A profound shift in retirement trends has been underway in America in the last couple of generations. The landscape has shifted from retirements funded largely through pensions and Social Security to retirement years that will be heavily dependent on individual savings, with relatively less help from Social Security. Meanwhile, the leading edge of the Baby Boom has begun retiring. The financial industry, eager to cash in on a perceived demographic windfall, is busy creating new investment products that claim to meet every retirement need. Retirement savers have lots of options, but without a good understanding of personal finance, they’re likely…
Today I’d like to offer a simple explanation for how life insurance “works.” This discussion will also lay a foundation for discussing the difference between term and permanent life insurance. The first post in this series, on the reasons someone might need life insurance, is worth reading if you’re not sure whether you need life insurance.
Suppose that you’re a 20-year old male and you’ve decided that you need some life insurance. For the purpose of this illustration, let’s assume you’ve determined that you need $1,000,000 in coverage for an indefinite period of time. Let’s also assume that you …Read More
If you have a longer-term CD that is now coming to maturity, you’ve probably been disappointed to discover how much interest rates have dropped since you last locked in your CD rate. What are the best options for those with short-to-medium-term cash to invest these days?
My first observation is a warning: you should scrutinize closely any investment that is not a straightforward money market fund or CD. Why? Because there are quite a few short-term cash “alternatives” being touted right now; among these are a variety of ultrashort bond funds, bank loan funds, and exchange-traded notes.
With interest rates …Read More
Many homeowners struggling to keep up with mortgage payments are probably using their credit cards to make ends meet. Now, apparently, people who can’t pay their mortgages have a new alternative: they can charge their monthly mortgage payments to a credit card directly. I wish I were making this up, but I’m not.
Paul Jackson at housingwire.com has noted various firms that let people make mortgage payments with plastic. Last year, American Express, which should know better, began piloting a charge-your-mortgage-payment service in collaboration with two mortgage lenders that are (surprise!) now down for the count. Actually, that’s not quite …Read More
I previously discussed a loophole in the Social Security law that allows current retirees to pay back the benefits they’ve received (without interest) and restart the Social Security clock at a higher benefit level. Recently, I discovered two additional unusual Social Security strategies.
Boston College maintains a Center for Retirement Research that publishes all sorts of interesting working papers and studies about retirement. Recently, the center published a short worksheet discussing three Social Security strategies that it dubbed “Strange, but True.”
The first item is the scheme that I discussed back in May; it arises from a loophole that …Read More