Money Management

Even if you don’t have the average millennial’s retirement savings of $62,600, you still have decades ahead of you to save and invest. See how. [[{“value”:”

According to a new survey from Northwestern Mutual, Americans believe that the ideal retirement nest egg is $1.46 million. This average “magic number” for what Americans think they need to retire has grown by 15% since 2023 due to higher inflation.

If you’re worried that you won’t be able to retire, here’s some good news: You still have lots of time, especially if you’re younger. By saving on a regular basis and investing in a diversified portfolio of stock ETFs, you can grow your money enough to have a comfortable retirement. The millennial generation (born in 1981–1996) still has decades of growth potential ahead — in their careers and as investors.

Let’s look at the reality of retirement savings for the typical millennial and see what it takes for your generation to save $1.5 million for retirement.

Average millennial retirement savings: $62,600 saved, 32 years left

Northwestern Mutual’s 2024 Planning and Progress Study found that millennials have an average of $62,600 of retirement savings. But millennials are generally optimistic about their retirement prospects: 56% of them told Northwestern Mutual that they believe they will be financially prepared for retirement when the time comes.

Even if you have $62,600 (or less) saved for retirement, if you are in your early 40s or younger, you have good reason to be hopeful about your long-range retirement goals. Let’s crunch the numbers and see why — but first, a few assumptions.

Since the millennial generation has birth years between 1981 and 1996, let’s say that a typical millennial was born right in the middle of that timeframe, in 1989. That makes our typical millennial retirement investor 35 years old in 2024.And let’s say that this 35 year old has the millennial average amount of retirement savings identified by the Northwestern Mutual survey: $62,600.If you’re 35 years old in 2024, your full Social Security retirement age is 67. So you have 32 more years to save and invest for retirement. That’s plenty of time! A lifetime, really.

How to invest for retirement

For the record, 32 years is a huge time horizon to let your retirement savings grow. Even if you have a lot less than $62,600 saved at age 35, let’s say you’re just getting started.

Let’s see how our typical millennial can retire, based on how much they save per month.

How much you’ll have for retirement if you save $500 per month

Let’s say that you’re starting with $62,600 saved for retirement, and you can save a total of $500 per month ($6,000 per year) for retirement. Depending on your salary and employer match, you could accomplish this savings goal completely within your 401(k) at work. Or you can use other retirement accounts like a Roth IRA or traditional IRA.

If you invest that $6,000 per year in mostly stock ETFs, you will perhaps maximize your chances of long-term investment growth. Even if there are ups and downs in the short term, let’s assume you can earn an average of 8% return per year.

After 32 years, at age 67, you would have $1,540,022 saved for retirement. Assuming you make 4% withdrawals per year, that nest egg would give you about $61,600 per year of retirement income. Just by saving $500 per month, right now as a 35-year-old, you can easily reach the $1.5 million retirement goal that most Americans believe is their “magic number” to retire.

But what if you’re not a typical millennial? What if you have zero money saved for retirement, and you’re just starting out? Let’s look at another example.

Starting with $0 at age 35: How much you’ll have for retirement if you save $1,000 per month

Let’s say you are 35 years old with nothing saved for retirement. What if you can save $1,000 per month ($12,000 per year) for the next 32 years? Assuming you get that same average annual return of 8% with a diversified portfolio of stock and bond ETFs, after 32 years, you’d have $1,610,562 saved for retirement. With 4% withdrawals per year, that nest egg would generate about $64,422 of income per year.

But what if you’re already over 40 with nothing saved for retirement, and you can’t afford to save $1,000 per month?

Starting with $0 at age 43: How much you’ll have for retirement if you save $500 per month

Let’s say you’re an “elder millennial,” born in 1981 — so you’re 43 in 2024. You have 24 years left to save for retirement before reaching your full Social Security retirement age of 67. Let’s say you haven’t been able to save anything for retirement yet — but you just got a big promotion in your career, you have a generous 401(k) match, and you’re ready to invest!

If you can start saving $500 per month ($6,000 per year), increase your retirement savings contributions by 2% per year, and earn 8% average annual returns on your stock and bond portfolio…after 24 years, you’d have $511,136 saved for retirement. That’s enough for an annual income of $20,445 — in addition to Social Security. (The average Social Security retirement benefit as of January 2024 is $1,907 per month.)

Bottom line

Millennials have plenty of time to save for retirement, even if you have $0 saved so far. Save with every paycheck, invest aggressively in (mostly) stocks, and let your investments grow for the long run.

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Many people like purchasing food at farmers markets. Keep reading to learn the perks and drawbacks of shopping at them. [[{“value”:”

If it seems like farmers markets are popping up more frequently where you live, you may be onto something. As of early 2023, there were approximately 8,600 farmers markets in the U.S., according to the National Conference of State Legislatures.

You may be inclined to visit a farmers market the next time one rolls into town. But while doing so has its benefits, there can also be some drawbacks to keep on your radar. Here are three pros and cons.

Pro No. 1: Getting access to fresh food that might last longer

When you buy produce at a supermarket, you have no idea how long ago those items were picked or harvested. When you purchase produce at a farmers market, you can ask that question and get a direct answer. And chances are, you’ll be looking at produce that’s way fresher than what you’ll find at your local grocery store. That could translate into more days of freshness in your refrigerator.

Pro No. 2: Getting higher-quality produce

The items you buy at farmers markets are probably not mass-produced like some of the products you might find at your local grocery store. The result? You can enjoy items that are fresher and higher in quality on a whole. And this doesn’t just apply to fruits and vegetables. You may find items like honey or baked goods that make for a better experience.

Pro No. 3: You’re supporting local farmers and businesses

The vendors at your neighborhood farmers market may not be local to your area — but they’re local somewhere. And they’re certainly not large corporations. If you’re someone who believes in supporting small businesses, that’s reason enough to shop at farmers markets. By keeping farmers and small businesses afloat, you’re helping create and sustain local jobs.

Con No. 1: You won’t necessarily save money

The items you buy at a farmers market may be fresh and high in quality. But if your goal is to save money on food, then shopping at a farmers market may not be the way to go. If anything, you might pay a lot more for food at one of these markets. If that just doesn’t work for your budget right now, you may need to stick to visiting the grocery store.

Con No. 2: You may not have regular access to the items you want

Chances are, your local supermarket is open all day, every day. But you may only have access to a farmers market in close proximity to where you live once a week. That could be a problem if you run out of certain items or are unable to get to your local farmers market during the limited window when it’s open.

Con No. 3: You might lose out on cash back or credit card rewards

It’s common to pay for groceries at the supermarket using a credit card. At a farmers market, you may be limited to using cash. But beyond the annoyance and time cost of having to hit the ATM, that could also mean giving up the cash back or reward points your credit card would normally give you. With some credit cards offering 3% back on grocery purchases, a $50 farmers market purchase in cash gives you $0, while a credit card puts $1.50 back in your wallet.

All told, shopping at farmers markets can be a positive experience. But do be aware of the potential drawbacks involved.

Of course, you may decide that you’ll shop at your local farmers market for a few specialty products each week or as a means of supplementing your regular supermarket purchases. That may be a more reasonable approach than planning to purchase the bulk of your food from farmers markets, especially if you do have a limited grocery budget to work with.

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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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Certificates of deposit can be a great way for retirees to create income and maintain flexibility. Read on for reasons why. [[{“value”:”

Certificate of deposit, or CD, accounts are typically thought of as long-term deposit vehicles. While that’s certainly true, there’s a lot more to CDs, and many of their qualities can be especially appealing to senior citizens. As we’ll discuss here, CDs can be a great way to create an income stream, maintain financial flexibility, and protect your hard-earned retirement savings.

1. Predictable income

Many people don’t realize this, but many banks allow CD owners to withdraw the interest in their account as it is paid, with no penalty, as long as the original principal balance is left alone.

Let’s say that you put $100,000 of retirement savings in CDs with an average APY of 5%. These CDs will generate $5,000 of income in the first year. You can withdraw those interest payments as they appear in your account, or you can choose to leave them to compound over time if you don’t need the money.

The point is that while CDs are typically thought of as a long-term savings vehicle, they can also be a great fixed-income investment, especially when interest rates are relatively high.

2. Financial flexibility

CDs can be used to maximize both income and financial flexibility for retirees, who may need access to their money for unexpected expenses from time to time. And there are a few reasons for this:

CDs can be found in terms ranging from just a few months to 10 years. If you don’t want a certain part of your savings tied up for longer than a year, you can simply open a 1-year CD.By creating a CD ladder (a portfolio of CDs with staggered maturity dates), you can get a great combination of steady income and some of your money maturing (becoming available) quite often.Money from CDs can be withdrawn in an emergency at any time, but you’ll have to pay a penalty. This might not be as bad as you think — CD penalties typically involve forfeiting the last few months’ worth of interest. Ideally, you’ll avoid early withdrawals entirely, but it can be less costly than, say, taking the tax hit from a large and unexpected individual retirement account (IRA) withdrawal.

3. You won’t lose principal

Most CDs (including all of those on our best CDs list) are FDIC-insured bank accounts, which means they’re protected for up to $250,000 per account holder, per institution in the event of a bank failure.

In short, your principal is safe when you open an FDIC-insured CD. Even if you have to unexpectedly close the CD early, you’ll typically only forfeit some of the interest you’ve been paid — not your principal (unless the penalty amounts to more interest income than you’ve earned to that point).

On the other hand, other fixed-income investments like Treasury bonds and bond ETFs have market values that can fluctuate over time. With investments like these, price and yield have an inverse relationship, so if interest rates unexpectedly rise, the market value of your bonds can fall. If you put $10,000 into a 1-year CD and rates rise, it’s still a $10,000 CD.

The bottom line on seniors and CDs

CDs can be an excellent way for seniors to simultaneously create a reliable income stream and protect their hard-earned retirement savings. There are certainly pros and cons to consider for opening CDs as opposed to other types of investments, but they can be a great choice for many income-seeking retirees.

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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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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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Bookkeeping doesn’t come naturally to everyone. If you’re a small business owner, check out three ways to overcome simple challenges. [[{“value”:”

As a small business owner, you undoubtedly have dozens of plates in the air simultaneously. And if you’re new to owning a business, you may just be learning the ins and outs. While it’s fun to dream of what you want your business to accomplish, it’s not always as exciting to consider the nuts and bolts of entrepreneurship — like keeping the books. Here, we offer three basic tips for overcoming any bookkeeping challenges you may face.

1. Determine an airtight method of record-keeping

At some point, every small business owner has a conversation with themselves. It may sound something like, “Man, I’m glad I’ve always been careful about record-keeping. It’s made my life so much easier.

Or it could sound something like, “What I wouldn’t give to go back in time and come up with a better system of record-keeping. I spend half my time spinning my wheels, trying to figure out where things are.”

Ideally, your conversation will involve congratulating yourself for being such an ace record-keeper. Your records are organized and up to date, and you keep track of invoices, receipts, bank statements, and correspondence. When a customer calls with a problem, you can easily pull up their records. When a vendor quotes you a price, you can quickly look to see how much you paid for it last time. When it’s time to pay taxes, you know right where to look for the needed numbers. In short, you’re killing it.

Whether record-keeping is a challenge for you or you’ve achieved pro status, consider taking advantage of the many tools available to you. For example, customer relationship management (CRM) software is a simple way to track your interactions with customers, analyze their past behavior, and anticipate future needs.

2. Prioritize cash flow management

Building a business that can withstand the test of time involves more than watching money roll into your business bank account. It’s about always knowing where you stand financially at all times. That’s where cash flow management comes in.

Cash flow management involves tracking the money that comes in and the money that goes out. Sales are great, but you must also know how much salaries, materials, utilities, insurance, and other business expenses will cost.

The only way to truly assess your business’s financial health is to have a complete picture of cost vs. revenue. In short, how much do you expect to earn, and how much of that money do you need to spend to keep your business up and running?

While there are plenty of great programs available to small business owners, one of the most practical for cash flow management is accounting software. Cloud-based accounting software can help you manage your cash flow by providing real-time financial data and reports. Rather than spend hours digging through records, accounting software allows you to learn where you stand at a glance. It’s a time-saver that frees you up to take on other important tasks.

3. Value your time

Speaking of time savers, be honest with yourself about the time constraints you may face as your business begins to grow. That could mean setting new hours of availability. For some small business owners, it’s tough to let the phone go to voicemail when a friend calls to shoot the breeze or to say no when asked to take on a task unassociated with their business. This can be especially true for those working from home.

No matter how demanding your business is, there will always be those who believe working from home means you have time to do them favors, like watching their kids or helping them pick up furniture across town. You may have to remind people that this is your business, not a hobby. You have set hours in which you should not be disturbed.

If you don’t value your time, the people around you won’t either.

Need help?

Finally, if bookkeeping begins to feel overwhelming, free help is available. The nonprofit organization SCORE is a perfect example. In partnership with the Small Business Administration (SBMA), SCORE is a large network of small business mentors who offer a variety of services to people like you who have struck out on their own. With chapters across the U.S., SCORE provides workshops, e-guides, videos, and in-person workshops. For example, this prerecorded one-hour webinar teaches the basics of small business bookkeeping.

One of the most exciting things about starting a business is the knowledge that you’re doing it on your own. Oddly enough, it’s also one of the most intimidating things about starting a business. The truth is, with time and repetition, bookkeeping practices will begin to make sense to you. In the meantime, you don’t have to go it alone.

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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.Dana George 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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Accountants aren’t perfect. Read on to see what recourse you have if your accountant is late with your tax return. [[{“value”:”

My friend Angela used to file her own tax return, since it was pretty easy work. But in 2023, she underwent two big changes: She became a homeowner jointly with her husband, and she went from being a salaried employee to becoming self-employed.

Because of this, she and her husband decided to use an accountant to tackle their 2023 tax return this past April. And while she did her homework by soliciting recommendations from friends and hiring an accountant with rave reviews, things went awry in the end.

To make a long story short, her accountant goofed big time and was late in filing her tax return by a few weeks. And while he wound up making things right, it was a stressful situation to experience.

When your accountant drops the ball

A big reason to hire an accountant to handle your taxes is to help ensure that the process goes smoothly from start to finish. But accountants are human and can make mistakes, including failing to submit your tax return on time — despite having all of the right information to do so.

If your accountant fails to file your tax return on time but you’re due a refund from the IRS, nothing bad really happens. In that situation, your refund simply hits your bank account later than it would’ve with an on-time filing. That’s not awesome, but it’s not terrible if you’re not so desperate for that money.

But if your accountant fails to file your tax return by the deadline and you owe money to the IRS, two very bad things can happen. First, you can be hit with a failure-to-file penalty equal to 5% of your unpaid tax bill per month or partial month your return is late. You can also get hit with a late payment penalty equal to 0.05% of your unpaid IRS balance per month or partial month you’re late, plus interest.

In my friend’s case, she and her husband owed a little bit of money because even though they had mortgage interest they could deduct on their 2023 return, they didn’t pay enough estimated taxes on her freelance earnings. And because their return was late, they were subject to both of the aforementioned penalties.

The good news is that Angela’s accountant made things right. He owned up to the error and covered the cost of their penalties. But not every accountant will take that step. And also, had the penalties been more significant, he may not have been willing to pay them. So it’s important to be vigilant about getting your taxes in on time, even if you’re using an accountant.

Once you’ve completed all of the right paperwork, follow up with your accountant to make sure they’ve submitted your return in time for the deadline. And if possible, ask for proof. It’s really the only way to know that the job has definitely been done.

The IRS might also cut you a break

If your accountant doesn’t file your tax return on time, you may be able to get out of associated penalties via a process called first-time tax abatement. Think of it as a get-out-of-jail-free card for tax-filers in good standing who haven’t been penalized before.

If you contact the IRS and explain that your accountant dropped the ball, you may be able to avoid a penalty for a late tax filing. If not, be firm with your accountant and try to push them to do the right thing and cover the costs you’ve incurred due to their error. They may agree for the purpose of protecting their reputation.

Of course, whether you decide to keep working with an accountant who failed to file your taxes on time is up to you. If you’ve had a relationship with them for years and this was a one-time slip-up, you may decide to let it slide — especially if your accountant owns their mistakes and offers to cover any penalty you incur due to their carelessness. But it also wouldn’t be a rash decision to decide to use someone else in the future, since failing to submit a return on time is a pretty big deal for someone whose core job is to file taxes.

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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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