Wow, 2020 sure seemed to last forever, right? Now, we can finally, finally say goodbye… wait, being told that it is actually the end of 2021.
Oh well, in another year that had a lot of ups and downs, we tried to share valuable financial information to help you make smart financial decisions. Therefore, as the year comes to an end, we would like to give our sincerest thanks to everyone who has enjoyed reading Advance Capital’s Financial Living blog. (If you haven’t yet, be sure to subscribe to receive our latest posts and newsletters delivered right to your electronic mailbox.)
However, in the hustle and bustle of daily life, you might have missed some of them. So, let’s close out 2020, er, 2021, by sharing our top 15 blogs of the year that will also get you ready for the new year and beyond.
Close to 70% of widows and around 50% of widowers reported experiencing significant financial troubles after losing their spouse, according to a survey by New York Life Insurance. Surviving spouses have to adjust to living on a reduced income and cutting discretionary expenses.
In some families, only one spouse is in charge of all finances. If he or she passes away, the survivor may struggle learning how to manage the family’s money for the first time.
As with other alternative investments, cryptocurrency may be an option for added return and diversification in your portfolio. But you’d have to tread carefully
For one, you don’t want recency bias to sway your investing decisions. Essentially, that means choosing investments based on recent performance, which often leads to lower returns. With all the media exposure surrounding cryptocurrency prices, some investors may suffer from a “fear of missing out.”
However, you cannot expect cryptocurrency values to continue to rise.
An inherited IRA is an account that is opened when an individual inherits an IRA or employer-sponsored retirement plan after the original owner dies. Additional contributions may not be made to an inherited IRA.
The good news is, as the beneficiary, an inherited retirement account could be a great source of money to help fund your financial goals. The downside, however, is that if you’re not the spouse of the original account owner, there are strict rules to navigate. One wrong move could result in paying more in taxes and/or penalties.
With record low interest rates, refinancing your mortgage can give you some breathing room by lowering your monthly payments and saving you money over time. By some estimates, applications to refinance a home loan surged by more than 100% for the year.
Refinancing sounds attractive, but it is not guaranteed to put you in a better position. It’s important to consider the pros and cons as they relate your personal situation.
As you know, government policies can affect our lives in many ways. So, when a new administration is elected or a major piece of legislation is announced, it’s reasonable to wonder what it means for your finances.
The reality is that politics often has less of an influence on the economy and capital markets than we are led – often during an election year – to believe. When it comes to politics and your money, it’s important to step back and consider an objective point of view.
As Charlie Munger tells it: “It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”
Put another way, “don’t be stupid” is a winning investment strategy. Think of investing as a game where the less mistakes you make, the longer you get to play and more investment growth you can earn. When you try to outsmart the market, you often end up losing.
Even at a low 1.5% annual inflation rate, what costs you $1,000 today will cost nearly $1,350 in 20 years and more than $1,550 in 30 years.
Inflation works like cold air seeping through cracks in your home. It will cost you over time without proper insulation. And inflation can disproportionately affect older Americans due to differences in spending habits. Healthcare prices, for example, typically rise much higher than those in other categories.
Unfortunately, as stated in an SEC report, up to 20 percent of people over the age of 65 have some form of cognitive impairment, and more than half of people older than 85 have Alzheimer’s disease or another kind of dementia.
As a result, older investors are a prime target for financial abuse or exploitation. Seniors lose an estimated $2.9 billion annually from fraud or financial abuse, according to the Senate Special Committee on Aging. This is likely an under count as many cases go unreported due to victims feeling embarrassed or ashamed.
Therefore, it is important not to underestimate the possibility of it happening to you or someone you love.
Contrary to conventional wisdom – that people save money to then spend it on the things they’ve always wanted – many retirees say they are satisfied with just leaving that money in the bank. The Employee Benefit Research Institute’s (EBRI) Spending in Retirement Survey evaluated the spending habits and well-being of 2,000 Americans ages 62 to 75, 97% of whom were retired. There may be a growing problem with how retirees spend money, but not the one you think.
It’s worth taking a closer look at the survey for what it can tell us about how people feel toward spending in retirement. There are key insights on how you might want to manage the tricky transition from saving in your working years to spending in retirement.
At the most basic level, college commencement speeches are intended to inspire and motivate graduates about to enter the “real world.” But these speeches often convey timeless pieces of wisdom that are relevant to anyone – including those 10, 20, 30 or even 40 years out of college.
These brilliant insights and observations can help shape our beliefs, ethics, careers, relationships and, yes, our finances.
Do you have a will or an estate plan? Around half of you reading this said “no.” And of those of you who said “yes,” most haven’t updated their will or plan in some time. If there’s a common unaddressed problem in the financial plans of many adults of all income levels, it’s what to do about their assets when they’re gone.
The need for long-term care can dramatically change your life as well as the lives of people close to you.
So, when should you start planning for long-term care? Like your other retirement planning needs: the earlier, the better. Many people though don’t start until they’re in their 50s. If planning for long-term care isn’t yet on your radar, these facts should do the trick.
Regardless if you want to keep working or retire, the first step is to determine how financially prepared you are for a period of unemployment. It could last weeks, months or even longer. So, you want to ensure you have enough money to cover your necessary expenses. If you come up short, make changes to lower your expenses wherever possible.
Around 80% of retirees wait to withdraw money from their retirement accounts until required minimum distributions (RMDs) start, according to a study from J.P. Morgan Asset Management and the Employee Benefit Research Institute. Further, of those who have reached RMD age, 84% took no more than the minimum amount.
In other words, they are letting RMDs dictate how much to take from their retirement accounts, which could be a big mistake.
The biggest risk of having too much cash isn’t the missed opportunity of growth, it is the loss of purchasing power over time. That is the adverse effect of inflation, the rise in price of goods and services. For instance, $10,000 saved at the bank today will not buy $10,000 worth of stuff in 10 years or, perhaps, even one year from now.
When you combine near-zero interest rates with rising inflation, you can expect your money’s value to gradually decline.