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Posts Tagged ‘Bankrate.com’

Will You Still Be Able To Retire On Schedule?

February 9th, 2010 by Matthew C. Keegan | 1 Comment | Filed in Retirement

Over the past few years, millions of Americans have come to the realization that their retirement plans may have to change. With pensions and retirement accounts decimated, housing values falling, and job loss on the increase, a long planned retirement date may have to be pushed back.

Retirement Delayed

Will you be relaxing or working during your retirement?

In the September 22, 2008 issue of “The Wall Street Journal,” Helga Cuthbert, a certified financial planner noted, “We’ll see more and more people postpone their retirement dates. Their expectations about the future and the kinds of returns they would get were simply unrealistic.” With nest eggs reduced and an economic recovery slowly taking place, Cuthbert’s assessment appears to be holding true nearly one and half years later.

But not every agrees with that point of view. Bridget Burgess, CFP, president of Symetra Investment Services and board chair of the Puget Sound Financial Planning Association in the state of Washington said, “While there are signs of economic recovery in the region, sticking to a plan, managing personal expenses and saving for retirement should be an ongoing priority, as market conditions can change quickly.”

Five Steps

Burgess added that there five steps every investor can take to ensure that their retirement plans stay on track, even when faced with financial challenges:

1. Create a plan. Begin by calculating what income you will need in retirement. Experts say that many retirees require at least 80 percent of their pre-retirement income to live comfortably. Estimate basic living costs and other expenses that may come into play, such as traveling, a new hobby, increased medical bills and, of course, inflation. Also estimate potential income from rental properties, other investments, inheritances, pensions, etc., and incorporate these estimates into your financial plan.

2. Manage and reduce your expenses now, before retirement. To help offset future costs, manage expenses before retiring. One of the best ways is to cut down credit-card debt. The average household’s outstanding credit-card debt was $10,679 at the end of 2008.2 When regular paychecks come to an end, large credit card bills can be a real burden.

3. Diversify your investment portfolio. After you decide how much you need in retirement and you’ve reduced expenses, develop a financial goal and begin investing now. As we’ve seen in the recent economic downturn, investing in securities incurs market risk. The best way to help cushion a portfolio against market volatility is to diversify – to divide your money among different types of investments, also known as asset allocation. Allocating assets among various investments and across investment styles is important because each investment responds differently to economic events and other market conditions. Diversification does not, however, assure a profit or prevent a loss.

4. Continually evaluate your investments. Changes in family, health and job benefits can affect how much income you will need for retirement. Make the most of the financial plan by reviewing investments regularly. Ensure they are still appropriate for your goals, timeline and risk tolerance. These life events also trigger the need for an insurance review to make sure your life insurance coverage is in line with changing needs.

5. Consider creating a guaranteed income stream during retirement. Creating a stream of guaranteed income, such as an income annuity, can fulfill income needs during retirement, especially if you don’t have a pension. People are living longer, and the prospect of outliving your lifetime supply of money is very real. Using a portion of your retirement portfolio for guaranteed income will help ensure that your money lasts as long as you do. This guaranteed income is based on the claims-paying ability of the underlying insurance company sponsoring the annuity.

Working Retirement

But even as people plan their retirement date, many are redefining what retirement means. In an October 6, 2009 article published to “Bankrate.com,” 75 percent of Americans surveyed said that they expect to work past their retirement date. 39 percent said that they plan to work because they enjoy work while almost one-third plan to work because they expect that they will need the money.

Photo Credit: Walter Groesel


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How to Negotiate With Your Creditors

January 19th, 2010 by Matthew C. Keegan | 3 Comments | Filed in Consumer Financing, Consumer Tips

If you have significant debt and are finding it difficult to reduce your financial burden, then negotiating with your creditors can help you manage your finances better. An important aspect in any plan involving financial management is working to lower your interest rates or even possibly having some of your debt forgiven.

Assemble your credit statements. Financial documents such as your credit card and loan statements can be useful in helping you determine what you owe and how much interest you are being charged for each debt. Review your statements and come up with a plan to have your high interest rate credit cards reduced. (see The Wall Street Journal: Credit Woes Hit Home)

credit cardsFor example, if you are paying 21.9 percent for one credit card, you can save money monthly simply by having that rate reduced to a more manageable 12 percent. That lower interest rate means that less money is being paid out monthly to cover interest charges while a larger portion of your payment can be used toward the loan principle. You may be able to reduce the amount you pay on your debt every month while helping yourself get out of debt faster.

Contact your creditors. Each of your statements includes contact information outlining how to reach your creditors. Contact your creditors and ask that your interest rate be reduced. According to Brad Dakake, a consumer advocate with Massachusetts Public Interest Research Group, “There’s no incentive for them to lower your rate unless you call. The squeaky wheel gets the oil.”

Will you get the lower rate? That’s hard to say. But, you won’t get a lower rate unless you ask. You may be paying a higher rate because you were late making payments or you deemed as a higher credit risk. No matter, credit card companies will sometimes reduce your interest rate just because you asked.

What about loan forgiveness? Now for the tricky part: can you get your loan balance reduced or forgiven? If so, what will that mean when it comes to your personal credit?

A lender may write off your loan if you have no way of making payments. But that comes with a price: your credit will take a major hit which means that you’ll have this mark on your credit for many years to come. While you did not declare personal bankruptcy, some lenders will view this action similarly.

Your credit score will be reduced and you may find it difficult to obtain new financing, rent an apartment, buy a home, even get a job. Yes, even employers can check up on your credit to see if you are a responsible with your debt.

Planning Ahead

Finally, if you are deeply in debt, what got you there? Poor spending habits? Job loss or reduced income? Mortgage problems? Seeking the assistance of a qualified financial adviser such as a debt consolidation specialist can help you resolve these issues and put you back on the path to financial freedom. (see SmartMoney.com: 4 Ways to Help Shrink Your Debt)

Just make sure that the person you find has the skill sets you need (degree, licensing, references) and presents a plan that will repair your credit not destroy it.


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What You Need To Know About Christmas Gift Cards

November 12th, 2009 by Matthew C. Keegan | 6 Comments | Filed in Consumer Tips

All week we’ve been examining how to get the most out of Christmas this year. On Monday, it was all about getting your Christmas shopping done early. On Tuesday, we reviewed five Christmas shopping tips for savvy shoppers while on Wednesday we looked at rethinking your Christmas giving altogether.

Gift Cards

gift cardsToday, the discussion turns to gift cards and what you should know about these immensely useful and thoughtful presents. Not everyone likes to give them, preferring to buy a special item and wrapping it themselves, but for many recipients a card is the preferred gift as it allows them to decide what they really want. Honestly, gift cards can be a bit of a mystery, especially since their “rules” vary from retailer to retailer. Personally, there are some shops I would never buy a gift card from, fearing that they’ll tack on a fee that will diminish the value of the gift or in some cases the retailer may be headed for bankruptcy rendering the card and gift worthless.

Bankrate Advice

To help matters, we’ve turned to Bankrate.com a leading aggregator of rates and financial information for a variety of financial products including gift cards. Bankrate notes that gift cards have been the number one gift for the past five years, something not likely to change this year. However, they’re quick to warn consumers that reading the fine print is important before making a purchase, taking into consideration the following data as well:

  • Beware of fees on your major credit company gift cards if you don’t spend the card after the first 12 months: Three credit issuers charge a $2.50 monthly maintenance fee after 12 months of inactivity on their gift cards;
  • All store gift cards don’t charge a fee for purchasing their card in-store (Starbucks charges a $1.50 handling fee for cards purchased online), however all credit issuer gift cards charge a $3.95 fee upon purchase;
  • Keep an eye on your credit issuer gift card’s “Valid Thru” date: While it’s not an expiration date, your gift card will have date on it which indicates when it’s valid through (reportedly due to the shelf life of the magnetic strip). Gift card owners will have to call the issuing company to swap that card for a new one to use it;
  • When buying a retailer gift card, make sure that the card you’re buying can also be used online. While most retailers do allow online purchasing, major retailers such as CVS, T.J. Maxx, and Marshall’s do not allow their gift cards to be used online;
  • February 2010’s Credit CARD Act will also have an impact on the gift card industry: While the CARD Act does not prohibit an inactivity fee, it does mandate that gift cards cannot expire in less than five years;

Shop Now!

Gift cards certainly come in handy, but not all cards are equal. Know what you’re buying and the restrictions of each can certainly make a difference. Of course, if cards are used right away, then a number of issues disappear just as fast, therefore encourage your recipients to hit the stores ASAP in order to find bargains and get full use of their gift cards.

Source: Bankrate.com

Photo Credit: Ivan Prole


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Suddenly, Certificates Of Deposit Are Appealing Again

September 23rd, 2008 by Matthew C. Keegan | 2 Comments | Filed in Consumer Tips

Nervous investors may be tempted to take what cash they have and stash those funds in a mattress, figuring that this is one place that their money won’t be at risk. With the stock market fluctuating widely, confidence in investment banks dropping through the floor, and big questions remaining about Piggybankjust how bad the current crisis is, the temptation to stash your cash somewhere in your home looms large.

But, as we all know, cash on hand can easily be lost, stolen, or destroyed in a fire, a move that can have devastating consequences.

Instead, battered consumers are taking a fresh look at an old-time, but reliable investment option: safe certificates of deposit (CDs). Yes, these low-yielding, FDIC insured deposit accounts are back in favor again thanks to a shaky market and consumers who cannot stomach sharp losses.

A Certificate of Deposit Sampler

Rates for CDs are nowhere near what they were in the early 1980s, when returns of 15% or more were common. Then again, mortgage rates aren’t high these days either, therefore finding a decent return means anything above 4%.

For the record, CDs are FDIC-insured for up to $100,000 or $200,000 if jointly held. Most financial institutions pay a base rate for a minimum deposit (such as 1.50% for six months) while increasing their rates for larger deposits and longer terms.

ING Direct, an online banking institution is one company offering tiered interest on certificates of deposit. For six-month deposits of under $50,000 the rate is 1.75%, but jumps to 3.20% for deposits of $50,000 to $99,999. For deposits of $100,000 and above, the rate peaks at 3.4%.

The best rates are paid for long term deposits, particularly those of a year or longer. A twelve month CD at ING currently pays 4% while an eighteen month CD tops out at 4.5%.  Longer term rates are lower, which reflects both a promotional on ING’s part and possibly a hedge by the bank on midterm rates.

Other institutions offering higher rates include GMAC Bank (4.35%, $500 minimum, 12-month term); Nationwide Bank (4.05: $500 minimum, 12-month term); and Pacific Mercantile Bank (4.5%, $500 minimum, 12-month term). If you’re worried about a bank’s health, check out Bankrate.com’s Safe ‘n Sound bank rating system to find out who is at risk. As long as your money is in accounts covered within FDIC parameters, you’ll be okay, but going through a bank crisis is unnerving and can be a hassle.

Strategy Based On Your Age

The best financial planning strategy is often based on your age. People in or closer to retirement will often flock to the safest investment choices while younger savers are more willing to take a risk, knowing that they can still recover from a market turn down some 20,30, even 40 years later.

Check out a smart saving strategies by age segmentation chart to learn just how you should proceed, especially during these times when financial upheaval looms large. Get equipped to make right decisions and avoid panicking which can cost you dearly.


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