent much of 2022 and 2023 raising interest rates in an attempt to slow the pace of inflation.

When we talk about the Fed raising rates, it’s not CD rates they specifically took action on. Rather, the Fed oversees the federal funds rate, which is the rate banks charge each other for overnight loans. But as that benchmark interest rate rises, other consumer rates tend to follow its lead. And that explains why CD rates are elevated.

Now, the problem: It’s not just CD rates and savings account rates that are high. Borrowing rates are up, too.

These days, it’s more expensive to sign a mortgage, finance a car purchase, or take out a personal loan than it was a few years ago. Credit card balances have also gotten more expensive to carry. And as long as CD rates remain elevated, borrowing rates will remain high, too. So while consumers with money in the bank are benefiting from today’s rates, those who owe money are in the opposite boat. And for those with CDs and loans at the same time, it’s sort of a wash.

Think carefully before opening a CD

You may be eager to open a CD while rates are nice and high. And that’s not necessarily a bad idea, especially since the Fed could start cutting rates pretty soon. But before you tie up money in a CD, think about your financial situation. Ask yourself:

Is my emergency fund in good shape, and do I have enough money to cover at least three months of essential expenses if needed?Do I think there’s a car or home repair in my near future?Am I anticipating another large expense, like having to travel for a wedding?

Remember, closing a CD early generally results in an early withdrawal penalty. So once you put money into a CD, it’s best to keep it there. Make sure you can afford to give up access to your money for the duration of your CD. And definitely assess your borrowing needs.

As we just discussed, now is not a good time to borrow. And it’s silly to put yourself in a position where you might, for example, have to sign a personal loan at a rate of 9% because you stuck your spare cash into a CD paying 5%.

You may also want to set up a CD ladder, rather than putting all of your money into a single CD. This way, portions of your cash will free up at different times during the year, making it less likely that you’ll have to borrow to cover a surprise expense.

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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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Without the right insurance, your company is vulnerable to natural disasters and ruinous lawsuits. Read on for helpful business insurance tips. [[{“value”:”

If your small business doesn’t have the right insurance, a few things can happen — and almost all of them are bad. Business owners don’t love to think about losses and risks and disasters; you got into business because you wanted to build something, wanted to create, wanted to grow.

But business risks are a fact of life. Accidents happen, mistakes get made, and even the most well-intentioned business owners can be vulnerable to misfortune, natural disasters, or an unfortunate lawsuit. The right small business insurance can help protect your company — and your personal bank account — from the worst-case scenarios of being an entrepreneur in America.

Let’s look at a few reasons why you should double-check your business insurance coverage — and upgrade your policy if needed, to make sure your business is properly insured.

1. Accidents happen — liability insurance can help

One of the first types of insurance that every business should get is a small business general liability insurance policy. This can protect your business from situations like “a customer slipping on the icy sidewalk” or “someone tripping down the stairs” and blaming your business.

What happens if you don’t have the right business insurance: An injured customer or passerby could potentially sue your company (or you personally) for damages in a personal injury case. Even if the lawsuit is without merit, spending time and money on lawyers and court filings is not most business owners’ idea of fun. Small business liability insurance can help defend you in court and protect your company, and your life savings, from a disastrous lawsuit.

2. Protect your business property — with business insurance

Does your business own real estate or other physical property? What happens if your building burns down or floods, or if your inventory gets stolen, damaged, or destroyed by a natural disaster? Commercial property insurance can help cover the costs of recovering from damage or losses affecting your business property.

What happens if you don’t have the right business insurance: You’re on the hook to pay the bills. Just like you don’t want to go without homeowners insurance or auto insurance, getting the right level of coverage to protect your business property can save you thousands of dollars (or more) — and help you sleep better at night. Be sure to re-evaluate your business property coverage levels each year, especially as your business grows — don’t outgrow your insurance protection.

3. Keep your business “in business” — with business interruption insurance

“Business continuity planning” sounds like corporate jargon, something that only the biggest companies need to worry about. But more small business owners need to dedicate some time and effort to thinking about “BCP.” Ask yourself:

What happens to your business if a tornado hits your building tomorrow?What if your computer systems get hit by a cyberattack?What if something terrible happens that keeps you from opening your doors to customers?

These kinds of disasters and disruptions are examples of when you need business interruption insurance. This type of insurance can help replace your business income in case you’re not able to be open for business and generate revenue — it’s also known as “business income insurance.”

What happens if you don’t have the right business insurance: Cash flow is the lifeblood of any business, and without the right business insurance, you could be left to recoup all that lost revenue by yourself. If you can’t get your business operations back to normal, this could be devastating. Not having business interruption insurance could make your business’s next interruption permanent.

Bottom line

Even if you have several months’ worth of cash reserves in your business bank account, no business owner wants to have to cover the massive losses of a lawsuit, a natural disaster, or a prolonged disruption to business operations. Getting the right small business insurance can help save you from the worst-case scenarios. Don’t face the risks and losses of life all alone. Check your small business insurance coverage and keep protecting yourself, your family, and your company as your business grows.

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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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Some accounts are better for your long-term savings than others. Read on for three safe suggestions for retirement cash. [[{“value”:”

Sometimes, it pays to have a higher risk tolerance for your money. For example, if you’re young and have a few decades before you retire, investing your money in the stock market for maximum earning potential is a good idea.

But sometimes, you may be interested in something other than earning the most money and instead want a safe place for your cash. Retirees, or those nearing retirement, may be more interested in these investments.

No matter your life stage, here are a handful of safe places to put your money.

1. CDs

Certificates of deposit (CDs) are a very safe place for your retirement money. For starters, they are FDIC insured (as long as you take them out from an FDIC member bank), so your money is protected up to $250,000 per account holder per bank.

CDs are also a good option for earning a high annual percentage yield (APY). Many CD rates pay 5.00% or higher right now, and you’re guaranteed to earn the agreed-upon rate as long as you leave your money in the CD for the entire term.

Just be sure you’re comfortable locking up your money for a set period. Many CDs charge between 90 to 180 days of interest on the amount you withdraw early.

Why it’s good for some retirement money: CDs are a great option if you want a safe place for some of your retirement cash and want a near-guaranteed return.

2. Money market accounts

Money market accounts (MMAs) offer maximum flexibility by combining checking and savings account features. Whether you want to earn a high APY, write checks, or use a debit card with the account, MMAs may be right for you.

Money market accounts are also typically FDIC insured (again, you’ll want to verify your bank is covered), and many of them offer APYs of 5.00% or higher now. This means your money can sit safely in these accounts and earn an impressive return at the same time. Remember that many MMAs may limit you to six monthly withdrawals and may have a lower APY than some online savings accounts.

Why it’s good for some retirement money: MMAs are a good choice if you want to earn a solid interest rate on your cash, but also want the flexibility of taking out your money without penalty.

3. Savings accounts

FDIC-insured savings accounts have always been a safe place to keep some of your money, but they’re also a great place to keep some retirement cash right now. That’s because many of them are paying APYs of 5.00% or higher.

It may be easier to find a higher APY with a savings account than with an MMA, which makes them a great choice for keeping retirement money that you want easy access to.

Why it’s good for some retirement money: A high-yield savings account is great for your emergency fund or for cash that you might need soon — say, for a home down payment or car purchase — but aren’t using immediately.

How much should go into these accounts?

Everyone’s financial situation is different. However, according to Charles Schwab, there are a few money distribution rules of thumb that are based on age:

Age 60-69: 60% in stocks, 35% in bonds, 5% in cashAge 70-79: 40% in stocks, 50% in bonds, 10% in cashAge 80 and up: 20% in stocks, 50% in bonds, 30% in cash

The investment firm recommends putting one year’s worth of cash in a safe, liquid account to supplement your Social Security and any other retirement income. This account could be a money market or savings account.

Additionally, have two to four years of expenses in a short-term reserve like bonds or CDs. This allows some of your money to continue earning interest with little risk or volatility.

Of course, where you put your retirement cash depends on your risk tolerance. But it’s important to remember that you should adjust your strategy as you get older and find a few safe places where you feel comfortable putting your money.

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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.Charles Schwab 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 positions in and recommends Charles Schwab. The Motley Fool recommends the following options: short June 2024 $65 puts on Charles Schwab. The Motley Fool has a disclosure policy.

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When a driver has an auto loan, lenders get a say in what auto insurance they purchase. Here are three protections drivers with auto loans might need. [[{“value”:”

Owning a car is expensive. Costs include the vehicle itself, plus registration fees, gas, routine maintenance, and auto insurance. And for drivers with auto loans, car insurance requirements are often steeper than the state minimum coverage.

Lenders need to protect their investment, so they often require these drivers to carry three additional protections that aren’t required by state law. Here’s a closer look at them.

1. Collision coverage

Collision coverage pays for damages to the policyholder’s vehicle if they cause an accident or are involved in a one-car accident — for example, if they run into a tree or a utility pole with their car. Lenders require this coverage because it ensures they get their money back, even if the car is totaled in a crash.

The average cost of collision insurance is $290 per year, according to the Insurance Information Institute (III). But rates vary significantly by make, model, and the driver’s location. Cars that were more expensive to purchase or that have rarer parts cost more to repair, so their collision coverage will cost more. Similarly, in areas where auto repairs cost more, drivers pay more for collision coverage.

2. Comprehensive coverage

Comprehensive coverage pays for damages to the policyholder’s vehicle due to problems like:

Animal-vehicle collisionsNatural disastersVandalismTheftTree branches falling on the car

In short, it covers damages to the vehicle that aren’t covered under collision protection.

It’s another one lenders require to protect their investment. The III estimates that comprehensive coverage costs about $134 per year. But again, a lot depends on the car and location. Areas where auto theft is common or where natural disasters strike frequently will pay more for comprehensive coverage than those in quieter parts of the country.

3. Gap coverage

Gap coverage pays the balance of the driver’s auto loan if the car is totaled in a crash and the depreciated value of the car isn’t enough. For example, say a driver has a $20,000 auto loan and after a year, the driver totals the car. Collision coverage pays up to the car’s value at the time of the accident, which was only $16,000. Gap coverage would kick in the additional $4,000 here to pay off the loan so the policyholder wouldn’t owe this out of pocket to the lender.

It’s possible to purchase gap insurance through a car dealer, but this is often more expensive than adding it to an existing car insurance policy. Getting gap coverage through a traditional car insurer only adds about $20 per year to the average annual premium, according to the III.

What this means for drivers

Lenders typically require drivers to provide proof of the above protections before they will approve the auto loan. Skipping it isn’t an option because the lender could repossess the vehicle if the owner fails to maintain appropriate insurance coverage.

Because of this, drivers with loans will have to purchase higher amounts of car insurance than their state requires. This isn’t necessarily a downside, though. More insurance coverage means fewer out-of-pocket costs for policyholders in the event of an accident. Even without an auto loan, drivers may want to purchase collision and comprehensive coverage so they don’t have to pay to replace their own vehicle if they get into a crash.

If budget constraints make this difficult, try comparing rates from several companies to see which offers the most affordable car insurance. Just be sure to notify the lender when changing insurance providers so it doesn’t think coverage has lapsed completely.

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Click here to read our full review for free and apply in just 2 minutes.

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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