Money Management

Planning a vacation? Determine whether you need travel insurance with this handy guide. [[{“value”:”

Travel is an adventure filled with unexpected detours. Whether it’s a volcano erupting in Iceland or a sudden illness before a big trip to Kenya, the unpredictable happens. That’s why travel insurance isn’t just a checkbox on your planning list; it’s a parachute in your backpack for your personal finances. Let’s dive into when you really need travel insurance and how it shields your travel investments.

What travel insurance can cover

Travel insurance can give you peace of mind when it comes to several elements of travel.

Natural disasters and severe weather

Did you know that 12% of trips are affected by natural disasters? Take, for instance, my personal mishap in 2010 when the infamous Eyjafjallajökull volcano in Iceland erupted. Ash clouds billowed into the sky, grounding flights across Europe, including my own in London. Stuck unexpectedly and without travel insurance, the financial and logistical stress was immense. This experience underscored a harsh truth: Travel disruptions are not just possible; they are a real risk that can happen anywhere, anytime.

If your travel destination has a reputation for weather-related unpredictability, travel insurance is a must. It ensures you can recoup the costs if you need to cancel or your travel is disrupted. This kind of foresight is invaluable, particularly considering that 41% of U.S. travelers do not purchase travel insurance when going abroad.

Health emergencies

The risk of falling ill or having an accident is more common than most travelers anticipate. In 2022, 1 in 5 paid travel insurance claims was for medical emergencies. U.S. health plans often provide limited coverage overseas, which means you could be facing hefty medical bills far from home without travel insurance. Plus, emergency medical evacuation — which can cost anywhere from $20,000 to $200,000 — is typically covered under travel medical insurance, safeguarding your health and your wallet.

High-cost trips

Travel insurance is crucial if you’re investing in a once-in-a-lifetime trip or your travel plans include high-cost, non-refundable elements like tours, cruises, or multiple connecting flights. In 2022, the average claim payment for travel insurance was $2,157, while travelers only spent an average of $266 per policy. This relatively small investment can protect against significant financial losses, especially if your non-refundable trip costs are more than your budget can stand.

The “cancel for any reason” safety net

Sometimes, plans change not because of a disaster or illness but simply because you decide to. That’s where “cancel for any reason” (CFAR) coverage comes in. This add-on allows you to recover part of your investment even if your reason for canceling isn’t covered under a standard policy. While CFAR can add about 50% to your insurance cost, it offers flexibility and peace of mind, reimbursing you for 75% of your prepaid, non-refundable expenses if you cancel at least 48 hours before departure.

Long journeys and remote destinations

Extended vacations or travels to remote locations with limited medical facilities also warrant travel insurance. The further you are from home, the more complicated and expensive it is to handle unexpected issues like medical emergencies or trip interruptions. The average trip cancellation claim was $6,448 in 2022 — highlighting how crucial it is to have coverage that matches the scope and scale of your journey.

This is also important if you plan to be abroad for a long time. For example, I live with my family in Switzerland for the summer, so we get insurance to cover our entire stay in the event we need to go to a doctor for anything from strep throat to a broken bone.

Other costs covered by travel insurance

Here’s a quick list of what’s typically covered.

Trip cancellation: Reimburses 100% of prepaid, non-refundable deposits if you cancel for a covered reason.Travel delay: Covers expenses incurred due to delays if the policy covers the cause.Cancel for any reason (CFAR): Allows cancellation for any reason not listed in the base policy and provides partial reimbursement.Trip interruption: Reimburses non-refundable parts of your trip if interrupted for a covered reason.Interruption for any reason (IFAR): This policy offers reimbursement for any interruption, regardless of the reason, as long as it’s not listed in the base policy.Missed connection: Compensates for costs incurred due to missing a scheduled flight or other transportation due to a covered event.Baggage delay: Reimburses for necessary purchases like clothing and toiletries if bags go missing during travel.

These coverages help manage the risks and potential inconveniences associated with traveling, providing peace of mind no matter where your journey takes you.

When you should get travel insurance

Like auto or home insurance, travel insurance is often considered a prudent investment, especially under certain travel conditions where the risks and potential losses could be significant. Here are some scenarios where buying travel insurance proves to be especially worthwhile.

High nonrefundable costs: If your trip’s upfront costs are substantial and nonrefundable, insurance can protect you from severe financial loss if your plans fall through.International travel: Having insurance is crucial when traveling abroad, where unexpected issues can complicate matters.Remote destinations: Travel insurance is essential for peace of mind and safety in areas with limited healthcare facilities.Hurricane-prone areas: Insurance can protect you from last-minute cancellations and disruptions when traveling to regions known for hurricanes or other severe weather.Complex itineraries: With connecting flights or multiple destinations, the chances of encountering issues increase, making insurance a smart choice.Flexible cancellation options: Certain travel insurance policies can offer partial reimbursement if you need to cancel or cut your trip short for any reason.

Choosing whether to buy travel insurance is about assessing risk. Will the peace of mind of knowing you can handle almost any issue while away from home make your trip more enjoyable? If the answer is yes, then travel insurance is worth it.

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

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A Costco Executive membership could put serious cash back in your pocket. But pursuing the maximum amount could seriously hurt your finances. [[{“value”:”

When I first joined Costco, I stuck to a basic (Gold Star) membership because I didn’t shop at the store all that often and felt it didn’t make sense to pay extra. But many years back, I upgraded to an Executive membership and have not regretted it since.

These days, a basic Costco membership will cost you $60, whereas you’ll pay $120 for an Executive membership. But for me, the Executive membership is worth it because you get 2% cash back on your Costco purchases — even those made online.

Since I shop at the store on a weekly basis and normally spend at least $100 per visit, that alone gives me $100 or so back during the year, which puts my $60 upgrade fee back in my pocket — plus at least an extra $40 to play with.

And that doesn’t even account for larger Costco purchases. This year, for example, we bought a new TV, so that’s an extra $30 in cash back coming my way.

But there’s a limit as to how much cash back you can get from a Costco Executive membership, and it’s $1,000. Most shoppers won’t come close to hitting that limit — myself included. And that’s actually a good thing.

Why $1,000 cash back is probably out of reach

To snag the maximum $1,000 back, you need to spend $50,000 at Costco in the course of a year. And, well, most of us aren’t coming close to that.

Even if you do all of your grocery shopping at Costco, chances are, you’re likely not spending more than $300 a week. Multiply that by 52 weeks, and your total tab is $15,600 — nowhere close to $1,000. Even if you throw in a $6,000 vacation and $10,000 in furniture, you’re still not getting $1,000 back.

But that’s OK. See, as long as you expect to spend more than $3,000 a year at Costco, the Executive membership makes financial sense. Any cash back you get beyond $60 is bonus money.

Know how Costco’s cash back program works

While the Executive membership often makes sense for people who shop at Costco regularly, like I do, it’s important to know the details of the program to see if that upgrade pays off for you. Although most Costco purchases qualify for cash back with an Executive membership, some don’t.

These purchases don’t earn cash back:

Automobile purchases (if it weren’t for this, you might easily hit that $1,000 limit)Eye examsTire installationsTobaccoAlcohol in many statesFood court purchases (not that those $1.50 hot dog and soda combos are going to make a huge dent anyway)

It may also surprise you to learn that gasoline purchases at Costco don’t qualify for 2% back with your Executive membership. However, many credit cards offer extra cash back at the pump, so if you swipe one of those, you may not miss your Costco cash so much.

All told, not getting $1,000 cash back on your Executive membership is probably a good thing, because you’d need to do a ton of spending on an annual basis to snag that maximum reward. Most of us can’t afford to come close.

But remember, there are benefits to an executive membership beyond just cash back. If you buy auto insurance through Costco, you get roadside assistance and lifetime renewability included — benefits only Executive members receive. And with homeowners insurance, Executive members get home lockout assistance and glass repair reimbursement.

Plus, there’s the Costco Connection — a monthly magazine showcasing different products and highlighting Costco roadshow schedules. I’d never recommend getting an Executive membership for the magazine alone, but it’s a small perk you might enjoy.

Top credit card to use at Costco (and everywhere else!)

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.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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Home prices keep climbing. Read on to see what the median home is selling for today. [[{“value”:”

Mortgages were super affordable in 2020 and 2021, when lenders lowered their rates substantially. But that’s not the case today — at all. The average 30-year mortgage rate is 6.94%, according to Freddie Mac. And that wouldn’t be so bad if it weren’t for the fact that home prices have also increased. In fact, you may be shocked at how much money the median U.S. home just sold for.

Home prices keep rising

You’d think today’s mortgage rates would be spurring a decline in buyer demand, resulting in lower home prices. But nope — if anything, home prices just keep rising.

In April, the median existing U.S. home sale price was $407,600, according to the National Association of Realtors. That’s an increase of 5.7% from a year prior. It also marks the 10th consecutive month of year-over-year home price gains.

How is it possible that home prices keep rising? It’s simple: There’s very little inventory. And because of that low supply, buyers are willing to pay more. (It’s kind of like how people were willing to pay $20 for hand sanitizer back in 2020. Whenever demand for a given product exceeds supply, prices just soar.)

Why is there such little inventory? It’s because of today’s mortgage rates. Existing homeowners don’t want to give up the lower rates they’re currently paying to buy another home at today’s rates at close to 7%. Can you blame them?

How to know if you can afford a given home

Rising home prices are pushing more and more buyers out of the market. But they’re not pushing everyone out. And that’s not necessarily a great thing.

Some buyers may be at risk of getting in over their heads by purchasing homes that are beyond their budgets. And that’s a trap you don’t want to fall into. Thankfully, there’s a really easy way to avoid that situation.

First, see what your monthly take-home pay comes to after taxes and other deductions. Next, figure out what 30% of that total is. That’s the maximum you should be spending on recurring housing costs each month.

From there, you can use a mortgage calculator to see what your monthly payment would be based on the price of a given home, the down payment amount you have, and the average mortgage rate available (though keep in mind that if you don’t have the best credit, you may end up with a higher rate). Then, add in recurring housing costs like property taxes, homeowners insurance, and homeowners association (HOA) fees, if applicable. If those numbers meet or fall below 30% of your pay, you’re in decent shape to buy a home.

So let’s say you bring home $6,000 a month. That means you have an $1,800 budget for monthly housing expenses. You won’t be able to afford a home selling for $407,600 if you only have a 20% down payment, because your monthly payment for a 30-year loan at 6.94% would be $2,155 for principal and interest. That’s already above $1,800 without even accounting for insurance and property taxes. But you can play around with different numbers to see what home price does work.

Home prices should fall eventually

In time, buyers should get relief from sky-high home prices. As mortgage rates fall, listings should increase, which should lead to prices falling to some degree. And because the Federal Reserve is expected to start lowering interest rates this year, we could be looking at more affordable mortgage rates before the end of 2024.

But if you want to buy now, and you come across a property you like, use the 30% rule to see if the home is affordable. If it’s not, do yourself a favor and wait so you don’t wind up taking on an expense you really can’t swing.

If you buy a home and can’t keep up with the costs, you risk losing your home and wrecking your credit. That’s a situation you never want to put yourself into.

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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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It’s easy to blow through your savings when you don’t have a job. Here’s how to get back to where you started. [[{“value”:”

In 2023, 63% of Americans could not cover an unplanned $500 expense by tapping their savings, according to SecureSave. If you were laid off earlier this year and raided your emergency fund to get through that period of unemployment, that’s actually a good thing. It means you had savings and were able to use that money to avoid costly credit card debt.

But what if you’re now looking at a savings account balance that’s way lower than what you started with? Or, worse yet, what if you had to deplete your emergency fund completely because it took a while to find a new job?

Don’t beat yourself up. Your emergency fund served its purpose. Be thankful you had that money to tap in the first place.

At the same time, it’ll help to focus more on rebuilding your savings than bemoaning the money that’s missing. Here’s your game plan.

1. Set up small automatic contributions

If you’re working again, one of the first things you should do is set up an automatic transfer so some money lands in your savings account every time a paycheck from your new job hits. That amount can be smaller to begin with if necessary — say, $50 or $75. And there are steps you can take to build on those contributions, which we’ll get to in just a minute.

But this way, you’ll get the peace of mind that comes with knowing you’re rebuilding your savings every month to some degree. Also, it’s smart to automate savings when you’re getting a new paycheck.

If your check is normally $2,600 a month after taxes and deductions, you’re better off setting up a $75 automatic contribution to savings so you can get used to living on $2,525 instead.

2. Reduce your spending by a lot — but only for now

People are often told that a good way to build savings is to slash spending. Well yeah, sure, it’s easy to bank extra money each month when you’re spending nothing on takeout meals, entertainment, or leisure purchases — but who wants to live like that?

Severely limiting your spending isn’t an effective way to build savings over time. But if you’re specifically trying to replenish a recently raided emergency fund quickly, then cutting your spending to an extreme degree for just a few months is a different story.

Remind yourself that you’re not making permanent changes — you’re simply cutting back temporarily to bring your savings up to a more comfortable level. Mentally, that might work better for you.

3. Consider picking up a side hustle

A side hustle could be a great way to boost your income and free up more money to put into your savings. But if you’re new to your job, one thing you don’t want to do is take on a side gig that compromises your performance at your main job while you’re still getting up to speed.

You may want to focus on side gigs that only have you working weekends. This way, if your new boss asks for a random sit-down at the end of a workday, you won’t have to say no because you’re darting off for your evening shift waiting tables at a restaurant four blocks away.

You may also want to focus on side gigs that let you set your own hours, like driving for a ride-hailing company, so you can truly dedicate yourself to your new full-time role. Uber says its drivers earn a median income of $33 per hour. If you can fit in five hours of work weekly and you snag that same rate, that’s $165. After a year, that’s $8,580 of earnings (though remember, you’ll need to set aside a portion of that income for taxes).

Having emergency savings to tap during a layoff is crucial. But it’s hard to see that money disappear, even if it served its intended purpose.

If you’re now trying to rebuild your emergency fund, use these tips to speed up the process. Be kind to yourself and remember that having a lower savings balance isn’t a failure — it’s a result of circumstances beyond your control that would’ve been much worse had you not saved that money in the first place.

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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 Uber Technologies. The Motley Fool has a disclosure policy.

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Retiring early is a popular goal. But here are three good reasons you might want to wait a few years. [[{“value”:”

What’s the ideal age to retire? Of course, there is no perfect answer to this question. Many people have a goal of retiring relatively early, while fewer people will tell you “I want to work longer than I have to.”

However, there can be some good reasons to work for a few extra years, particularly regarding your financial security after you leave the workforce. Here are three factors to keep in mind when deciding the best retirement age for you.

1. Social Security can be (much) higher

While some people retire with pensions, the reality is that for the majority of retirees, Social Security will be their only inflation-protected source of retirement income. So, it could be a smart idea to maximize your Social Security cash flow.

According to the latest information (April 2024), the average retired worker receives a monthly Social Security benefit of $1,915. That’s just shy of $23,000 per year.

However, you might be surprised at how much of an affect the age at which you claim Social Security can have. For Americans born in 1960 or later, the full retirement age for Social Security purposes is 67 years old. But you can choose to start collecting Social Security at any point between the ages of 62 and 70.

If you claim early, your benefits will be permanently reduced. In fact, if your full retirement age is 67 and you decide to start receiving checks at 62, they will be 30% lower than they would have been if you waited. On the other hand, if you delay Social Security beyond your full retirement age, your benefit will be permanently increased by 8% for every year you wait, until as late as age 70.

Now, you don’t necessarily have to wait until age 70, or even until your full retirement age. But the point is that if you can wait a couple of years (or even a few months) longer than you had planned, it can make a big difference.

2. More time to save

When you decide to keep working for a few more years than you had planned, it gives you more time to save and build up a retirement nest egg. It could be a good idea to take advantage of the additional time by increasing your 401(k) or IRA contributions.

Plus, if you’re over 50, the contribution limits are higher for you than for the general population. For 2024, the standard IRA contribution limit is $7,000, but for account owners age 50 and older, it’s $8,000. When it comes to 401(k) and similar plans, it’s even more generous, as those 50 or older can contribute as much as $30,500 to qualified retirement plans in 2024, compared with the standard limit of $23,000.

3. More time to compound

Last, but certainly not least, waiting to retire gives your investments and savings more time to compound. Compound growth is when the interest you earn on invested or saved cash also earns interest. Of course, there’s no guarantee that your stock investments will perform well in any given year, but delaying retirement for a few years gives your money additional time to grow.

The bottom line

The decision of when to retire has a lot of moving parts. It isn’t just about financial considerations. Maybe you want to keep working, but your health isn’t cooperating. Maybe you lose your job a few years before you’d ideally like to retire. And maybe you have big plans to travel or spend more time with family.

The point is that there’s no ideal retirement age for everyone. My goal is to get you thinking about the financial benefits of waiting for a year or two longer than you originally planned, but ultimately, you need to consider all of the pros and cons of retiring at certain ages and make the best decision for you and your loved ones.

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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 recommends Flow. The Motley Fool has a disclosure policy.

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