Plan Now for Long-Term Care

In early June, a 102-year-old South Carolina woman made headlines with her secret to a long life: minding her own business. While most of us probably won’t live that long (or resist the temptation to be nosy), modern medicine has increased the likelihood that we’ll live well into our nineties. But living longer also raises a daunting question: Will you need long-term care, and if so, how will you pay for it?

More than two-thirds of 65-year-olds will need some type of long-term care in their lifetime, according to the Administration for Community Living, a division of the U.S. Department of Health and Human Services. The cost of long-term care can deplete even a well-funded retirement savings plan: According to the 2020 Genworth Cost of Care Survey, the median cost of a private room in a skilled nursing home exceeds $8,800 a month. And the cost varies depending on where you live. A typical private room in New York costs about $12,930 (according to the Genworth survey), compared with about $7,600 in Tennessee. (To get an idea of how much you would need in each state, check the Genworth Cost of Care Survey.)

Many Americans mistakenly believe that Med­icare will cover their long-term care. Medicare Part A may cover care that is deemed medically necessary at a certified skilled nursing facility for up to 90 days, but if you need custodial care for a condition such as dementia, Medicare won’t cover the costs.

Long-term-care insurance provides benefits in the event you need help with at least two “activities of daily living”—bathing, getting dressed or eating, for example—for more than 90 days. (Some policies will kick in at 60 days or less, but you’ll pay higher premiums.) Most policies will pay for care in your home or at a long-term-care facility, and some will pay for your transportation to a doctor’s appointment.  

A long-term-care policy could give you peace of mind, but the cost is steep. Premiums are expensive and are continuing to increase, due in large part to the rising cost of care and historically low interest rates. These premiums, as well as returns from fixed-income investments, cover the cost of long-term-care insurance. But many policies were designed 30 years ago, when interest rates on U.S. Treasuries were much higher than they are today, says Jesse Slome, executive director of the American Association for Long-Term Care Insurance (AALTCI). For a single percentage point decline in interest rates, an insurer needs to raise premiums 10% to 15%, he says. If rates rise significantly, premiums could decrease, but that’s unlikely anytime soon.

Costs aside, you have to deal with the uncertainty of your long-term needs. You or your spouse may not require care at all or only for a short period of time.

Determining whether insurance is right for you depends on whether you have enough money to self-insure and what’s best for your family. If you can’t afford to pay for long-term care, family caregivers could be forced to cut back on work hours or quit their job to take care of you, jeopardizing their own retirement security. In a recent survey by Fidelity Investments, 28% of respondents left their job due to caregiving responsibilities. Of those who eventually went back to work, more than one-third said their earnings declined.

Can you self-insure?

If you have suf­ficient assets, you may choose to self-insure, which means any long-term-care needs you have will be paid out of your own coffers. “If someone has over $1 million in liquid assets, then they could probably self-insure, provided they were willing to spend it all for their own care,” Slome says. If you’re married, he ups the number to $2.5 million.

When you self-insure, you’re basically betting that you won’t require a prolonged stay in a nursing home—and it’s not a bad bet. According to the Administration for Community Living, most people who go into a nursing home stay for less than 12 months. Instead, you are more likely to rely on in-home care. It costs about $4,600 a month for one or more caregivers to provide 44 hours a week of in-home care, according to the Genworth Study.

Mari Adam, a certified financial planner with Mercer Advisors, in Boca Raton, Fla., suggests sitting down with a financial planner to figure out how much you’ll have in savings to cover long-term care. You’ll typically include funds in your traditional and Roth IRAs, 401(k) plans, taxable accounts, Social Security, and any pension income.  

Your home is also part of the equation when calculating whether you can self-insure. If you’ve built a substantial amount of home equity, you can downsize to a smaller place. If you eventually need to move to assisted living or a nursing home, you may be able to use proceeds from the sale of your home to cover the costs. If you don’t want to sell your house, a home-equity line of credit or a reverse mortgage is also an option. (Here’s more on how to tap your home equity.)

If you’re enrolled in a high-deductible health insurance plan, you can also harness the tax-saving power of a health savings account (HSA) to pay for some of your long-term-care costs. Contributions are pretax (or deductible if you set up an HSA on your own), earnings are tax-free, and distributions aren’t taxed if you use them to pay for qualified medical expenses. Plus, you can keep your account after you stop working and take tax-free withdrawals for medical expenses in retirement, including any long-term-care costs. To qualify for an HSA, your 2021 health plan must have at least a $1,400 deductible for self-only coverage or $2,800 for family coverage. You can contribute up to $3,600 if you have self-only coverage or up to $7,200 if you have family coverage. If you’re 55 or older at the end of the year, you can contribute an extra $1,000 in catch-up contributions. Once you enroll in Medicare, you’re no longer allowed to contribute to an HSA, but the money continues to grow until you’re ready to use it.

You can also use money from your HSA tax-free to pay long-term-care insurance premiums, with the maximum annual tax-free amount based on your age. If you’re age 40 or younger, you can withdraw up to $450 tax-free from an HSA in 2021 to pay the premiums; if you’re 41 to 50, you can take out $850; if you’re 51 to 60, $1,690; if you’re 61 to 70, $4,520; and if you’re 71 or older, $5,640. If you and your spouse both have long-term-care policies, you can each use money tax-free from your HSA to pay premiums, up to the maximum for each of you based on your ages by the end of the year. These limits increase slightly each year to adjust for inflation.

The case for insurance

Once you have run the numbers, you may conclude that you can handle the cost of long-term care. However, if you’re married, you may still want to consider buying a long-term-care insurance policy, Adam says. The risks are higher that at least one spouse will require long-term care, and those costs could exhaust your combined savings, leaving the other spouse with no resources.

A 55-year-old couple can expect to pay $2,100 a year for a typical policy with an initial benefit pool (the pot of money the insurance company will pay out) for each spouse of $165,000 to cover adult day care, home aide services, assisted living and nursing home costs. If that seems like a high price to pay for something you may never use, there are ways to trim the cost.

Married couples can reduce what they pay in the long run by buying a shared benefit plan, which allows spouses to pool their benefits. If one spouse exhausts his or her benefits, then he or she can tap the other spouse’s share. To get the best value, both spouses need to apply for the same amount of benefits—for example, three years at $200 a day—and then add a shared benefits rider. Plus, depending on the carrier, both spouses can get a discount of between 15% and 30% on their premiums if both buy a policy with the same company, according to Bill Dyess, a long-term-care expert and insurance broker in Boca Raton. However, even if just one spouse buys a policy, the insurance company is likely to provide a 10% to 15% premium discount because married people are less likely to go into a nursing home than single people.

You can also save money by skipping the inflation rider. While these riders will help you keep up with the rising costs of long-term care, they can double your premiums, Dyess says. For example, if a 55-year-old man bought a traditional policy with a benefit pool of $165,000 and he wanted to add a 2% inflation rider, he would pay $1,750 in annual premiums, compared with $950 for a policy without a rider, according to data from the AALTCI. A 55-year-old woman would pay $2,815 instead of $1,500.

Buying a policy when you are in your forties or early fifties will also decrease the cost of premiums (although you’ll be paying for them over a longer period of time). Insurance companies assume you’re at a higher risk for health problems as you age.

Slome says the sweet spot for buying a policy is between the ages of 55 and 65, before you sign up for Medicare. “The first time that people actually take advantage of all those wonderful free health screens is usually after they sign up for Medicare,” he says. “And when they do, the doctors tend to find something.” If you have a health condition, you’ll pay higher premiums, or the insurer may decline to cover you at all.

A traditional policy with $165,000 in initial benefits (and no inflation rider) that would cost a 55-year-old man $950 a year jumps to almost $1,200 a year, on average, if he waits until his 60th birthday to buy coverage. A 55-year-old woman’s premiums would jump from $1,500 to about $2,000.

If you decide to buy a policy at a relatively young age—in your fifties, for example—you may want to add a restoration of benefits rider. If you make a claim and later recover from the illness that caused you to require long-term care, the rider enables the benefit amount you used to be restored to your policy benefit pool. For example, suppose at age 60 you make a claim for $50,000 to pay for your care. If you recover and can show your insurance company you’ve been healthy for a set amount of time (usually determined by the insurance company when the policy is written), the restoration rider will add back the $50,000 you initially used. This type of benefit is typically only good for a one-time use. A policy with this rider, which not every insurer offers, costs about 4% to 6% more than one without it.

If the numbers start to feel overwhelming, keep in mind that you probably don’t need a policy that will cover 100% of your long-term-care costs, Adam says. Instead, you should consider whether a policy can help you pay for some of your long-term care without depleting all of your retirement assets. And if a policy that offers the benefits you want is unaffordable, a long-term-care insurance specialist can help you look for ways to lower the cost.

Consider a hybrid policy

Another alternative to a traditional long-term-care policy is a hybrid life insurance policy that includes long-term-care benefits. If you tap the policy to pay for long-term care, your death benefit will be reduced, although some hybrid policies will pay a small residual benefit even if the entire death benefit is exhausted by long-term-care costs.

Say you have a hybrid policy with a $120,000 death benefit that provides $180,000 of potential long-term-care benefits. If you spend $80,000 on long-term care, your heirs will still receive $40,000 after you die. If you spend the entire $180,000 on care and your policy pays a small residual death benefit, your beneficiaries may receive $10,000.

Such a policy may appeal to you if you’re determined to leave something to your heirs, but you’ll pay more for this kind of insurance. A 55-year-old man can expect to pay roughly $4,600 a year (compared with $950 for a traditional long-term-care insurance policy) for a life insurance policy that provides $180,000 in long-term-care benefits with a $120,000 death benefit.

To find a long-term-care specialist, go to aaltci.org and click on “LTC Resources.” Type in your zip code to find a professional in your area; make sure he or she has a “certified in long-term care” designation.

Is government help on the way?

In a recent poll conducted by the Associated Press, 60% of respondents favored a federal, Medicare-like long-term-care insurance program. Some 70% said Medicare should cover long-term care. While a federal long-term-care program is unlikely anytime soon, President Joe Biden has proposed spending $400 billion on home and community-based services for long-term care (although the outlook for the proposal is unclear).

In the meantime, some states may look into starting their own programs. In 2019, the Washington State legislature passed a bill to create a state long-term-care program funded by a new payroll tax. Starting on January 1, 2022, the state will add an additional 58 cents to payroll taxes for every $100 of eligible wages reported on Form W-2. Employees can opt out by November 1, 2021, if they purchase a qualifying long-term-care insurance policy.

If you’re thinking that Medicaid will be your golden ticket for long-term care, think again. To qualify for Medicaid, you must spend down nearly all of your assets first. Medicaid also has a “look back” period that involves examining your financial transactions from the past five years to determine whether you gave away money to qualify for Medicaid, which could render you ineligible. And even if you qualify for Medicaid, you’ll have to go to a facility that accepts Medicaid, and as the population ages, those will be increasingly hard to find.

table of who will need long-term care by gender and health conditionstable of who will need long-term care by gender and health conditions

Source: kiplinger.com

Amex credit card showdown: Blue Business Cash vs. Blue Business Plus – The Points Guy


Amex credit card showdown: Blue Business Cash vs. Blue Business Plus – The Points Guy



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Many of the credit card offers that appear on the website are from credit card companies from which ThePointsGuy.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). This site does not include all credit card companies or all available credit card offers. Please view our advertising policy page for more information.

Editorial Note: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Source: thepointsguy.com

What Is a CEF?

Closed-End funds, or CEFs, are a lesser-known type of investment fund that may benefit income investors who are looking to build a portfolio that provides both diversification and passive income. Similar to other funds such as index funds, mutual funds and exchange-traded funds (ETFs), CEFs pool together funds to purchase a basket of different types of assets, including stocks, bonds, and more. By investing in them individuals gain exposure to a variety of investments through a single portfolio asset.

Many retirees’ investment strategies include CEFs because of their high yields, which average 7.3%, according to BlackRock.

Recommended: Types of Investment Funds Explained

What Makes CEFs Unique?

The main difference between CEFs and other funds is that they are ‘closed,’ meaning that investors can’t buy into them at any time they want. Instead, CEFs hold an initial public offering (IPO), similar to a stock IPO, when investors can buy into them and then close sales once the offering ends.

It’s useful to evaluate CEFs based on their Net Asset Value (NAV), which is the sum of the assets in the fund’s portfolio. Brokerage firms post CEF Net asset values on a daily basis. The NAV differs from the CEF’s market price. CEF shares may sell for a discount to their market value, making it beneficial to buy them through the market rather than in their initial offering.

CEFs vs ETFs: How They Compare

CEF and ETF Similarities

•  Trade on exchanges during daily trading hours like stocks

•  Fund portfolios can be leveraged

•  Can offer capital gains and distributions to investors

•  Have fee schedules and expense ratios

•  Hold portfolios of investments that have a total value

•  Investors can trade shares like stocks using margins, shorting, and limit orders

•  Can focus on specific sectors or broad indexes

CEF and ETF Differences

•  ETFs usually track the performance of an index, whereas CEFs are actively managed

•  Investors are more likely to pay capital gains with CEFs than with ETFs

•  ETFs can’t issue debt or preferred shares, while CEFs can use these tools to create leverage

•  ETFs have features that ensure their share price doesn’t differ very much from their net asset value. In contrast, it’s common for a CEF’s net asset value and share price to be different.

Recommended: ETFs vs Index Funds

CEFs vs Mutual Funds: What’s the Difference?

CEF and Mutual Fund Similarities

•  Can pay out income and capital gains distributions to investors

•  Run by professional management teams

•  Have fee schedules and expense ratios

•  Have a net asset value and contain multiple investments

CEF and Mutual Fund Differences

•  Mutual funds issue and redeem shares daily, whereas CEFs trade on exchanges

•  CEFs can issue debt and preferred shares in order to leverage their net assets, which can increase the amount of their distributions as well as the fund’s volatility

Recommended: Mutual Funds vs ETFs

Types of CEFs

Like other types of funds, every CEF has a different investment strategy and asset size. Funds may hold millions of dollars in assets or billions. Each has its advantages and downsides.

The main issue with small CEFs is they generally don’t trade at high volumes. That means that if an investor holds a large position they can actually affect the price when they buy or sell.

CEF Distributions

CEFs pay out distributions on a regular basis. These are similar to dividend payments but have some key differences.

Since CEFs include both stocks and bonds, distributions can include bond interest payments, equity dividends, return of capital, and realized capital gains. The tax on the investment income from those earnings may differ between funds since they each have a different asset makeup.

CEF distributions can change over time, so a fund that has a very high payout may make cuts to it. So while an investor may choose a CEF with a high yield, it’s important to keep in mind that it could change over time.

One way to find a fund with an ideal yield is using the distribution-to-NAV ratio. CEFs are actively managed, and the managers need to earn money in order to pay out distributions. So by looking at the net asset value of the CEF compared to it’s distributions, investors can see whether a CEF will be able to maintain its current yield rate. If the NAV isn’t high enough to maintain a high distribution, the manager may cut the distributions.

One main benefit of CEFs is since they are actively managed, the managers can redistribute investments to maximize returns. However, like any asset, CEFs don’t always perform well. Some CEFs focus on a particular industry, and if that industry isn’t doing well the CEF may not perform well either. The success of a CEF also depends on the management team.

Recommended: How Often Are Dividends Paid?

How to Buy and Sell CEFs

It’s simple to buy and sell CEFs on major stock exchanges, and both beginning investors and those with more experience can participate in the CEF market. Investors can trade them during regular trading hours just like ETFs and stocks, although there are far fewer CEFs available on the market and they have much smaller trading volumes.

CEF Fees

One major downside of investing in CEFs is the high fees. The average annual CEF fee is 2.2%. However, the fees are taken out of the fund so investors may not notice them immediately. Proponents of CEFs claim that they have high fees because they have high quality managers who help the fund earn more money.

Fees can also include the cost of leverage, which is a tool CEFs use to make the fund more profitable. CEFs have more borrowing ability than individuals, so they can greatly benefit from using leverage, making the high fees worth it for investors. Of course, using leverage for investment also brings on additional risk.

It’s important for investors to consider whether paying high fees is worth it based on the performance of any particular CEF.

The Takeaway

CEFs are a type of investment fund that typically offers diversification and passive income. CEFs have several similarities to exchange-traded funds and mutual funds, but they are closed investments that typically have higher fees and smaller trading volumes.

If you’re interested in building a portfolio using other types of investments, a good place to start is by opening an account on the SoFi Invest® brokerage platform. You can use it to buy and sell stocks, ETFs, and even cryptocurrencies with just a few clicks on your phone. The platform offers both active and automated investing strategies.

Photo credit: iStock/ayagiz


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by email customer service at [email protected] Please read the prospectus carefully prior to investing. Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.
SOIN21118

Source: sofi.com

What Homeowners Do to Sleep at Night

Happy woman sleeping peacefully in bed in the morning
Dean Drobot / Shutterstock.com

Now that you’ve signed the mortgage and moved into your new home, you may be thinking it’s time to kick back and enjoy it.

Not so fast.

Have you got a plan for covering the bill when the garage door sticks halfway down just as you’re leaving for work? When the ice maker leaks? When the oven stops cold while you’re baking your 4-year-old’s birthday cake?

There’s no calling the landlord now. It’s all on you.

Here’s an idea: Call America’s 1st Choice Home Club and Reliable Home Warranty now, so you’re covered when (not if) your home systems and appliances break down.

As America’s 1st Choice Home Club says, “Life happens. Be prepared.”

Different from home insurance

It’s easy to confuse home warranties with home insurance. They sound sort of alike.

But they’re not.

Home insurance protects your structure and some of your possessions after a disaster — fire, storms and hail, for example. But home insurance may not help pay to fix or replace your broken garage door or the stopped-dead oven.

That’s when you’ll want a home warranty. A warranty helps repair or replace a home’s systems and appliances that have broken from normal wear and tear.

You’ve got choices

Some plans cover more, others less. Reliable Home Warranty, for example, has three levels of coverage — one for basics (including plumbing, electrical, water heater, oven and dishwasher — oh, and that garage door) and an upgraded plan that covers more: things like laundry appliances, built-in microwaves, and cooling and heating systems. Yet another plan lets you add coverage for pools, spas, roof leaks and septic systems.

“Regardless of the age, make, or model, if we can’t repair it, we’ll replace it,” Reliable Home Warranty says.

At America’s 1st Choice Home Club, you can choose among plans that cover six, nine, 15 or 18 appliances and systems. There’s additional coverage you can buy for home systems, including heating, air conditioning, plumbing and electrical. Check out America’s 1st Choice Home Club; they’ll give you a quote in 30 seconds.

As always, when signing a contract, read all the details, including the fine print.

Do you need a home warranty?

Okay, warranties are a good thing. But do you need one? Well, ask yourself what you will do if:

  • Your furnace quits in mid-December
  • The washer grinds to a halt halfway through a load
  • Your water heater springs a leak while you’re out of town

Can you afford to put life on hold while you search for a repair person? And raid savings to cover surprise repair bills? If so, a warranty’s not for you.

But for many of us, it’s a good idea.

With a home warranty, you can sleep at night knowing that when you call your warranty company, they’ll step in to help.

Warranties sell homes

Thinking of selling your home? Make your listing stand out when you offer a home warranty with the purchase. That added perk gives buyers peace of mind when they make an offer on your home.

Start here by getting your quotes from Reliable Home Warranty and America’s 1st Choice Home Club.

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

Source: moneytalksnews.com

Why I don’t plan to spend a single cent on my Delta credit card for the rest of 2021 – The Points Guy


Why my Delta credit card will be in my sock drawer for the rest of 2021 – The Points Guy


Advertiser Disclosure


Many of the credit card offers that appear on the website are from credit card companies from which ThePointsGuy.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). This site does not include all credit card companies or all available credit card offers. Please view our advertising policy page for more information.

Editorial Note: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Source: thepointsguy.com

25 Smart Financial Money Moves to Make in Your 40s

When I turned 40, I reluctantly admitted to myself that I’d reached middle age.

Which raised all sorts of questions, many centered around money. How does my income and net worth compare to other Americans? Am I on track for retiring when I want? Am I living the lifestyle that I want, and raising my children the way I want?

These are important questions to ask, but far from the only ones. In this midway decade of your life, it’s time to jettison any remaining baggage from your childhood and young adulthood — emotional or financial — and start living your own ideal life.

Credit and Debt

Too many 40-somethings still drag around the weight of heavy debts. Before you can build real wealth, focus on becoming debt-free to relieve the pressure of unsecured debts.

1. Pay Off All Unsecured Debts

If you still have student loans, personal loans, or credit card debt that you don’t pay in full each month, you have a problem.

It doesn’t make sense to invest for an historically average 10% return on stocks, for example, if you’re paying 25% interest on credit card balances. Your first priority must be paying off your unsecured debts.

Use the debt snowball method to knock out your debts one by one. With each debt you pay off, you’ll have more money each month to put toward the next one, accelerating your progress over time.

You can leave your auto loan and home mortgage in place, but stop hemorrhaging money on high-interest unsecured debts as quickly as you can, so you can turn your attention toward building actual wealth.

2. Switch to Biweekly Car and Mortgage Payments

After paying off your unsecured debts, consider a more laid-back approach to your car and home loans.

Set up automated recurring payments every two weeks, for half a month’s payment. You won’t notice the difference in your monthly budget, but this strategy will pay down debts faster than making monthly payments.

Why? Because you’ll make 26 half-month payments each year — the equivalent of 13 months’ payments. That extra monthly payment each year will shave time and interest off your loan.

You can get more aggressive with higher payments of course, if you want to pay down your loans even faster. But this strategy works well because it feels “invisible” in your budget.

3. Push Your Credit Score over 800

More doors open up to people with higher credit scores.

If you don’t have perfect credit, figure out why not — and start working on improving it. Pull your credit report for free from AnnualCreditReport.com, and look it over. Then open an account with Mint or Credit Karma to monitor your credit and view suggestions for improving it.

Fortunately, paying off your credit card balances does wonders for your credit score. Read up on other ways to improve your credit score, and lay the groundwork for cheaper, easier credit the next time you need it.


Safety Nets

Everyone needs financial safety nets, and no one more so than families with young children, as so many 40-somethings have at home. Make sure you manage your family’s risk effectively with the following safety nets.

4. Emergency Fund

Some people need a larger emergency fund than others. Exactly how much you need depends on the stability of your income and expenses, and how you hold your emergency fund.

Emergency funds are measured by the number of months’ worth of expenses they can cover. While two months’ expenses might be enough for someone with an extremely secure job and stable expenses, someone with fluctuating income or expenses might need as much as 12 months’ expenses set aside.

If you don’t have anything set aside in emergency savings, start by putting $1,000 in a high-yield savings account at an online bank like GO2Bank. From there, you can build up your emergency fund, and add layers to it based on your own risk tolerance.

5. Health Insurance

Everyone needs health insurance at all times. Period.

A friend of mine had a gap of three weeks between jobs, and went without coverage during that time. Sure enough, that’s when he broke his arm. A perfect example of Murphy’s Law hard at work.

Again, individuals’ needs vary; some people are better off with high-premium, low-deductible insurance, while others are better off with a high-deductible insurance plan combined with a health savings account (HSA).

And just because your employer doesn’t offer insurance doesn’t mean you should skip it. Try these options for health insurance without employer coverage.

6. Extensive Homeowners or Renters Insurance Coverage

The other type of insurance that everyone needs is property insurance. That means homeowners insurance or renters insurance, depending on whether you own or rent.

For homeowners, insurance covers both the building itself and all your personal belongings. Given that your home is almost certainly your largest asset, you need strong coverage to protect it.

Renters insurance just covers your personal belongings, which still matter because losing all your worldly possessions would probably constitute a financial crisis too.

Note that you can and should include high-value belongings as specific inclusions on your policy. For example, my wife’s engagement ring is a family heirloom, and worth far more than all our other belongings combined. So we listed it as a specific inclusion on our homeowners insurance policy, and had to provide them with documentation such as an appraisal.

7. Life Insurance

Not everyone needs life insurance. But some do, and particularly families dependent on a single earner to make ends meet.

That goes for single-breadwinner families of course, but it also applies to any family that would be in financial trouble if one spouse died. For instance, in families where both partners work but one earns 75% of the household income, that partner should likely be insured.

Single-parent households should also consider life insurance, particularly if the caretaker designated in your will would be financially strapped by taking on the care of your children.

8. Disability Insurance

Similar logic applies to disability insurance: if your family relies heavily on one earner, you should consider how to protect against losing their income, which could happen due to an injury or disability, not just death.

Unlike life insurance, single people with no dependents might need disability coverage as well. If you suffer a disability, you still need to cover your own living expenses, after all.


Lifestyle and Budget

It’s all too easy to blindly chase more money, and assume that higher incomes mean a better lifestyle. As someone who took a paycut and moved overseas, I can personally attest that there’s far more to lifestyle than your income.

9. Reevaluate Your Lifestyle and Career

Do you love your work? Not just like it well enough, but truly feel passionate about it?

What about the hours you work, both in total number and when you work them? Do you love the town where you live?

The midway point in your career is a perfect time to reflect on where you are, how you got there, and whether it’s delivering the actual life you want to live. Too many people fall into their careers by accident. They gradually earn more, and immediately spend more with each raise, in a perpetual cycle of lifestyle inflation.

That creates a golden handcuff, where taking a paycut would force them to overhaul their spending and lifestyle.

Take some time to explore the concept of lifestyle design. Start thinking about what your own ideal life would look like — and then start mapping a route to get there.

It could involve a job or career change, moving to a new state or country, switching to remote work, setting your own hours, or any number of other dramatic changes. You don’t have to do it all at once, but form a plan and make it a reality.

10. Overhaul Your Budget

If you consider budgeting the “B” word, it’s time to change your attitude along with your budget.

Wealth comes from the gap between what you earn and what you spend — in other words, your savings rate. To build wealth, you need to grow that savings rate.

Which almost certainly involves taking your budget more seriously.

Start by creating a brand new ideal budget in Google Sheets or with an a company like Tiller. From there, you can draw up your current spending, and close the distance between your current and your ideal spending in each budget category.

You’re halfway through your career. If you aren’t serious about saving now, when will you be?

11. Talk About Your Parents’ Plans

In your 40s, your parents often start aging faster. That can leave 40-somethings as a “sandwich generation,” stuck in the middle caring for both young children and aging parents simultaneously.

That care can come in many forms. It could mean helping their parents out with money, or paying a live-in caregiver, or paying for a nursing home. It could even mean moving a parent in with you, and even providing physical care for them yourself.

According to a study by Care.com, nearly one-third of adults end up providing financial help to their parents. That’s an expense on top of their own bills, their own child care responsibilities, and their own hopes and dreams.

Talk to your parents about their plans, and about their financial assets. Together, come up with both a Plan A and several contingency plans for their long-term care. For example, Plan A might be aging in place in their home. If their health starts failing, the first contingency plan is bringing in an in-home caregiver. The next contingency plan could involve them moving in with you or one of your siblings. A final contingency plan could be a nursing home if they become more work than you or your siblings can manage.

Make sure you can financially handle each contingency plan, no matter how healthy your parents are today.

Finally, triple check that your spouse is absolutely, positively, 100% on board with your and your parents’ plans. If they have any reservations, expect stormy seas ahead.

12. Rethink Your Housing

Your housing needs change and evolve over time. If you have children or aging parents living with you, you probably still need that large house that so many 40-somethings find themselves inhabiting.

But if you had children when you were on the younger side, they might already be moving out while you’re in your 40s. Do you really need that large suburban home with the huge yard, the high utility bills, and the constant maintenance work? Consider downsizing to simplify your life and your finances.

If you plan to move out of state, make sure you consider states with lower housing costs or lower tax burdens. For that matter, you could move to another country with a lower cost of living and live large on just $2,000 per month.

Or you can house hack to eliminate your housing payment entirely. Given that housing is the largest expense for most families, ditching it means supercharging your savings rate.

13. Ditch the Status Symbols

By your 40s, you’re old enough to let go of the conspicuous consumption and status symbols that distract so many younger adults — and keep them broke.

The paradox of wealth is that the more you spend on the appearance of wealth, the less actual wealth you have. Imagine that you could technically qualify for a $40,000 car loan at 6% interest to buy a BMW, or you could buy a used Hyundai for $5,000 in cash. In one scenario you borrow $40,000 over five years, racking up $6,398.60 in interest, for a total of $46,398.60. In the other, you pay $5,000 once and avoid a $773.31 monthly payment and five years of debt entirely.

Yes, the new BMW would be exciting for the first week or two. You’d get to show it off to your friends, to compulsory oohs and ahs. Then it would just fade into the background and serve the exact same purpose as the used Hyundai: a way to get from Point A to Point B.

Real wealth exists on paper, or more accurately in ones and zeroes in your brokerage account and other financial accounts. It’s not flashy, you can’t drive it or host friends to dinner parties there. But it will create passive income for you, let you retire early, pay for your kids’ college education, buy citizenship in another country, or let you live your ideal lifestyle.

Get over showing off your success, and start creating true wealth.


Career and Income

Your 40s should be prime earning years in your career. If you aren’t happy with your career or income, now is the time to make a change.

14. Beware of Stagnation

A troubling report by the New York Fed found that almost all of American men’s earning growth takes place before age 35. After that, income stagnates.

If your own career has gone a bit stale, you can read those findings in one of two ways. You could read it with fatalistic indifference, shrugging and saying “Guess it’s all downhill from here.” Or you can read it as a wake-up call, and slap yourself awake to go out and make that career change you’ve been considering before it’s too late.

The Fed study found an exception to the overall trend. The top 10% of earners didn’t see their income level off around age 35 — theirs kept rising.

Sort yourself into whichever camp you prefer, but take responsibility for the choice.

15. Keep Learning and Growing

How do you continue growing your income past age 35? By continuing to grow yourself.

Get new certifications to keep you in the top of your field. Get a new degree if it will help advance your career and earning potential. Subscribe to industry newsletters and publications, and financial newsletters to boost your investing IQ.

If you want to stay competitive, to continue climbing in your career, you need to become more knowledgeable than your peers. Average isn’t good enough if you don’t want your income to stagnate.

While you’re learning new skills, learn how to negotiate. You don’t get what you deserve in life, you get what you negotiate, so learn how to negotiate a higher salary, better benefits, and more flexibility in your work.

16. Consider a Fun Side Business

You might think side hustles are for 20-somethings. You’d be wrong.

Consider starting a business on the side of your full-time job. Do it for fun, do it for the experience, do it to make some extra money. It might just turn into your full-time gig rather than a side gig.

Your 40s are the prime age for starting a successful business. A study by the Census Bureau and two MIT professors analyzed 27 million startups, and found an average age of the most successful founders was 45. They went on to show that a 40-year-old founder was more than twice as likely to launch a successful company than a 25-year-old founder.

It turns out that your greater experience, professional network, and even wisdom actually go a long way in the world of entrepreneurship. Who’d have thought?


Investing and Planning

The future doesn’t look quite so far away once you reach your 40s.

If you feel behind on investing and planning for your financial future, it’s time to get cracking. As the proverb goes, the best time to plant a tree was 20 years ago. The second best time is now.

17. Set a Date for Financial Independence

I know middle-class people who retired in their 30s and early 40s. While that ship may have sailed for you, you can follow the same strategies they used to reach financial independence quickly.

If you’re willing to budget and save accordingly, that is.

As soon as you can cover your living expenses with passive income from your investments, you reach financial independence. Work becomes optional at that point, and you can go pursue your passions.

That might mean volunteering full-time, or working for a nonprofit, or simply switching to that career that doesn’t pay a huge salary but which you always wished you’d had the courage to pursue. Or it could simply mean reducing your hours and spending more time with your family, or just retiring young.

Read up on how much you need for retirement and how much to save and invest in order to reach financial independence quickly. You might be surprised at how feasible it is once you get serious about saving and investing.

Set a target date, and make it happen.

18. Take Advantage of Matching Contributions

If your employer offers to match your contributions to a retirement plan, it’s effectively free money. But you have to choose to take it.

There are plenty of financial questions that come with long-winded, complex answers. But this isn’t one of them — take full advantage of your employer’s matching contributions to your 401(k) or SIMPLE IRA. Full stop.

19. Reevaluate Your Investment Advisor

Do you have an investment advisor?

If not, and your net worth is under $500,000 or so, open an account with one of the best robo-advisors in the market. Many are free, and the others are affordable.

People with net worths over $500,000 can start thinking about using a human investment advisor rather than a robo-advisor. But the simple truth is that the better robo-advisors offer human hybrid investing at a fraction of the price of traditional human advisors, so you may be better off simply upgrading your robo-advisor to a human hybrid advising plan.

Regardless of what type of advisor you use, you should use an investment advisor, even if only a free robo-advisor. They can set an appropriate investment portfolio for you, automate your transfers and investments in it, and rebalance it automatically.

Pro tip: Have you considered hiring a financial advisor but don’t want to pay the high fees? Enter Vanguard Personal Advisor Services. When you sign up, you’ll work closely with an advisor to create a custom investment plan that can help you meet your financial goals. Learn more about Vanguard Personal Advisor Services.

20. Optimize Your Tax-Sheltered Accounts

The more money you shower on Uncle Sam, the less you have for your own long-term goals.

Take advantage of tax-sheltered retirement, education, and health care accounts to minimize your losses to the IRS. Combine your IRA contributions with an employer-sponsored retirement account. For that matter, consider using an HSA as another retirement savings account. It comes with the best tax advantages of any account in the U.S., after all.

Bear in mind that you may well owe higher taxes in retirement. Beyond contributing to a Roth IRA over a traditional one, consider rolling over your traditional IRA funds to your Roth IRA.

And if you want to help your children with their college costs, look to tax-sheltered accounts for them too.

21. Make a Plan for Your Children’s Education

You may decide not to help out with your kids’ college education expenses, and there’s nothing wrong with that. But if you do want to contribute something, follow a few rules.

First, prioritize your own retirement investments before your kids’ college expenses. Your kids have dozens of ways they can pay for college, but if you run out of money in your older years, you have almost no options.

Second, proceed with caution before investing in a state-run 529 plan. If your child goes to school in another state or overseas, or doesn’t go to college at all, you could get hit with penalties and red tape. Consider an ESA as another option, but it too requires that you put withdrawals toward education costs or suffer penalties.

Finally, don’t fall into the trap of thinking one-dimensionally about paying for your children’s education. Get creative, and combine many different ways to help them with education costs.

Invest flexibly, because you simply don’t know what your child will end up doing.

22. Stick with Stocks

In your 40s, you still have enough time on your side to stick with investing in high-return, high-volatility stocks rather than getting conservative with bonds. In the perpetual low-interest environment that has become the new normal in recent memory, bonds simply can’t generate high enough returns for someone still years away from retirement.

Yes, the stock market could crash. So what? You don’t need to withdraw the money any time soon. Consider it a fire sale and buy up even more stocks while they’re available at a discount.

23. Consider Diversifying into Real Estate

When most people think of real estate investing, they think of rental properties or flipping houses. Both of which are viable options, but they aren’t the only ones available.

If you don’t have the time or the stomach for buying real estate directly, consider investing through real estate crowdfunding platforms. Some work like real estate investment trusts (REITs), but you buy and sell shares directly from the company rather than on stock exchanges.

You can invest in equity REITs that own properties — whether apartment buildings, office buildings, or other types of real estate — or lend money secured against real estate. Some REITs combine both ownership and loans. Try Fundrise or Streitwise as private REITs that allow non-accredited investors.

Other crowdfunding platforms let you pick and choose loans to fund. For example, GroundFloor allows you to invest as little as $10 toward any given loan. They too allow non-accredited investors for short-term loans rather than long-term commitments.

But crowdfunding isn’t the only way to invest indirectly in real estate. Try these ideas to invest passively in real estate, without the 3am tenant phone calls.

24. Make an Estate Plan

If you don’t have an estate plan by your 40s, you certainly need one now.

Your will dictates who should raise your children if you die unexpectedly, along with how your assets should be divided, who must assume responsibility for seeing it done, and optionally other directives like your funeral wishes. Try Trust & Will as a simple but effective way to create a will.

But estate planning doesn’t end with your will. You should also lay out your health care wishes in a living will, advance directive, or power of attorney in case you become incapacitated. You might wish to create a trust.

Start with online estate planning services with a company like Trust & Will if you have modest assets with no complications. But don’t hesitate to speak with an estate planning attorney for more complex or nuanced questions and assets.

25. Track 3 Numbers Each Month

I like to track three simple numbers each month as a report card of my progress.

First, track your savings rate: the percentage of your income that went toward savings, investments, or extra debt payments. The higher your savings rate, the faster you build wealth.

Second, monitor your wealth by tracking your net worth. It fluctuates along with financial markets, but watching it grow over time reminds you why you’re saving and investing money rather than buying new clothing, gadgets, or other treats every month. Try Mint or Personal Capital to track your net worth automatically.

Finally, track your FIRE ratio or FI ratio. The acronym stands for financial independence/retire early, and it simply tracks the percentage of your living expenses that you can cover with passive income from investments. If you spend $4,000 per month and earn $1,000 in passive income, you have a FIRE ratio of 25%. Once you reach 100%, you’ve reached financial independence, and working becomes optional.

All told, tracking your progress need only take you around 10 minutes per month. But that which gets measured gets done, so measure your financial progress to keep your eyes on the prize.


Final Word

Your 40s can feel like you’re constantly running but never actually getting anywhere. You drive your children all over the city, every day of the week. You help your parents out whenever they need it, which becomes increasingly often. Meanwhile, you’re in your peak earning years, with all the demands that entails. None of which leaves much time for a social life, hobbies, or personal time.

With all that busyness, you probably don’t spare many thoughts for your finances and long-term goals. But a little forethought and a few smart money moves go a long way in helping you reach those financial goals faster, which in turn gives you more flexibility to create your perfect life.

Source: moneycrashers.com

American Express Delta Gold – 90,000 Miles + $200 Statement Credit [Last Day]

The Offer

No direct link, shows up when doing a dummy booking

  • American Express is offering a sign up bonus of 90,000 miles after $2,000 in spend within the first three months. You also get a $200 statement credit after your first Delta purchase within three months of account opening

The Fine Print

  • Statement credit issued approximately 8-12 weeks after you make a Delta purchase on your Card in your first 3 months.
  • Bonus miles will be issued after you make $2,000 in purchases on your new Card in your first 3 months.
  • Offer Expires 7/28/2021.

Card Details

  • Annual fee of $99 waived first year
  • Card earns at the following rates:
    • 2x miles per $1 spent on restaurants (including takeout and delivery), groceries and Delta purchases
    • 1x miles per $1 spent on all other purchases
  • $100 Delta Flight Credit when you spend $10,000 in purchases on your Card in a calendar year
  • First Checked Bag Free
  • 20% Back on In-flight Purchases
  • Receive Main Cabin 1 Priority Boarding on Delta flights

Our Verdict

Similar to the 70,000 miles + $400 deal we just posted but for $200 less and 20,000 more miles. I think this offer will only show if you do a dummy booking for award flights but not certain on that. Another great offer and will add this our list of the best credit card bonuses immediately. American Express doesn’t match bonuses unfortunately, but sometimes they offer courtesy points if you applied for a lower bonus recently.

Source: doctorofcredit.com

Dear Penny: Can My Criminal Ex-Husband Take My Social Security?

Dear Penny,

My spouse was in the Air Force National Guard on and off. He owned a private, profitable tree work, gutter cleaning, snow-plowing and roof-raking company. He hasn’t filed business or personal taxes since the mid-’90s. He NEVER paid into Social Security and has been involved in fraudulent activities. Is he still entitled to 50% of my Social Security?

I’ve been disabled since 2000. I’ve paid all the bills, while he has been stashing cash and trying to get me to return to work, all while working only on bending his right elbow and lying in court. 

His attorney told the court outright that he will NOT file taxes. Since he’s a hoarder, I believe he filled his friend’s dumpster and disposed of his paperwork in the friend’s outside furnace to impress his mistress.

-Hands Off My Social Security

Dear Hands Off,

Unfortunately, Social Security doesn’t have special rules for lying, cheating, no-good rotten scoundrel spouses. The rules that were meant to protect spouses who stayed at home for much of their marriage, often caring for a family, also apply to guys like your husband.

So yes, he’ll probably be able to collect up to 50% of your full retirement age benefit, whether you’re still married or you’re divorced.

You say your husband has been involved in fraudulent activities. Technically, if your husband were incarcerated for more than 30 days, any Social Security benefits would be suspended until his release. But this sounds like it’s a nasty divorce involving a deadbeat husband, rather than a criminal case.


That’s the bad news. The good news is that even if your ex gets Social Security based on your work record, it will never, EVER affect your benefit. If you remarry at some point, his benefit also wouldn’t have any impact on your current spouse.

Since your husband was in the National Guard off and on, I’m guessing he paid at least something into Social Security, even if it wasn’t much. What happens in this situation is that Social Security looks at whatever your husband qualifies for based on his own work record. Then they use his current or ex-spouse’s record to qualify him for extra benefits if applicable.

It sounds like this divorce is still underway. You’re probably not going to be able to prove how much cash he’s earned over the years or whether he torched his business records. Focus on what you can control. For example, anything you can do to prove you shouldn’t pay alimony or that any assets should go to you would be a far better use of your time and energy than worrying about his Social Security.

Hang on to any financial documentation you have, like bank statements and copies of bills you’ve paid, so that you can present them to an attorney. If you can’t afford an attorney, search the American Bar Association’s website to see if free legal assistance is available in your area.

Your ex’s Social Security benefit is out of your hands, and it doesn’t affect you. You can’t undo what sounds like a miserable couple of decades with this guy. But rather than getting angry about his Social Security, channel your energy toward building a life that he’s not part of.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].

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Source: thepennyhoarder.com

‘Star Trek’ Star Sells

You don’t have to travel to a galaxy far, far away to scope out this celebrity home sale.

Anton Yelchin, who plays the part of Pavel Chekov in J.J. Abrams’ refresh of the “Star Trek” franchise, has parted ways with his home in Tarzana. The Los Angeles Times brings word that the 24-year-old actor listed the home in May for $987,000 and recently sold the 2,725-square-foot property for $900,000 – realtor.com records indicate the sale is currently pending.

Yelchin, who has appeared in a number of other films — including “Alpha Dog,” “Like Crazy” and “Fright Night” — came to own the four-bedroom, four-bathroom split-level last year after his parents transferred ownership to him. They originally paid $670,000 for the home in 2003.

Built in 1975, the Braemar Estates home features a foyer with stained glass inlays, hardwood flooring and a living room with a fireplace. The kitchen has been recently remodeled and now sports granite countertops, tile flooring and stainless-steel appliances. Outside, the private yard sits shaded among mature foliage and boasts a wraparound pool and spa that overlooks the “elite” Braemer Golf Course and Country Club.

The young actor was recently tapped to appear in a modern-day adaptation of Shakespeare’s “Cymbeline,” joining a cast that includes Ethan Hawke, Ed Harris and Milla Jovovich. The modernized version of the timeless play is said to be “in the vein of ‘Sons of Anarchy’ and in the style of ‘Romeo + Juliet,’” which sounds amazing.

Gus Bolona of Rodeo Realty handled the listing.

Source: realtor.com

Empty Cubicles? Many Workers Want to Stay Home

September marks the beginning of a new school year, and children who have been learning remotely won’t be the only ones adjusting to a new environment. Millions of employees are returning to work as companies reopen their physical offices. But many employees are hesitant to return to the office—either because of pandemic-related concerns or because they’ve discovered they prefer working from home.

A survey by FlexJobs.com found that 58% of workers said they’d look for a new job if they cannot continue remote work in their current role. But before you give notice, there are steps you can take to navigate changes to your workplace—and your budget.

If you want to continue working from home, you’ll need to negotiate that with your supervisor. But first, prepare talking points that highlight how your remote work will benefit your employer, says Toni Frana, a career coach at FlexJobs. Instead of explaining how working from home will help you, she says, focus on how it will increase your productivity.

Your employer may also be more receptive to an arrangement in which you work remotely part of the time rather than full-time. In May, Google announced that it would adopt a hybrid work week, requiring in-person office work for only three out of five days starting in September. Other companies—especially in the technology sector—are also developing hybrid work models.

Still, while some com­panies are open to hybrid work schedules, others want their employees back in the office full-time. If your employer falls into that group, leverage your bargaining power, says Alison Green, founder of the Ask a Manager website and author of Ask a Manager: How to Navigate Clueless Colleagues, Lunch-Stealing Bosses and Other Tricky Situations at Work. At a time when many companies are struggling to fill open jobs, managers may be forced to be more receptive to your concerns, she says.  

Anticipating a changing budget. Nearly 60% of Americans who worked from home at some point during the pandemic said it had a positive effect on their personal finances, according to a survey by Bankrate.com. People who were able to work remotely saved money on expenses such as transportation, lunches, workplace attire and child care, says Bankrate analyst Ted Rossman. To cut your back-to-work costs, ask your employer if it plans to offer (or reinstate) sub­sidies for parking or mass transit. If you have unused funds in a pretax commuter benefits account, make sure to use them. And now that you’ve learned how much money you can save by cooking at home, you may be inspired to start bringing your lunch to work.

chart of how much money people save working at homechart of how much money people save working at home

Source: kiplinger.com