Archives for September 8, 2019

Many workers spend years dreaming of the day they can finally retire, and for some, early retirement would be a dream come true.

Approximately 60% of soon-to-be retirees say retirement will be the most liberating phase in their entire life, according to a survey from TD Ameritrade, and 50% of survey respondents said they would like to retire by age 60. However, while many workers want to retire that early, only a third said they expect to be able to do so.

When you’re saving for retirement, a lot of focus is put on saving enough to meet your financial needs. But another factor to consider is whether you can lower your costs in retirement. By living a less expensive lifestyle, you can retire earlier and live more comfortably without breaking the bank.

General living costs will likely be your most significant expense in retirement, and those costs are largely impacted by where you live. Move to one of these more wallet-friendly cities, and you may be able to save enough to retire early.

1. Sun City, Arizona

If you’re looking to move to a community designed specifically for retirees, you can’t beat Sun City. The median home value in the city is around $180,000, according to Zillow — much less than the median U.S. home value of $229,000.

Once you start collecting Social Security benefits, you won’t pay any state income taxes on them in Arizona. While you shouldn’t rely too much on Social Security in retirement, the tax break can help save some money.

The general cost of living is slightly higher in Sun City than the national average, but the city has plenty of activities for retirees. With various clubs, events, and other recreational activities, it’s easy to keep yourself busy during retirement while sticking to a budget. And because you’ll be surrounded by other retirees your age, it will be easier to make friends and find ways to stay occupied without spending too much money.

This is key if you’re planning to retire early because you’ll likely have decades of free time. If you spend all your free time traveling or learning expensive new hobbies, there’s a good chance you’ll blow through your retirement savings too quickly.

2. Fort Meade, Florida

There’s a reason why the Sunshine State is such a popular retirement destination. Not only does it have beautiful beaches and nearly year-round sunny weather, but Florida residents don’t pay state income taxes on Social Security benefits — making it one of the more tax-friendly retirement destinations.

There are several cities in Florida that make for ideal retirement destinations, but Fort Meade is one of the most affordable. The median household income is just under $60,000 per year — nearly $20,000 more per year than the national average — yet the city has a relatively low cost of living. The median home value in Fort Meade is just $108,000, and the overall cost of living is nearly 20% lower than the national average.

A small town with a population of less than 6,000 residents, Fort Meade is a good option for those looking for a quieter retirement. Yet the city is also only an hour’s drive from Tampa, so there are still plenty of entertainment options when you’re itching to get out of the house for a day trip.

3. Idaho Falls, Idaho

Idaho may seem like an odd retirement choice, but it has potential to be the perfect retirement destination for many people. Just over a third of people who have moved to Idaho in 2018 said their primary reason for moving was to retire, according to a survey from United Van Lines, and the state is one of the most popular destinations in the country for those looking to relocate.

Idaho Falls has the best of both worlds in that it’s a relatively big city with plenty of amenities, yet the cost of living falls close to 10% below the national average. Idaho is also among the states that does not tax Social Security benefits, so the tax advantage can help your retirement income go further.

The city has plenty of museums, restaurants, and other social activities, so you’ll have no shortage of ways to enjoy your retirement in Idaho Falls. The city is also a nature lover’s dream, with miles of hiking trails along the Snake River and beautiful scenery, complete with the city’s famous waterfalls. For those on the adventurous side, you can even visit Wilderness Ridge Trail Llamas to enjoy a hike through the mountains from the back of a llama.

Is moving during retirement the right option for you?

Before retiring early to move across the country on a new adventure, be sure to do your due diligence and decide whether it’s the best retirement option for you. If you’re determined to retire early, take a close look at your savings to see just how early you’re able to retire.

Don’t forget about healthcare costs and Social Security benefits, too. You’re not eligible to enroll in Medicare until age 65, and the earliest you can begin claiming Social Security is age 62. Also, there’s a possibility that Social Security benefits could be cut in the next few decades. So as you’re planning for retirement, make sure you’re not going to be relying too heavily on your benefits to cover your expenses.

If you’ve decided that early retirement is right for you, make sure to do your research before moving to a new city. Take a couple of weeks to visit your prospective new town to find out whether you could see yourself living there. Try to live like a local and see whether it feels like home. Do you fit in with your prospective new community? Does the city have enough amenities to keep you busy in retirement? Will your friends and family be able to visit? Giving your new city a trial run can ensure you’re happy there before you start packing your bags.

Not everyone can retire early, but it’s not impossible. You’ll likely need to supercharge your savings to make sure you have enough to last several decades, but lowering your costs by moving to a less expensive city can also help your money last longer — and create a more enjoyable retirement for decades to come.

Recent figures show that Israelis take on more personal debt than any other nation, outspending their income by 156%. Research by the Taub Center showed that the average debt for 25- to 29-year-olds was NIS 150,000 ($42,000) compared to NIS 315,000 for those 50-60 ($89,000).

The danger of accumulating so much credit card and personal finance debt is the burden of passing this onto your children or close relatives. Whilst the idea of borrowing more might seem like a simple solution, there are some other effective alternatives.

Consider credit unions

If you have a bad credit score due to a history of bad debt, you could look at joining a credit union in order to be able to access a cheap personal loan.

Credit unions are co-operatives that are locally and independently run, and they aim to help people who may not otherwise have access to certain services and financial products elsewhere due to their credit history or background.

In the UK, there are approximately 300 credit unions to choose from, all of which provide loans, current accounts, and savings options. However, keep in mind that every credit union has its own set of rules and services that determine who can join them such as you usually have to be a member of an organization or work in the public sector.

Credit unions are not savvy high street banks or lenders, access to funds can be slow – but the rates are the lowest around and unions do not usually charge default fees or late charges.

Think about remortgaging

Remortgaging can also be another option for you to help you overcome debt. Whilst you need to keep in mind that a mortgage still remains a loan on your property (and if you cannot keep up with repayments, the lender in question can take back the house) it can offer you cheaper rates than your existing mortgage and you can also borrow money against your home and combine the payments into your ongoing mortgage.

Accordingly, the homeowner replaces an existing mortgage with a new one. This could mean that the homeowner decides to change products with the existing mortgage provider, or decides to switch to another one completely.

Remortgage may be a good option for you as a homeowner trying to overcome debt as it could help you to release equity that is tied up in your property. If you remortgage, you could get the equity as a lump sum, enabling you to repay outstanding debts.

In the UK, there were a whopping 469,000 remortgages in the period dating from July 2018 to June 2019, with a total value estimated to be around £84 billion.

Debt consolidation loans

If you are considering debt consolidation loans, this enables you to pay off existing debts you have, and the total amount owed is transferred into just one loan, which you repay back on a monthly basis.

Whilst it is still necessary for you to pay back the money outstanding, a loan consolidation is a more practical way of paying off lots of outstanding credit cards, bills and loans – helping you eventually get debt free. You also save money because this should help you pay off your debts on time, and avoid any late charges.

Balance transfer credit card

Balance transfer credit cards are another potential alternative financial product for you to help tackle debt issues. They can help you to reduce the cost of your credit card borrowings, as well as help you to consolidate a variety of debts.

A balance transfer means that you move either all, or some of a debt from one credit card to a new credit card. Balance transfers often come at 0%, so if you have a few thousand in credit card bills to pay, at least it will be interest-free.

However, it is still important that you repay your debt on this balance transfer card prior to the introductory interest rate period runs out (this is usually a period of one to two years in total) as it is unwise to assume you will definitely qualify for another balance transfer deal after this one has finished.

Beth Moncel learned how to whip up tasty meals on a lean budget — then taught millions of savings-hungry home cooks to do the same.

During the recession in 2009, Moncel was struggling to stay afloat while making pizzas in the prepared-foods department at Whole Foods. She had graduated two years earlier from Louisiana State University in Baton Rouge with five-figure student loans that had recently gone into repayment.

As Moncel tried to make ends meet while spending money on little other than bills, she decided the only category in her budget with any wiggle room was food, she told MarketWatch. And with a nutritional science degree under her belt, she knew that eating less or subsisting solely on canned beans weren’t healthy options. So Moncel, a lifelong home cook from a family of seven who says cooking marries her passions for science and art, worked to whittle down her food budget.

She took note of how her Amazon-owned AMZN, -0.39% employer tracked every bit of its food waste and repurposed leftovers: Ingredients that didn’t sell well might wind up as a creative pizza topping, she said, or as part of a specialty sandwich.

She also paid close attention to how Whole Foods priced its hot foods and salad bar at a flat $8- or $9-per-pound rate, she said, noting that the total cost per pound accounted for foods that were both more and less expensive by weight.

“Working in commercial food service taught me to be really mindful of waste, and how to strategically use expensive and inexpensive ingredients in a way that keeps overall meal costs low,” said Moncel, who is now 38 and lives in Nashville, Tenn., with her boyfriend and dog. “If you keep your ratios correct, you’ll still keep your total cost low.”

A Whole Foods spokeswoman confirmed to MarketWatch that caring for the environment and cutting food waste has long been a part of the grocery chain’s mission. “These efforts save money and have major social and environmental benefits for communities across the country,” said Kathy Loftus, Whole Foods’ vice president of sustainability.

Moncel realized she could design recipes with a similar ratio in mind, relying on inexpensive staples like sweet potatoes, beans and lentils to provide the bulk of a meal while incorporating small amounts of cheeses, nuts and meats to keep her palate satisfied.

She learned how to reduce waste by freezing leftover ingredients or repurposing them creatively, she said, and used grocery-store receipts and servings-per-package information to price out her meals by ingredient. She started seeing where her money was going when she cooked.

The average American spent $4,363 on food at home in 2017, accounting for about 7% of his or her total spending, according to data from the Bureau of Labor Statistics — a 7.8% increase over the previous year. Meanwhile, the United States throws out up to 40% of its food every year, amounting to $165 billion in food waste, according to the Natural Resources Defense Council.

After Moncel’s Facebook FB, -1.79% posts about her budget meals generated demand for recipes, she launched the Budget Bytes blog as a low-cost personal project in the summer of 2009 before heading back to school for a clinical laboratory science degree. To her surprise, her blog began to earn exposure from high-profile sites like Lifehacker.

“I didn’t really expect anyone to see it,” she said. “But because it was 2009 [during a] recession, I think I was just in the right place at the right time.”

Ten years later, Moncel’s blog draws around 2.5 million unique users and an average of six million page views per month, she said, with traffic varying by season. She carved out time for the blog by going part-time at her laboratory job in the fall of 2014, eventually resigning in the spring of 2015 to work on it full-time. The blog has spawned a book and mobile app by the same name, and while most of her revenue today comes from the blog, Moncel said she has plans to diversify with meal-plan ebooks.

As for Moncel’s student loans, which she estimates totaled “somewhere in the upper $80,000s” after her two degrees, she followed the so-called snowball method “so I could focus on only one loan at a time and could avoid looking at the total.”

“After sinking every penny I could into the loans for almost 10 years, they are all paid off now,” she said. “Luckily, I’m one of those people that really gets off on watching the numbers go down, so making the biggest payment I could every month actually made me happy instead of depressed.”

Many of the roughly 1,100 recipes Moncel has posted over the past decade — each of which includes the cost per recipe and cost per serving — showcase her trusty ratio.

She points to her chorizo sweet-potato skillet recipe ($7.09 per recipe and $1.81 per serving), for example, which enlists relatively cheap rice, black beans and sweet potatoes to help offset the cost of a half pound of chorizo. Her Tuscan white-bean pasta ($6.45 per recipe and $1.61 per serving) leans largely on pasta and canned cannellini beans while indulging in “good” shredded Parmesan and grape tomatoes. And her chicken-noodle soup ($10.44 per recipe) stretches two chicken breasts into eight $1.31 servings by bulking up on inexpensive egg noodles and vegetables like carrot, celery and onion, she said.

Moncel calculates recipe costs by factoring in “whole” ingredients she used in their entirety along with “partial” items of which she used a fraction; she estimates the cost of pantry ingredients like olive oil using their total cost, serving size and servings per container. Most spices and herbs get ballparked at 5 cents a teaspoon — or at 10 cents for pricier fare — to avoid getting too far into the weeds.

Her number-crunching doesn’t account for variation across brands, stores or regions, she said, as daily price fluctuations would make that “literally impossible.” “It’s not so much about the exact price,” she said. “It’s to show you the relationship between the cost of the different ingredients and how they affect the overall cost of the recipe.”

Here’s how to get thriftier about cooking, food shopping and reducing waste, according to Moncel:

Always start by “shopping your pantry.” Before you rush out to fulfill your grocery list, cruise through your pantry and freezer to make sure the ingredients you need aren’t hiding in plain sight. “Half the time, my grocery list gets cut in half,” she said. “Making sure I always use what I have on hand first is really important.” Follow the “first in, first out” credo used by commercial kitchens, using up the oldest ingredients in the pantry before you reach for more recent additions, she added.

Halve your meat and eat it, too. While a lot of American cooking calls for a whole pound of ground beef or a whole chicken breast, Moncel said, it can be cheaper to reduce a recipe’s meat component by half and sub in plant protein. “I keep my meat more of a side-accent ingredient in recipes, rather than it being a main focus,” she said. (Bonus: Researchers have linked diets relatively higher in plant-based foods and lower in animal-based foods with lower mortality and lower cardiovascular disease risk.)

Skip “super-convenience” foods that you could probably make yourself for cheaper. That goes for premade peanut-butter-and-jelly sandwiches or frozen veggies that come in a premade herb-seasoned sauce, Moncel said. “It takes like 30 seconds to add some herbs and butter to vegetables,” she said.

Beef up on basic veggies. Moncel says many people consider eating healthy to be an expensive proposition because they’re preoccupied with “trendy superfoods” of the moment. But reliable standbys like cabbage, potatoes, onions, bell peppers, carrots and even kale are relatively inexpensive, she said. “I try to bulk up on those ingredients and try to make them the star of the show,” she said.

Incorporate fats (sparingly). Add small amounts of fat — whether it’s bacon, avocado, nuts or cheese — to help keep your meal satisfying, Moncel said. While some of those ingredients may not come cheap, you can stretch them by using small bits at a time.

Warm up to your freezer. Moncel likes to freeze the obvious items like meats, but also leftover ingredients like tomato paste, cheese, fresh ginger, lemons and limes, and bread, all of which can be thawed for use in future meals. She gravitates to frozen broccoli and cauliflower, cruciferous veggies that are a pain to chop and can be pricier when fresh. She also tosses in single-serving portions of freezer-friendly foods like chili, soups, stews and rice dishes, which can be eaten alone or used to supplement fresh ingredients later.

Broaden your grocery-shopping horizons. “A lot of people don’t realize how much prices can differ with different types of stores,” Moncel said. Farmers’ markets often have cheaper produce than your local supermarket, she said, as do international grocery stores. You can also buy many cuisine-specific items at the latter that would be sold as pricier “specialty” foods at a typical grocery store, she added.

Portion out your food into single servings right after you cook it. This prevents Moncel from overserving herself later on, she said. “If you just eat recklessly, you’re blowing through your budget recklessly,” she said. “I think that because so many of us eat mindlessly, we end up eating more than we actually need.” Experiment with portion size to find how much you need to feel satisfied, she suggested.

The retirement dream is moving out of reach for many Americans. A quarter of baby boomers expect to postpone retirement until age 70 or beyond, according to a report from the Insured Retirement Institute, and 8% don’t think they’ll ever retire.

Even if you’re doing everything you can to scrape together some cash to put toward your retirement fund, saving for the future isn’t easy. The average American thinks retirement will cost around $1.7 million, a survey from Charles Schwab found, and one in 10 thinks they’ll need at least $3 million to retire comfortably.

Although it can be difficult to save for retirement, there are few things that may be making it harder than it should be. These mistakes may seem harmless at first glance, but they have the potential to derail your entire retirement plan.

1. Helping children with student loans rather than saving for retirement

More than half (53%) of parents say that helping their children pay for college is a bigger priority than saving for retirement, according to a survey from T. Rowe Price, and 68% are willing to delay retirement to help pay for college tuition.

There’s nothing wrong with financially helping your kids if you can afford it, but putting your own financial needs on the back burner can potentially lead to disaster down the road. Saving for retirement isn’t something that can be done overnight, or even over a decade or two. Unless you have thousands of dollars to put toward your retirement fund each month, you’ll likely need to start saving several decades before you plan to retire.

For example, say you want to retire at age 70 with $800,000 saved. You’re currently helping your kids pay for college, so you hold off on saving for retirement until age 45. To reach your goal, you’d need to save approximately $1,100 per month, assuming you’re earning a 7% annual return on your investments. But if you’d started saving at age 30, you’d only need to save around $350 per month.

It can be tough to strike a balance when you have multiple financial priorities pulling your wallet in different directions. But the longer you wait to start saving for retirement, the more difficult it will be to catch up. That’s not to say you can’t help your children with college, but if you ever want to retire, you can’t forget about your goals, too.

2. Not paying off high-interest debt

Debt in any form can be a strain on your budget, but high-interest debt in particular can wreak havoc on your financial health. Depending on how much debt you have, you could end up paying thousands of dollars in interest alone, and it could take years to pay off your debt completely.

In most cases, it’s a good idea to start saving for retirement as early as you can. If you hold off on saving for years until your debt is completely paid off, you’ll have to work significantly harder to save enough to retire. However, if you’re saddled with loads of high-interest debt, you could be paying more in interest than you’re earning on your investments. Especially if you have credit card debt (with some cards charging interest rates upwards of 20% per year), even a solid 7% to 8% rate of return on your investments may not outweigh what you’re paying in interest.

In that scenario, it may be wise to pull as much cash together as possible and pay off your high-interest debt as quickly as you can. Begin with the debt with the highest interest rate (not necessarily the highest balance), and then work your way down. Once you’re left with only lower-interest debt (like a mortgage or student loans), you’ll likely be able to go back to saving for retirement.

You may still need to jump-start your retirement savings to catch up once you pay off your debt, but once you’re no longer paying an exorbitant amount in interest, you’ll have more to save each month.

3. Not having an emergency fund

An emergency fund is a crucial yet often overlooked factor that can help you save more for retirement, yet only 61% of Americans have enough cash saved to cover an unexpected $400 expense, according to a report from the Federal Reserve Bank.

If an unexpected cost pops up and you can’t afford to cover it, you’ll either need to rack up credit card debt, take out a loan, or tap your retirement accounts for cash. Going into debt has its financial consequences, and borrowing or withdrawing cash from your retirement fund can potentially cost you thousands of dollars over time.

More than half of Americans have withdrawn money from their retirement accounts for reasons other than retiring, a survey from MagnifyMoney found. But withdraw from your 401(k) or traditional IRA before age 59-1/2, and you may be subject to a 10% penalty fee. You also could be missing out on thousands of dollars in potential future retirement savings, even if you only withdraw a small amount.

Compound interest — which is essentially when you earn interest on your interest — helps your savings grow exponentially. The key, though, is that your money has to sit untouched for decades to reach its full potential. When you withdraw or even borrow from your retirement fund, you’re missing out on valuable time to let your money grow, as well as making it harder to reach your savings goals. But if you have an emergency fund to cover unexpected costs, you won’t have to worry about dipping into your retirement fund to make ends meet.

Everyone makes mistakes, especially when it comes to retirement planning. However, some mistakes are worse than others, and the worst offenders can cost you thousands of dollars. But by avoiding these common mishaps, you can keep your retirement planning on track and make sure you’re doing everything you can to set yourself up for success.