Money Management

Hate the idea of seeing your tax rate go up in retirement? Then you may want to save in this account specifically. [[{“value”:”

Taxes are pretty much a part of life no matter your age. You could be 22 working your first job or 72 living largely on Social Security, and the IRS is still going to come after a portion of your income.

But while having to pay taxes in your 20s can be burdensome in its own right, having to pay taxes in retirement can be all the more stressful. That’s because you’re living on a fixed income that may consist only of Social Security and savings.

And adding to the stress is the potential for your tax rate to rise over time. One account, however, could make it so that rising tax rates, if they come to be, aren’t a problem for you once you’re no longer working, and are instead using your savings.

How tax rates work

The U.S. tax system is a marginal one that has you paying a higher rate of tax on your highest dollars of earnings and a lower rate of tax on your lowest dollars of earnings. Each year, the IRS establishes tax brackets based on income.

In 2024, for example, if you’re single earning $11,601 to $47,150, you’re in the 12% tax bracket, which means your tax rate is 12% on income within that range. You only pay 10% on your first $11,600 of income.

The highest tax rate you could be liable to pay today is 37%. That rate applies if you’re single with an income of $609,351 or more.

But in time, the tax rates that apply today could change for the worse. Lawmakers could decide that single income falling between $11,601 and $47,150 is subject to a 15% tax rate, not 12%. They could also end up raising the top tax rate from 37% to a higher number — say, 39%, or 41%, or even 45%.

Let’s say you save enough so you’re able to withdraw $20,000 a year from your IRA in retirement and you also get $25,000 a year in Social Security. That’s $45,000 in total. Assuming you’re single, based on today’s tax rates, you’d pay 12% on your highest dollars of earnings. But if your tax rate goes up in retirement, you take home less of your $45,000 annual income.

Now, you can’t change the amount of tax you might end up paying on Social Security. But you can take steps to make sure you don’t have to pay taxes at all on the money you withdraw from your retirement savings.

It pays to save in a Roth IRA

If the idea of paying more tax in retirement scares you, then it pays to put your savings into a Roth IRA. A Roth IRA won’t give you an upfront tax break on your contributions like a traditional IRA will. However, with a traditional IRA, you’re paying taxes on the funds you remove in retirement. With a Roth IRA, you won’t pay taxes on those withdrawals. And because of this, rising tax rates won’t impact the income you get from your savings.

Let’s say you’re taking $20,000 a year out of a retirement plan. If it’s a traditional IRA, your tax rate matters. With a Roth IRA, it really doesn’t because you’re not paying any tax on those withdrawals. So if you’re currently in the 12% tax bracket and that gets bumped up to 15%, as far as your savings go, it’s irrelevant.

Of course, without a crystal ball, it’s impossible to know which direction tax rates will move in by the time you reach retirement. But if you’d rather not worry about it, at least in the context of tapping your savings, then it makes sense to put your money into a Roth IRA.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

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.

“}]] Read More 

There are ways to make a cruise with kids a more affordable family vacation than you think. Keep reading for insider tips. [[{“value”:”

Cruising with kids can certainly be expensive, but it doesn’t have to be. If you take advantage of deals that are offered, stick with the more budget-friendly cruise lines, and manage your spending wisely while in port, it can be more affordable than you may realize.

1. Look for “kids sail free” deals

Several major cruise lines offer deals letting kids travel at no cost, and this can save you hundreds or even thousands of dollars if you book one of them. Now, the timing of the deals and age requirements vary by cruise line, and these are generally offered on non-peak sailing times (in other words, times you’ll likely have to pull the kids out of school to go). But they aren’t unheard of during the summer months.

Norwegian offers third and fourth guests in a stateroom for free (regardless of age) on select itineraries. Royal Caribbean offers many “kids sail free” deals, but they only apply to kids 12 and younger. Costa, Holland America, and MSC also offer some variety of these deals, so shop around and see what is available that works with your schedule.

2. Skip the Disney cruises

I get it — kids love Disney. And I don’t have much to say that’s negative about the Disney Cruise Line’s ships or itineraries. But they are expensive.

The difference in price depends on variables like the ship you choose and the time of year you’re sailing, but in my experience, a Disney cruise is at least twice the price of a comparable itinerary on Royal Caribbean or Carnival. Last summer we actually booked a seven-night Carnival cruise from Port Canaveral and a four-night trip to Walt Disney World for less than we would have spent on the six-night Disney cruise we were considering.

In addition, Disney ships have fewer activities for adults, and there are many reports of excessive crowds in the kids’ clubs (makes sense — nearly every cabin on a Disney ship has kids in it).

On the other hand, my kids love Camp Ocean and Adventure Ocean on Carnival and Royal Caribbean, respectively. In addition to the camps, both of these have tons of free activities for kids, such as waterparks, arts and crafts, and much more.

3. Don’t book excursions at every port

All ports are different, and there’s a lot of variety in the available options — especially when it comes to safety. So, do your homework. But you generally can have a great time for significantly less money than it would cost to book a shore excursion through the cruise lines.

For example, it isn’t recommended (by me or the U.S. State Department) to simply wander around in Jamaica, but ports like Grand Cayman are very safe to walk around. As a personal example, on our last cruise to Grand Cayman, the cruise line was selling a “beach club” excursion for about $80 per person. Instead, we spent $40 round trip on a cab ride to a beautiful area of Seven Mile Beach and about $70 on an excellent lunch.

Another option is to book a day pass to a local resort. There are several third-party companies that offer these (we use Resort for a Day), and this can be a more budget-friendly and safe way to spend the day at the beach in many cases.

The bottom line

This isn’t an exhaustive list, and there are many other ways you can make your cruise with kids cheaper. For example, you can usually bring snacks off the ship to eat while you’re in port. Bringing the right travel credit card can earn you rewards and help you avoid paying foreign transaction fees in port. But the bottom line is that a cruise vacation with your kids could be more affordable than you think, and without sacrificing fun.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

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.

“}]] Read More 

Do you hate being charged extra fees when buying airfare? Frontier has changed its airfare options to be more transparent about pricing. Find out more. [[{“value”:”

Frontier Airlines has undergone recent changes, and the updates are a win for travelers. The popular low-cost airline has a reputation for its affordable airline tickets. But since it’s a low-frills airline, the carrier charges extra fees for seat selection and bags. However, Frontier recently changed how tickets are priced to be more transparent. This is a win for busy travelers working hard to reach their personal finance goals. Here’s what you need to know about the news.

Frontier unveils bundles with upfront pricing

The low-cost airline recently announced it now offers ticket bundles, with additional extras built into the ticket price. The extras included will vary depending on the bundle chosen. These additional costs are now built into the total price on top of the standard, basic fare price. The following bundles will be available to flyers:

Economy Bundle (begins at $30 per person per one-way flight)Premium Bundle (begins at $50 per person per one-way flight)Business Bundle (begins at $100 per person per one-way flight)

The airline will also continue to offer its basic fare. Travelers who purchase this most affordable ticket option must pay additional fees to choose their seats, access early boarding perks, or add a carry-on bag or checked bags to their reservation. A personal item is included.

Here’s an overview of what flyers can expect depending on the fare chosen:

Change and cancel fees are eliminated for most tickets

That’s not all that’s changed. As you may have noticed from the previous chart, bundles will give passengers access to no change or cancellation fees. The airline recently announced it would eliminate change and cancel fees for most ticket fees — a major win for your checking account.

For economy, business, and premium bundled fares, no fees will be charged if a passenger makes changes or cancels their flight. When canceling a ticket, passengers will receive a flight credit to their account, valid for 12 months. Flight credits are non-transferable.

However, travelers purchasing basic fare tickets will be charged change and cancel fees if they alter their reservations or cancel their fights. Fees start at $49 per person per one-way flight for changes and $99 per person per one-way flight for cancellations.

Don’t miss the new For Less price guarantee

The airline also announced a brand-new For Less price guarantee. If a passenger finds a lower price for a comparable flight (same route and date), Frontier will award them 2,500 FRONTIER Miles after they complete their Frontier journey.

The lower price must be found within 48 hours of making a Frontier booking and must be submitted before midnight on the day before travel with Frontier. Travelers must fill out a claim form online and include a screenshot with their claim.

Travel doesn’t have to break the bank

It’s possible to travel while continuing to honor your budget. Flying with low-cost carriers is one way to keep your spending in check when buying airfare for your next trip. Make sure you review all fees before making a reservation. Frontier’s new transparent pricing updates make it easier to avoid overspending on travel expenses.

Consider paying for your travel costs with a travel credit card. These cards earn valuable rewards that can be redeemed for free hotel stays or flights in the future. Review our list of the best travel credit cards to find the right card for your needs.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

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.

“}]] Read More 

A Costco membership can benefit you tremendously when you own a car. Read on to see why. [[{“value”:”

It costs an astounding $1,015 a month, or $12,182 a year, to own a car these days, according to AAA. And even if your car is already paid off, you might still spend a small fortune on expenses like auto insurance, maintenance, and repairs.

It pays to do everything you can to make vehicle ownership more manageable, financially speaking. And in that regard, joining Costco could result in a world of savings. Here’s why it pays for every car owner to sign up for a Costco membership.

1. You can purchase affordable tires and get extended protection

Many auto shops will sell you a new tire and send you along on your merry way. At Costco, your tire purchase doesn’t just include an initial installation. When you buy tires through Costco, you get a five-year road hazard warranty that protects you from having to shell out money to fix a newly replaced tire. You also get a host of free services throughout the life of your tires, from inflation checks to rotations.

2. You can save big on gas

Even if you own a fuel-efficient car, if you do a lot of driving, gas could be a huge expense in your budget. The nice thing about joining Costco is that you’ll get the option to fill up your car at your local warehouse club store. The result? A world of savings, since Costco is known for its competitive prices on gas.

3. Free air for your tires

Changes in outdoor temperatures can lead to poor tire pressure. That, in turn, could lead to poor gas mileage, so it’s important to keep your tires well-inflated. At Costco, you can do so for free — even if you don’t buy your tires from Costco’s auto center. Many warehouse club stores have a free air pump that members can use when their tires need inflating.

4. You can load up on affordable vehicle accessories

There may come a point when you need to replace your car’s floor mats, or when you need new windshield wipers. You may also decide to invest in a roof rack for your car to transport sporting equipment. Costco offers items like these at affordable prices. And if you happen to buy an Executive membership at Costco, you’ll get 2% cash back on these and other purchases.

When you’re grappling with the expense of a car, it pays to do whatever you can to make vehicle ownership more affordable. A Costco membership could be your ticket to affordable gas all year long and a host of other benefits car owners appreciate. So it pays to sign up, whether you’re new to owning a vehicle or have years of experience on the road.

A basic Costco membership costs $60 a year, while an Executive membership offering 2% cash back on your purchases costs $120. Think about which membership is right for you based on your anticipated spending and get ready to save a bundle on numerous vehicle-related expenses.

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.

Click here to read our expert recommendations for free!

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.

“}]] Read More