Income Archives - Hanover Mortgages

May 8, 2021

The Best Financial Advice I Got From Mom

Everyone knows that Mom is always right. But on Mother’s Day, we could all use a little reminder.

We talked to some of our favorite financial experts about the best money advice they ever received from their moms – and how you can apply that wisdom to your own life.

Why You Should Wait Before Buying Something

When CFP Nate Nieri of Modern Money Management was little he saved up enough money to buy a video game. He asked his mom for a ride to the store to buy it, but she would only take him if he waited two weeks to make sure he really wanted it. As his mom predicted, he changed his mind before the time had passed.

“It was a very valuable lesson on impulse purchasing and patience, and something that has really stuck with me,” he said.

How to apply it: A general rule of thumb is to wait at least 24 hours before buying something or a week if the item is particularly expensive. Add it to your wish list or a special folder on your browser and walk away. Chances are, you’ll forget about the item – and if you don’t, it might actually be worth buying.

Plan Your Meals Early

Mindy Jensen, host of the “BiggerPockets Money Podcast,” said her mom told her, “Always know what you’re having for dinner by 8 a.m.”

Jensen got this advice when she was a stay-at-home mom and would forget to plan dinner until late in the day. Usually, this meant getting take-out or going to a restaurant.

How to apply it: The advice rings true, whether you’re cooking for a family or just yourself. If you can plan dinner first thing in the morning, you won’t be tempted to get DoorDash at 6 p.m. Starting in the morning gives you enough time to defrost something, throw a chicken breast in the slow cooker or run to the grocery store for ingredients.

Set Specific Savings Goals

Ricardo Pina of The Modest Wallet said his mom always told him to save for a particular item, instead of stashing money away just because it’s the responsible thing to do.

“Whether we were saving money to buy a new video game or a brand new bike, she used to say that when you have a savings goal, saving becomes so much more enjoyable,” he said.

How to apply it: Set up a savings goal in Mint. Every time you transfer money into your account named “Italy trip,” for instance, you’ll remember why you’re saving in the first place.

If you’re saving for retirement, get a clear picture of what kind of retirement you want. Whether it’s living in a Tahoe cabin or a Florida beachfront condo, a more specific image will make it easier to save.

Start Saving Early

Marcus Garrett, author of “Debt Free or Die Trying,” said his mother encouraged him to start saving early by taking him to open a savings account at age 16. When he got his first job at a movie theater, she agreed to match whatever he saved toward his first car.

“By age 16, I already saw and understood the value of an ‘employee match,’” he said.

How to apply it: If you have access to an employer-sponsored retirement plan, you may receive a company match. This means the company will contribute money to your retirement account, usually up to a certain amount. Always contribute enough to earn the full company match, because it’s essentially free money.

If you’re a parent, you can also utilize this strategy with your own kids by matching every dollar they save. It will encourage them to save more, because every dollar they put away will be doubled.

Don’t Rely on Future Earnings

Jacob Wade of I Heart Budgets said his mother-in-law gave him some crucial advice when he and his wife first got married: always live on last month’s income.

“That changed everything for us and helped us avoid day-to-day financial stress,” he said.

It took him and his wife six months to save up a full month’s income, but it’s been worth it. Even 13 years later, they still live on last month’s earnings.

How to apply it: Having a month’s worth of income in the bank means you won’t have to wait for payday to afford your bills. If you’re self-employed, this is especially important because clients can pay late. If you have enough money in your checking account, you won’t have to dip into your savings to make rent.

Learn more about security

Source: mint.intuit.com

May 8, 2021

Cash Management Account – What It Is, Pros & Cons of Saving This Way

A cash management account is a type of financial account that combines many of the features of checking, savings, and investment accounts into one product.

You get the safety and interest-earning capability of a savings account, the flexibility of a checking account, and the ability to buy and sell securities with an investment account.

Cash management accounts are typically offered by nonbank financial companies, such as brokerage companies. Although each cash management account will differ in its specific terms and features, they share a number of characteristics.

How Do Cash Management Accounts Work?

Cash management accounts combine many of the features of different financial accounts, so it can be hard to understand exactly how they operate.

Store & Protect Large Amounts of Cash

Cash management accounts are designed for people who have a lot of cash to deposit. Like a savings account, they help you keep your money in one place and keep it safe.

The way that cash management accounts do this is through Federal Deposit Insurance Corporation (FDIC) insurance. The FDIC offers up to $250,000 per depositor, per account type, at covered banks. That means if your bank fails and is unable to return your money, the FDIC will reimburse you for up to $250,000 in lost money.

Cash management accounts often have much higher insurance limits. For example, SoFi Money cash management account offers coverage for up to $1.50 million. That’s because SoFi automatically splits your deposits between six different banks, handling all of the management of these accounts on your behalf. You only ever have to work with SoFi when you want to access your money or make a deposit.

Use Your Money When You Need It

Cash management accounts also give you the flexibility of a checking account. Most offer checkbooks or debit cards you can use to make payments or withdrawals from your cash management account.

Depending on the account provider you choose, you may be able to completely replace a checking account with a cash management account. If you get a debit card, checkbook, and the option to make bill payments using your account funds, you’re covered for all of your checking account needs.

Earn Interest

Cash management accounts are able to pay interest like savings accounts do. Most offer interest rates on par with the best savings accounts in the market.

Cash management accounts pay these high rates because they are mostly offered by online financial companies. By avoiding the need to operate physical locations, online companies save a lot of money on overhead costs. That lets them pass more interest on to their customers.

Low Fees

Another benefit of cash management accounts being offered by online financial companies is they have lower fees than traditional bank accounts do. Many have no monthly maintenance fees at all, leaving you free to worry about using your money instead of fees.

Invest Your Funds

Many cash management accounts are offered by investment companies or brokerages. Although they’re usually separate from your brokerage account, it’s easy to link the two accounts. In some cases, there is no separation.

You can submit purchase orders for investments and have the funds deducted from your cash management account. Similarly, proceeds from any sales you make get deposited directly to the account.

This makes your cash management account the hub of your financial life and keeps managing your money easy. You’ll have just one account to monitor with all of your income and expenses flowing through it.

How Does a Cash Management Account Differ From a Checking or Savings Account?

Cash management accounts are neither checking nor savings accounts. They work like a mix of the two, offering the interest of a savings account with the flexibility of a checking account. For day-to-day use, you won’t notice much difference between a cash management account and a traditional bank account.

The big difference is behind the scenes. The company that offers your cash management account opens checking or savings accounts on your behalf at its partner banks. It then handles the management of these accounts for you, moving money in and out of those accounts as needed.

Essential Features of a Cash Management Account

If you’re thinking about opening a cash management account, these are the factors you should compare when looking at your options.

Ease of Access

Cash management accounts are meant to give you the flexibility of a checking account. That means it should be easy to access your money when you need it.

Look for accounts that make it easy to use your money. That includes providing a checkbook, debit card, and online bill payment.

For accounts that offer a debit card, don’t forget to look at the restrictions. Some cash management accounts limit the amount you can withdraw in a day.

You’ll also want to make sure the debit card works on the ATM network you prefer. Some cash management accounts reimburse ATM fees, leaving you free to use any ATM you come across.

Fees

With any financial account, you should keep an eye on the fees you’ll have to pay. There’s no reason to pay a fee when you don’t have to.

Before opening a cash management account, check to see if it has any monthly maintenance fees or minimum balances. Also take a moment to look for other fees might wind up paying, such out-of-network ATM fees.

Interest Rates

Cash management accounts are able to pay interest rates on par with the best savings accounts on the market, but that doesn’t mean they all pay the same rate. Compare the interest rates each account offers. Some will vary with your account balance, while others will be the same regardless of how much you deposit.

If it doesn’t cost you anything and you won’t lose any features that you need, opt for the account with the higher interest rate.

FDIC Insurance Limits

Cash management accounts let you protect your money by splitting your balance among multiple banks. This gives you more than the standard $250,000 insurance offered by the FDIC.

If you have a large balance to deposit to your cash management account, check to see how much of it will be insured by the accounts you’re considering. Some cash management accounts offer more protection than others.

If you’re worried about keeping large sums of cash, look for an account that offers enough insurance to protect your full balance.

Pros of Cash Management Accounts

There are a few reasons you should consider opening a cash management account.

They Make Money Management Simple. With a cash management account, you don’t need a checking or savings account. Many cash management accounts also link to your brokerage account. That makes it easy to keep all of your money in one place for easy management.
They Provide Protection. Cash management accounts keep your money safe with FDIC insurance, which is something investment accounts and money market funds cannot do.
They Have Higher Interest Rates Than Checking Accounts. You’ll earn more interest than you would from a checking account while maintaining the same level of flexibility with your funds.

Cons of Cash Management Accounts

Cash management accounts aren’t without their flaws, and you should be aware of them before opening one.

They Don’t Offer the Best Returns. Many investments, such as stocks, bonds, and mutual funds. offer great returns. There are also certificates of deposit (CDs) and some savings accounts that offer better rates than cash management accounts.
Face-to-Face Customer Service Might Not Be Available. Most cash management accounts are offered by online financial companies. If you need help, you have to call customer support or participate in an online chat. This can be difficult for people who prefer getting help in person or for complicated situations.
You Might Not Get All of the Features You Need. Cash management accounts are meant to combine the features of checking and savings accounts, but some cannot fully replace those dedicated accounts. For example, you might not have the option to make online bill payments from a cash management account, even though that’s a standard feature of checking accounts.

Who Needs a Cash Management Account?

Cash management accounts are a good choice for a few different groups of people.

The first group is people who have a large amount of cash they want to keep liquid but protected. If you have a few hundred thousand dollars you need to have easy access to, you don’t want to tie it up in investments. You also don’t want it sitting in a checking account, slowly losing value to inflation.

And if you exceed the $250,000 FDIC insurance limit, you’ll have to split it between multiple banks if you want all of your money to be insured.

Cash management accounts let you earn a reasonable rate of interest on your cash while maintaining its FDIC protection. You also don’t have to worry about splitting your money between multiple banks.

Cash management accounts are also great for people who want simplicity. All your money is in one place. You don’t have to maintain a separate checking and savings account. If you get your cash management account from the same company you use for your brokerage account, you can keep all of your finances in one place.

Anyone who likes online banking can make good use of a cash management account. If you’re already accustomed to doing your banking through a computer or phone rather than in-person, you’re ready to start using a cash management account.

Where Can I Get a Cash Management Account?

You can get a cash management account from a number of companies.

The first place you should look is your brokerage company. Why not keep all of your money in one place? Many financial firms offer cash management accounts, and your brokerage may even offer perks for customers who maintain a large balance, so using your brokerage for your cash management needs can help you reach balance thresholds.

If your brokerage doesn’t offer a cash management account, you have plenty of alternatives. Many robo-advisors and online investing platforms offer cash management accounts.

For example, Robinhood offers a cash management account you can link to your brokerage account. SoFi Money and Betterment offer both cash management and checking account options.

Alternatives to a Cash Management Account

If you don’t think a cash management account is right for you, you have other options.

If you’re considering a cash management account because you want to combine the features of a checking and savings account, a money market account can help you do that.

Most banks offer money market accounts, which provide the interest rates of a savings account with the check-writing capabilities of a checking account.

The downside is your ability to make withdrawals from the account is limited to six transactions per month. Money market accounts also have higher fees and minimums than cash management accounts.

If you want a cash management account for the safety and returns they offer, you can open a CD. CDs pay more interest than savings accounts and are fully insured by the FDIC up to the $250,000 limit.

The only drawback is you have to commit your deposit to the account for a set period of time. If you make an early withdrawal, you have to pay a fee.

If returns are your primary concern, you should open an investment account instead. You won’t have the safety of FDIC insurance, but you can earn far more money by investing your cash in stocks, bonds, or mutual funds.

Final Word

Cash management accounts offer safety, simplicity, and a solid return on your cash. They’re a great choice for anyone who wants to make managing their money easier, but they don’t have all of the features of dedicated checking and savings accounts.

If you’re looking to store and protect a large sum of cash, whether in anticipation of putting a down payment on a home or keeping it as an emergency fund, a cash management account could be a great option that provides you with the best features of checking, savings, and investment accounts all in one place.

Source: moneycrashers.com

May 8, 2021

BBVA Bank Review | The Simple Dollar

With a full-suite of banking services online and an easy-to-use interface and mobile app, BBVA is best for those who want to handle all their banking needs online.

Savings APY

0.01%

1Y CD Rate

0.05%

J.D. Power Rating

N/A

SimpleScore

2.8 / 5.0

SimpleScore BBVA 2.8

Savings APY 2

1Y CD APY 2

Customer Satisfaction 2

Mobile App 3

Product Variety 5

BBVA bank, formerly BBVA Compass bank, was founded in 1964 and is based in Alabama. BBVA has quite a few branches spread across seven states — Alabama, Arizona, California, Colorado, Florida, New Mexico and Texas — although around half of those locations are in Texas. BBVA is a full-service bank and has been around a long time, but it also has a strong online banking presence. Unlike many other banks that we would consider “online banks,” BBVA offers a full suite of services, from checking and savings to money market accounts, investing, CDs and even home and auto loans.

BBVA Bank

Min Savings Deposit	Max Savings APY	J.D. Power Survey Score	Key Benefit
$25	0.01% APY	N/A	Full-service banking with many options

What we like about it

BBV bank has been around for quite a while and has a sizable presence in the states where it has branches. Unlike many other banks that offer accounts online, this one offers a full suite of banking services, meaning you can do all of your banking in one place. The website and app are where this bank shines. With an easy-to-use interface that also offers a lot of functionality, it’s easy to manage accounts, even if you don’t live near any branches. Their mobile app offers a wide range of features too, along with great digital security options.

Things to consider

Because BBVA is a more traditional, full-service bank, their interest rates are lower than most online bank offerings, and they do have some fees that are higher than other banks. For example, overdraft fees are $38 each and you can incur up to six per day. That means even simple mistakes can add up quickly. The rates on BBVA’s CDs and savings APY rates are also low, and there are options with higher rates and lower fees available elsewhere.

BBVA checking accounts

BBVA bank offers the Free Checking account, which doesn’t have monthly Service Charge. This account includes free ATM withdrawals at not only BBVA ATMs, but the network of Allpoint ATMs as well, which means you have 44,000 options around the US. Fees for overseas withdrawals are small and reasonable. The bank also offers the Premium Checking account, which earns interest on your money. Like the other accounts, there is only a $35 minimum balance to open it, but if your balance is below $5,000 you’ll pay a hefty $26 monthly maintenance fee. If you’re going to keep that high of a balance, you may want to look at their money market account instead. We have more information on BBVA’s money market accounts below.

BBVA savings accounts

There are a few different types of savings accounts offered by BBVA. The first is the BBVA Build My Savings Account. You can earn a match bonus depending on the term you choose, your opening account balance and how much you add to the account regularly, up to $25 per term.

The BBVA Online Savings Account account also has a minimum opening balance of $25 and the same interest rate, but it does not have the same match options as the Build My Savings Option. It does offer easy access to your funds and a link to your checking account for overdraft protection, and there is no Service Charge for the account. The BBVA Savings Account offers similar benefits to the BBVA Online Savings Account and the same minimum opening balance, but there is a $15 quarterly Service Charge that can be waived if you meet certain criteria.

BBVA money market accounts

The BBVA Money Market account earns better interest than the Premium Checking account, but the APY varies by region. It can be set up as overdraft protection for your checking account, and you can access your money anytime you need it with ATM access or online and mobile banking. You’ll only need a minimum of $25 to open the account, and while there are higher-interest MMAs to be found elsewhere, most require a much more substantial minimum balance.

BBVA CDs

BBVA CDs require a minimum of $500 to open — certainly not the highest minimum around. Rates vary depending solely on term. These are certainly not the most spectacular rates out there if that’s what you’re looking for, but there are no maintenance fees associated with these accounts.

BBVA IRA accounts

As a full-service institution, BBVA offers SEP, ROTH and traditional IRAs with a variety of ways to invest, including mutual funds and ETFs. There are a wide variety of portfolios and funds to choose from based on your needs, how soon you want to retire and how risk-averse you may be. They also offer other ways to invest that can help you build your retirement income, including annuities and lifetime-income options.

BBVA credit cards

There are four credit card options with BBVA bank. All offer varying levels of rewards and interest rates that depend on your credit-worthiness and the type of perks you would like to earn.

The BBVA Rewards Card offers unlimited 1.5% rewards on all purchases and the ability to earn an additional unlimited 0.5% reward bonus with $1,000 in monthly direct deposits to a BBVA deposit account, among other perks like 0% balance transfer options.

The BBVA ClearPoints Credit Card is a rewards card that lets you choose how you earn up to 2x & 3x points in categories you select each quarter. It has no annual fee and offers a 0% introductory APR for 13 months on purchases, among other perks.

The Select Credit Card allows you to choose how you earn 3x the points in categories you select, and it offers access to Visa Signature travel and entertainment benefits, a 24/7 complimentary concierge, and no foreign transaction fees. The downside is the $125 annual fee, which BBVA waives for the first year.

The exception to this is the Optimizer Credit Card, a secured credit card that’s collateralized by a savings account. This card is designed for those who can’t qualify for a traditional credit card and will help rebuild their credit. It has a high interest rate, but the credit limit can be increased at any time with a matching deposit in the savings account.

Regardless of your credit history and your desire for rewards, BBVA probably has a credit card that will work for you.

BBVA investing

There are two investing options with BBVA. The first is self-directed investing, which is just what is sounds like. You control and direct your investments, and you can put your money in mutual funds, ETFs and other options. You can even establish a margin account through the bank.

If you want more options and someone to manage your investing for you, BBVA offers full-service investment accounts as well. This means your money is managed by a professional. BBVA also offers 529 plans and options that help you save to pay for your child’s college managed under this plan.

Compare top bank accounts

Too long, didn’t read?

Are you looking for a full-service bank online that offers plenty of options? If the answer is yes, then BBVA may be the right place for you. Many fees can be avoided though they are steeper than many other banks, and the interest rates are respectable but not the highest around.

If you’re looking for the highest rates and lowest fees, or have very simple banking and financial services needs, BBVA may not be the best place for you. If you shop around, you will find higher interest rates, lower fees and simpler options from other online banks. From full-service investing to traditional banking and lending products, BBVA’s strength lies in its options. If you’re shopping around for a bank, they’re certainly worth a second look.

Source: thesimpledollar.com

May 8, 2021

The Best Cities for Artists in America

No starving artists here: These cities are the best places for artists to live well and practice their craft.

Having access to art and culture is one of the best parts of living in a city. While it’s true that art is found and created anywhere — in cities, there are some definite benefits. Cities act as cultural hubs that draw both new and existing artistic talent. There is a feedback loop of inspiration that cities foster.

With people from many different cultures, backgrounds and walks of life living in close quarters, there is vibrant multiculturalism. Urban density makes it easy to try and experience many different things from theater to food. Artists feed off that creative energy. And when you also live surrounded by other creative individuals, you are constantly being inspired to create new work

But it takes more than that to make a city a great place for artists. It’s widely known that both historically and in modern times, artists are often underpaid for their work. That “starving artist” trope didn’t come from nowhere — artists still need to pay for things like rent and food. They still need to make a living in this world the same as everyone else.

That’s why, on top of a thriving cultural scene, artists need to live in a place that supports their passion and livelihood. That ranges from affordable housing for work and creation, walkability to get around to gigs and much more.

So if you’re an artist with a dream, these are the best cities for artists to create and live.

Finding the best cities for artists

Art is for everyone because there are so many different ways to create. You have visual mediums like painting, drawing or photography. There are performance arts like dancing or theater. And there are musicians across an incredible breadth of genres and instructions, from voice to electronic DJ.

Having a thriving artistic community makes a city a better place to live. There are shows and performances to go to, which improves the quality of life for residents and encourages tourism. But to have such a community, artists need to make a viable living in that city. Quality of life and cost of living for essentials like food and housing, plus affordable rent remain important for those looking to dive into their artist endeavors.

To determine the best cities for artists, we looked for cities with a good walk score and t the average price for studio apartments. Many artists need or want separate spaces to create and work in, same as with offices for other industries, so having affordable studios for rent is key.

We also looked for how many museums there are per density and how many artistic organizations were in the city by density. That included theaters, artistic collectives, performing arts centers and more. All cities also had a population of over 50,000.

The following 10 places emerged as the best cities for artists to live and work in.

10. Baltimore, MD

baltimore md

In recent years, Baltimore has risen the charts as one of the best cities for creatives. This is especially true for the visual arts.

There are more than 60 diverse museums within the area, and it’s the home of renowned museums like the Baltimore Art Museum and the Walters Art Museum. Their substantial collections feature historic art from around the world, as well as exciting contemporary work. The city also supports modern, experimental art in outdoor public spaces like the Glenstone museum and sculpture garden and Downtown Frederick Public Art Trail, making art accessible to all.

There are also ample opportunities in the performing arts. The city is home to seven different performing arts companies and numerous dance and music groups.

Living here, artists can enjoy an abundance of creative outlets and good, affordable quality of life. With an average city median income of $51,000, the average cost for a studio apartment is $1,346. This was down 8.3 percent from last year. That gives artists lots of choices for space, as well as affordable rates.

Baltimore also has good public transportation, and a high Walk Score of 72.

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9. St. Louis, MO

st louis mo

This city that was once the gateway to the West is now a gateway for artists to comfortably live and create in an up-and-coming art city. While it is not the most walkable city, there are many other benefits. The average rent for a studio apartment is $1,328 — with plenty of availability.

St. Louis has an especially good reputation for performing arts, with 14 performing art companies and ten dance companies. Performance venues like The Fabulous Fox, housed in a grand old movie theater, and the Center of Creative Arts give the community hubs to experience art. And the contemporary visual arts scene is also on the rise.

The public can appreciate art in outdoor spaces like Citygarden, and museums like the Grand Center and the St. Louis Art Museum boasts exceptional modern art collections. So there are plenty of places for artists to congregate and work together.

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8. Chicago, IL

chicago il

Chicago has a well-deserved reputation for being one of the United States’ best cities for art, alongside staples like Los Angeles and New York City. But of those two, Chicago is the only one to make it into the top 10 best cities for artists. This means it’s much more affordable than the other two, but still gives artists the creative stimulation they crave. It’s also the place where many greats get their start.

Chicago has many benefits — the downtown area is a dense urban grid, with a very high WalkScore of 84. For outlying areas, there’s excellent public transit. However, most art and culture institutions are downtown — from theaters to museums — so it’s a very centralized area. There are outdoor spaces like Millennium Park for fresh air, access to nature and art installations (hello, The Bean). Museums like the Art Institute of Chicago enjoy tremendous renown for their collections.

Plus, there are top-ranked performing arts opportunities, from theater to music to improv at Second City, one of the nation’s best comedy and improv schools. While average studio rent is $1,784, making it the second most expensive city for studios in the top 10, you’ll have access to world-renowned art institutions for learning and displaying your art.

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7. Berkeley, CA

berkeley ca

Although Berkeley is largely known as a center for engineering, science and tech due to UC Berkeley, art and culture are equally strong here. This city of over 121,000 has an incredibly diverse population. And the presence of the university invites fresh, young minds from around the world, feeding innovation and creativity.

Berkeley also feeds off of the cultural thrum of the surrounding Bay Area and nearby San Francisco.

But being in the tech-heavy Bay Area, life is expensive. A Berkeley studio costs an average of $2,250. This makes it the most expensive of the top ten cities. But on the upside, Berkeley is extremely walkable, making it easy to get to the many artistic opportunities that exist. Berkeley is especially known for its performing arts. It’s home to the Berkeley Repertory Theatre, a Tony-winning regional playhouse and other top theater and performance companies.

For visual artists, collectives like the ACCI Gallery and museums like Berkeley Art Museum and Pacific Film Archive exist. West Berkeley and the North Shattuck areas are especially popular artist neighborhoods.

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6. Philadelphia, PA

philadelphia pa

Aspiring and working artists priced out of New York have been turning to Philadelphia. This has made it one of the most exciting artistic hubs on the East Coast. Steeped in history, the city also buzzes with vibrant young minds and modern energy.

Rent and cost of living are significantly lower than in NYC. A studio costs, on average, $1,745. Two top art schools call Philly home: the Pennsylvania Academy of Fine Arts and Temple University’s Tyler School of Art.

And there is art everywhere, from museums to public spaces. The Philadelphia Art Museum is the third-largest in the U.S., and the Rodin Museum has one of the largest collections of his work outside Paris. Performing arts-wise, there is a great live music scene, especially for classical music thanks to the Philadelphia Orchestra.

The Avenue of the Arts acts as a hub, with performance spaces for everything from dance to experimental work. Dancers will also find a welcoming community here, as there are multiple esteemed dance companies.

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5. Seattle, WA

seattle wa

Seattle’s reputation for incredible live music needs no introduction. Grunge originated here, thanks to influential bands like Nirvana. And music and performance are still part of the lifeblood of the city. But there’s more to Seattle’s art scene than that.

There are over 80 theater companies and great dance companies like the Pacific Northwest Ballet. Galleries and small venues provide space for experimental, undercover art movements. But “mainstream” art also has a place here at museums and places like the Seattle Art Museum, Chihuly Garden and Glass and the Olympic Sculpture Park.

In Seattle, studio apartments run an average of $1,481. And this is down almost 14.2 percent from last year, so there is plenty of space available and demand.

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4. Washington, D.C.

Washington D.C.

The U.S. capital is a hotbed for history and art, which go hand in hand here. There are abundant museums and inspiring architecture everywhere you turn. But it’s not just about the past. There is also a thriving contemporary art community.

Check out spots like the Culture House DC, a 19th-century church painted in bold colors and now houses an artist collective. And there are frequent art festivals and performances of music, dance and theater.

If you’re an artist looking for a city with a lot of options for studios, D.C. is the place for you. The average rent is $1,686, plus it’s also a very pedestrian-friendly city that’s easy to navigate on foot.

All in all, D.C. offers a great emerging art scene in a city that’s affordable and safe, with plenty of history to inspire you.

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3. Pittsburgh, PA

pittsburgh

In 2018, Pittsburgh ranked as one of the top cities in America for artistic vibrancy. It’s no small wonder. Similar to Philadelphia, artists love the affordable cost of living — $1,194 for a studio.

In Pittsburgh, they’re finding world-class museums, outdoor festivals, creative collectives and performing arts companies that are pushing boundaries and generating buzz. Some must-visit spots include the Carnegie Museum of Art, the Andy Warhol Museum and The Mattress Factory.

Outside of town, you’ll also find Frank Lloyd Wright’s architectural masterpiece, Fallingwater.

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2. Minneapolis, MN

minneapolis mn

Coming in at No. 2 in the top 10 best cities for artists is one half of the Twin Cities itself: Minneapolis. Of course, this Midwest hub is well-known for its friendly residents, parks, lakes and outdoor access. But it also has fantastic opportunities for art.

Minneapolis has 55 different museums to visit, among them the eye-catching Weisman Art Museum. As a city that loves nature, lots of art is outdoors and open for everyone. Minneapolis is especially well-known for its vibrant murals, easily found all over the city. Oh, and of course, there’s a great music scene. What else would you expect from the home of Prince?

Add in low rent on studios, $1,236 on average, and you’ll discover why it’s no wonder so many artists find inspiration here.

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hartford ct

Topping the list of the best cities for artists is the Connecticut capital of Hartford. This scenic city celebrates both contemporary and historic art through its many institutions, from museums to collectives.

World-class touring performances come through at venues like the Bushnell Center for the Performing Arts. And local companies like TheaterWorks showcase contemporary work. The city is also committed to promoting diverse artists and voices. For example, the unique Artists Collective highlights the work of the African Diaspora. And the Real Art Ways organization supports experimental and new work in a variety of mediums.

Beyond the artistic community, Hartford is also very affordable for working artists. It boasts the cheapest prices for studio apartments — the average being $1,121.

Good quality and cost of living go a long way toward supporting an artist’s lifestyle. And if the urban scene isn’t sufficiently inspiring, Connecticut’s natural beauty is also sure to spark the imagination.

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The 50 best cities for artists

Now that you’ve seen the top 10, let’s branch out to discover even more cities that have created an atmosphere where artists can thrive and create. Please note, our methodology allows for ties.

Methodology

To find the best cities for artists, we used the following data points:

Performing arts businesses and establishments per density
Museums per density
Walk score
Average rent of a studio apartment

We looked at cities with at least 50,000 people according to the U.S. Census Bureau’s 2019 population estimates and ranked each city in each of these four categories. Then, we added up the rankings for each of the four categories to determine a final score for each city. Ties were allowed in our rankings. The cities with the lowest overall score were determined to be the best cities for artists.

We excluded cities from this study that had insufficient rental inventory or other data.

Business and establishment data comes from commercially sourced business listings. This may not account for recent business openings or closures.

Rent prices are based on a one-year rolling weighted average from Apartment Guide and Rent.com’s multifamily rental property inventory as of April 2021. Our team uses a weighted average formula that more accurately represents price availability for each unit type and reduces the influence of seasonality on rent prices in specific markets.

The rent information included in this article is used for illustrative purposes only. The data contained herein do not constitute financial advice or a pricing guarantee for any apartment.

Source: rent.com

May 7, 2021

Where Is My Tax Refund? Why Youâre Still Waiting and What to Do

Chances are you’ve gotten your third stimulus check by now, but you may still be waiting on that other chunk of change the IRS owes you: your tax refund.

The IRS is sitting on a backlog of 29 million returns that require manual processing, which basically means that a human needs to review it.

To be clear, most taxpayers who e-file have their returns processed and receive their refunds within 21 days, according to the IRS. But if you’re still waiting and wondering “where is my tax refund?”, here’s what’s going on and how you can track it.

Why You Haven’t Received Your Tax Refund

The 2020 tax season has been an especially complicated one for IRS staff and accountants.

As of March, the IRS still had a backlog of more than 2 million returns from 2019. Most of them are leftover returns filed by mail that piled up last year when most IRS offices were temporarily shuttered due to COVID-19.

But on top of that, there are a number of complexities created by the three stimulus bills, the most recent of which passed in the middle of tax season. On top of the usual tax season mayhem, the IRS was tasked with delivering the third stimulus check. Plus, tax season started 16 days later than usual this year. These challenges prompted the IRS to extend the tax deadline to May 17.

For example, people who typically qualify for the Earned Income Tax Credit, a credit for low- and middle-income working families, may not have been eligible in 2020 due to expanded unemployment benefits. The $900 billion stimulus package that passed in December changed the rules to allow families to use 2019 income to qualify instead of 2020 income.

However, the IRS didn’t have time to update its programs to reflect this change, so if you’re seeking the Earned Income Tax Credit based on 2019’s income, an IRS employee will need to manually review it.

The same applies if you qualify for stimulus money from the first two checks based on your 2020 return that you didn’t qualify for based on your 2019 or 2018 return. For example, if your 2019 income was higher than your 2020 income, you may qualify for more stimulus money. Or if you had a child in 2020, you’d get stimulus credits on their behalf. These situations also require a manual review.

But your tax refund could also be delayed for all the reasons that would apply in a normal year. For example, if your refund was sent to a bank account that you’ve since closed, the IRS will eventually cut you a paper check, but that adds to the wait time. If someone fraudulently filed a tax return in your name to steal your refund, the IRS will think that you’ve already filed and reject it. Your refund will also be delayed if you made an error or your return was incomplete.

If you owe certain types of debt like child support or back taxes, the IRS could take your refund and use it to offset what you owe.

Paper returns require manual processing, so if you’ve filed by paper, expect a long wait, even if there are no issues with your return. The IRS is urging taxpayers who have yet to submit their returns to file online instead of by mail.

If you made an error that requires an amended return, your tax season will be even more prolonged. The IRS will notify you of the error by mail, and you’ll have to send in Form 1040X. There’s only one way to do this: by mail. Then, your amended return will be added to the 29 million-plus unprocessed returns.

What to Do if You’re Still Waiting

The first step is to make sure the IRS has actually received your return.

You can track your return using the Where’s My Refund feature on the IRS website or the IRS2Go app. You’ll need to provide your Social Security number, filing status and your exact refund amount.

But these tools have limited usefulness. If your return has been processed, they tell you when your refund is scheduled for deposit, but they don’t provide information about why a return is still being processed or whether you need to provide additional information, which prompted recent criticism from the Taxpayer Advocate Service.

If you filed electronically, you should be able to see whether the IRS has accepted your return within 24 hours. If the IRS has accepted your return, that just means it has confirmed it received it. The IRS still has to process it.

If you sent a paper return, you can expect a long wait before you can confirm that the IRS even has your return. Even in normal circumstances, tracking a paper return can take about four weeks.

The IRS says its staff will help you research the status of your refund only if you filed electronically more than three weeks ago or sent it by mail at least six weeks ago, or if Where’s My Refund tells you to get in touch.

Considering that the IRS has only answered about 7% of individual taxpayer phone calls to date, it’s pretty tough to talk to a human. Even if you’re one of the lucky ones who gets through to a human, they probably won’t be able to give you much information. The IRS systems don’t tell employees who handle phone calls why a return required manual processing. But if you want to try, the number for checking the status of a refund is 800-829-1954.

What to Do if You Haven’t Filed Yet

The big takeaway if you haven’t filed yet: Filing electronically is the way to go. There are plenty of easy-to-use tax software options, many of which have free versions.

Not only will you get your refund faster, but you’re also less likely to make errors that could result in further delays because the software is doing the math for you. Additionally, filing electronically is more secure than putting all that personal information in an envelope.

And of course, the sooner you file, the better. It usually takes longer to get your refund as Tax Day approaches, so stop delaying and block off time for a date with your tax software of choice.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to [email protected]

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Source: thepennyhoarder.com

May 7, 2021

10 States With the Highest Sales Taxes

Before you embark on a shopping spree in any of the 10 worst states for sales taxes featured here, you’ll want to make extra room in your budget. Our biggest offender clocks in at 9.55% once both state and local sales taxes are factored in (continue reading our round-up to find out which state is the priciest culprit).

However, retirees and other relocators shouldn’t judge a state by its sales tax alone. While this expense may be costlier in some areas, residents in states with a high sales tax may be able to reap the benefits of other tax-related perks, such as not having to pay state income tax.

Got your attention? Take a look at our list to find out which states will nickel-and-dime you the most on everyday purchases.

Sales tax values are for 2020 and were compiled by the Tax Foundation. Income tax brackets are for the 2020 tax year. Property tax values are for 2019.

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10. New York

Overall Rating for Middle-Class Families: Least tax-friendly

State Sales Tax: 4% state levy. Localities can add as much as 4.875%, and the average combined rate is 8.52%, according to the Tax Foundation. In the New York City metro area, there is an additional 0.375% sales tax to support transit. Clothing and footwear that cost less than $110 (per item or pair) are exempt from sales tax. Groceries and prescription drugs are exempt, too. Motor vehicle sales are taxable, though.

Income Tax Range: Low: 4% (on up to $8,500 of taxable income for single filers and up to $17,150 for married couples filing jointly); High: 8.82% (on taxable income over $1,070,550 for single filers and over $2,155,350 for married couples filing jointly).

Starting in 2021, the top rate is 10.9% on taxable income over $25 million (regardless of filing status).

New York City and Yonkers imposed their own income tax. A commuter tax is also imposed on residents of New York City, as well as on residents of Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester Counties.

Property Taxes: In the Empire State, the median property tax rate is $1,692 per $100,000 of assessed home value.

For details on other state taxes, see the New York State Tax Guide for Middle-Class Families.

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9. California

Overall Rating for Middle-Class Families: Most tax-friendly

State Sales Tax: 7.25% state levy. Localities can add as much as 2.5%, and the average combined rate is 8.68%, according to the Tax Foundation. Groceries and prescription drugs are exempt from these taxes, but clothing and motor vehicles are taxed.

Income Tax Range: Low: 1% (on up to $17,864 of taxable income for married joint filers and up to $8,932 for those filing individually); High: 13.3% (on more than $1,198,024 for married joint filers and $1 million for those filing individually).

Property Taxes: If you’re planning to buy a home in the Golden State, the median property tax rate is $729 per $100,000 of assessed home value.

For details on other state taxes, see the California State Tax Guide for Middle-Class Families.

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8. Kansas

Overall Rating for Middle-Class Families: Least tax-friendly

State Sales Tax: 6.5% state levy. Localities can add as much as 4%, and the average combined rate is 8.69%, according to the Tax Foundation. These rates also apply to groceries, motor vehicles, clothing and prescription drugs.

Income Tax Range: Low: 3.1% (on $2,501 to $15,000 of taxable income for single filers and $5,001 to $30,000 for joint filers); High: 5.7% (on more than $30,000 of taxable income for single filers and more than $60,000 for joint filers).

Property Taxes: Kansans who own their homes pay a median property tax rate of $1,369 per $100,000 of assessed home value.

For details on other state taxes, see the Kansas State Tax Guide for Middle-Class Families.

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7. Illinois

Overall Rating for Middle-Class Families: Least tax-friendly

State Sales Tax: 6.25% state levy. Localities can add as much as 4.75%, and the average combined rate is 8.82%, according to the Tax Foundation. Food and prescription drugs are taxed at only 1% by the state. Clothing and motor vehicles are fully taxed.

Income Tax Range: There is a flat rate of 4.95% of federal adjusted gross income after modifications.

Property Taxes: For homeowners in Illinois, the median property tax rate is $2,165 per $100,000 of assessed home value — the second highest in our round-up.

For details on other state taxes, see the Illinois State Tax Guide for Middle-Class Families.

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6. Oklahoma

Overall Rating for Middle-Class Families: Not tax-friendly

State Sales Tax: 4.5% state levy. Localities can add as much as 7%, and the average combined rate is 8.95%, according to the Tax Foundation. Prescription drugs are exempt and motor vehicles are taxed at a rate of 1.25% (a 3.25% excise tax also applies). Grocery items and clothing are taxable at 4.5%, plus local taxes.

Income Tax Range: Low: 0.5% (on up to $1,000 of taxable income for single filers and up to $2,000 for married joint filers); High: 5% (on taxable income over $7,200 for single filers and over $12,200 for married joint filers).

Property Taxes: For Oklahomans who own a home, the median property tax rate is $869 per $100,000 of assessed home value.

For details on other state taxes, see the Oklahoma State Tax Guide for Middle-Class Families.

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5. Alabama

Overall Rating for Middle-Class Families: Tax-friendly

State Sales Tax: 4% state levy. Localities can add as much as 7.5% to that, and the average combined rate is 9.22%, according to the Tax Foundation. Prescription drugs are exempt. Groceries and clothing are fully taxable, while motor vehicles are taxed at a reduced rate of 2% (additional local taxes may apply).

Income Tax Range: Low: 2% (on up to $1,000 of taxable income for married joint filers and up to $500 for all others); High: 5% (on more than $6,000 of taxable income for married joint filers and more than $3,000 for all others).

Some Alabama municipalities also impose occupational taxes on salaries and wages.

Property Taxes: In Alabama, the median property tax rate is $395 per $100,000 of assessed home value — the lowest on our list.

For details on other state taxes, see the Alabama State Tax Guide for Middle-Class Families.

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4. Washington

Overall Rating for Middle-Class Families: Most tax-friendly

State Sales Tax: 6.5% state levy. Municipalities can add up to 4% to that, with the average combined rate at 9.23%, according to the Tax Foundation. Grocery items and prescription drugs are exempt. Clothing is taxable, as are motor vehicles. However, there’s an additional 0.3% tax on sales of motor vehicles.

Income Tax Range: Washington has no state income tax.

Property Taxes: Home buyers in the Evergreen State can expect to pay a median property tax rate of $929 per $100,000 of assessed home value.

For details on other state taxes, see the Washington State Tax Guide for Middle-Class Families.

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3. Arkansas

Overall Rating for Middle-Class Families: Mixed tax picture

State Sales Tax: 6.5% state levy. Localities can add as much as 5.125%, and the average combined rate is 9.51%, according to the Tax Foundation. Prescription drugs are exempt. Grocery items are taxed at 0.125% (additional local taxes may apply). Motor vehicles are taxed if the purchase price is $4,000 or more (7% tax rate in Texarkana). However, starting in 2022, the rate on sales of used motor vehicles priced between $4,000 and $10,000 will only be 3.5%. Clothing is taxed at the standard rate.

Income Tax Range: Low: 2% (on taxable income from $4,500 to $8,899 for taxpayers with net income less than $22,200), 0.75% (on first $4,499 of taxable income for taxpayers with net income from $22,200 to $79,300), or 2% (on on first $4,000 of taxable income for taxpayers with net income over $79,300); High: 3.4% (on taxable income from $13,400 to $22,199 for taxpayers with net income less than $22,200), 5.9% (on taxable income from $37,200 to $79,300 for taxpayers with net income from $22,200 to $79,300), or 6.6% (on taxable income over $79,300 for taxpayers with net income over $79,300). Beginning in 2021, the top rate for taxpayers with net income over $79,300 will be 5.9% (on taxable income over $8,000).

A “bracket adjustment” of between $40 and $440 is subtracted from the amount of tax due for taxpayers with net income from $79,301 to $84,600.

Property Taxes: For homeowners in the Natural State, the median property tax rate is $612 per $100,000 of assessed home value.

For details on other state taxes, see the Arkansas State Tax Guide for Middle-Class Families.

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2. Louisiana

Overall Rating for Middle-Class Families: Tax-friendly

State Sales Tax: 4.45% state levy. Localities can add as much as 7%, and the average combined rate is 9.52%, according to the Tax Foundation. Groceries and prescription drugs are exempt from the state’s sales tax, but localities may tax these. Clothing and motor vehicles are taxable.

Income Tax Range: Low: 2% (on $12,500 or less of taxable income for individuals, $25,000 for joint filers); High: 6% (on more than $50,000 of taxable income, $100,000 for joint filers).

Property Taxes: The median property tax rate in Louisiana is $534 per $100,000 of assessed home value.

For details on other state taxes, see the Louisiana State Tax Guide for Middle-Class Families.

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1. Tennessee

Overall Rating for Middle-Class Families: Most tax-friendly

State Sales Tax: 7% state levy. There’s also an additional state tax of 2.75% on sales of single items that applies to the portion of the sales price from $1,600 to $3,200. Localities can add up to 2.75%, with an average combined rate of 9.55%, according to the Tax Foundation. Groceries are taxed at 4% by the state, in addition to any additional local taxes. Clothing is taxed at the standard rate. Motor vehicles are taxed at the basic 7% rate, plus the additional 2.75% on purchases between $1,600 and $3,200. There’s no tax on prescription drugs.

Income Tax Range: There’s no state income tax in Tennessee. However, dividends and some interest are subject to the Hall Tax at a 1% rate in 2020. The first $1,250 in taxable income for individuals ($2,500 for joint filers) is exempt. 2020 is the last year for this tax, which is being phased out. Also, the tax is waived if you’re over the age of 100.

Property Taxes: In Tennessee, the median property tax rate is $636 per $100,000 of assessed home value.

For details on other state taxes, see the Tennessee State Tax Guide for Middle-Class Families.

Source: kiplinger.com

May 7, 2021

The Art of Mortgage Pre-Approval

Buying a home can feel like a cut-throat process. You may find the craftsman style house of your dreams only to be bumped out of the running by a buyer paying in all cash, or moving super swiftly. But fear not, understanding the home buying process and getting a mortgage pre-approval can put you back in the race and help you secure the house you want.

What is Mortgage Pre-approval?

Mortgage pre-approval is essentially a letter from a lender that states that you qualify for a loan of a certain amount and at a certain interest rate based on an evaluation of your credit and financial history. You’ll need to shop for homes within the price range guaranteed by your pre-approved mortgage. You can find out how much house you can afford with our home affordability calculator.

Armed with a letter of pre-approval you can show sellers that you are a serious homebuyer with the means to purchase a home. In many ways it’s competitive to buying a home in cash. In the eyes of the seller, pre-approval can often push you ahead of other potential buyers who have not yet been approved for a mortgage.

Getting pre-qualified for a mortgage is not the same as pre-approval. It’s actually a relatively simple process in which a lender looks at a few financial details, such as income, assets, and debt, and gives you an estimate of how much of a mortgage they think you can afford.

Taking out a mortgage is a huge step and pre-qualification can help you hunt down reputable lenders and find a loan that potentially works for you. Going through this process can be useful, because it gives you an idea of your buying power, or how much house you can afford.

Check out local real estate
market trends to help with
your home-buying journey.

It also gives you an idea of what your monthly payment might be and is a chance to shop around to various lenders to see what types of terms and interest rates they offer. Pre-qualification is not a guarantee that you will actually qualify for a mortgage.

Getting pre-approval is a more complicated process. You’ll have to fill out an application with your lender and agree to a credit check in addition to providing information about your income and assets. There are a number of steps you can take to increase your chances of pre-approval or to increase the amount your lender will approve. Consider the following:

Building Your Credit

Think of this as step zero when you apply for any type of loan. Lenders want to see that you have a history of properly managing your debt before offering you credit themselves. You can build credit history by opening and using a credit card and paying your bills on time. Or consider having regular payments , such as your rent, tracked and added to your credit score.

Checking Your Credit

If you’ve already established a credit history, the first thing you’ll want to do before applying for a mortgage is check your credit report and your FICO score. Your credit report is a history of your credit compiled from sources such as banks, credit card companies, collection agencies, and the government.

This information is collected by the three main credit reporting bureaus, Transunion, Equifax and Experian. Your FICO score is one number that represents your credit risk should a lender offer you a loan.
You’ll want to make sure that the information on your credit report is correct.

If you find any mistakes, contact the credit reporting agencies immediately to let them know. You don’t want any incorrect information weighing down your credit score, putting your chances for pre-approval at risk.

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Stay on Top of Your Debt

Your ability to pay your bills on time has a big impact on your credit score. If you can, make sure you make regular payments. And if your budget allows, you can make payments in full. If you have any debts that are dragging on your credit score—for example, debts that are in collection—work on paying them off first, as this can give your score a more immediate boost.

Watch Your Debt-to-income Ratio

Your debt-to-income ratio is your monthly debts divided by your monthly income. If you have $1,000 a month in debt payments and make $5,000 a month, your debt-income ratio is $1,000 divided by $5,000, or 20%.

Lenders may assume that borrowers with a high debt-to-income ratio will have a harder time making their mortgage payments. Keep your debt-to-income ratio in check by avoiding making large purchases before seeking pre-approval for a mortgage. For example, you may want to hold off on buying a new car until you’ve been pre-approved.

Prove Consistent Income

Your lender will want to know that you’ve got enough money coming in each month to cover a potential mortgage payment. So, they’ll likely ask you to prove that you have consistent income for at least two years by taking a look at your income documents (W-2, 1099 etc.).

For some potential borrowers, such as freelancers, this may be a tricky process since you may have income from various sources. Keep all pay stubs, tax returns, and other proof of income and be prepared to show them to your lender.

What Happens if You’re Rejected?

Rejection hurts. But if you aren’t pre-approved, or you aren’t approved for a large enough mortgage to buy the house you want, you also aren’t powerless. First, ask the bank why they made the decision they did. This will give you an idea about what you might need to work on in order to secure the mortgage you want.

SoFi Mortgage.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Mortgages are not available in all states. Products and terms may vary from those advertised on this site. See SoFi.com/eligibility-criteria#eligibility-mortgage for details.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

SOMG18100

Source: sofi.com

May 7, 2021

Investing during a recession – Lexington Law

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

When things get lean, it’s natural to want to tighten your belt and save money wherever possible. But should you stop investing completely? It’s an entirely personal decision. Get some facts and insights about investing during a recession below to help you determine what will work for you.

Is It a Good Idea to Invest During a Recession?

It depends on a few factors, including what you’re referring to when you say “investing.” If you’re talking about funding a 401(k), you probably want to continue doing so unless you would be unable to pay your necessary bills and living expenses.

But if investing means the stock market or other similar options, you should seriously consider your financial situation. If you already have emergency savings and have disposable income to risk, investing can be an option. This is especially true if you won’t be touching your portfolio for a while, so you have time to weather the ups and downs associated with a recession economy.

But you do want to be aware of the bear market trap so you don’t fall into it. Bear traps occur when a lot of investors have bought into certain stock. This increases the selling pressure, which just means that there are buyers for the stock but not a lot of stock to be had.

Institutions that want the stock to move higher may push prices lower via short sales or other strategies, making it appear as if the prices are falling. That can scare people into selling the stock. In the long run, however, the stock maintains its price or increases in value, so selling early can mean losing out on future gains. This is just one reason you might want to work with a professional advisor when investing.

7 Tips for Investing During a Recession

1. Be Patient and Think Long-Term

Buying and selling stocks rapidly to turn huge profits is mostly an event seen in movies and television. And while it’s not impossible for pros to luck into a big win, this is not typically how individuals should look at investing. It may take time for your investments to pay off, especially if the economy as a whole is struggling, so it’s important to avoid being guided by emotions and rely on logic and sound financial advice.

2. Commit to a Personal Investment Plan

A personal investment plan is a written document that includes your financial goals and what types of limitations you might have, such as what you can afford to spend on investing. Creating such a document ensures you have a logical, well-thought-out guide to turn to when things do get tricky. If you feel tempted by a seemingly perfect investment, for example, your plan can remind you what you can realistically put into this new investment.

3. Use the Dollar-Cost Averaging Strategy

Dollar-cost averaging is a strategy used by many investors, including some professionals. Its goal is to potentially reduce the volatile nature of a single purchase. The DCA strategy works like this:

You decide how much you’re going to invest in certain assets within a set period
You divide that budget over that time and make periodic purchases of the asset
You do this despite the price of the asset at any given time

The goal is to build up the investment for a long-term gain strategy. This is actually how most 401(k) investments are managed.

4. Focus on Quality Over Quantity

But don’t think that you have to buy tons of assets to be investing for the future. If you have limited funds to invest with, it can be tempting to buy up stock that is cheap just to get some quantity. But cheap stock isn’t always a great investment, and it might be better to buy a smaller number of shares in a well-trusted company with a history of strong stock performance.

5. Consider Funds Instead of Individual Stocks

Another option is to consider funds, which spread your investment over numerous stocks. You’ve probably heard that you have to diversify your portfolio. That just means investing in numerous types of assets so that if one doesn’t perform well, you have other gains to make up for the loss.

A mutual fund is an investment option that’s already diversified, for example. Plus, it’s a convenient way to add numerous assets to your equity portfolio without buying and managing numerous stocks yourself.

6. Rebalance When Necessary

While investing is a long-term strategy, active investing can’t be a set-and-forget strategy. You have to make efforts to rebalance your portfolio—or ensure someone is doing that for you—from time to time.

Rebalancing just means aligning your assets with your target goals. For example, you might have a goal of 60% in stocks and 40% in other assets. But if your stocks gain rapidly during a few years, outpacing the gains of your other assets, you could have a 70/30 split. If your goal is still 60/40, you would rebalance by selling stock, purchasing other assets or both.

7. Invest in Recession-Resistant Industries

Recession-resistant industries are those that don’t tend to succumb to downturns in the economy, often because they’re necessary. Examples of industries that have historically weathered recessions well include healthcare, technology, beauty, retail, construction and pet products.

Note that because a company is in a recession-resistant industry doesn’t mean that company itself is necessarily resistant. It’s always important to be discerning about which stocks you invest in. For example, if the company doesn’t have strong financial leadership or has known money problems, it may not matter what industry it’s in.

Review Your Finances and Decide What’s Best for You

Ultimately, only you can decide whether investing during a recession is right for you. Start by reviewing your own finances. Some things you might want to look at include:

What kind of savings you have. Having emergency savings is important, especially in a recession. Before you start investing, you may want to build yours.
Your income and expenses. You need disposable income before you can invest. That means that your income should be more than your expenses.
Your credit history. Buying stocks and investing typically doesn’t rely on you having good credit. But before you start building wealth, get a good look at your credit reports to ensure there’s nothing lurking that you might need to attend to. If you find any surprises, consider reaching out to Lexington Law for help disputing inaccurate items and working to make a positive impact on your credit.

And if you do decide to invest—during a recession or otherwise—consider working with a financial advisor to help you navigate the complexities of managing your portfolio.

Reviewed by John Heath, Directing Attorney of Lexington Law Firm. Written by Lexington Law.

Born and raised in Salt Lake City, John Heath earned his BA from the University of Utah and his Juris Doctor from Ohio Northern University. John has been the Directing Attorney of Lexington Law Firm since 2004. The firm focuses primarily on consumer credit report repair, but also practices family law, criminal law, general consumer litigation and collection defense on behalf of consumer debtors. John is admitted to practice law in Utah, Colorado, Washington D. C., Georgia, Texas and New York.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

May 7, 2021

How to Use Your Health Savings Account (HSA) for Retirement Investing

Saving for retirement is difficult, but it’s an important part of everyone’s financial life. There are a number of ways to make saving for retirement easier, such as using tax-advantaged accounts like individual retirement accounts (IRAs) and 401(k) plans.

One special type of tax-advantaged account, the health savings account (HSA), isn’t specifically designed to help people save for their retirement. However, its unique benefits make it one of the most powerful tax-advantaged accounts out there.

If you have access to an HSA, it can be one of the best ways to set money aside for retirement.

What Is an HSA?

A health savings account (HSA) is a special type of account that is designed to help people save money to pay for medical bills. HSAs are only available to people who have certain types of health insurance plans called high-deductible health plans (HDHPs).

Like retirement accounts, HSAs offer tax advantages that make it easier to set aside money to pay for medical bills. If your employer offers eligible insurance plans, they may also make contributions to your HSA on your behalf, similar to 401(k) matching.

The unique tax benefits of HSAs are what make them potent vehicles for saving for both medical expenses and retirement.

Pro tip: If you’re thinking about opening an HSA, you can get started through Lively. There are no hidden fees and you’ll be able to set up recurring contributions.

How Do HSAs Work?

Understanding how HSAs work is essential to making the most of them when it comes to saving for both health care and your retirement. You risk paying penalties if you fail to follow the rules.

Insurance Requirements

First, not everyone can open an HSA. They’re only available to people who have a qualifying high-deductible health plan.

An insurance plan’s deductible is the amount that you pay before your insurance kicks and starts covering costs. For example, if you have a $2,000 deductible, you have to pay $2,000 toward your health care expenses before your insurance pays any of the cost.

For an insurance policy to qualify as an HDHP, it must meet the following requirements:

It charges a higher annual deductible than typical health plans (for 2020, the minimum is $1,400 for individuals and $2,800 for families).
It has a maximum limit on the sum of the annual deductible and out-of-pocket medical expenses that you must pay for covered expenses (for 2020, the maximum is $6,750 for individuals and $13,500 for families).
It may, but is not required to, provide preventative care without a deductible or with a lower deductible.

Other Qualifications

The exact requirements for qualifying for an HSA are:

You are covered by an HDHP.
You have no other health insurance coverage, with the following exceptions:
- Liabilities incurred under workers’ compensation laws, tort liabilities, or liabilities related to ownership or use of property.
- A specific disease or illness.
- A fixed amount per day (or other period) of hospitalization.
- Coverage for accidents, disability, dental care, vision care, and long-term care.
You aren’t enrolled in Medicare.
You aren’t claimed as a dependent on anyone else’s tax return.

If you meet the requirements, you can open an HSA.

Contribution Limits

Like other tax-advantaged accounts, you cannot make unlimited contributions to an HSA. There is a limit on how much you can contribute each year.

For 2020, the limit is $3,550 for individual plans and $7,100 for family plans.

Some employers that offer HDHPs make contributions to their employees’ HSAs as an employee benefit. Employer contributions count toward these limits, so make sure you don’t exceed the contribution limit with your contributions and your employer’s contributions combined.

Tax Advantages

The primary reason that people use HSA for savings is the tax advantages. Like traditional IRAs and 401(k)s, the money you contribute to an HSA is contributed before tax. That means you can deduct the amount you add to the account from your income when filing your taxes.

If you have a taxable income of $50,000 and put $5,000 in your HSA, you can report your taxable income as just $45,000. That will save you about $1,100 on your tax bill, meaning your $5,000 contribution only costs you $3,900 out of pocket.

With a traditional IRA or 401(k), you pay income tax on the money that you withdraw from the account. HSAs are different. If you use the money in the account for qualified health expenses, you pay no taxes on the withdrawals either. This makes them doubly tax-advantaged.

If you have extra money in your HSA after you turn 65, you can begin making withdrawals from the account for nonmedical expenses too. If you do, you pay income tax on the amount you withdraw, but no penalties, just like a retirement account.

Penalties

Typically, you can only withdraw money from an HSA for qualified medical expenses. The IRS outlines all qualified expenses in its Publication 502, but it includes most things you’d expect, including:

Ambulance fees
Birth control
Body scans like MRIs or X-rays
Contact lenses
Dental treatment
Drug addiction care
Eye exams
Hearing aids
Hospital services
Physical exams
Prescriptions
Surgery

If you withdraw money from an HSA for a nonmedical expense and you are under age 65, you pay a 20% penalty on the amount withdrawn. You also have to pay income tax on your withdrawal, meaning you are doubly punished for using the money for nonmedical expenses when you’re under 65.

Once you reach age 65, however, you can use HSA funds for nonmedical expenses penalty-free, but will still have to pay income tax on the amount withdrawn.

Although you generally don’t have to prove that you’ve used your HSA money for qualified medical expenses when you file your taxes, you should always save your receipts so that you can show how much you spent compared to how much you withdraw. The receipts will come in handy if you wind up getting audited.

How to Use an HSA for Retirement Savings

HSAs are useful for saving for health care expenses, but they’re one of the most powerful retirement accounts available to Americans. If you want to use your HSA to save for retirement, these tips can help.

1. Contribute as Much as You Can

If you want to use your HSA for retirement savings, the first thing to do is contribute as much as you can to the account.

Typically, you want to contribute to your 401(k) until you max out the amount that your employer will match. Getting employer matching contributions is like getting a raise, so it’s worth getting as much in matching funds as possible.

After that, you can focus on putting money in your HSA until you max it out.

2. Invest Your Balance

The name “health savings account” might make you think that your HSA is a simple savings account. Savings accounts pay interest, but they’re not great for long-term wealth building because you usually wind up losing spending power to inflation.

Depending on your HSA provider, you likely have the option to invest your HSA in the stock market. That means that you can use the money in your HSA to build an investment portfolio like you do in your retirement and taxable brokerage accounts. Building a portfolio of low-cost index funds is a great way to help your HSA’s balance grow.

Just remember to keep some of the money in cash if you plan on using the HSA to cover health expenses as well.

3. Wait Until You’re 65

Once you’ve opened your HSA, made contributions, and invested your money, all you have to do is wait. Once you turn 65, you can withdraw money from the account as if it were a 401(k) or IRA. There’s no requirement that you use the money for health care expenses.

The only downside of this strategy is that IRAs and 401(k)s are slightly more flexible when it comes to withdrawals. You can start taking money from those accounts, penalty-free, when you turn 59 ½.

4. Save Your Receipts

Even if you don’t plan to use your HSA to cover health care expenses, you should make sure that you save every medical-related receipt that you get.

The reason to save every receipt is that there is no time limit for withdrawing money from your HSA after you incur a qualified medical expense.

Consider this example: you injure your leg while out for a run and have to go to the hospital for surgery. After you recover, you get the hospital bill and have to pay $5,000.

You can withdraw money from the HSA now to pay the bill, or you can pay the bill out of pocket, leaving your money in the HSA to grow, tax-free. You decide to pay the bill out of pocket.

Because there’s no time limit on withdrawals, you can take $5,000 out of your HSA, tax-free and penalty-free, any time you want. You can make the withdrawal tomorrow, next year, 10 years from now, or when you retire.

This is better than simply waiting until you turn 65 because withdrawals for nonmedical expenses still incur income taxes. If you pay for medical expenses out of pocket but save your receipts, you can withdraw from your HSA without paying any tax at all, up to the total amount of your qualified medical expenses that you’ve incurred over the years.

This makes HSAs more powerful than standard retirement accounts because you pay no tax on contributions or qualified distributions.

The full list of qualifying medical expenses is long, and some might surprise you. Over time, you’ll likely build up plenty of qualified expenses, which will make it easy for you to make tax-free withdrawals when you need to.

Advantages of Using an HSA for Retirement Savings

HSAs are one of the most powerful tax-advantaged accounts when used properly, so there are a lot of perks to using one for retirement savings.

1. Tax Benefits Add Up

One of the primary reasons to use an HSA for retirement savings is the tax benefits. If you use the account properly and save your medical receipts you can ultimately pay no tax on any of the money you contribute or withdraw from the account.

Even if you don’t have enough medical expenses to withdraw the entire amount tax-free, you have the backup plan of paying taxes on penalty-free withdrawals after you turn 65, effectively making the account into a second IRA or 401(k). Over the long term, the amount that you save in taxes can be huge.

If you’re in the 22% tax bracket — single earners making $39,476 to $84,200 and couples making $78,951 to $168,400 — and withdraw $10,000 per year from your HSA tax-free, you save $2,200 per year in taxes. That means needing to save about $55,000 less for retirement if you’re using the 4% rule to determine how much of your portfolio to withdraw each year.

2. HSA Contributions Don’t Count Against Retirement Contribution Limits

Using an HSA for retirement savings also increases the amount of tax-advantaged saving “cap space” you have for other retirement vehicles. IRAs and 401(k)s limit your contributions (to $6,500 per year and $19,500 per year, respectively). HSA contributions don’t count against those caps.

If you’re maxing out your tax-advantaged retirement contributions and looking for other ways to reduce your tax bill, HSAs can be an attractive option.

Disadvantages of Using an HSA for Retirement Savings

Just because you can use an HSA to save for retirement doesn’t mean that doing so is a good idea. Here are the disadvantages to consider.

1. You Might Need the Money for Medical Expenses

One reason not to use your HSA for retirement savings is the possibility that you might wind up needing that money to pay for health care expenses. Odds are good that you’ll wind up with a big medical bill at some point in your life.

If you have a high-deductible health plan, the out-of-pocket expense could be significant, and unless you have a strong emergency fund in savings, you might need to tap your HSA account to pay the bill.

If your HSA is one of your primary methods of saving for retirement, you might have to dip into your nest egg to cover a medical emergency, which is never ideal.

2. HSAs Aren’t Designed for Retirement Investing

Another drawback is that HSAs aren’t designed for retirement saving. The tax rules surrounding HSAs make them a great way to save for retirement, but that isn’t their intended purpose. HSA accounts aren’t necessarily optimized for long-term investing.

Some HSA providers might not offer the option to invest your balance at all, or might offer options that charge hefty fees for the privilege. Some HSAs limit your investment options to expensive mutual funds whose fees can eat away at your balance over the long term, meaning your savings will grow much more slowly in an HSA than a specifically designed retirement account.

By contrast, many true retirement plans have specially designed investment options, such as target-date funds, that make saving for retirement easy.

3. The Rules for HSAs Could Change

Finally, just because HSAs are great for retirement savings now doesn’t mean that they will be 20, 30, or 40 years from now. The government could change the rules for how you can use the money in the account. For example, the IRS may add a time limit for withdrawing funds after you incur a medical expense.

Future changes may make it harder to use the money you have in the account or alter the tax implications, which could limit its usefulness as a retirement savings vehicle.

Final Word

HSAs can be a good way to save for retirement, but you need to have a high-deductible health plan to be eligible for one. Furthermore, you must be able to cover out-of-pocket medical expenses by other means in order to make the most of these accounts as retirement savings vehicles.

For most people, 401(k)s and IRAs will be the main methods of saving for retirement. Don’t forget that you can also benefit from opening a taxable brokerage account if you want to invest for long-term goals beyond retirement.

Source: moneycrashers.com

May 7, 2021

What’s Your Strategy for Maximizing Your Social Security Benefits?

Deciding when to take social security is a bit like playing chess. You’ll need to strategize and think a few moves ahead to maximize your benefit because age and timing matter. Applying at the youngest age possible, 62, reduces a monthly benefit 25% to 30% for the rest of your life than if you had waited until full retirement age. Delay until the latest age possible, 70, and that monthly benefit increases 8% each year you wait past your full retirement age, a bonus of 24% to 32% depending on your birth year.

Your birth year matters because the full retirement age is rising — from 66 for people born between 1943 and 1954, to 67 for those born in 1960 or later. If your birth year falls between 1955 and 1959, the full retirement age rises two months every year.

The retirement age isn’t the only thing that’s changing. The rules for claiming Social Security are different for those born after Jan. 1, 1954. This includes the majority of people filing for benefits today, and the changes especially affect married, two-earner couples.

First, the basics: Individuals pay into Social Security their entire working life in order to receive a steady stream of income in the form of a monthly benefit once they retire. The benefits are based on the person’s 35 highest years of earnings. If you don’t have 35 years of earnings, then zeroes are entered for the remaining years, reducing the monthly benefit.

As pensions disappear and life expectancies rise, a guaranteed lifelong income that isn’t tied to the stock market has tremendous value. “Social Security is the best deal out there,” says Diane M. Wilson, a claiming strategist and founding partner of My Social Security Analyst in Shawnee, Kan. “It’s an annuity that lasts a lifetime, and it’s indexed to inflation.”

Maximizing that benefit has produced a cottage industry of claiming strategists to help retirees determine the best time to start taking benefits, but it’s not a simple calculus. “In the end, it’s a longevity decision,” says Kurt Czarnowski, who counsels clients about Social Security at Czarnowski Consulting in Norfolk, Mass. “If you knew when you were going to die, all this would be a snap.” Instead, people should understand their choices and make an informed decision, he says.

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The Differences Between Restricted Filing and Deemed Filing

For married couples, that decision involves accounting for two people’s earnings and benefits, as well as the likelihood of one spouse outliving the other. Spouses are not only entitled to the benefit based on their own work history, but they also may be eligible for additional money when the spousal benefit is factored in, what Wilson calls “add-ons.” The spousal benefit equals 50% of the higher-earning spouse’s benefit if the lower-earning spouse takes it at full retirement age. The amount is reduced when taken early, and you can’t claim the spousal benefit until your spouse begins taking Social Security. To be clear, you do not get to take two benefits, but rather Social Security increases your benefit to equal half of your spouse’s if the one based on your own work history is smaller.

People born on or before Jan 1, 1954, can maximize benefits while still receiving some Social Security. By taking whichever benefit is lower — their own or a spouse’s — when they first apply, they let the larger benefit grow before switching to it at a later age. That option, known as “restricted filing,” isn’t available for people born after Jan. 1, 1954. For them, there’s no choice. Social Security simply bestows their own benefit and any add-ons the person is eligible for when they file for benefits, a practice known as “deemed filing.”

Let’s say the higher-earning spouse is the husband and the lower-earning spouse is the wife. Under deemed filing, when the wife applies for Social Security at her full retirement age, she is given the highest amount she is eligible for, which in this instance is 50% of her husband’s benefit, assuming he started taking it. If he hasn’t, she will be given only the benefit based on her own work history. Once her husband applies for his benefits, Social Security will increase hers so that it equals half of his. If the wife was the higher earner and her benefit was more than 50% of his, she won’t get any additional money when he starts claiming Social Security. She will simply continue collecting her own higher work benefit.

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Maximizing Social Security Benefits for Married Couples

Deemed filers may have fewer options, but there are other strategies to consider, such as when to start claiming and which spouse should file for Social Security first. Those decisions can change cumulative lifetime benefits substantially, sometimes by as much as six figures, says Wilson. When she advises couples affected by the new rules, she generally recommends the higher earner to delay as long as possible, ideally until age 70, while the lower earner can file, giving the retired couple some income.

The couple’s age difference matters, particularly if the younger spouse is also the lower earner, says Jim Blair, co-owner of Premier Social Security Consulting in Cincinnati. In that case, “if they’re five years or more apart in age, you want the younger person filing as early as possible, at 62, and the older person delaying as long as possible,” he says. “Odds are the younger person is going to receive a survivor benefit before they reach their breakeven point, which is about 12 years past retirement age.” The breakeven point is the age when the total value of cumulative benefits, whether taken early or later, is roughly the same.

If the situation is reversed and the younger spouse is the higher earner, “we’ll look at what the younger individual will need in retirement,” Blair says. “If taking that benefit early at age 62 means a 25% reduction, they’re going to have to live with that for the rest of their life.” There will need to be other income to compensate for the reduction, he adds.

Couples who straddle the 1954 birth year, with one spouse falling under the old rules and the other under the new, have more ways to move the pieces on the Social Security chess board. For instance, if the wife is the younger, lower earner, she may want to apply early, taking her own reduced benefit. That would allow the husband, who was born before the 1954 cutoff date, to use a restricted application and request only a spousal benefit. Meanwhile, his benefit based on his own work history continues to grow 8% per year from his full retirement age until he turns 70. He can switch to his own higher benefit later, whether at 70 or sooner.

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Understanding Social Security Survivor Benefits

Couples should try to postpone taking whichever spouse’s benefit is higher to ensure a larger survivor benefit. This is particularly important when the lower earning spouse is younger and likely to outlive the higher earner by many years. “You want that higher benefit to take care of the survivor,” says Wilson, who warns clients of expenses, like home health aides, that someone living alone will almost certainly have.

A spousal benefit turns into a survivor benefit when a spouse dies, but the benefits are not the same. A surviving spouse who is at least full retirement age can receive 100% of the deceased spouse’s benefit, as opposed to 50% for a spousal benefit. The amount is reduced if the surviving spouse claims the benefit before full retirement age. You can claim a survivor benefit as early as age 60 (50 if you are disabled). But you don’t have to take it early, and you may not want to if you’re still working.

Social Security imposes an annual earnings limit for anyone younger than full retirement age who collects benefits, a rule that also applies to surviving spouses. For every $2 earned above the limit, which is currently $18,960, Social Security will deduct $1 in benefits, with the money restored later in the form of a higher benefit when you reach full retirement age. The earnings rule is more generous the year you reach full retirement age with Social Security deducting $1 for every $3 in earnings above $50,520. There’s no limit on earnings once you are full retirement age.

A widow who is, say, 60 when her husband passes away could hold off and take the survivor benefit when she reaches her full retirement age and stops working. There’s no reason to wait beyond that age because the survivor benefit won’t increase.

A survivor benefit is also not subject to the deemed filing rule. Someone born after the 1954 cutoff date can choose to take either their own or the survivor benefit when applying for Social Security. That opens a whole new avenue of claiming strategies. A widower, for example, could take the survivor benefit first if he needs the income and let his own larger benefit continue accruing delayed retirement credits before switching to it at age 70. If his own benefit is smaller, he could take that early and switch to the larger survivor benefit when he reaches full retirement age. The survivor benefit won’t be reduced because he took his own benefit early. The survivor benefit is only reduced if he takes it before his full retirement age.

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How Death, Divorce and Remarriage Affect Social Security Benefits

A divorced spouse is also eligible for benefits based on a former spouse’s earnings history. If your ex is still alive and both of you are at least age 62, you can collect a spousal benefit even if your ex hasn’t started collecting, provided that the marriage lasted at least 10 continuous years, the divorce was two or more years ago, and you haven’t remarried. Your ex won’t know you’re taking the benefit. A divorced spouse who is full retirement age can get 50% of the former spouse’s benefit; it’s reduced if taken early. Deemed filing rules still apply if you were born after New Year’s Day 1954, with only the highest benefit amount given to you.

If your ex has passed away, you can collect a survivor benefit as early as age 60, but the other requirements — a marriage that lasted at least 10 years and a divorce that was finalized two years ago — remain. You also can’t have remarried before age 60.

If you remarry after age 60, you are allowed to keep the survivor benefit from a former spouse whether you were divorced or not, but timing is everything. Wilson had a client, a widower, who was two months away from turning 60 and collecting a survivor benefit. He was also about to remarry. “I told him about the rule, and he said, ‘I can’t reschedule this now.'” He went ahead with the wedding as planned, sacrificing the survivor benefit at the altar. Wilson points out that her client could collect a survivor benefit from his first marriage if the second one ends for any reason.

As with any survivor benefit, there’s no deemed filing. A divorced spouse has the option of choosing which benefit to take first — their own or the survivor benefit — and let whichever is larger continue to grow before switching to it later on.

Remarriage brings other claiming strategies, such as applying for a spousal benefit based on the new spouse’s work record, but there is a waiting period. To collect a spousal benefit, you generally need to be married one year, Czarnowski says. An exception is made for someone who is already collecting a Social Security benefit and remarries. Then the waiting period is waived, he says. For example, a widow over age 60 who is collecting a survivor benefit and remarries is “immediately eligible to collect 50% of the new husband’s benefit, assuming he is collecting his benefit,” Czarnowski says. You will need to choose which benefit you want — the survivor benefit from an earlier marriage or the new spousal benefit.

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When Singles Should File for Social Security Benefits

For single people who never married, there’s no survivor to consider so the decision of when to claim is based on the need for income and how much they’ll get at any given age between 62 and 70. “It’s really which point along this continuum makes sense,” Czarnowski says. You can get an idea of how much your benefit will be at different ages based on your current earnings by using Social Security’s quick calculator. You can also enter your earnings history for a more precise figure.

Most of Wilson’s single clients start claiming at full retirement age so that their benefits aren’t reduced. Should they wait until age 70 to get the highest possible benefit? “They may want to if they’re still working and they don’t need Social Security,” Blair says. “The flip side is when they pass away, the benefits end. If they pass away at 72, they didn’t collect very long.”

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You Can Pause Your Social Security Benefits

Someone pushes a red button that is labeled "No!"

Social Security also gives people who regret taking a benefit early the chance to reverse that decision. If you change your mind within the first 12 months of claiming your benefit, you can withdraw the application. All the benefits you received will need to be repaid, including any spousal benefits based on your work record, but you’ll get a higher monthly benefit when you restart later on.

The second way is to suspend your benefit, which you can only do once you reach full retirement age. You won’t need to repay the benefits you’ve received, and you earn delayed retirement credits of 8% per year until age 70, enabling you to reverse some of the damage from claiming early. Keep in mind, however, that when you suspend a benefit, you also suspend any other benefits based on your work record, such as a spousal benefit. If your spouse was getting $1,500 per month and $500 was based on your work record, she’ll only get her own $1,000 benefit when you suspend.

Source: kiplinger.com

Why You Should Wait Before Buying Something

Plan Your Meals Early

Set Specific Savings Goals

Start Saving Early

Don’t Rely on Future Earnings

How Do Cash Management Accounts Work?

Store & Protect Large Amounts of Cash

Use Your Money When You Need It

Earn Interest

Low Fees

Invest Your Funds

How Does a Cash Management Account Differ From a Checking or Savings Account?

Essential Features of a Cash Management Account

Ease of Access

Fees

Interest Rates

FDIC Insurance Limits

Pros of Cash Management Accounts

Cons of Cash Management Accounts

Who Needs a Cash Management Account?

Where Can I Get a Cash Management Account?

Alternatives to a Cash Management Account

Final Word

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