Money Management

It’s recommended that everyone saves for retirement throughout their career. Find out how your retirement could be affected if you don’t save enough. [[{“value”:”

When you have bills to pay right now, it’s tempting to put your retirement savings on the back burner. After all, retirement could be decades down the road. You have plenty of time to figure it out.

Except many people who take this approach don’t figure it out. Retirement-age Americans (those 65 and older) make a median income of $50,290 per year, according to retirement income research by The Motley Fool. There’s just one problem: They spend an average of $57,818 per year.

One of the reasons people put off saving for retirement is that there aren’t immediate consequences. But it can cause serious problems, like the four discussed below, once you’re ready to retire.

1. Being forced to downsize your home

Retirees who can’t make ends meet sometimes find that the best option is getting a cheaper home. If you’re renting or paying off a mortgage, housing is likely one of your biggest monthly expenses. Reducing that could be your only option to make your budget work.

If you’ve paid off your house, then it may be your largest asset. But you can’t just tap into that like a withdrawal from a savings account. If you want to make use of that money because you don’t have enough in your retirement savings, you’ll need to sell your home and buy or rent a more affordable place.

Plenty of retirees downsize because they don’t need as much space as before. But it’s stressful to be forced into it, especially if you’re attached to your current home.

2. Needing to work longer than you want

Most of us don’t want to work forever. Once people get into their 70s and 80s, they usually feel like winding down. Or running for President of the United States. This is a strange time to be alive.

For everyone who wants to retire at a normal age, you can start receiving Social Security at 62. But you need to wait until your full retirement age (currently 67, for those born in 1960 or later) to get the maximum benefit amount.

Social Security only takes you so far. For the average worker, it replaces about 40% of pre-retirement income. If you don’t have enough in your retirement savings to make up the difference, you may need to keep working until you do.

3. Relying on loved ones for financial support

If you have a good relationship with your parents, and you see them struggling with money in retirement, you’ll probably want to help them. And if you have a hard time financially in retirement, your kids will likely want to do the same.

There’s nothing wrong with families helping each other. In many cultures, it’s the norm. But it’s important to realize that your loved ones may feel responsible for helping you if you need it. If you don’t want that, then you’ll need to make sure you can fully support yourself in retirement.

Parents, in particular, sometimes end up not saving enough for retirement because they prioritize college funds for their kids. It seems like the right thing to do — making sacrifices for your children. But you need to take care of your own needs, too. There are plenty of ways to pay for college. There aren’t retirement loans for seniors who haven’t saved enough.

4. Not being able to have the experiences you want

People often have big plans for their retirement. Get an RV and see all the national parks. Hop on a plane and travel the world. Spend every major holiday with your family. There’s a lot you can do, and with no job taking up your time, you have the freedom to do it.

It’d be a shame to work your entire life, only to not be able to do the things you want in retirement. But if you’re barely getting by on your retirement income, that could be what happens. It’s hard to travel the world when you’re just focused on making it to the next month.

How to save enough for retirement

The best way to save for retirement is to make it automatic. First, open retirement accounts. If your employer offers a 401(k), that’s a great place to start. You can also open an individual retirement account (IRA). Both of these accounts allow you to invest in stocks and investment funds that can help grow your retirement savings.

Set up automatic contributions to your retirement accounts every month. Aim to save a fixed portion of your income. Ideally, you’ll save at least 10% of your income for retirement. If you can do more, that’s even better. If you can’t do that much, that’s fine — save what you can. No matter how much you start saving, try to increase the amount every year so you’re putting away more.

When you automate your retirement savings, you get used to that money coming out of your account. While you won’t see the benefits right away, your nest egg will grow every month. By the time you’re ready to retire, you’ll be well prepared financially.

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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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Travel credit cards have lots of benefits, including some that fly under the radar. Discover the little-known perks you could get with a travel card. [[{“value”:”

When people look at travel credit cards, they usually focus on the features that the card issuer highlights. A big welcome bonus of 50,000 points or more. Spending credits. Airport lounge access. These are all valuable, exciting benefits, so they get most of the attention.

There are also a few common perks that don’t get mentioned or noticed nearly as much. Some cardholders don’t even realize their travel cards offer them. If you already have a travel card or you’re planning to get one, don’t forget to check for these little-known perks.

1. Complimentary protections for common travel issues

If you’ve rented a car before, you’ve probably heard the sales pitch for the optional rental insurance. It’s not cheap, often running about $20 to $40 per day. And if you decline, you get the legal disclaimer about how if anything happens to the car, you could be liable for the full value of up to $50,000, or however much the rental company says it’s worth.

It doesn’t exactly get you excited to hit the road. But if you pay with the right credit card, you don’t need to worry. Many travel cards include complimentary rental car insurance covering damage and theft.

There are also quite a few other common travel card protections. You can normally find these on the card issuer’s website, and they’re in the guide to benefits that comes with the card. Here are more travel protections some cards offer:

Trip cancellation and interruption insurance if your trip is canceled or cut shortTrip delay reimbursement for expenses you incur on lengthy delaysLost luggage reimbursement if your luggage goes missingDelayed baggage insurance for essential purchases while waiting for your luggage

2. Concierge service — your own personal assistant

Trying to get a restaurant reservation for tonight? Or are you planning a vacation and looking for ideas on what to do? You could do this yourself, but if you have a travel card with concierge service, you could also let them handle it.

Concierge service is a benefit found on lots of travel cards, but it’s easy to miss. It may be buried toward the bottom on the list of benefits. I’ve been using travel cards for nearly eight years, and I recently called my card’s concierge for the first time.

Your concierge can help with a wide variety of requests. When you call the concierge line, you tell them what you need, and they might ask you a few questions to get more details. Then, they handle your request and contact you when it’s done, or when they have the information you need. They can contact you by email or phone — your choice.

As mentioned above, a concierge could help with getting a restaurant reservation or vacation planning. Here are a few more examples of ways a concierge can assist you:

Gift shopping, including choosing a gift that fits your budget and having it delivered to the recipientGetting concert tickets for youRecommending businesses in your area for any service you need

3. Transferable points you can use for high-end bookings

Many travel cards let you redeem points toward travel purchases at a fixed rate. Rates normally range from $0.01 to $0.015 per point, depending on the card. If the rate is $0.01 per point, then the card issuer may advertise that 50,000 points are worth $500 toward travel.

But some of these cards also include another option: Transferring your points to travel partners. The biggest card issuers are partnered with airlines and hotels, allowing you to transfer your points to them. And when you transfer your points, it’s possible to get much more value from them, especially if you use them for expensive travel bookings.

You can transfer your points if you have a card in any of the following rewards programs:

Chase Ultimate RewardsAmerican Express Membership RewardsCapital One Venture RewardsCiti ThankYou Rewards

Let’s say you’re booking business-class airfare that costs $1,500, or 50,000 miles. If you get $0.01 per point for travel purchases, it would cost 150,000 points to book that ticket in cash. But if you can transfer your points to that airline, then you could transfer 50,000 points to turn them into miles. Then, you book the ticket, saving 100,000 miles in the process.

You can get incredible deals this way, but most people don’t do it. Only 14% of consumers transfer rewards to travel partners, according to credit card research by The Motley Fool Ascent. If you have this option with your card, it’s worth taking advantage.

Getting more out of your travel credit card

Travel cards are often loaded with features. While it makes sense to focus on the most valuable perks, they’re not the only useful ones. Make sure to learn about everything your card offers so you can make the most of 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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. American Express is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

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Many financial experts were convinced that a recession would’ve happened by now. Read on to see why we’ve been able to avoid one. [[{“value”:”

In 2022, many economists were sounding warnings about a 2023 recession. And last year, economists were continuing to warn about a downturn in 2024.

But thankfully, we’ve made it to April and economic data seems strong. March’s jobs report well exceeded economists’ expectations, and unemployment is low.

In fact, in President Joe Biden’s recent State of the Union address, he said, “I inherited an economy that was on the brink. Now our economy is the envy of the world.”

But while today’s economic situation is one to be thankful for, the reality is that it is sort of surprising. Recent economic conditions weren’t exactly pointing to such a strong 2024. But there are a couple of key reasons why we’ve managed to avoid a recession thus far.

Interest rate hikes didn’t wreck the economy as expected

A big reason so many experts were convinced we’d hit recession territory in 2023 or 2024 was that the Federal Reserve spent much of 2022 and 2023 implementing interest rate hikes to cool inflation. All told, there were 11 rate hikes that arrived in short order, making it more expensive for consumers to do everything from carry a credit card balance to sign an auto loan.

Often, when the cost of borrowing increases exponentially in short order, consumers stop doing it and instead cut their spending. And reduced spending has the potential to lead to an economic slump. But that didn’t happen this time around, and there are a couple of reasons why.

First, as mentioned, unemployment has remained low. That’s helped sustain consumer spending even during a period when it’s been more expensive to borrow.

Also, the economy has held up well overall, helping consumers maintain their spending even at a time when inflation was surging and the cost of signing a loan was downright exorbitant. We didn’t have an economic meltdown or banking crisis like we did during the Great Recession.

It’s still a good idea to prepare for a recession

At this point, economists have largely backed off of warnings for a 2024 recession. And based on current conditions, a notable downturn looks unlikely this year.

But sometimes, recessions have a sneaky way of happening when you’d least expect them to. So it’s always a good idea to be recession ready.

To that end, check up on your savings and make sure you have enough money in the bank to pay for three months of essential living expenses at a minimum. Recessions and job loss tend to go hand in hand, and it might take at least three months to find a job if yours is cut.

Also, do your best to chip away at high-interest debt. Not only can this save you money, but having smaller monthly debt payments could be a lifeline at a time when your income might disappear for a few months.

What’s more, since the economy is strong now, you may want to pick up a side hustle to boost your savings. That side gig is also one you can potentially fall back on should a recession strike and compromise your main source of income.

Finally, make an effort to grow your professional network and job skills. The more people you know in your industry and the more knowledge you bring to the table, the easier it might be to find work if your company is forced to downsize.

Many economists were convinced that higher borrowing costs would have fueled a recession by now. But just because we seem to have avoided that fate at this point doesn’t mean things won’t eventually take a negative turn. Prepare for that possibility so that if a recession does hit, you’re in a stronger position to get through 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 a disclosure policy.

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High-yield savings accounts are awesome, but they don’t have to be forever. Here’s why one writer plans to move her money out soon. [[{“value”:”

If you’re anything like me, there are characteristics of your personality that drive you a little batty but sometimes come in handy. For example, I tend to think (and worry) three or four steps ahead and often wish I could just live in the moment.

However, thinking ahead is why I buy groceries before we get snowed in, have the car’s oil changed before setting out on a road trip, and follow financial news so I can get a jump on any expected changes. This article has to do with the latter: Getting a jump on expected changes.

Fixed vs. variable interest

I’m moving money out of a high-yield savings account because it has a variable interest rate and into certificate of deposits (CDs) because they have a fixed rate. This means I’m guaranteed a particular rate until my CD term expires.

A fixed interest rate remains the same for an agreed-upon period of time, while a variable rate can change at any given time. High-interest savings accounts almost always carry a variable interest rate.

High-yield accounts did (and still do) make sense

In 2022, the APYs on high-yield savings accounts hit record highs. Since then, it’s made perfect sense to move money from our traditional savings and checking accounts to high-yield accounts. Earning money for doing nothing is one of my secret fantasies.

But rates didn’t increase because some sweet soul sprinkled fairy dust on them. They increased as a result of the Federal Reserve’s aggressive rate hikes of 2022-2023. In case you’re not a card-carrying member of Fed Fans (a term I just made up), allow me to break down how it works.

Throughout history, inflation has risen and fallen. We’re never quite sure when it will happen, but we know it will happen.When COVID-19 hit, inflation began to rise. The Federal Reserve (responsible for managing the U.S. money supply) began ratcheting up interest rates in an effort to slow the rate of inflation down. There was nothing new or unusual about this move — it’s how the system works.In all, the Fed raised rates 11 times between March 2022 and July 2023.As the rate banks pay other financial institutions to borrow money started to rise, banks began to pay a higher rate on banking products, like CDs, money market accounts (MMAs), and high-yield savings accounts. A few banks even paid a small amount of interest on interest-bearing checking accounts.As interest rates slowly edge downward, we can expect the interest rates paid on accounts with variable rates to decrease. These accounts include MMAs, high-yield savings, and interest-bearing checking accounts.Locking in a fixed CD interest rate now — while rates are still high — means I’m guaranteed to earn the rate being promised today rather than settling for a lower rate later. Just as attractive in my situation is that CDs are available for all different terms. Whether I want to lock my money in a 1-year, 5-year, 7-year, or longer CD, it’s my choice.

Looking at life through the rearview mirror

As someone who tried to buy their first home as mortgage rates hovered around 18% to 20%, I’m here to vouch for the fact that everything changes. Sometimes, those changes make it harder on consumers (like those ridiculous mortgage rates). Sometimes, those changes are so sweet everyone wants in on the action (like the historically low rates experienced early in the pandemic).

Anyone who tells you they can predict the financial future with 100% certainty is blowing smoke. After all, few could have predicted a global pandemic that would change the landscape of the economy, and the recession experts were sure would happen never actually materialized last year. The best anyone can do is look back at history and try to find patterns that make sense.

And what those patterns tell us is that change is inevitable. When the annual percentage yield (APY) on high-yield savings accounts began to soar, I wanted a piece of the action. But what goes up must come down, and I don’t want to be stuck with a variable rate as it plummets to the ground.

Remaining calm and rational

I’m not approaching this transition from high-yield savings accounts to CDs like my hair is on fire. After all, the highest rates I can find today show that the rates on high-yield accounts and MMAs are still a smidge higher than the best rates on CDs.

Instead, I’m keeping my eyes peeled, waiting for the day when APYs are pretty much equal across the board. That’s when I’ll know financial institutions are dropping their variable rates (even if it’s being done at a snail’s pace). Once that happens, I’ll be opening CDs that guarantee me a fixed rate.

CD interest is fixed — and so is your money

Opening a CD means committing money for a specific amount of time. I can open a CD based on when I think I may need the money. For example, if I’m saving for a vacation, I might open a 12-month CD. It’s important to know what I’m saving for before opening a new CD, because making an early withdrawal can result in a penalty. It’ll usually be a certain amount of the interest earned on the account.

Sure, I might be committing my money for a certain period of time, but in return for leaving my mitts off the money over that period, banks offer me a fixed rate that I can count on.

It should go without saying that we all manage money in a different way, and that’s smart. It means that we’ve each learned lessons based on our personal experiences. As for me, experience tells me that I’ll feel like I missed out if I don’t capture CD rates while they’re high.

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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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There is such a thing as too much Costco shopping. Read on to learn more. [[{“value”:”

Costco is a pretty popular store to shop at, as evidenced by the 73 million people who now have a membership there. But while shopping at Costco has the potential to result in big savings, there may come a point when it makes sense to cut back. Here are three reasons to consider doing that.

1. You’re buying too many non-essential items

Costco’s selection of inventory is downright impressive. You can buy everything from clothing to laptops to toys on top of your weekly grocery haul.

The problem, though, is that because Costco stocks so many items, you may be likely to continuously fall victim to impulse buys. Those could really bust your budget and lead you into debt (or pile onto existing debt).

If you know that pretty much every time you visit Costco, you wind up with at least one unplanned item, it may be time to cut back. In that case, consider visiting Costco less frequently and stocking up on items that are either non-perishable or ones you can freeze. If you continue to waste your money on non-essential items at Costco, you might negate the financial benefits of having a membership.

2. You’re buying food you don’t end up eating

There can be big savings when you buy grocery items in bulk. But if you find that you’re frequently throwing away things like spoiled produce or dairy, it means you may be overbuying in bulk.

It’s true that at Costco, you might pay much less per ounce for things like fruits and vegetables. But if you buy strawberries there every week and wind up tossing out 40% of the container as it goes moldy, that’s a waste of your money.

One good thing to do going forward is sit down with your family, review your Costco list, and work together to determine which perishables are worth buying and which aren’t. Perhaps it still makes sense to purchase deli meat in bulk since everyone in your household eats it for lunch multiple times a week, but maybe you’re better off buying fruit at a regular supermarket in smaller quantities.

3. You’re maxed out on storage and can’t fit any more bulk items

Many of the bulk discounts you’ll get at Costco are of the non-perishable variety. For example, you can load up on toilet paper and paper towels and there won’t be a ticking clock you have to worry about. But if you no longer have storage space available at home and you’ve reached the point where you’re housing your 12-pack of tissue boxes next to your living room couch, it may be time to cut back on Costco shopping until space frees up at home (although to be fair, that bulk pack of tissue boxes could potentially double as a foot rest).

It’s true that buying non-perishables in bulk — especially when Costco has them on sale — can be a money-saver. But sometimes, it can be worth forgoing savings for the sake of your sanity. So if it bothers you to be tripping over Costco boxes left and right, hold off on adding to your haul and let some of those sales pass you by.

Shopping at Costco could be a huge source of savings for your family. But it could be a wise idea to shop there less frequently if you keep making impulse purchases that are adding to your credit card debt. It’s time to break the habit of throwing away food and turning your home into a Costco showroom.

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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Although the economy is strong, layoffs could still hit your place of work. Read on for ways to prepare if you’re worried about one. [[{“value”:”

In March, the U.S. economy added 303,000 new jobs, blowing expectations out of the water. Unfortunately, even in a strong economy, there’s no guarantee that layoffs won’t hit your company. And there may be signs that plans to downsize are imminent.

If your company has, in recent months, started cutting back on expenses like business travel, it’s a sign that slashing headcount could be next. Similarly, if big projects are being put on hold, it may be due to financial concerns that lead to the loss of people’s jobs.

If you’re worried about a spring layoff, the good news is that there are steps you can take to prepare for one. Here are some moves worth making if you’re concerned that your job may soon be on the chopping block.

1. Grow your professional network

Often, the people you know can be more instrumental in helping you get a job than the things you know. If you’re worried about near-term layoffs, spend the coming weeks growing your professional network.

Attend industry conferences available to you, and go to networking events in your area that are open to the public, such as general young professionals gatherings. Also, if you have a LinkedIn profile, browse your connections and see if there are any you haven’t touched base with in ages. A quick check-in phone call or email could set the stage for a favor in May or June should you need to ask for help in finding a job.

2. Boost your skills to make yourself more hirable

While it’s important to have good connections when trying to find a job, having the right skills definitely helps, too. Take a look at job descriptions for your role and see what skills they’re largely asking for. If there are one or two requirements you keep seeing that are not such strong points of yours, spend the coming weeks working on them.

Along these lines, make sure any licenses or certifications you have are up to date. And if you’re midway through a certification, see if you can ramp up to get that credential ahead of a layoff.

3. Secure a second source of income

The loss of a paycheck could constitute a huge blow to your personal finances. But if you have a second source of income to fall back on, that hit could be minimized in the event of a layoff.

Take the time now to line up and start working a side hustle, whether it’s a weekend catering hall gig or a few hours a week delivering groceries. If you spend the next few weeks working out the kinks, you may be better positioned to maximize your side hustle if your job actually does go away. Plus, having the extra income now could help you boost your savings.

4. Check up on and boost your emergency fund

The good news about potentially getting laid off this spring is that the economy is not in a recession. So this would mean losing your job at a time when work is still available on a whole.

Still, it’s a good idea to make sure your emergency fund can cover at least three full months of essential bills. Even in a strong economy, it might take that long to blast out your resume, attend interviews, and negotiate an offer. If you don’t have enough cash in the bank to pay your bills for three months, do your best to boost your savings starting now.

As mentioned above, a second job could be your ticket to extra savings. But also, examine your budget and try to cut back on non-essential spending during this period of uncertainty. That could mean saying no to dinners at restaurants for the time being, with the understanding that you can resume that habit once your job situation stabilizes — whether that means landing a new job or making it through your company’s layoffs unaffected.

Even though you might hear reports of a strong economy, it’s important to pay attention to happenings at your place of work. If you have reason to believe that layoffs may be right around the corner, take these steps to protect yourself financially and set yourself up to land a new job soon.

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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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