7 Ways to Save for Retirement Without a 401(k)

Man saving for retirement
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When talking about saving for retirement, many of us immediately jump to the 401(k).

However, while the 401(k) can be a great tool for building wealth for retirement, not everyone has access to this retirement savings vehicle.

Here are some ways to save for retirement without a 401(k).

1. Health savings account

Doctor talking to a patient in a hospital bed
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A health savings account (HSA) is one of the most tax-friendly savings tools available, offering a tax deduction up front and allowing your money to grow tax-free — and to be withdrawn tax-free — as long as it’s used for qualified medical expenses.

While you can’t contribute as much to an HSA as you can to a 401(k), for those who qualify, it can make a solid addition to your effort to save money for health care costs during retirement.

You do need to have a high-deductible health care plan in order to qualify, and you can’t be enrolled in Medicare or listed as a dependent on someone else’s tax return.

2. Traditional IRA

individual retirement account
Don Mammoser / Shutterstock.com

The traditional IRA is one of the most flexible accounts. It allows you to make contributions as long as you have taxable income. You can even contribute if you have other types of retirement accounts.

Depending on your situation, your contributions might even be tax-deductible, reducing your taxable income and thereby also reducing your tax bill.

Contribution limits are lower for the traditional IRA than for the 401(k), but it can still be a way to build up a retirement portfolio.

3. Roth IRA

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If you don’t want a tax benefit today, but instead prefer your money to grow tax-free over time, you can contribute to a Roth IRA.

With the Roth, however, you must meet income requirements to contribute. Once you earn over a certain amount, you’re no longer allowed to contribute to a Roth IRA.

4. Taxable investment account

Stock bull
robert cicchetti / Shutterstock.com

You don’t need a tax-advantaged retirement account to set money aside for the future. It’s possible for anyone to open a taxable investment account and begin growing a portfolio.

A taxable investment account typically offers fewer tax advantages than a retirement account. However, you don’t have to worry about early withdrawal penalties and other restrictions to accessing your money when you need it.

5. Solo 401(k)

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If you’re a business owner, you can set up a solo 401(k) and make contributions in line with a regular 401(k). In order to use a solo 401(k), though, you must be a business owner without employees. The only exception is if you have a spouse and set up a plan for you and your spouse.

Because you act as both employer and employee, you’re also allowed to set up your 401(k) so that you can make employer contributions on top of your employee contributions. This can create enormous tax advantages for some people.


remote worker home office
Roman Samborskyi / Shutterstock.com

Another option for a business owner is to set up a Simplified Employee Pension Plan (SEP) IRA. You can even open this type of plan if you are self-employed.

The IRS says business owners must offer the SEP IRA to all employees who are at least 21 and who worked for the employer in three of the last five years. The employee must also receive at least $650 in compensation in 2021. You can find more details about the rules at the IRS website.

As a business owner, a SEP IRA can be a way to save for your own retirement, as well as a flexible way to provide a retirement plan for your employees.


workers in an office meeting
Rawpixel.com / Shutterstock.com

You can also open a Savings Incentive Match Plan for Employees (SIMPLE) IRA as a business looking to provide some type of retirement plan for employees.

In order to qualify to contribute to a SIMPLE IRA, you need to earn at least $5,000 in any two calendar years before the current year and also expect to earn that much in the current year. However, the IRS states that “an employer can use less restrictive participation requirements than those listed, but not more restrictive ones.”

For more on the rules, visit the IRS website.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

DACA home loans — FHA will now approve home loans for ‘Dreamers.’ Here’s how to get approved

‘Dreamers’ can now get approved for FHA home loans

‘Dreamers’ — U.S. residents with DACA status — just got a huge boost to their homeownership dreams. The Federal Housing Administration (FHA) announced it had changed its policy on DACA home loans.

From this day forward, FHA is willing to approve home loans for DACA recipients — meaning they’ll get access to the low-down-payment FHA mortgage program that’s so popular with U.S. home buyers.

This new rule opens up the field of mortgage options for Dreamers, giving them access to a wider variety of affordable, accessible paths to homeownership.

Check your home loan options (Jan 25th, 2021)

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FHA’s new stance on DACA home loans

In a statement, U.S. Sen. Sherrod Brown (D-OH), who’s expected to soon chair the Senate Committee on Banking, Housing, and Urban Affairs, summed up what the change means: “DACA recipients are fully eligible for FHA loans.”

FHA’s new policy should make it easier for many Dreamers to buy real estate in the United States.

You might assume that this change was one of the first acts of the Biden administration. But, actually, it was one of the last of the outgoing Trump administration.

Previous FHA rules for DACA recipients

Official policy before January 19 (it was changed the day before it was announced) was that DACA recipients were ineligible for FHA loans.

According to the FHA Single Family Housing Handbook, “Non-US citizens without lawful residency in the U.S. are not eligible for FHA-insured mortgages.”

And up until January 19, those classified under the Deferred Action for Childhood Arrivals program (DACA) did not count as lawful residents according to HUD (the agency that manages the FHA).

FHA loans are one of the easiest mortgage programs to qualify for, having more lenient guidelines than many other home loans.

So for many Dreamers, the reversal of this policy is a significant change.

New FHA rules for Dreamers

Of course, the new rule only levels the playing field for DACA recipients.

Applicants still need to meet the same eligibility guidelines as every other lawful resident in order to get their FHA loan approved. More on those in a minute.

Note that Dreamers weren’t entirely locked out of homeownership even before the change.

They have always been eligible for some conventional loans, subject to lenders’ policies, including conforming ones that are offered by Fannie Mae.

Check your home loan options (Jan 25th, 2021)

FHA loan benefits

If Dreamers have been able to get some mortgage loans all along, what difference will access to FHA loans make?

Well, they’ll be able to access the same advantages that attracted more than 8 million borrowers who currently have single-family mortgages backed by the FHA.

Some of the biggest benefits of an FHA loan include:

  1. Small minimum down payment — Only 3.5% of the purchase price is required
  2. Lower credit score — Lenders approve applicants with FICO scores of just 580 and 3.5% down. You might even get a loan if yours is 500-579, if you can make a 10% down payment (though it will be harder to find a lender)
  3. More flexibility with existing debts — FHA loans typically allow higher debt-to-income ratios (DTIs) than other types of mortgages. So if you have a lot of existing debt, it could be easier to qualify

No wonder FHA loans are popular among first-time buyers and those who’ve been through difficult financial patches. And why they’re likely to appeal as DACA home loans.

One more thing. If you’re struggling to come up with a 3.5% down payment and cash for closing costs, explore the grants and loans (sometimes forgivable loans) that are open to homebuyers everywhere.

These down payment assistance programs are available in every state, and are often targeted toward first-time and lower-income home buyers who need a little extra help with their upfront housing costs.

FHA loan drawbacks

Inevitably, there’s a downside along with all those perks. FHA loans typically have higher borrowing costs than many other sorts of mortgage loans.

It’s not that FHA mortgage rates are higher. They’re actually pretty competitive.

Rather, the added cost comes from FHA loan mortgage insurance premiums (MIP).

MIP adds an upfront cost equal to 1.75% of your loan amount (most home buyers roll this into the mortgage balance). And it adds an annual cost equal to 0.85% of the loan balance (paid monthly).

Conventional loans charge mortgage insurance, too, if you put less than 20% down. But this can be canceled later on. With an FHA loan, by comparison, you have to refinance to get rid of MIP.

Mortgage insurance is not a bad thing if it helps you buy a home. But if you qualify for both an FHA loan and a conventional loan, be sure to compare the cost of mortgage insurance on each one so you understand which has higher long-term costs.

Which DACA recipients are eligible for an FHA mortgage?

If you’re a Dreamer, you may well find FHA loans appealing. And you’ll be anxious to know whether you personally are eligible.

So here, quoting extracts from the announcement, is what the FHA says borrowers will need:

  1. A valid Social Security Number (SSN), except for those employed by the World Bank, a foreign embassy, or equivalent employer identified by the Department of Housing and Urban Development (HUD)
  2. Eligibility to work in the U.S., as evidenced by the Employment Authorization Document issued by the USCIS
  3. To satisfy the same requirements, terms, and conditions as those for U.S. citizens

To the third point, those requirements include a credit score of at least 580; a down payment of at least 3.5%; and a debt-to-income ratio below 50%.

Your lender you apply with will require documents to verify credit, income, savings, and employment when you turn in your loan application.

You also need to make sure your loan amount (home price minus down payment) is within the FHA’s loan limits for your area.

FHA also requires that the property be your primary residence, meaning you must plan to live there full time.

Employment Authorization Document

That Employment Authorization Document is clearly central to your application succeeding. But suppose yours is due to expire within a year.

That shouldn’t be a problem. The FHA says:

“If the Employment Authorization Document will expire within one year and a prior history of residency status renewals exists, the lender may assume that continuation will be granted. If there are no prior renewals, the lender must determine the likelihood of renewal based on information from the USCIS.”

In other words, you should be fine if your status has already been renewed at least once. There’s an assumption it will be again.

If it hasn’t already been renewed, the lender will check with US Citizenship and Immigration Services (USCIS) to see how likely a renewal is.

Check your FHA loan eligibility (Jan 25th, 2021)

Other home loan options for Dreamers

We already mentioned that some lenders of “conventional loans” (meaning those that are not backed by the government) consider applications from Dreamers.

Fannie Mae’s conforming loans are also open to those in the DACA program.

Most mortgage lenders offer loans backed by Fannie Mae, and these include a wide variety of options like:

  • The 3% down Conventional 97 loan
  • The 3% down HomeReady loan for low-income buyers
  • Loans with less than 20% down WITH mortgage insurance (PMI)
  • Loans with 20% down payment or more and NO mortgage insurance

The situation is less clear for Freddie Mac (the other agency that backs “conforming” home loans).

Freddie’s guidance uses language that was similar to the FHA’s old wording. And those who lacked “lawful residency status” were ineligible. A search of its website on the day this was written revealed no hits for “DACA” or related terms.

But it may well be that Freddie will soon update or clarify its DACA policies now that the FHA has — and now that a new, more Dreamer-friendly administration is in place.

And it would be no surprise if other organizations (including the VA and USDA) similarly refined their policies in coming weeks to reflect those factors.

If you’re a DACA recipient in the market for a home loan in the coming year, keep an eye on the news and do periodic Google searches of these agencies to see whether any new loan programs have been added to your list of options.

Explore your home loan options (Jan 25th, 2021)

Which DACA home loans are best for you? 

On average, DACA recipients are younger than the US population as a whole, because they had to be under 31 years as of June 15, 2012. But, besides that, it may be a mistake to generalize about them.

Just as other American residents, some Dreamers will have stellar credit scores and others bad ones. Some will have plenty of savings and others won’t. And some will be laden with student loans and other debts, while others owe nothing.

So a DACA borrower needs to seek out the type of loan that best suits their personal financial circumstances — just like everyone else.

Those most attractive to lenders (high credit scores, 20% down payment, and small debts) will likely find a conventional loan to be their best bet.

Those with low scores, 3.5% down payment, and lots of debts may need to go for FHA loans.

And those between the two might find Fannie Mae offers their best deals. Better yet, Fannie requires a minimum down payment of just 3%.

Shop for loan options and mortgage rates

Whichever type of loan you choose, be aware that you’ll be borrowing from a private lender. The mortgage rates and overall deals you’ll be offered are likely to vary widely from one lender to the next.

So be sure to comparison shop for your mortgage, getting competitive quotes from several lenders and comparing them side by side.

That’s the best way to find a low interest rate and save money on your home loan, no matter which program you choose.

Verify your new rate (Jan 25th, 2021)

Source: themortgagereports.com

6 Insider Tips for Getting the Most From Social Security

Mary Beth Franklin is a nationally recognized expert in Social Security claiming strategies, she is also a frequent public speaker. And, she literally wrote the book (Maximizing Your Clients’ Social Security Retirement Benefits) that retirement planning experts use to advise clients on Social Security.

Making the most of Social Security

She offers you her Social Security expertise with six insider tips for getting the most from Social Security. If you like following concepts, be sure to listen to Franklin’s interview with Steve Chen, founder of NewRetirement, for even more great ideas for maximizing your benefits.

Mary Beth does not mince words on this guidance, “It’s critical that people understand that although they can claim Social Security benefits as early as age 62, their benefits will be permanently reduced for the rest of their life if they do. For married couples, it also means a possible reduction in survivor benefits for the remaining spouse. And if you collect SS benefits early and continue to work, your benefits could be temporarily reduced or eliminated if you earn more than $15,720 in 2016. Benefits lost to the earnings cap are restored at full retirement age.”

Getting the most from Social Security means waiting to start benefits. The only true exception to this rule is if you know that you will not live very long.

It is surprising how many people start benefits without actively comparing the monthly income for starting early versus starting later. Mary Beth suggests that you, “know how much your benefits would be worth if you claimed now compared to waiting until your full retirement age (FRA), which is 66 for anyone born from 1943 through 1954.

“Consider whether you can afford to wait until age 70 to claim Social Security when benefits are worth the maximum amount. For every year you postpone claiming beyond FRA up to age 70, your benefits would grow by 8% per year, possibly boosting your retirement benefit to 132% of your FRA amount.”

In response to the question, “What are the biggest regrets you hear from people who have already claimed Social Security?” Mary Beth says, “Many retirees regret that they claimed reduced Social Security benefits as soon as they could at age 62 but often it was unavoidable because of health issues or job loss.”

Not everyone knows this and the rules are tricky, but Mary Beth says that, “anyone can change their mind and withdraw their application for benefits within 12 months of first claiming. Although they must repay any benefits they have received, as well as any benefits collected on their earning record by a spouse or minor dependent child, it would allow them to collect a bigger benefit in the future.

“If they miss the 12-month widow, they can wait until 66 to suspend their benefits. Although they would not be able to collect any benefits during the suspension period – and no family members such as a spouse or dependent child could collect any benefits on their earnings record during that time – they would be able to earn delayed retirement credits worth 8% per year up to age 70.”

The Government Accountably Office (GAO) did a study showing that Social Security representatives do not fully understand all the rules and all too often give incorrect guidance to people who have questions about their benefits.

Mary Beth says, “With more than 2,700 rules that govern Social Security benefits, it’s not surprising that some Social Security Administration reps don’t always get it right. The best solution is to know your rights before you apply for benefits, including the possibility that you may be able to switch between collecting spousal benefits first and retirement benefits later or to be able to choose when you claim survivor benefits vs your own retirement benefit.”

If getting the most from Social Security is important to you, you might not want to only trust what the SSA has to say.

“A maximum retirement benefit also translates into a maximum survivor benefit for surviving spouses or eligible ex-spouses who were married at least 10 years before divorcing.”

Do any of these ideas appeal to you? Try out these strategies on your own retirement plan. The NewRetirement retirement planning calculator makes it easy to test different what if scenarios. You can immediately find out how your finances improve or worsen by delaying you or your spouse’s or both of your benefits and more.

Mary Beth Franklin, CFP, Contributing Editor, Investment News

Questions about Social Security? Find answers in her ebook Maximizing Social Security Retirement Benefits.

Source: newretirement.com

8 Mistakes That Can Sabotage Your Retirement

Senior filled with regret
Krakenimages.com / Shutterstock.com

Making big financial mistakes can sabotage the comfort of your golden years. You can wreck even the best-laid plans with a single poor choice.

Be aware of these common blunders — some that many people make well before retirement age, and others that happen after they leave the workforce — and take action to avoid them.

Mistake No. 1: Failing to plan for medical expenses

Lisa F. Young / Shutterstock.com
Lisa F. Young / Shutterstock.com

Medicare kicks in at age 65, but that is not the end of your medical expenses. Fidelity estimates that a couple, both age 65, who retire in 2020 will need $295,000 of their own money for medical expenses over the course of retirement.

Such costs include deductibles and premiums associated with Medicare, plus out-of-pocket costs.

Take action: Start by reading “How to Pick the Best Medicare Supplement Plan in 4 Steps.” Also:

  • Stay healthy by exercising regularly and maintaining a healthy weight.
  • Check into long-term care insurance. It’s cheaper if you sign up when you’re younger.

Mistake No. 2: Underestimating costs

Corepix VOF / Shutterstock.com
Corepix VOF / Shutterstock.com

Retirement costs can be surprisingly high. You may find that to manage your costs, you need to earn some extra income. It’s not the end of the world, but possibly not what you had in mind.

If you do take this path, check the Social Security Administration’s rules for working while receiving Social Security benefits.

Take action: There are a lot of jobs you can do from home, and many ways to earn a little money on the side. If you’re lucky, it may be something you love to do as a hobby — gardening, tending pets, caring for children or working as a handyman.

For more, check out “20 Ways Retirees Can Bring in Extra Money in 2020.”

Mistake No. 3: Celebrating retirement with a big purchase

Monkey Business Images / Shutterstock.com
Monkey Business Images / Shutterstock.com

You’ve undoubtedly got a wish list for retirement. But hold off on making major purchases at first. Instead, give retirement a spin and see what you’re spending each month.

Track expenses — every single one. A year’s tracking gives the best picture because it includes both one-time and seasonal expenses.

Take action: Keep receipts, watch bank and credit card accounts online on a weekly basis, and update your tracking regularly:

  • Try online budget programs. Money Talks News partner You Need a Budget lets you track expenses automatically. Other options include Mint and BudgetTracker.
  • If you prefer, track expenditures manually and offline on a spreadsheet.

Mistake No. 4: Helping out adult kids

Iakov Filimonov / Shutterstock.com
Iakov Filimonov / Shutterstock.com

Many parents set themselves up for a crisis in retirement by supporting adult children financially.

Adult children still have time to pay off any college loans and save for retirement. Their parents — in other words, you — are running out of time to save for the golden years ahead.

Take action: Make a concrete plan with goals and deadlines for gradually withdrawing financial help from your kids. Then:

  • Discuss the changes with your kids and help them learn to budget.
  • Model financial restraint and responsibility for your kids.

Mistake No. 5: Claiming Social Security too soon

Andrey_Popov / Shutterstock.com
Andrey_Popov / Shutterstock.com

Waiting to claim Social Security benefits is one of the best investments around. As we point out in “12 Ways to Maximize Your Social Security Checks“:

“If you start receiving benefits right at age 62, your checks will be forever 20% to 30% smaller than if you had waited until you reached your full retirement age.”

A Social Security Administration table shows the reduction for taking early Social Security benefits depending on the year you were born, as well as listing the range of full retirement ages (FRA) by year of birth.

Take action: Go to the Social Security Administration’s website to see your estimated benefits. If you’ve paid into the Social Security system while working, you can create an account and pull up a statement showing what you’ll earn by claiming benefits at various ages. Also:

  • Keep your current job if you can, and delay retirement. Or get a part-time job that helps you hang on longer before claiming benefits.
  • Hire a certified financial planner to review your retirement plan, income and expenses with you.

Mistake No. 6: Forgetting about the taxman

Carol Franks / Shutterstock.com
Carol Franks / Shutterstock.com

The IRS won’t disappear from your life when you retire.

For instance, traditional tax-deferred retirement plans like 401(k) plans and IRAs require you to withdraw a minimum amount each year (a required minimum distribution or RMD) beginning in the year you turn 72. If you don’t take that income, you could be hit with a big penalty.

​Good planning — especially before retirement — can help manage the tax bite. Money Talks News founder Stacy Johnson says one strategy is to roll a portion of retirement savings into a Roth retirement plan, which has no minimum distribution requirements.

Roth plans require taxes to be paid before the money goes in. You withdraw the funds tax-free later. The strategies you use will depend on your income now and what you expect it to be after retirement.

Take action: Make a plan — or stop by our Solutions Center to find a great financial adviser who can help you craft a strategy — that takes taxable retirement income into account.

Mistake No. 7: Ignoring estate planning

Kellis / Shutterstock.com
Kellis / Shutterstock.com

Get your affairs in order before you’re ill or old. That way, you’ll control where your money and possessions go. It’s a kindness to your heirs, too, because they won’t be saddled with the work.

Take action: Make or update your will. If appropriate, make a revocable living trust.

  • Sign a durable power of attorney naming someone you trust to make your legal and financial decisions if you cannot.
  • Assign health care power of attorney to someone to make your medical decisions if you’re unable.

Mistake No. 8: Investing too conservatively

designelements / Shutterstock.com
designelements / Shutterstock.com

As retirement grows nearer, it seems prudent to invest more conservatively. But you could live another 20 or 30 years. Savings held too conservatively shrink because of inflation. A portion of your funds needs to grow.

“Never taking risk means taking a different risk,” Stacy Johnson says.

Take action: Learn about investing so you can be confident about taking measured risks to earn gains, even as you grow older. It’s not difficult to follow the basic rules for sane investing, including how to spread risk among diverse holdings.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

Save and Invest Easily With This Phone App

Man investing on his phone
Photo by panitanphoto / Shutterstock.com

Investing can be intimidating, and it’s easy to let excuses keep you from getting started.

You might not think you have enough money, or know enough about it. Maybe you worry that you’re not good at saving or that you’ll have to meet with an overbearing and overpriced investment adviser.

Acorns is an investing app that addresses all those concerns. With just your phone and a few bucks per month, you can get started building your retirement today.

It’s an easy way to begin investing, even if you don’t have a lot of cash to spare and don’t know an ETF from an APY. (If you need help with financial terminology, check out our story “14 Financial Words You Need to Understand.”)

There’s no minimum investment to get started, and the app will do the heavy lifting for you.

How Acorns works

The main idea of Acorns is to get your savings rolling with money you won’t even miss. It does this with “Round Ups,” which round up the price of your everyday purchases to the nearest dollar.

It takes that rounded amount (your “change”) and automatically invests it in ETFs, or exchange-traded funds, which Money Talks News founder Stacy Johnson calls “a great, low-cost way to buy, own and sell diversified groups of stocks and/or bonds.”

That diversity is key to minimizing the risk commonly associated with investing in the stock market — as with any investment, you could potentially lose money. But spreading it around through an ETF is less reckless than guessing which stocks to buy yourself, and you also get to decide how much risk you want Acorns to take on your behalf.

Once you link the app to your credit card or checking account, it can do this automatically, instantly turning your everyday spending into a way to invest without extra work on your part.

For instance, say you buy a bag of groceries for $10.45 and pay for it with your linked credit card. The price charged to the card is rounded up to $11, then Acorns debits the difference (55 cents in this case) from your account and invests it.

Acorns also has “Found Money” partnerships with more than 350 brands that work like cash back on a credit card — except the money is earmarked for investment. When you shop with these companies using your Acorns-linked credit or debit card, some of the cost of your purchase is invested back into your account.

Depending on the partner, “Found Money” can take up to 120 days to find its way back to you. But it’s automatically invested, and you can track it in the Acorns app.

Acorns alone likely isn’t going to give you a satisfying nest egg for retirement. However, if you’ve put off saving and investing money, it can be a very practical and rewarding nudge in the right direction.

How much does it cost?

Acorns charges a flat fee of $1 to $5 per month depending on the features you want. The basic tier, Lite, is enough to get started saving and investing. For $1 a month, Acorns will start making better use of your spare change with “Round Ups.”

The higher Personal tier is $3 per month, and includes retirement and checking accounts plus access to money advice. It lets you set up recurring contributions in an IRA, a popular type of retirement account.

The $5 per month tier, Family, lets you set up investment accounts for your kids.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

Single homeownership is on the rise — especially in these age groups

Single and ready for homeownership

Single and ready to buy a home? Apparently, your chances are better than they’ve ever been. According to a new analysis, single homeownership is at its highest rate since at least 1900.

Single homeownership is at an all-time high

Single Americans now own nearly 40% of the country’s housing stock, according to a new analysis from Ralph McLaughlin, chief economist at Haus.

According to McLaughlin, the jump in these shares boils down to something pretty simple: fewer people are getting married.

“Why are singles increasingly owning homes?,” McLaughlin asks. “There are many reasons, but the elephant in the room is that there is a higher share of the U.S. population that is single.”

At the gender level, single males account for about 15% of all homeowners, while almost a quarter are female. Consistently, the female share of single homeowners has always been larger. McLaughlin says there are three reasons behind this: a higher number of widowers among women, a smaller likelihood of remarriage, and a larger number of women than men, population-wise.

Legit ways to buy a house with little or no money out of pocket

The most single homeowners

Interestingly, an increasing share of today’s single homeowners are younger and have never been married at all. In fact, of the nation’s under-35 homeowners, about a third have never been married, while nearly 15% of those 35 to 54 haven’t either. 

Previously, high divorce rates drove homeownership rates among singles. Since 2000, though, rates of divorce have actually fallen — at least among these age groups. 

Geographically speaking, the most single, under-35 homeowners are seen in Des Moines, Iowa, where they make up 23.7% of all homeowners. Detroit also claims a high share at 21%. 

The smallest shares are in high-cost Western cities like Provo, Utah (only 4.8% of homeowners are single and under 35), San Jose, Calif. (6.8%), and San Diego (7.9%).

11 first-time homebuyer mistakes to avoid

Get today’s mortgage rates

Want to join the ranks and become a single homeowner yourself? Shop around and see what rates you qualify for today.

Source: themortgagereports.com

10 Ways to Retire Earlier Than Friends on the Same Salary

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The notion of early retirement is all the rage, with books and blogs devoted to the idea of quitting work while you are still “young enough” to enjoy life.

If you do not work for a company that provides a pension, self-funding an early retirement might seem daunting — but it can be done.

The key is to understand that the decisions you make are at least as important as the amount of money you earn. If you want to retire early — or at all — keep the following suggestions in mind.

1. Marry or partner with the right person

Rido / Shutterstock.com
Rido / Shutterstock.com

A significant other can give you such a thrill, but love won’t pay the bills. It’s probably not wise to ask about credit scores on the first date. However, talking about other goals and money management habits can be fine fodder for those getting-to-know-you chats.

As the relationship heats up, you need to talk frankly about finances. If the object of your affections is vague about future plans or careless about spending, ask yourself whether you want to do all the heavy lifting when it comes to cash.

For more advice, check out “11 Essential Money Matters to Discuss Before Marriage.”

2. When you pair up, try to stay that way

Monkey Business Images / Shutterstock.com
Monkey Business Images / Shutterstock.com

Many relationships have rough patches. Be prepared to work through them. Put bluntly, divorce is expensive as well as traumatic. It might also be unnecessary. Some problems that feel insurmountable can be overcome through couples counseling.

Unless your safety or your long-term financial well-being is at stake, remember why you married that person and work hard to work it out.

And if you do wind up splitting? Please read “7 Ways Divorce Can Cost You Big — and How to Avoid Them.” What you learn could save you money and maybe even keep you solvent.

3. Be aware of the true cost of at-home parenthood

goodluz / Shutterstock.com
goodluz / Shutterstock.com

Some people feel strongly about having one parent at home full-time for years. However, stay-at-home parents may have trouble getting jobs if they stay out of the workforce for too long.

While quitting a job might be the right choice, you should not do so simply because child care costs too much. For tips on continuing to work while keeping as much of your paycheck as possible, see “9 Ways to Save Money on Babysitting.”

4. Take calculated investment risks

Dean Drobot / Shutterstock.com

Diversify your retirement investments. Stocks and real estate involve some risk, but over the course of decades they historically have returned more than safer savings accounts.

For more information on investing, check out “8 Basics That Beginning Investors Must Know.”

5. Build an emergency fund

Rido / Shutterstock.com
Rido / Shutterstock.com

You need an emergency fund. Period. That cash will help you fix a car, replace a broken appliance or pay for a pet’s illness. And you will avoid putting those costs on a credit card or borrowing from your 401(k).

You can almost always find ways to save, even if you don’t make much money. “11 Tips for Building Your Savings Despite a Low Income” is a good place to start.

6. Don’t be in a rush to pair up

CASTALDOstudio.com / Shutterstock.com
CASTALDOstudio.com / Shutterstock.com

So what if all your friends from high school or college are getting engaged? That is no reason to rush into matrimony. Keep your eyes wide open with regard to financial and personal compatibility.

You want to pair with someone with whom you can share goals and who is willing to do what it takes to achieve them.

Love makes it easy to overlook red flags such as careless spending patterns, high debt load and an inability to plan for the future. The old saying “Marry in haste, repent at leisure” has a lot of truth to it.

7. Don’t have kids too early

fizkes / Shutterstock.com

An unplanned pregnancy can take a major toll on your finances, and even on your emotional well-being. That is especially true if it turns out that the person you thought was Mr. or Ms. Right is the wrong fit.

Even if you plan to wait to have children, remember that a surprise pregnancy is always a possibility. That’s another reason to be on the same financial page with your beloved. The more organized your finances are, the more likely you will be able to cope with an unplanned pregnancy.

8. Consider a smaller family

Billion Photos / Shutterstock.com
Billion Photos / Shutterstock.com

“How many kids should we have?” is a good question to discuss before you get married. Some people opt for only one or two children due to the high cost of raising them. Others keep their families small because they feel fulfilled and happy with producing only a couple of outstanding new citizens.

Remember, it isn’t just a question of whether you can feed and clothe more than one or two children. Family size can also affect:

  • Your mortgage. A two-bedroom starter home won’t be large enough for your version of “The Brady Bunch.”
  • Your car payment. You cannot tote five kids in a compact car.
  • Your retirement. If one parent takes a lot of time off to raise kids, he or she will likely put a lot less into both Social Security and any personal retirement program.

9. Live in a cheaper area

goodluz / Shutterstock.com
goodluz / Shutterstock.com

You don’t have much choice about housing if your work is in New York City or Los Angeles. But today isn’t necessarily forever. Perhaps you can find work in your field in a less-expensive area.

Look for ways to cut the cost of housing. You might move a little farther away from work, as long as the additional commuting expenses will not cost more than potential rent/mortgage savings.

Perhaps you can take in a roommate or two. Even married couples sometimes rent out a room to help ease mortgage costs.

10. Don’t try to keep up with the Joneses

Nejron Photo / Shutterstock.com
Nejron Photo / Shutterstock.com

Why should marketing experts determine how you live? Champagne tastes on a Kool-Aid budget will translate into debt that might keep you from ever retiring.

Put another way: The Joneses might be up to their hairlines in debt. Still want to be like them?

That’s especially true when it comes to cars. Maybe you want a sweet ride that leaves others in the dust — and makes them feel envious to boot. The higher cost of a luxury or sports car plus the higher cost of auto insurance will siphon tens of thousands of dollars from your wallet, and that’s money that could otherwise grow in your retirement accounts.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

Homebuyers take note: These are the cities where home values will appreciate the most this year

Head South for home values

Want to make sure your home grows in value? Then buy a house in the South. According to new analysis, that’s where home values will appreciate the most in 2020.

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Your safest bets for high home values

According to the Home Price Expectations Survey from Zillow, which takes into account expert analysis from 100 economists and real estate experts, housing will be hottest in the South this year.

At the city level, experts say Austin, Texas, will see the most home value appreciation in 2020. A whopping 83% of those surveyed expect the city to outperform national averages this year.

Cost gap shrinks between buying a home and renting one

Other cities where home values are expected to outperform include Atlanta (63%); Charlotte, N.C. (59%); Nashville, Tenn. (59%); and Denver (55%). 

“A collection of relatively affordable, Sun Belt markets are among those in which home value growth in 2020 is most expected to outperform the national average,” explains Skylar Olsen, Zillow’s director of economic research. “Of the 14 markets that received a positive score — a higher share of panelists said they expected the market to outperform than underperform, 11 were in Texas or elsewhere in the Southwest or Southeast. Portland, Minneapolis, and Denver were the only non-Southern markets to make the list of those expected to outperform.”

Where home values won’t do so great

If you’re looking for high home value appreciation, California probably isn’t your best bet. Three Cali cities topped experts’ “most likely to underperform” lists, including San Francisco, San Jose, and Los Angeles.

“Panelists didn’t just expect those large California markets to underperform, but maybe still grow slightly. In many cases, they said they expected the typical home values in those places to outright fall, ending 2020 lower than where they began the year,” Olsen says. “Panelists — 42 total — who thought at least one major metro would see falling home values in 2020 generally agreed that California markets would make that list.”

How low can we go? 30-year mortgage rate chart tells a story

Cincinnati also ranked among the top, with 46% of experts saying its home value appreciation rate would come in under national averages. Seattle came in with 40%. 

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Get today’s mortgage rates

Want to buy a house where home values are on the rise? Shop around and see what mortgage rates you qualify for today.

Verify your new rate (Jan 20th, 2021)

Source: themortgagereports.com

The 7 Fastest Ways to Catch Up on Retirement Savings

Sergey Nivens / Shutterstock.com

Are you among the millions of workers who have fallen behind on retirement savings?

Many workers have not made a serious plan to save for their golden years. The pandemic, with job losses and income uncertainty, is making it even harder.

If you can, start turning that situation around now. Money Talks News talked with financial experts to gather tips on how to catch up when you are far behind.

Even if you can’t add to retirement savings at the moment, read on to plan for how you’ll tackle this shortfall when you’re back on your feet financially.

1. Re-examine your budget

Tero Vesalainen / Shutterstock.com

If you need more money for retirement savings, the first place to find that cash is by making changes to your budget.

“Scrub your budget to ensure all dollars are identified and working for you,” Skip Fleming, a Certified Financial Planner and founder of Lodestar Financial Planning in Colorado Springs, Colorado, tells Money Talks News.

Fleming urges you to reduce or cut expenses that prevent you from achieving goals.

“Some things I see in a typical budget that are often overlooked include the high-priced bundled cable bill, gold-plated cellphone plans that are not used, dining out several nights every week and borrowing money to pay for a vacation,” he says.

2. ‘Catch up’ your 401(k)

saving money
Dean Drobot / Shutterstock.com

Your 401(k) misses you. It’s time to give it a little extra attention.

Fortunately, Uncle Sam has the perfect way to make up for years of neglect.

“If you are over 50, be sure to take advantage of the ‘catch-up contribution’ in your 401(k),” Michele Clark, a Certified Financial Planner and senior portfolio manager with St. Louis-based Acropolis Investment Management, tells Money Talks News.

Here are the basics for 2020:

  • The base limit for contributions to workplace retirement accounts is $19,500. In addition, starting at age 50, workers with a 401(k) plan can contribute an extra $6,500 per year.
  • If you use an IRA — either traditional or Roth — you can contribute $6,000, plus an extra $1,000 starting at age 50.

Learn more:

3. Exploit every investment opportunity

building wealth
wk1003mike / Shutterstock.com

Sure, you can invest in your 401(k), and you should, at least with enough to get full employer matching funds, Nola Kulig, a Certified Financial Planner and founder of Kulig Financial Advisors in Longmeadow, Massachusetts, tells Money Talks News.

But don’t stop there.

Some employers also match contributions to a health savings account, which can be a great hidden way to save for retirement. Check it out.

“Then, I would maximize IRA contributions — Roth or traditional — depending on what is possible given income,” Kulig says.

If you’re fortunate enough to have money left over, invest it in a taxable account.

Here are “5 Reasons to Use a Health Savings Account as a Retirement Fund.”

4. Amp up your earnings

now hiring
Andrey_Popov / Shutterstock.com

If you are behind in saving for retirement, you might need to boost your earnings faster. To earn more income, Kulig suggests considering:

  • Changing employers
  • Getting training to update skills
  • Finding a side gig

“If income does not grow over time, it is difficult to have savings strategies accelerate retirement success,” Kulig says.

For inspiration, check out “107 Easy Ways to Make Extra Cash.”

5. Be smart with raises and windfalls

Career coach
shyshak roman / Shutterstock.com

Congratulations on the raise! You’ve worked hard to get it. Now, it’s time to make it work for you.

“When you get a raise, give half of it to your ‘Now Self’ and half of it to your ‘Future Self,’” advises Clark.

For instance, if you get a 4% raise, split the amount: Put 2% into a checking account and 2% toward retirement savings.

Diverting 2% from your “Now Self” helps prevent lifestyle creep, as can happen when you use newfound money to increase your lifestyle today instead of saving for tomorrow.

Put any work bonuses, tax returns and even rebates to work building wealth, too. “Later, you will be so glad you did,” says Clark.

6. Minimize spending

fizkes / Shutterstock.com

For many people, this is the most challenging of the changes suggested by our experts. It is also likely the most important, Margot Dorn, a Certified Financial Planner and founder of Dorn Financial in San Diego, tells Money Talks News.

Not only does minimizing spending increase your savings, it also teaches you to live with less. “If they learn to live more modestly, they will also not need to save as much to continue their lifestyle in retirement,” Dorn says.

Not sure where all your money is going? To find out, track your spending, Andy Tilp, a Certified Financial Planner and founder of Trillium Valley Financial Planning in Sherwood, Oregon, tells Money Talks News.

“List all the expenses and track them over time,” he says. “Once you know where it goes, then you have the information necessary to see if there are places where spending can be diverted to savings. Otherwise, it’s a guess.”

7. Make a ‘mortgage payment’ after the house is paid off

Reverse mortgage
William Potter / Shutterstock.com

If you’ve worked hard to pay off the mortgage, congratulations. What are you going to do with all the money you used to earmark for your mortgage payment?

“Save that money, don’t spend it,” Clark says. Put it in an investment account to tap for retirement spending.

Use the same strategy when you pay off a car loan and watch your wealth grow.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

76% of People Who Don’t Fret Over Money Report Doing This

Young couple working on a budget
Photo by Rido / Shutterstock.com

Want to get rid of stress? You could meditate, count to 10 or simply start a zero-based budgeting system.

In fact, 76% of people who use such a system report either no financial stress or a decrease in the level of their financial stress last year, according to a recent survey by YNAB (short for “You Need A Budget”), an app that helps people rein in spending and reach financial goals.

In a zero-based budgeting system, you earmark every dollar of your income to different spending categories.

For example, someone with a $100 budget might allocate:

  • $50 to food
  • $25 to clothing
  • $15 to toiletries
  • $10 to entertainment

Once you have made your allocations, you have “zero dollars” left to spend — hence, the name “zero-based budgeting system.” Someone who wants to spend more in a certain category — say, $30 on clothing — has to reduce spending in one of the other categories. This keeps you out of debt.

YNAB notes that the results from the study of 6,000 people are especially remarkable because they indicate the power of budgeting to calm nerves at a time when the COVID-19 pandemic and massive job losses have put people on edge.

In fact, 29% of respondents experienced job or income loss in 2020. Yet, 98% of all survey respondents say they felt more in control of their money and financial future thanks to starting a budget.

Despite the pandemic — and related job losses — 66% of respondents say they saved more money in 2020 than in 2019. Part of that might be because they spent less on:

  • Travel (74.9% of respondents)
  • Gas (67.8%)
  • Dining out (51.2%)

Groceries are the one category where people tended to spend more in 2020 than the prior year, with 66% of respondents reporting an uptick.

How to build a better budget

The survey clearly shows the power of building a budget. If you don’t make a conscious effort to control expenses, they can quickly overwhelm you. For more on such mistakes, check out “9 Overlooked Expenses That Ruin Your Budget.”

YNAB itself is a great tool for budgeting. The Money Talks News partner is an app that makes it easy to track day-to-day expenses, prepare for unexpected costs and build savings.

You can even connect the program directly to your bank and credit card accounts, which allows you to download transactions to YNAB automatically so you don’t have to manually enter them one by one. That makes it much easier to track expenses.

For more, check out “An Easy Way to Track Your Spending and Build Your Savings.”

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com