inheritance

Am I financially independent? (And does it matter?)

It’s been two years since I last looked at my overall financial situation to determine whether I have the resources to meet my goals. In those two years, much has changed.

I sold my condo and bought a home in the country. I repurchased Get Rich Slowly. I invested in not one but three other businesses. The stock market has bounced around, I’ve begun part-time work at the family business, and I’ve made many other minor adjustments to my daily life.

With all of these fluctuations, I’m naturally left to wonder: Am I still financially independent?

As I’ve mentioned many times, financial freedom exists along a continuum. For the sake of this article, I’m discussing the fifth stage of FI, the point at which investment income supports standard of living.

[The Stages of Financial Freedom]

At the end of 2016, I was FI (but only just). What about at the end of 2018? Do I still have enough saved to fund my future indefinitely? Let’s find out.

Can I Buy Life Insurance for Your Parents

You may want to buy a life insurance policy covering your parents and naming you as a beneficiary if you expect a significant financial impact from their deaths. Insuring a parent’s life can pay for burial expenses, fund an inheritance, … Continue reading →

The post Can I Buy Life Insurance for Your Parents appeared first on SmartAsset Blog.

The Basics of Estate Tax Planning

Estate planning matters if you’re hoping to preserve as much of your wealth and assets as possible for future generations. One of the biggest challenges is finding ways to minimize your tax liability, as taxes can shrink the value of … Continue reading →

The post The Basics of Estate Tax Planning appeared first on SmartAsset Blog.

How to Refinance an Inherited Property to Buy Out Heirs [2023 Guide]

Inheriting a house with siblings means that each person owns an equal share of the property. While you and your siblings can continue to share ownership of the inherited house, refinancing is another option worth considering. Follow this guide on how to refinance an inherited property to buy out heirs.

The post How to Refinance an Inherited Property to Buy Out Heirs [2023 Guide] first appeared on Total Mortgage.

Saving regret — and how to avoid it

In November 2018, the National Bureau of Economic Research published a paper called “Saving Regret” [here’s the full PDF version]. Once you wade through the study’s academic language, there’s some interesting stuff here about why people do and don’t save for retirement.

Saving regret, the authors say, is “the wish in hindsight to have saved more earlier in life”.

Obviously, you can suffer from saving regret at any age. When I met 31-year-old Debbie for dinner last week, her issues boiled down to saving regret. She wishes she’d saved more when she was younger. But for the purposes of this paper, the authors turned their attention to folks aged 60 to 79, people of traditional retirement age.

The researchers found that two-thirds of those surveyed said they should have saved more when they were working: “66.6 percent said they would save more if they could re-do their earlier life.”

As you might expect, the authors found that high-wealth and high-income people experience less saving regret. (I’m pleased that the researchers recognize that there’s a difference between income and wealth.)

But what causes saving regret in the first place? Why don’t people save more? Let’s take a look at what the study found.

Saving Regret -- and How to Avoid It

Sources of Saving Regret

In their survey of 1590 people, the authors asked about education, personality, and what they term “positive and negative shocks”. (The latter is basically trying to to determine how unexpected events affect saving.)

After compiling the results, they reached these conclusions:

  • “We found only modest evidence for a relationship between our measures of procrastination and the desire to re-optimize saving.” Yes, procrastination is a factor in saving regret. But it’s not as big as you might expect.
  • Failure to anticipate negative shocks — underestimating their probability and effects — has a greater effect on saving regret.
  • Overall, “a substantial percentage of respondents view their economic preparation to be adequate, yet they nonetheless express saving regret.” In other words, as many GRS have experienced, even when you think you have enough saved, you often wish you had more.

“Saving regret is high at the time of or shortly before retirement but is much lower at older ages,” the authors write. They believe there are two reasons for this.