Cómo crear un presupuesto de emergencia para hacer frente al COVID-19

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El COVID-19 ha producido un gran impacto en la vida de muchas personas y en las economías de todo el mundo. Debido a las empresas que pasaron a trabajar de forma remota, a los restaurantes que cerraron sus puertas y a la caída de la bolsa de valores, se frenó gran parte de la economía estadounidense y esto ha afectado a millones de ciudadanos del país. Desde que el brote de coronavirus llegó a los Estados Unidos, más de 10 millones de estadounidenses han solicitado beneficios por desempleo con la esperanza de recuperar el ingreso recientemente perdido.

Si, al igual que muchos estadounidenses, estás haciendo frente a la crisis ocasionada por el COVID-19, es probable que te preocupe tu situación financiera. Independientemente de que la pandemia haya afectado o no tu salario o estilo de vida, es importante mantener la estabilidad financiera durante estos tiempos de tanta incertidumbre. La mejor forma de evitar una emergencia financiera es preparar un presupuesto para tal fin que funcione para ti y para tu hogar.

Proteger tus finanzas en medio de una pandemia mundial puede parecer una hazaña imposible, pero con el presupuesto correcto, puedes prepararte adecuadamente para los gastos imprevistos que puedan surgir. Si usas esta guía, te ayudaremos con el proceso de crear un presupuesto de emergencia y lograr la tranquilidad que mereces durante estos tiempos sin precedentes.

¿Qué es un presupuesto de emergencia?

En esencia, un presupuesto de emergencia prioriza la supervivencia por encima de todo lo demás. Si bien es similar a tu presupuesto semanal o mensual promedio, un presupuesto de emergencia elimina todos los gastos innecesarios y solo cubre tus necesidades y responsabilidades financieras básicas.

Si se usa de forma efectiva, un presupuesto de emergencia puede proporcionar un margen financiero adicional que te permita depositar más dinero en un fondo de emergencia o, simplemente, que el dinero te dure más. En la medida que el COVID-19 ejerce presión en su bienestar financiero, muchos estadounidenses enfrentan una realidad que los obliga a reducir los costos y volver a priorizar los gastos.

Debido a la naturaleza impredecible del coronavirus, esperar lo inesperado debe ser una pieza fundamental del rompecabezas que supone planificar tu presupuesto. Por último, tu presupuesto de emergencia debe contemplar los costos necesarios para llegar a fin de mes y todos los ingresos sobrantes deberían ir a un fondo de emergencia.

Cómo crear un presupuesto de emergencia: guía paso a paso

Crear un presupuesto de emergencia es muy similar a crear tu presupuesto mensual habitual; sin embargo, en lugar de asignar fondos a gastos tales como cuotas de gimnasio o cenas en restaurantes, debes enfocarte más en cómo cubrir las necesidades básicas y dedicar el resto a asegurar tu estabilidad futura.

Toma una calculadora y ten a la mano tus presupuestos pasados para ver paso a paso cómo crear un presupuesto de emergencia.

Paso 1:  Evaluar tu presupuesto actual

Para crear un presupuesto de emergencia exitoso, primero debes entender el estado de tus finanzas antes de la pandemia. Tu presupuesto actual revelará todo lo que debes saber acerca de tus gastos actuales y adónde va tu dinero.

Haz una lista de todos tus gastos mensuales, que incluya los gastos periódicos y los variables así como las necesidades y los deseos. Para tener una imagen más clara de estos cargos, tal vez te ayude revisar tus transacciones en Mint o en tus estados de cuenta bancarios o de tu tarjeta de crédito. Suma el total de estos gastos para calcular tus gastos mensuales.

Ahora comparemos tus gastos mensuales con tu ingreso actual. Esto es fundamental si has perdido tu empleo recientemente o te han reducido el salario. Esta comparación te brindará información precisa sobre cómo tendrás que modificar tus gastos para cubrir las necesidades básicas y asignar el ingreso residual a gastos futuros o a un fondo de emergencia.

Paso 2: Dividir tus gastos

Una vez que hayas hecho una lista completa de tus gastos mensuales, divídelos en dos categorías: gastos necesarios e innecesarios. Dado que lo esencial en cuanto al estilo de vida varía según cada persona, eres tú quien debe distinguir entre tus necesidades y tus deseos. Ten en cuenta que, a cuantos más deseos puedas renunciar, más dinero tendrás para cubrir necesidades más adelante.

Para ayudarte a empezar, usa estas listas de necesidades comunes y gastos innecesarios:

Necesidades: también conocidas como gastos fijos. Incluyen todo lo que garantice que cubras tus necesidades básicas. Estos son algunos ejemplos:

  • Alimento
  • Transporte
  • Seguro
  • Alquiler o hipoteca
  • Cuidado de niños
  • Servicios públicos
  • Pago de préstamos
  • Servicio básico de telefonía e Internet

Gastos innecesarios: abarcan los costos de cosas que en realidad no necesitas y deberían ser los primeros en eliminarse o volver a evaluarse a la hora de crear tu presupuesto de emergencia. Estos son algunos ejemplos:

  • Suscripciones a servicios de entretenimiento (streaming, videojuegos, etc.)
  • Comidas en restaurantes
  • Compras
  • Pasatiempos
  • Cuota del gimnasio

Paso 3: Ajustar tu presupuesto

Si entiendes visualmente cómo se dividen tus finanzas entre necesidades y deseos, puedes tomar decisiones más inteligentes y calcular mejor tu presupuesto de emergencia. Independientemente de que estés atravesando o no dificultades financieras, es importante hacer los ajustes de presupuesto necesarios para evitar números negativos si surge una emergencia médica o se produce un cambio radical en tu vida.

Reconstruir tu presupuesto significa determinar cuáles gastos mantener o recortar y encontrar formas de reducir los gastos fijos periódicos. Vamos a analizar esto.

Decidir cuáles gastos mantener o recortar

Determinar cuáles gastos mantendrás y cuáles eliminarás queda a tu entera discreción; sin embargo, debes tener en cuenta que, cuantos más gastos innecesarios puedas recortar, mejor.

Esto puede significar cancelar tus suscripciones a servicios de streaming y la cuota de las clases de yoga a fin de tener más dinero en tu presupuesto del mes próximo para comprar artículos de almacén.

Buena parte del país tiene instrucciones de quedarse en casa, por lo cual eliminar los costos de cenar en restaurantes, las cuotas del gimnasio y los gastos de salidas nocturnas debería ser relativamente sencillo, dado que estos establecimientos ya no están abiertos al público. En virtud de este cambio, haz tu mayor esfuerzo para convertir una situación limitativa en una de crecimiento. Desempolva un viejo juego de mesa para reemplazar tus métodos de entretenimiento más costosos o prueba una nueva receta para saciar tus ganas de tener una cena fina.

La gran mayoría de nuestras necesidades probablemente estarán incluidas en tu presupuesto de emergencia ajustado y, de aquí en adelante, siempre deberían ser los gastos prioritarios de cada mes.

Reducir los gastos fijos

Una vez que hayas eliminado todos los gastos innecesarios, puedes definir mejor los detalles de tu presupuesto de emergencia. Repasa tu lista de gastos esenciales y fíjate cuáles se pueden reducir. Te asombrarás al descubrir cómo se pueden reducir muchos costos fijos para ajustarse mejor a este momento de dificultad financiera.

Aunque la mayoría no lo sabe, las empresas de servicios públicos, las compañías de cable y los proveedores de telefonía móvil estarán dispuestos a trabajar contigo para encontrar un plan más económico que les garantice que continúes siendo un cliente fiel. Negociar tus facturas de proveedores requiere de un poco de conocimiento y persistencia, pero tal vez descubras que puedes ahorrar $10 o $100 en una factura periódica con una simple llamada telefónica.

Paso 4: Explorar los beneficios disponibles

A luz de que la situación del coronavirus ha afectado a los estadounidenses, el Gobierno federal ha ampliado la ayuda que ofrece a aquellos que están en una situación más vulnerable. Desde paquetes de incentivo hasta la ampliación de los beneficios de desempleo, hay muchas medidas de asistencia disponibles y en progreso para las que puedes ser elegible.

El Servicio de Impuestos Internos de los Estados Unidos confirmó que, a partir del 30 de marzo de 2020, los contribuyentes con un ingreso bruto ajustado de $75,000 o menos son elegibles para recibir el pago de impacto económico otorgado por el Gobierno, que es de $1,200 y se paga por única vez. Las parejas casadas con un AGI de $150,000 o menos serán elegibles para recibir un cheque por $2,400 y hasta $500 más por cada hijo que califique. Siempre que hayas presentado una declaración de impuestos de 2019 o 2018, el IRS (Servicio de Impuestos Internos) calculará y enviará el pago a las personas elegibles mediante un depósito directo o un cheque por correo postal.

Los programas de ayuda por desempleo federales y estatales trabajan de forma conjunta para proporcionar asistencia financiera a aquellos que hayan perdido sus empleos sin justa causa. La  Ley de Ayuda, Alivio y Seguridad Económica en Respuesta al Coronavirus (CARES, por sus siglas en inglés), que se promulgó el 27 de marzo de 2020, otorga de forma activa beneficios de desempleo a trabajadores temporales o por proyecto, trabajadores independientes y empleados con licencias no pagadas.

El Programa de Compensación de Desempleo de Emergencia por la Pandemia (PEUC, por sus siglas en inglés) permite a los trabajadores que hayan agotado sus beneficios de compensación por desempleo recibirlos durante 13 semanas más. Este programa también otorga beneficios a trabajadores por proyecto o temporales, trabajadores freelance y contratistas independientes.

Según cuál sea tu situación en particular, es posible que seas elegible para varios programas de asistencia del Gobierno, que pueden ampliar los límites de planificación de tu presupuesto de emergencia.

Paso 5: Volver a evaluar tus objetivos financieros

Ante la posibilidad de una emergencia financiera, el objetivo más importante debe ser pagar tus facturas más esenciales. Para la mayoría, esto probablemente signifique tener que pausar cualquier otra meta para el futuro cercano y que la máxima prioridad sea llegar a fin de mes hasta que se restablezca el flujo de ingresos normal.

Los expertos en finanzas recomiendan tener un fondo de emergencia que permita afrontar los gastos de tres a doce meses a fin de protegerte de cualquier bache y proporcionar una base extra para atravesar tiempos difíciles. Al volver a evaluar tus objetivos financieros durante el COVID-19, céntrate en no alejarte de tu presupuesto de emergencia y en crear un fondo para el mismo fin.

Conclusión

En tiempos de gran incertidumbre, es esencial que mantengas tus finanzas en orden. Aunque no hay una respuesta universal en cuanto a cómo manejar una dificultad financiera, hay varias formas posibles de prepararse para ello. Si usas esta guía sobre presupuestos de emergencia, podrás tomar las medidas preventivas necesarias para asegurar que te mantengas estable y seguro durante la pandemia del COVID-19.

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How Rising Inflation Affects Mortgage Interest Rates

While the inflation rate doesn’t directly impact mortgage rates, the two tend to move in tandem. Rising inflation can shrink purchasing power as prices of goods and services increase. Higher prices can then influence the Federal Reserve’s interest rate policy, affecting the cost of borrowing for lending products like mortgages.

Homebuyers looking for a home loan and homeowners who want to refinance a mortgage need to know that mortgage rates may rise as inflation increases. Therefore, understanding the difference between the inflation rate, interest rates, and what affects mortgage rates matters for all home finance consumers.

Inflation Rate vs Interest Rates

Inflation is a general increase in the overall price of goods and services over time.

The Federal Reserve, the central bank of the United States, tracks inflation rates and inflation trends using several key metrics, including the Consumer Price Index (CPI), to determine how to direct monetary policy. A target inflation rate of 2% is considered ideal for maintaining a stable economic environment over the long run.

When inflation is on the rise and the economy is in danger of overheating, the Federal Reserve may raise interest rates to cool things down.

Interest rates reflect the cost of using someone else’s money. Lenders charge interest to borrowers who take out loans and lines of credit as a premium for the right to use the lender’s money.

Higher rates can make borrowing more expensive while also providing more interest to savers. People borrowing less and saving more can have a cooling effect on the economy.

When the economy is slowing down too much, on the other hand, the Fed can lower interest rates to encourage borrowing and spending.

Recommended: Federal Reserve Interest Rates, Explained

What Affects Mortgage Rates?

Inflation rates don’t have a direct impact on mortgage rates. But there can be indirect effects because of how inflation influences the economy and the Federal Reserve’s monetary policy decisions. Again, this relationship between inflation and mortgage rates is related to how the Federal Reserve adjusts interest rates to cool off or jump-start the economy.

The Federal Reserve does not set mortgage rates, however. Instead, the central bank sets the federal funds rate target, the interest rate that banks lend money to one another overnight. As the Fed increases this short-term interest rate, it often pushes up long-term interest rates for U.S. Treasuries. Fixed-rate mortgages are tied to the 10-year U.S. Treasury Note yield, which are government-issued bonds that mature in a decade. When the 10-year Treasury yield increases, the 30-year mortgage rate tends to do the same.

Recommended: Understanding the Different Types of Mortgage Loans

So in terms of what affects mortgage rates, movement in the 10-year Treasury yield is the short answer. Higher yields can mean higher rates, while lower yields can lead to lower rates. But overall, inflation rates, interest rates, and the economic environment can work together to sway mortgage rates at any given time.

A simple way to see the relationship between inflation rates and mortgage rates is to look at how they’ve trended historically . If you track the average 30-year mortgage rate and the annual inflation rate since 1971, you’ll see that they often move in tandem.

They don’t always move perfectly in sync, but it’s typical to see rising mortgage rates paired with rising inflation rates.

Inflation Trends for 2022 and Beyond

In March 2022, the U.S. inflation rate hit 8.5%, as measured by the Consumer Price Index. This increase represents the largest 12-month increase since 1981 and moving well beyond the Federal Reserve’s 2% target inflation rate.

While prices for consumer goods and services were up across the board, the most significant increases were in the energy, shelter, and food categories.

Rising inflation rates in 2022 are thought to be driven by a combination of things, including:

•   Increased demand for goods and services

•   Shortages in the supply of goods and services

•   Higher commodity prices due to geopolitical conflicts

The coronavirus pandemic saw many people cut back on spending in 2020, leading to a surplus of savings. In addition to government stimulus, these savings created a pent-up demand for purchases once the economy got back on track. However, the supply chains have not been able to catch up to demand.

Supply chain disruptions and worker shortages are making it difficult for companies to meet consumer needs. This has resulted in rapidly rising inflation to levels not seen in decades.

In March 2022, the Fed started to raise interest rates to tame inflation and will likely continue to raise interest rates throughout the year. Many analysts believe that inflation is peaking and will steadily decline throughout 2022. However, there is still a lot of uncertainty surrounding the economy that makes forecasting price trends difficult.

Recommended: 7 Factors that Cause Inflation

Is Now a Good Time for a Mortgage or Refi?

There’s a link between inflation rates and mortgage rates. But what does all of this mean for homebuyers or homeowners?

Rising inflation and higher interest rates have caused mortgage rates to spike at the fastest pace in decades, though mortgage rates are still near historic lows. As the Fed continues to pursue interest rate hikes, it could lead to even higher mortgage rates. It simply means that if you’re interested in buying a home, it could make sense to do so sooner rather than later.

Buying a home now could help you lock in a better deal on a loan and get a reasonable mortgage rate, especially as home values increase.

The higher home values go, the more important a low-interest rate becomes, as the rate can directly affect how much home you can afford.

The same is true if you already own a home and are considering refinancing an existing mortgage. However, when refinancing a mortgage, the math gets a bit trickier. You might need to determine your break-even point — when the money you save on interest payments matches what you spend on closing costs for a refinanced mortgage (a refi).

To find the break-even point on a refi, divide the total loan costs by the monthly savings. If refinancing fees total $3,000 and you’ll save $250 a month, that’s 3,000 divided by 250, or 12. That means it’ll take 12 months to recoup the cost of refinancing.

If you refinance to a shorter-term mortgage, your savings can multiply beyond the break-even point.

If your current mortgage rate is above refinancing rates, it could make sense to shop around for refinancing options.

Keep in mind, of course, that the actual rate you pay for a purchase loan or refinance loan can also depend on things like your credit score, income, and debt-to-income ratio.

Recommended: How to Refinance Your Mortgage — Step-By-Step Guide

The Takeaway

Inflation appears to be here to stay, at least for the near term. Buying a home or refinancing when mortgage rates are lower could add up to a substantial cost difference over the life of your loan. From a savings perspective, it’s essential to understand what affects mortgage rates and the relationship between the inflation rate and interest rates.

SoFi offers fixed-rate mortgages and mortgage refinancing. Now might be a good time to find the best loan for your needs and budget.

It’s easy to check your rate with SoFi.


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The 15 Best Value Stocks to Buy Right Now

In 2022, the old rules of investing have mostly gone out the window, but one thing hasn’t changed: Wall Street’s best value stocks continue to be an attractive place for investors to plunk down their money for the long term.

The S&P 500 is down roughly 10% year-to-date. War continues to rage in Ukraine and disrupt energy markets. And significant changes in interest-rate policy continue to upend investment strategies that have been profitable for several years running.

But that’s the thing about investing. If you want to get ahead, it’s important to think beyond the obvious opportunities and consider a holistic approach that will generate returns even in even challenging environments. That involves looking beyond fashionable growth investments to value stocks that might been roughed up of late but still offer long-term upside.

In hopes of finding the best value stocks for investors right now, we looked for:

  • Companies with a minimum market value of about $1 billion
  • Those with forward price-to-earnings (P/E) ratios below the broader market (for reference, the S&P 500’s forward P/E is currently at 18.8)
  • Those with price/earnings-to-growth (PEG) ratios below 1 (PEG factors in future growth estimates, and anything under 1 is considered undervalued)
  • Strong analyst support, with at least 10 Wall Street experts covering the stock and the vast majority of those issuing ratings of Buy or Strong Buy

A few of these companies have admittedly seen trouble lately, hence their sagging stock prices, but even then, their underlying businesses are sound. And considering the broader challenges to every company on Wall Street, it’s important for investors to focus on high-quality picks over the latest flashy growth narrative, regardless of recent performance.

Here are 15 of the best value stocks to buy now.

Share prices and other market data as of April 25. Analyst ratings courtesy of S&P Global Market Intelligence. Stocks are listed by analysts’ consensus recommendation, from highest score (worst) to lowest (best).

1 of 15

Boot Barn Holdings

rows of boots on shelvesrows of boots on shelves
  • Market value: $2.8 billion
  • Dividend yield: N/A
  • Forward P/E ratio: 16.8
  • Analysts’ ratings: 6 Strong Buy, 1 Buy, 4 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 1.82 (Buy)

Even if you’re the kind of person who wouldn’t be caught dead wearing a cowboy hat in public, don’t let your personal tastes get in the way of understanding the fundamentals that make Boot Barn Holdings (BOOT, $94.71) one of the most attractive value stocks in 2022.

Shares have soared roughly 800% over the past five years. That’s in response to a top line that has soared from just under $630 million in the fiscal year ended spring 2017 to what is projected to be nearly $1.5 billion at the end of this fiscal year.

Say what you want about cattleman hats, but you can’t disparage results like that.

But growth has become harder to come by in this niche retail model. More recently, that has weighed on shares, which are down about 30% from their 52-week highs in late 2021. With the worst of COVID-19 behind us, however, and given Boot Barn’s loyal customer base, there’s every reason to expect this retailer to keep putting up big numbers – including a stunning growth outlook of more than 60% revenue expansion this fiscal year.

That might make this recent pullback a chance to get in on one of Wall Street’s best value stocks, now that BOOT’s valuation is more in line with peer specialty retail stocks despite outsized growth projections.

It’s also worth noting that, unlike down-market goods, Western wear is a decidedly luxury category, despite what many might think. Quality boots and hats can run $500 or more. And history has shown that these kinds of purchases keep churning along even amid high inflation and other consumer pressures.

2 of 15

Tempur Sealy International

a Tempur Sealy buildinga Tempur Sealy building
  • Market value: $5.1 billion
  • Dividend yield: 1.4%
  • Forward P/E ratio: 8.3
  • Analysts’ ratings: 6 Strong Buy, 1 Buy, 4 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 1.82 (Buy)

The pandemic changed many behaviors and expectations, and among those were many consumers thinking hard about housewares for the first time in a few years. Since nobody could travel and we were all spending so much time in our homes and apartments, it was natural to finally pull the trigger on furniture upgrades that hadn’t seemed particularly urgent before COVID-19.

Mattress leader Tempur Sealy International (TPX, $28.70) rode that wave in a big way, watching shares rise more than four-fold from March 2020 through fall of last year. However, many investors have abandoned the stock lately on the idea that the upgrade cycle is over; indeed, TPX has lost nearly half its value since September 2021.

That has created a big opportunity for value investors. The 2013 mash-up of some of the biggest mattress brands on the planet gives this company deeply entrenched relationships with retailers. And while many folks are buying mattresses online these days, there’s one thing that TPX has that these e-commerce brands don’t: a massive hospitality business, which continues to look very strong as hotels look to an important summer travel season after the pandemic.

In fact, even though TPX stock is down more than 40% on the year, Wall Street is actually anticipating double-digit revenue growth and continued earnings improvement. While perhaps things got a bit overheated in this stock thanks to the “stay at home” trade, continued growth coupled with a more reasonable price now makes this mattress leader look like one of 2022’s best value stocks to buy right now.

3 of 15

Carter’s

A Carter's/OshKosh retail storeA Carter's/OshKosh retail store
  • Market value: $3.7 billion
  • Dividend yield: 3.3%
  • Forward P/E ratio: 9.9
  • Analysts’ ratings: 6 Strong Buy, 0 Buy, 4 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 1.80 (Buy)

When it comes to durable retail spending categories, it’s hard to find a store that is more reliable than Carter’s (CRI, $89.72). This go-to brand is focused on children’s clothing under its own nameplate, as well as under associated brands like iconic OshKosh overalls.

Kids keep growing and keep needing clothes no matter what, and upscale fashions make Carter’s stores a go-to destination for moms and grandmas everywhere.

Admittedly, the growth outlook is relatively modest here. Revenues are projected to expand by merely single digits both in 2022 and 2023. However, Carter’s is expected to squeeze plenty of blood from that stone, with earnings per share estimated to jump by 14% this fiscal year and another 11% in fiscal 2023 if current projections hold.

CRI has been investing heavily in e-commerce over the past few years, and in fact, its international segment posted an impressive growth rate of nearly 30% this last fiscal year in part because of digital successes.

OK, sure, international sales account for just 13% of total revenue. But this is exactly the kind of under-the-radar narrative that investors should look for in value stocks: outsized growth in a small business segment that will ensure strong operating results in the future, even if there’s no disruptive innovation on the horizon set to deliver instant gains.

Children’s wear is a durable spending category, and CRI remains one of the top brands in the space. With shares trading at a forward P/E of just about 10 right now, it might be worth looking at this retailer as a potential bargain stock.

4 of 15

Target

A Target store on a sunny dayA Target store on a sunny day
  • Market value: $111.7 billion
  • Dividend yield: 1.5%
  • Forward P/E ratio: 16.4
  • Analysts’ ratings: 15 Strong Buy, 7 Buy, 7 Hold, 1 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 1.80 (Buy)

Big-box shop Target (TGT, $241.66), at more than $110 billion in market value, is one of the largest U.S. retailers out there. But although Target takes great pains to offer higher-quality furnishings and more fashionable apparel than its down-market competitors, this big box giant is itself being discounted in 2022 – creating an ideal opportunity for those seeking out value stocks to buy right now.

Right now, Target’s market value is slightly below its projected revenue for next year, while competitors like Costco Wholesale (COST) are trading at a premium on this metric. TGT stock is also being discounted compared with earnings, with a forward P/E of 16.4 right now compared with a reading of almost 19 for the broader S&P 500 Index.

It’s also worth noting that while COVID-19 disruptions took their toll on many retailers, Target is actually riding a broader tailwind for its business thanks to the fact that is has adapted to the “omnichannel” approach of a digital age. Total sales are up almost $30 billion since 2019 thanks to a robust e-commerce presence, curbside pickup and an agile approach to compete in a digital age.

The dividend yield might not burn down the house – at 1.5%, it’s better than the broader S&P 500 but worse than 10-year T-note. But Target is a Dividend Aristocrat that has strung together half a century’s worth of uninterrupted payout growth – and with annual payouts just totaling $3.60 per share and earnings set to approach $16 per share next fiscal year, there’s more than enough headroom for increased dividends down the road.

And for those concerned with environmental, social and governance (ESG) traits, note that Target also has earned a place among our Kiplinger ESG 20.

5 of 15

D.R. Horton

A D.R. Horton home is under constructionA D.R. Horton home is under construction
  • Market value: $26.3 billion
  • Dividend yield: 1.2%
  • Forward P/E ratio: 4.5
  • Analysts’ ratings: 11 Strong Buy, 4 Buy, 6 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 1.76 (Buy)

A $26 billion homebuilding company, D.R. Horton (DHI, $74.19) has a pretty easy-to-understand business. It acquires land, builds residential homes on the sites, then sells the finished houses for a hefty profit.

It operates under the D.R. Horton brand, as well as Express Homes, Emerald Homes and Freedom Homes. It also offers mortgage financing and related services to help put buyers in their new homes.

If you own a home or are shopping for a home right now, chances are you’re attuned to the ever-rising values in most markets. But to give newcomers an example, home prices in March surged 15% year-over-year to set yet another record, proving this red-hot sector is far from cooling off.

DHI, however, has rolled back as investors have gone “risk off” in 2022, with shares now off about 35% from 52-week highs set in November. Part of the reason is because folks are afraid that higher interest rates could result in higher mortgage costs and thus scare off potential homebuyers.

At least so far, that has not been the case. No small wonder. Consider that the National Association of Realtors estimated that in March the inventory of homes actively for sale on a typical day in March decreased by 19% compared with the prior year. There is simply not enough supply for the buyers that are out there, and interest rates aren’t rising enough to make enough of those buyers reconsider.

That adds up to a compelling story for DHI. Couple that with a bargain valuation, including a forward price-to-earnings ratio that is below 5 right now, and it’s worth considering staking your claim to one of today’s best value stocks in the housing space.

6 of 15

Huntsman

worker spraying waterproof layer on concreteworker spraying waterproof layer on concrete
  • Market value: $7.3 billion
  • Dividend yield: 2.5%
  • Forward P/E ratio: 8.6
  • Analysts’ ratings: 10 Strong Buy, 3 Buy, 5 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 1.72 (Buy)

Chemicals company Huntsman (HUN, $34.19) produces products worldwide including polyurethanes, dyes, epoxies and other materials. It’s not a particularly glamorous business, making these raw materials for end-users to craft their own finished goods. However, Huntsman’s chemical operations are incredibly reliable, and they’re seeing strong demand across the board as the global economy recovers in the wake of the pandemic.

As proof: A few months ago, Huntsman posted Street-beating sales and earnings for the fourth quarter of 2021, and it provided strong guidance for 2022. That’s not just because of improving demand broadly, but also because of higher prices it can command as a result of the current inflationary environment.

Thanks in part to these strong results, HUN also has been blessed by a Standard & Poor’s upgrade to its credit rating in April that will help the chemicals company access financing at better rates going forward.

Value investors will be interested to learn that Huntsman is incredibly committed to its shareholders. It recently doubled its stock buyback program to $2 billion in the wake of recent success, and it has already bought up more than $100 million under that authorization. It also recently increased its dividend by 13%, to 21.25 cents per quarter – that’s 70% from the 12.5-cent quarterly payout it provided as recently as late 2017.

And with payouts at less than 20% of next year’s earnings, there is ample upside for future dividend increases, too.

7 of 15

Corning

Glass similar to that made by CorningGlass similar to that made by Corning
  • Market value: $29.1 billion
  • Dividend yield: 3.1%
  • Forward P/E ratio: 14.4
  • Analysts’ ratings: 7 Strong Buy, 4 Buy, 3 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 1.71 (Buy)

Although it got its start as a specialty glass company was back in 1851, Corning (GLW, $34.42) has a long history of high-tech partnerships – from working with Thomas Edison on his early lightbulbs to leading the charge on cathode ray tubes that powered the first generation of televisions to modern fiber optic cable and touch-screen displays.

In fact, its chemically strengthened Gorilla Glass is currently the gold standard for mobile devices. It is designed to be thin, responsive and damage-resistant – all must-have characteristics for phones and tablets. 

Corning has been a slow-and-steady performer compared with some of the flashier names in technology. But there is definitely still growth here. GLW produced an outsized spurt in 2021, with revenues up nearly 25% year-over-year. Looking forward, estimates are still for mid- to high-single-digit sales improvement over the next couple years. And promisingly, Corning has largely sidestepped most of the supply-chain issues plaguing many manufacturers; indeed, CEO Wendell Weeks said earlier this year that its biggest problem wasn’t supplies or labor, but capacity to meet high demand!

On top of that, GLW offers a decent dividend north of 3%. That dividend is growing, too, up to 27 cents quarterly at present compared with 10 cents per quarter back in late 2014. And with annual earnings per share of more than $2.60 projected next fiscal year, that dividend isn’t just sustainable but also ripe for future increases down the road.

When looking for the best value stocks – those that can perform over the long run – a stock like Corning is a great example of taking an alternative approach to fashionable trends to avoid some of the volatility. Nobody thinks of this glass company first when plotting investments in tech, and that allows for moments like this when shares are more reasonably priced than some other assets out there.

8 of 15

Wells Fargo

Wells Fargo bankWells Fargo bank
  • Market value: $173.7 billion
  • Dividend yield: 2.2%
  • Forward P/E ratio: 10.6
  • Analysts’ ratings: 13 Strong Buy, 8 Buy, 5 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 1.69 (Buy)

Among financial stocks, the $180 billion financial powerhouse Wells Fargo (WFC, $45.83) in many ways was, for a time, in a class by itself. However, the company has piled up a number of black marks on its corporate record in recent years that have caused many investors to think twice about putting their money behind WFC stock.

One of the biggest challenges started in late 2016, with news that some Wells employees were opening checking and savings accounts for clients without their consent. There was also word that Wells was misleading businesses on corporate credit card fees, followed by a 2018 move by the Federal Reserve announcing it would restrict the bank in response to “widespread consumer abuses and compliance breakdowns.”

Understandably, some folks have abandoned WFC stock in recent years – including even Warren Buffett, who exited almost all of his stake last year. And that’s not without cause. But as with so many things, the race for the exit has created a buying opportunity for value-minded investors.

WFC stock currently trades for a price-to-book ratio of just 1.1, compared with closer to 1.3 for Bank of America (BAC) and 1.5 for JPMorgan Chase (JPM), and 1.7 for “super-regional” U.S. Bancorp (USB). So while Wells remains one of the biggest banks in the U.S., it’s still treated as an also-ran compared to large peers.

But with interest rates on the rise, creating a tailwind for most lenders, it’s worth considering whether the negativity around past transgressions has turned Wells Fargo into one of the banking industry’s best value stocks to buy.

9 of 15

ConocoPhillips

deepwater oil rig for drillingdeepwater oil rig for drilling
  • Market value: $118.8 billion
  • Dividend yield: 1.6%
  • Forward P/E ratio: 8.9
  • Analysts’ ratings: 14 Strong Buy, 9 Buy, 3 Hold, 1 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 1.67 (Buy)

Everyone who has filled up their car with a tank of gas recently knows all too well how inflationary pressures have gripped the energy sector in a big way over the last year or so. And as a result, many oil and gas stocks have seen strong performance as well.

With crude oil prices at around $100 per barrel presently, that has created continued tailwinds for Big Oil names such as ConocoPhillips (COP, $91.66). It’s not the biggest firm in the oil patch, but it’s still a major player at nearly $120 billion in market value and a global energy business that explores, develops and produces oil and natural gas worldwide. And unlike the big integrated energy giants, COP mostly operates in “upstream” operations (exploration and production), meaning it’s uniquely positioned to make the most of the current environment.

Case in point: As a result of inflationary pressures across all energy commodities these days, the company is plotting revenue growth of more than 25% this fiscal year.

An investment in ConocoPhillips certainly carries risks, insofar that a significant rollback in oil prices would likely disrupt the stock the same way we saw rising prices create better performance. However, COP is making big structural moves lately that should ensure shareholder value for many years to come.

Specifically, COP plans to return 30% of operating cash to shareholders with a predicted outlay of $65 billion back to shareholders from 2022 through 2031. That follows a $1 billion boost to its stock buybacks last year.

These are significant figures that should make any value investor a believer in this stock.

10 of 15

General Motors

General Motors' Hummer electric vehicle is built in a GM ZERO plantGeneral Motors' Hummer electric vehicle is built in a GM ZERO plant
  • Market value: $57.9 billion
  • Dividend yield: N/A
  • Forward P/E ratio: 6.0
  • Analysts’ ratings: 12 Strong Buy, 7 Buy, 4 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 1.65 (Buy)

Traditional automakers have struggled for a host of reasons in recent years.

For starters, younger generations of Americans simply aren’t as concerned with driving or car ownership. Then there’s the electric vehicle revolution that has put many legacy brands behind the 8-ball when it comes to innovation. And to top it all off, major disruptions to semiconductor supply chains have created bottlenecks, preventing car manufacturers from tapping into pent-up demand.

However, these circumstances have also scared off many investors who do not see the underlying value in car stocks such as General Motors (GM, $39.82).

GM currently trades for just six times earnings estimates – more than three times lower than the typical S&P 500 stock right now. Furthermore, it trades for a slight discount to book value and at half next year’s projected revenue. These kind of metrics are a value investor’s dream.

To be clear, GM’s bargain price isn’t because of, say, disturbing growth projections that warrant this discount. Rather, GM is projected to see an impressive 23% growth in the top line this year. And while earnings are set to take a hit in fiscal 2022, they are forecast to make up all the lost ground and then some in fiscal 2023.

The automotive market assuredly is full of risk and uncertainty. However, GM has a long history and strong brand recognition that should serve it well, especially as the company shows that it’s willing to be flexible.

At these prices, GM stock could be one of the sneakiest value stocks to buy now.

11 of 15

Skechers

Skechers shoes are shown behind the window of a storeSkechers shoes are shown behind the window of a store
  • Market value: $6.3 billion
  • Dividend yield: N/A
  • Forward P/E ratio: 13.6
  • Analysts’ ratings: 8 Strong Buy, 2 Buy, 3 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 1.62 (Buy)

Skechers U.S.A. (SKX, $39.24) is a roughly $6 billion footwear company that continues to connect with consumers and build on its already impressive brand.

But what really makes Sketchers one of the best value stocks to buy now is its direct sales operations that continue to boost margins and drive real results for shareholders. In February, for instance, Skechers reported that its direct-to-consumer segment posted more than 30% year-over-year gains during the fourth quarter.

And looking forward, the brand continues to explore new products via its “comfort technology” and predicts yet another record year in 2022 as it rides growth trends even higher.

SKX stock has struggled over the past year. Shares are off by about 25% over the past 12 months as some investors have questioned whether recent growth trends can continue. Well, the pros are projecting low-double-digit revenue growth in each of the next two years – and similar expansion on the bottom line next year before a 24% explosion in profits in 2023.

Meanwhile, Skechers is helping its own cause, authorizing a $500 million stock buyback program in February to help prop up its shares.

Despite all this, SKX stock still trades for a slight discount to annual sales and a forward price-to-earnings ratio of about 13 right now – significantly lower than both the S&P 500 as well as other top consumer discretionary stocks. With continued growth ahead and continued investment in the high margin direct-to-consumer arm of its business, there’s good reason to expect Skechers has what it takes to succeed going forward.

12 of 15

Lowe’s

Lowe's storeLowe's store
  • Market value: $132.5 billion
  • Dividend yield: 1.6%
  • Forward P/E ratio: 14.8
  • Analysts’ ratings: 18 Strong Buy, 4 Buy, 7 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 1.62 (Buy)

While Home Depot (HD) might be the go-to name in home improvement, investors would be wise to not sell short its competitor Lowe’s (LOW, $200.38). Consider that while Home Depot has roughly 2,300 locations in the U.S., Lowe’s commands roughly 2,000 locations of its own. However, HD is valued at $315 billion while Lowe’s market capitalization is almost a third of that, at $130 billion or so.

And as long as we’re comparing, Lowe’s boasts a forward price-to-earnings ratio of less than 15 and a price-to-sales of about 1.4 while HD has a forward price-to-earnings ratio of about 19 and a price-to-sales ratio of 2.1.

In other words, Home Depot might be the larger DIY chain, but that’s in part because investors are paying a significant premium for shares.

And this discount comes despite the fact that Lowe’s has delivered better returns across most timeframes, including a 159% total return (price plus dividends) over the past five years versus 124% for HD. Helping that total return is one of the most consistent dividends on Wall Street – Lowe’s is another Dividend Aristocrat, having raised its payout annually for 59 consecutive years.

If you’re looking for value stock picks, Lowe’s is the better buy among DIYs.

13 of 15

Air Lease

An airplane like the ones Air Lease leases out to customersAn airplane like the ones Air Lease leases out to customers
  • Market value: $5.0 billion
  • Dividend yield: 1.7%
  • Forward P/E ratio: 9.5
  • Analysts’ ratings: 4 Strong Buy, 4 Buy, 0 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 1.50 (Strong Buy)

Air Lease (AL, $43.76) is an aircraft leasing company concerned with the purchase and leasing of aircraft worldwide. Right now, it owns just shy of 400 planes and is benefiting from a resurgence in air travel now that the coronavirus pandemic is on the wane.

The fundamentals of Air Lease are looking up thanks to improving air travel trends, as evidenced by a projection of 15% revenue growth this fiscal year and then roughly 18% growth the following year.

But despite this tailwind (pardon the pun), AL stock is still reasonably priced with a forward price-to-earnings ratio of about 9 right now. That’s less than half the S&P 500 average at present.

In February, Air Lease said that its lease utilization rate for both 2021’s fourth quarter and full year was an amazing 99.8%. There is no better metric of success for a company like this, proving that its existing resources are in high demand. Additionally, the triple-net lease model of Air Lease requires that the users of its planes pay for the taxes, insurance, and maintenance regardless of whether those planes are grounded or flying. All of this means a higher likelihood that money will continue to roll in for the foreseeable future.

With COVID-19 on the wane and an uptrend in air travel trends this year, the stage is set for AL stock to finally take off after years of stalling. But the time to buy should be soon, while it’s still one of Wall Street’s top value stocks.

14 of 15

Signature Bank

Skyscrapers in a big citySkyscrapers in a big city
  • Market value: $16.4 billion
  • Dividend yield: 0.9%
  • Forward P/E ratio: 13.2
  • Analysts’ ratings: 10 Strong Buy, 7 Buy, 0 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 1.41 (Strong Buy)

Signature Bank (SBNY, $261.06), a roughly $16 billion regional bank stock, is riding the tailwind that has benefited most financial firms in the last several months: namely, higher interest rates that have lifted margins on loans. 

Signature boasts about $120 billion in assets under management, mostly in major metro areas including New York, Charlotte and San Francisco. The company primarily serves local consumers and businesses through conventional offerings including checking accounts, real estate loans and lines of credit. But beyond that, SBNY also is a major player in high-growth areas like cryptocurrency trading via its Signet platform, as well as slow-and-steady business lines such as insurance that help ensure strong long-term performance.

Thanks to the uptrend in operations lately, SBNY is projecting big-time increases in its operating metrics, including a nearly 45% jump in revenue this year. The bottom line is expected to expand by just as much.

Many segments of Wall Street that can wax and wane, and financials are no exception. But Signature Bank’s wide and sustainable footprint will serve it well in the current rising-rate environment. It’s not as large as other diversified financials, but it’s trading at levels that put it among the top value stocks to buy right now.

15 of 15

Micron Technology

semiconductorssemiconductors
  • Market value: $78.3 billion
  • Dividend yield: 0.6%
  • Forward P/E ratio: 6.1
  • Analysts’ ratings: 26 Strong Buy, 7 Buy, 4 Hold, 0 Sell, 0 Strong Sell
  • Analysts’ consensus recommendation: 1.41 (Strong Buy)

Data storage leader Micron Technology (MU, $70.12) is a company that has deep roots in the modern digital economy. Founded back in 1978 – in Idaho, of all places – Micron carved out a niche in semiconductor design that has ultimately kept it at the cutting edge of the tech sector for more than three decades.

Nowadays, Micron specializes in data storage technologies, including for graphics and servers, as well as mobile-focused solutions known as dynamic random-access memory (DRAM). And it’s this sustained growth in the memory market that looks to provide the biggest tailwind for MU stock in the years to come.

Just look at the numbers. Micron is projected to enjoy more than 20% revenue growth in both fiscal 2022 (the current year for MU) as well as 2023. And that will more than filter down to the bottom line. The pros are looking for 50%-plus growth in earnings per share this fiscal year, then another 30% growth in 2023.

Yes, semiconductor stocks are up against the ropes right now. And yes, there are perhaps more interesting stocks in the space than MU. However, with a forward price-to-earnings ratio of just over 7 right now and strong growth projections for the next two years, it might be worth looking to this unsung chip play at its current bargain valuation.

Source: kiplinger.com

Does a Year Make a Difference? How to Know Whether to Retire Now or Later

senior making a decision
Syda Productions / Shutterstock.com

This story originally appeared on NewRetirement.

In some cases a year can make a huge difference. Think back to 2019. It was certainly different than 2020 (to say the least). But sometimes years go by and not all that much has changed. Knowing when to retire is a huge decision. It can be easy to put it off a year and then again another year.

Do those years really make a difference in the grand scheme of things? The answer largely depends on your perspective, but the answer is yes. Our choices about when to retire — even waiting just a year — impact both our financial as well as our emotional well-being.

Current and Future Value of Your Decision

Older couple thinking about their long-term investments
ESB Professional / Shutterstock.com

When figuring out when to retire, you need to think about both the present and your future. What does delaying retirement net you now? What does it mean to your future?

For example: If you retire earlier, can you still afford your future? If you delay retirement, can you be more financially secure without regretting the extra year working?

Let’s take a look at what the real differences are when you delay your retirement one year. What about if you wait another five years or longer?

1. Your Time

Grandparents spend time with their grandchildren at home on a sofa
Monkey Business Images / Shutterstock.com

Your time is your most valuable resource. And, let’s face it, how you spend your time gets increasingly more important as you age. You have fewer years ahead of you and you want to make the best use of them.

You should probably consider time as an important component in your when-to-retire decision-making. What does delaying retirement for a year or more mean if you value your time?

If you are happy, fulfilled, and are finding meaning in your work, then there is probably no need to rush to retirement. However, if there are other ways to spend your time that you think are more important, then you might want to prioritize retirement sooner rather than later.

Ashley Whillans, an assistant professor at Harvard Business School, writes about how to think about and value your scarcest resource, your time, in her book, “Time Smart: How to Reclaim Your Time and Live a Happier Life.”

She became interested in the value of time after observing that people don’t spend money for optimum happiness.

Here is what she said on the NewRetirement podcast, “If people are not spending one resource that’s so precious in our lives, money, in a way that promotes happiness, I’m sure that they’re probably not optimizing the way they spend their time, either. And we also became really interested in trying to understand the trade-offs that we make between time and money.”

She advocates taking time seriously. “So I do hear from a lot of my MBAs, a lot of the executives I chat with, saying, ‘Well, once I get this title, once I hit this number in the bank, then I can start focusing on what I would like to do with my time. But it’s not until I achieve this title or achieve this amount of money in the bank that I’m really going to take time seriously.’”

How do you value your time? How can you use that valuation to inform your decision of when to retire?

2. Your Pension, If Applicable

enciktepstudio / Shutterstock.com

If you have a pension, waiting a year can make a HUGE difference between vesting into income or not. For most pension holdings, when they qualify for income is the most pivotal factor for when to retire.

This could be a million-dollar decision. Don’t retire before you get your pension.

3. Social Security: A Decision That Lasts Longer Than a Year

Older worker with money
Elnur / Shutterstock.com

There are a few considerations to think about with regards to delaying retirement and what that means for your Social Security retirement income.

First, you can retire from work and delay the start of Social Security. And if this is your decision, then when you retire might not have appreciable financial considerations.

However, if you need to start Social Security right away after you retire and you haven’t yet turned 70, then you may take a financial hit. Depending on your Social Security earnings and how long you live, the difference between starting Social Security at age 62 and age 70 can be a $500,000 decision in lifetime value.

But, what is the difference of just delaying the start of Social Security for one year?

Examples:

Higher Earner: Let’s say you are a relatively high earner and will be earning the maximum Social Security benefit available. If this is true, then your monthly benefit at your Full Retirement Age (66 for most people) would be around $3,100. If you were to delay for a year, then you could boost your monthly benefit to around $3,300. That is a $200 monthly and a $2,400 a year difference. The boost would result in almost an extra $50,000 over a 20-year retirement.

Average Earner: What about someone more average? Does delaying a year still make a big difference? The average Social Security benefit at Full Retirement Age is $1,500. Delaying the start for two years boosts monthly income by an extra $200. That is a $2,400 a year difference and would result in an extra $48,000 over a 20-year retirement.

So, delaying retirement a year can indeed make a big difference in Social Security income because it is a decision that impacts you not just in one year, but over your lifetime.

4. Work Income (and Related Expenses, Savings, and Needed Withdrawals)

older worker whose job was affected by the coronavirus crisis
Gustavo Frazao / Shutterstock.com

Retirement and retirement planning depends on a variety of inter-related levers: your income, expenses, how much you save, and how much you withdraw from savings will all be impacted whether or not you have work income.

Keep reading for some estimates of what delaying retirement by a year might mean with regards to work income:

The Income

Senior man with money
aerogondo2 / Shutterstock.com

Let’s start with the obvious. Delaying retirement gives you an extra year of income. And that is no small chunk of change at probably $50,000 or more, perhaps much more.

Retiring early simply means that you aren’t banking that money or are able to use it for living expenses (and you need to pay for life somehow).

Withdrawals

Stealing money
esthermm / Shutterstock.com

Work income enables you to delay making withdrawals to cover expenses. And, this delay enables the money to stay invested and continue to grow. So, the value of delaying a year can be equal to whatever you would have taken out of savings PLUS your returns on that money.

Many people withdraw about 4% of their savings a year, and the average retirement savings for someone in their 60s is around $200,000.

So, with those averages, delaying that withdrawal for a year would net you $8,000 plus however much your money might appreciate. (The appreciation might be $1,500 over 20 years at a 6 percent return.)

Expenses

Potstock / Shutterstock.com

When you are working, you might have higher (or lower) expenses than when you retire — depending on your personal situation.

You’ll want to think about commuting costs, lunches out, fancy coffee on your way to work, and your wardrobe — well, if we ever get out of the pandemic anyway. And, if you choose to retire, you’ll want to carefully consider if your expenses will go up or down. Many people find that they spend a lot more after retirement. Explore best ways to budget for retirement.

However, the biggest potential factor with regard to expenses and when to retire might be where you live. If you intend to relocate after retirement, this can be a pretty massive financial factor. Buying and selling a home is a big decision, and timing those transactions can mean big swings in value.

Expenses can’t be easily generalized — delaying retirement a year might result in a higher or lower burn rate. So, let’s just call it even. (But we really recommend that if you are considering when to retire, do detailed personalized planning so that you can feel confident with your decision.)

Savings

Mirco Vacca / Shutterstock.com

First, do you know how much savings you need to have the retirement you want? If you don’t have enough and an extra year or more in the workforce could get you there, then keep working.

But maybe you want an extra cushion or to leave behind a bigger financial legacy. Working longer could potentially enable you to contribute greatly to savings.

Extra savings — especially if you are able to do catch-up savings — can be a great use of an extra year in the workforce. You are allowed to save up to $33,000 in tax-advantaged accounts after the age of 55 (as of writing). (And, those savings might appreciate $6,500 over 20 years.)

Work Benefits

workplace benefits
Rawpixel.com / Shutterstock.com

Many workplaces offer benefits in addition to salary. Health insurance and 401(k) matching are notable big-ticket items that should be considered if you’re debating whether you should delay retirement a year.

If you are retiring before you are eligible for Medicare at 65, then you may face huge out-of-pocket insurance costs. And, if your employer offers 401(k) matching, then you will be walking away from that cash.

Health Insurance: Fidelity estimates that out-of-pocket costs for health care are just shy of $12,000 a year.

401(k) Matching: The most common employer match is 50 cents on the dollar of up to 6 percent of your salary. So, at a $150,000 salary, an employer might be adding $4,500 to your retirement account (assuming you saved at least $9,000).

Does Delaying Retirement by a Year Really Make a Big Difference?

Questioning senior
Krakenimages.com / Shutterstock.com

Yes. Delaying retirement by a year can be meaningful. But, the reality is entirely dependent on your personal situation. Without counting appreciation on the additional savings, here is how it adds up:

Social Security: A year could mean a $0–$500,000 difference. Let’s take a modest example and say it costs you $50,000

Pension: (Because few people have a pension, and almost no one would retire before they vest, we’ll leave it out of this summation.)

Work Income: $50,000+

Work Benefits: $16,500 ($12,000 for health insurance and $4,500 for employer match)

Delayed Savings Withdrawals: $8,000+

Savings Contributions: $33,000 (if you can max out catch-up contributions)

Your Time: As the TV commercial used to say, PRICELESS

There is a huge range for what delaying your retirement for just one year might cost you — but it is safe to say that $100,000–$200,000 is a conservative estimate, except that your time really is priceless. At a minimum, it has some value to you that should offset whatever you might gain from working longer.

You can use the NewRetirement Planner to run scenarios for what delaying retirement a year — or moving it up five years — might mean to you. Just remember to balance the financial side of the equation with how you really want to be spending time.

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

Source: moneytalksnews.com

It’s official: Airline mask rules begin to fall – The Points Guy


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