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BUILDING A FINANCIAL FUTURE

Some retirement saving tips for late starters METRO NEWS SERVICE

Despite countless television ads touting the virtues of retirement planning, it seems many people are not getting the message. According to a survey from GOBBankingRates.com, one-third of Americans have nothing saved for retirement. Financial advisers recommend men and women begin saving for retirement as early as possible. The longer people delay opening a retirement account, the less time their money will have to grow. Those who never open such accounts may not be able to meet their cost of living in the future. While it pays to start saving for retirement early, late bloomers who need to catch up should know that it’s never too late to start. • Sign up for an employer-sponsored retirement account. Many employers arrange for retirement savings accounts like a 401(k) for their employees. Such accounts are typically tax-deferred. As a result, men and women likely won’t even notice the money missing from their paychecks each month. Take advantage of such offerings if they exist. Such opportunities can be even more beneficial to late bloomers whose employers match contributions up to a predetermined percentage. • Start saving as much as possible.

Metro News Service

Men and women who have delayed saving for retirement should not panic. While it’s always best to begin saving for retirement as early as possible, there are ways for late bloomers to catch up and/or create a decent-sized nest egg for their golden years. Many people contribute 6 percent of their pay to a retirement savings account such as a 401(k). That rule of thumb may be enough for young workers, but late bloomers may need to contribute a higher percentage of their

incomes if they hope to catch up. If 10 percent is doable, then contribute 10 percent, being sure to diversify how that 10 percent is invested. Workers who can afford to contribute more might want to explore other retire-

ment account options so they avoid putting all of their eggs into one basket. • Avoid high-risk investments. Investors trying to catch up on retirement savings may be tempted to invest their money in high-risk funds with the hope of making up ground quickly. But investors typically want to reduce risk as they get older. That approach should still gover n late bloomers’ investing decisions, as highrisk funds that don’t perform well could leave aging investors with little to nothing come retirement. Prospective investors who need help choosing the right funds for themselves should contact a financial adviser. • Cut spending. Men and women getting a late start on retirement saving should examine their monthly expenses, looking for places to cut costs so they can reallocate those funds for retirement savings. Some ways to considerably reduce monthly expenses include cutting the cord with a cable provider, driving a preowned vehicle instead of a new model, and downsizing to a smaller home. Men and women who have delayed saving for retirement should not panic. While it’s always best to begin saving for retirement as early as possible, there are ways for late bloomers to catch up and/or create a decent-sized nest egg for their golden years.

STRETCHING YOUR DOLLARS

There are a number of ways to live comfortably on less METRO NEWS SERVICE

Many people look toward retirement with mixed feelings. There is the anticipation and excitement of no longer having to stick to a set schedule. However, there may be some trepidation about living without a steady income. Bloomberg financial experts found the number of Americans aged 65 and

older without a disability that weren’t in the labor force rose to 800,000 in the fourth quarter of 2016. This has become a long-standing trend of Baby Boomers leaving the workforce and entering retirement. Although boredom may compel many people to re-enter the workforce, some may have started working again to

make ends meet. Researchers found the higher the earnings in one’s late 40s, the more likely a retiree is to go back to work. While retirees may need to alter their spending habits, it is possible to live happily on less. Here are some ways to do just that. • Accurately assess home expenses.

The National Foundation for Credit Counseling says the cost of home-related expenses accounts for roughly 45 percent of spending for retirees. Individuals can add up exactly how much their homes are costing them and then decide if downsizing is a practical solution.

See STRETCHING, Page 6


FINANCES AND THE FAMILY

Parents can create practical household budgets METRO NEWS SERVICE

Raising a family is no small feat. Along with the love and joy, there are some obstacles that must be surpassed, including the financial investment required. A 2015 report from the Department of Agriculture found that middle-income married couples would spend an estimated $233,610 to raise a child born in 2015. Parents who find that figure high should know that it does not include costs incurred after children turn 18. So parents could be responsible for nearly a quarter million dollars before they ever write a college tuition check. The high cost of raising a child only emphasizes the importance parents must place on creating household budgets. A few dollars put away here and there can add up to substantial savings over the years.

Housing Housing is many families’ most substantial monthly expense. When determining how much they can

Carefully constructed household budgets can help parents survive the often expensive costs of raising a family. Metro News Service

afford to pay for housing, families may come up with a figure they’re comfortable paying for their monthly mortgage. But it’s important that parents, particularly those who have never owned their own home before, also take utility costs into consideration before signing their mortgage agreements. Utility costs for single-family homes can dwarf the cost of utilities in apartments. The U.S. Bureau of Labor Statis-

tics’ Consumer Expenditure Survey recommends people making housing budgets commit 58 percent of total housing costs to mortgage payments, 21 percent to utilities, just over 9 percent to furnishings and equipment, and roughly 7 percent to household operations. Utilizing this formula before taking out a mortgage can help families ensure they are not scraping pennies together each month to meet their housing costs.

Food Food is another significant expense, especially for growing families. The BLS notes that the average U.S. household spends just about 13 percent of its monthly budget on food. Parents who examine their spending habits over the previous year can look at how much they’re devoting to food and find ways to reduce that figure if it’s well over 13 percent. Reducing food spending may require more savvy spending at the grocery store, including shopping sales or buying certain items in bulk when it’s advantageous to do so.

Transportation Parents may find this odd, but the BLS reports that the average U.S. household spends more of its monthly budget (roughly 17 percent) on transportation than it does food. Parents who want to trim their monthly budgets can opt for more affordable cars and trucks, reserving their splurging on luxury vehicles for later in life when their kids have moved out of the house.

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PLANNING FOR FUTURE EDUCATIONAL COSTS

Parents can help finance their children’s educations through various savings plans. A financial adviser may shed more light on which products are best for families.

METRO NEWS SERVICE

Accounts to pay for college or even private high schools can be a smart way for parents to prepare for their children’s futures. Not every account is the same, and certain savings accounts could affect financial aid eligibility and taxes. It is in parents’ and students’ best interests to educate themselves on the various education savings plans available to them — and which ones make the most sense for their families. Families should do their research and work with professionals who understand the subtleties of school savings plans. For example, according to Cappex.com, a college information site, students’ income and savings have a larger, more negative impact on the availability of financial aid than the portion of their parents’ assets factored into the equation. Students with sizable savings accounts in their name may end up adversely affecting their financial aid eligibility. A financial adviser and loan expert can advise families on these confusing financial facts. • 529 College Savings Plan: 529

Metro News Service accounts are a popular education savings plan. They operate in a similar fashion to IRA and 401(k) plans in that savings for education are earned tax-free through investment opportunities. SallieMae says 529 plans are offered by states or educational institutions under Section 529 of the Internal Revenue Code. These tax-advantaged plans generally have no income limitations and high contribution limits. The usage of funds

in 529 accounts are subject to regulations. • Coverdell Education Savings Account: Coverdell accounts are versatile in that they enable the money to be spent for elementary through college education, which is a larger range than other plans. This is another tax-free plan when used for school purposes. Coverdell contributions are capped at $2,000 per year, and they’re only available

to families below a specified income level, says the resource SavingforCollege.com. • Uniform Gifts to Minors Act Account: These accounts are not traditionally designed for education but can be established to offer gift assets to minors. The custodian of the account can sell the assets for the child’s benefit at any time, and once the child reaches 18 or 21, recipients can use the funds in whatever manner they choose. However, UGMA may affect financial aid eligibility. • Roth IRA: Parents can open up a Roth IRA in their child’s name once the child begins earning income. Even though there are penalties to taking earnings out before the age of 59.5, exceptions include purchasing a first home or qualified education expenses. A Roth IRA isn’t subjected to legal and administrative fees that can come with trusts, which are another savings avenue. Parents can help finance their children’s educations through various savings plans. A financial adviser may shed more light on which products are best for families.

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ECOLOGY AND THE ECONOMY

Going green can save money in multiple ways METRO NEWS SERVICE

Furnishing a home with antiques can protect the planet and may even save homeowners money.

Many people adopt eco-friendly practices in an effort to protect and preserve the planet. But going green can be as good for adults’ pocketbooks as it is for the planet. People who start making concerted efforts to go green are often surprised to learn the myriad ways they are suddenly saving money. While finances might not be the primary motivator that compels people to start living more eco-friendly lifestyles, recognizing the many ways that going green can save consumers money might be just what people need to keep them on track in their efforts to help the planet.

On the road Drivers who alter their driving habits can save money in various ways. Defensive driving has long been touted as the safest way to take to the road, but such an approach to driving also can be financially savvy. Drivers who do not frequently accelerate or stop suddenly can conserve fuel, saving them money at the filling station.

Metro News Service

In addition, following manufacturer-recommended maintenance guidelines can ensure all vehicle components are operating smoothly. That means the engine does not have to work as hard as it would if a vehicle was poorly maintained, thereby conserving fuel.

Lighting Household lighting is another area where consumers can protect the

planet and save money at the same time. According to the U.S. Department of Energy, Energy Star-qualified LED lights consume just 20 to 25 percent of the energy used by incandescent bulbs, all the while lasting as much as 25 times longer than incandescents. That saves men and women money on their energy bills. While LED lights are more expensive to purchase than many of the alternatives, their long life expec-

tancy means consumers can expect to see returns on that investment long before the bulbs are no longer functional.

Furnishings Another way to go green and save money is to forgo new furnishings for used furniture or antiques. Some antiques might prove more expensive than brand new items, but savvy shoppers can likely find older, less costly items for a fraction of the price of brand new furnishings. Buying used furniture or antiques reduces landfill waste and cuts back on manufacturing, packaging and transportation, each of which can take a toll on the planet. Consumers who need new furnishings for their homes also can look for products made of recycled materials, which reduces landfill waste, or items made from eco-friendly materials that grow quickly, thereby reducing the need for pesticides. Going green is a commendable way to live and safeguard the planet. Adopting such a lifestyle also can be a great way to save money.

       

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PHYSICAL AND FINANCIAL HEALTH

METRO NEWS SERVICE

High-deductible plans and HSAs are not for everyone, particularly people who require a lot of medical coverage throughout the year, necessitating high medical costs. People are urged to talk with a tax adviser to see if an HSA might be the right option for them.

Health savings accounts are specialized savings accounts that allow people with specific health insurance plans to set aside money to pay for qualified medical expenses. These funds are deducted before taxes are withdrawn. Health savings accounts are a popular option among American workers.

How do HSAs work? Health Savings Accounts (HSAs) enable people to put money aside for use throughout the year on allowable health care needs. Some HSAs are offered in addition to health insurance through company plans, or health insurance providers may market them separately to individuals. Some financial institutions also support their own HSA. People decide how much to contribute to an HSA account each year, although there may be government-mandated minimums. In the United States in 2017, the limit was $3,400 for an individual and $6,750 for a family, according to the financial resource NerdWallet. Health Equity says that those who have an HSA account own the account, even if they change health plans, retire or change employers.

Who is eligible? Unlike flexible spending accounts (FSAs), HSAs are restricted to people who participate in high-deductible health plans only. High-deductible plans often have lower monthly premiums, but come at the cost of these higher amounts that must be paid before insurance kicks in, states HealthCare.gov. The U.S. Internal Revenue Service defines a high deductible health plan as any plan with a deductible of at least $1,300 for an individual or $2,600 for a family.

Metro News Service When HSAs are combined with high-deductible health plans, people may be able to lower their monthly health insurance premiums, all the while having a cache of savings to use toward eligible expenses.

HSA benefits HSAs can lower monthly health insurance premiums or offset some of the costs people pay for out-of-pocket health-related services, such as insurance copayments or services not covered by other insurance. HSAs are used primarily for tax benefits. Contributions to HSAs are made pre-tax and are tax-deductible. Because a person is taxed after making an HSA contribution, individuals are

taxed as if they make less money, thereby lowering their income tax. Another possible benefit for some people is that HSAs can be invested in mutual funds, stocks and other investment tools to generate even more money. Health Savings Administrators, which helps clients invest their HSA funds, says some people find that investing in HSAs enable them to see greater savings that can be put toward retirement than in more traditional 401(k) or IRA contributions. High-deductible plans and HSAs are not for everyone, particularly people who require a lot of medical coverage throughout the year, necessitating high medical costs. People are urged to talk with a tax adviser to see if an HSA might be the right option for them.

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SAVING MONEY

Discounts are available for the over-50 crowd METRO NEWS SERVICE

Many people may not look forward to the day they turn 50, but cracking the half century mark can have its perks. Many retailers and businesses offer discounts to men and women over 50, and the following are just a few ways that people who have turned the big 5-0 might be able to save some money. • Movie tickets: The cost of going to the movies has skyrocketed in recent years, as today’s theaters now offer an array of amenities and, thanks to bigger screens and better technology, a better viewing experience than the theaters the over-50 crowd grew up visiting. While film lovers may need to wait until they turn 60 to cash in on discount movie tickets, many chain movie theaters offer discounted tickets to older patrons.

• Travel: Men and women over 50 may be able to save substantial amounts of money on travel simply by typing in their birthdays when purchasing tickets or planning trips. For example, men and women over the age of 62 are eligible to receive a 15 percent discount on the lowest available rail fare on most Amtrak trains. • Ancestry: As men and women age, many begin to develop a greater interest in their heritage. Those who join AARP (membership is available to men and women who are 50 or older) can receive a 30 percent discount on an Ancestry World Explorer membership in the first year they’re members. • Auto rentals: AARP members also are eligible to save up to 30 percent on base rates for vehicle rentals at Avis.

• Hotels: Men and women over 50 may have extra time on their hands once their kids go off to college and then begin careers and families of their own. Many such adults use that extra free time to travel, which requires staying in hotels. Many hotels offer discounted rates to travelers over the age of 50, and such discounts may make it more affordable to book directly through hotel

websites instead of using popular travel sites where rates tend to fluctuate by the minute. • Dining: Of course, many restaurants offer early bird specials for patrons who want to eat a little bit earlier than guests typically arrive for dinner. However, many chain restaurants also offer discounts to senior diners regardless of when they arrive.

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• STRETCHING Continued from Page 1 Downsizing has a host of benefits, not the least of which is reducing housing-related expenses. • Invest in health care. Unexpected health care costs can quickly deplete individuals’ finances. That’s why it is essential to have a solid insurance plan in place. Health care planning also may include thinking ahead to longterm care, such as assisted living and nursing homes. One may have to make concessions elsewhere, but investing in health care can assuage concerns men and women might have about the cost of living in their golden years. • Use alternative transportation. Cars can be expensive. A budget-friendly alternative to driving is to use public transportation or

transportation services provided to seniors free or for nominal fees. • Take advantage of senior discounts. Many restaurants, stores and service centers offer discounts to seniors. The starting age for discounts may vary from store to store, so always ask before cashing out. • Shop for food differently. Bulk buys may have been appropriate for men and women when there were kids running around, but empty-nesters can cut back on food expenses. Shopping sales and making more meals at home can help seniors save money. The market research firm NPD Group found that in-home meals cost roughly one-third of what it costs to eat the same food at a restaurant. Save dining out for special occasions. Retirees can make changes to save money without negatively affecting their quality of life.

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FINANCES AND RECREATION

METRO NEWS SERVICE

Many people are passionate about traveling. Travel, whether it’s domestic or international, can be an invaluable way to experience other cultures, meet new people and get a sense of history. As valuable as travel can be, many people feel they cannot afford to travel. However, there are ways to travel on a budget and still have fun. • Stay close to home. Men and women traveling on limited budgets can save money and still have fun by staying close to home. The closer your destination to your home, the less costly your trip figures to be. By visiting destinations that are within driving distances, travelers can save money on the cost of airfare, which is typically among the most expensive components of traveling. Road trips also afford travelers ample flexibility that might not be available to travelers who are traveling abroad. That flexibility can make road trips more fun than more structured vacations. • Choose affordable destinations. Overseas travel is not necessarily more expensive than domestic trav-

Metro News Service

Travelers who must travel on budgets can still have fun and make lasting memories on their vacations. el. Certain destinations are ideal for bargain hunters year-round. Research affordable destinations via a Google search or utilize the “deals” sections on travel websites.

• Cook some of your meals. Food is among the most costly expenses for travelers. Men and women can save some money by cooking some of their meals during their vacations.

Doing so saves money on dining out, and travelers willing to experiment by cooking dishes native to the places they’re visiting can have some fun in the kitchen. • Travel during the off-season. Avoiding certain destinations during the height of their tourism seasons is another great way to save. The cost of lodging and airfare peaks during tourist season, but travelers willing to travel during the off-season can save substantial amounts of money. In addition to saving money on lodging and airfare, travelers who plan their vacations during the off-season may also save money on local attractions. • Do your homework regarding your destination. Thanks to travel websites, travelers can now learn as much as they want to learn about a given destination before they ever visit it. Such websites can be invaluable resources to travelers who want to enjoy their vacations but must do so on a budget. Research affordable tourist attractions and restaurants, even looking for free activities. Such research can be fun and make for more enjoyable trips.

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