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Posted
Sep 26 2007, 08:38 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This post comes from partner blog Five Cent Nickel. Have you ever heard of "longevity insurance”? In short, longevity insurance is a relatively new form of insurance that provides you with a guaranteed stream of income later in life, typically starting after you turn 85. To get longevity insurance, you have to make a substantial up-front payment 20 or so years earlier. Longevity insurance is really just a repackaged deferred annuity that's targeted for retirement-age individuals concerned about whether they'll outlive their savings. There are differences.
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Posted
Nov 14 2007, 07:59 AM
by
Karen Datko
Money Blog: Smart Spending Blog - MSN Money
This post comes from partner blog FiveCentNickel . Have you maxed out your traditional or Roth IRA for 2007? If not, you have until Tax Day to get it done, so you'd better get crackin'. The maximum allowable IRA contribution for 2007 is $4,000 ($5,000 if you're 50 or older). Assuming that you contribute once a month from now through April, you'll need to squirrel away just shy of $667 a month to reach the maximum ($833 per month if you're 50 or older). Even if you can't hit the full contribution mark, you should do what you can to pump money into your IRA. After all, IRA contribution limits are a use-it-or-lose-it proposition. If you fail to contribute in any given year, you can't carry the unused portion of your contribution limit forward to the next year. Worried that some sort of emergency might arise? No sweat. You can get your money back out if you end up needing it. Remember, you can withdraw your Roth IRA contributions (but not earnings) at any time, for any reason, without taxes
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Posted
Nov 23 2007, 10:13 AM
by
Karen Datko
Money Blog: Smart Spending Blog - MSN Money
This post comes from partner blog Blueprint for Financial Prosperity . My fiancée and I often play Scrabble . In fact, we've moved on to Super Scrabble (think Scrabble, but larger board and more tiles). At my fiancée's suggestion, I've come up with eight lessons from the tiles I think are crucial for both Scrabble and personal finance. Patience, patience, patience. To win at Scrabble, you need to be patient when you use your tiles. If you can position words on spots with double- or triple-word scores and double- or triple-letter scores, your score will increase exponentially. Personal finance also requires patience. Compounding takes a tremendous amount of time. An 11% gain on $100 is only $11 the first year. If you’re patient and let that 11% accrue over 40 years, you’re talking about a $6,400 gain. An early lead means nothing. You could build up an early lead with the bonus-point spaces in the middle, but as the game progresses and those triple-word-score squares (and quadruple if you
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Posted
Dec 26 2007, 04:17 PM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
The Dividend Guy has concluded that women investors have the edge over men, based on an article in the Toronto Star detailing research on the subject. The studies mentioned -- and we recommend that you read the Star article -- showed that women's portfolios outperformed those of men. Why would that be, we wondered. To avoid any appearance of subjectivity or sexism, we'll simply present The Dividend Guy's explanations.
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Posted
Jan 22 2008, 12:49 PM
by
Karen Datko
Money Blog: Smart Spending Blog - MSN Money
Mike knows how to build houses and fix cars, but he's not much into personal finance. So after one of Mike's co-workers withdrew all funds from his own 401(k) when it started losing money, Mike wondered if he should do the same. He turned to his favorite personal-finance blogger, glblguy, for advice. "My immediate reply was 'No!' and I explained to him why this was such a bad idea," glblguy writes at Gather Little by Little.
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Posted
Feb 13 2008, 09:26 AM
by
Donna Freedman
Rating:
Money Blog: Smart Spending Blog - MSN Money
Want to drop a bad habit or develop a good one? You need a plan. Specifically, you need a list. Lists make us feel confident and in charge. They make us feel we're already halfway to achieving our goals.
We love our lists. We especially love short lists. "Three easy ways to … (lose weight, stop smoking, become a millionaire)" is a guaranteed attention-getter.
Life is never really that simple, of course. If all it took were three steps, everybody would be thin and rich, with unstained fingers.
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Posted
Mar 19 2008, 05:59 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This post comes from partner blog The Dough Roller. A mind is a terrible thing to waste. So let's not waste ours today. Here are four useful financial calculations that you can perform in your head: What am I giving up in retirement savings when I spend money today? This is an easy one: Add a zero to the price tag. Assuming you have 30 years until retirement and earn 8% annually on your investments, that $3,000 watch would have been worth $30,000 in retirement if you had invested the money instead. Coming down to earth a bit, the $4 latte (it's always the latte) purchased five days a week costs about $1,040 a year, or $10,040 in your retirement account 30 years later. How much do I need to earn before taxes to buy stuff that I want? Assuming you're in the 28% federal tax bracket, multiply the cost by 1.4. That means a $20,000 car costs $28,000 before taxes. Yikes! Of course, this doesn't account for state tax and Social Security and Medicare taxes, all of which would make the multiplier even higher.
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Posted
Mar 24 2008, 11:29 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
Grace's post at GRACEful Retirement will sound familiar to many aging boomers watching the effect of Wall Street gyrations on their retirement accounts. Grace is 58 and playing catch-up after getting a late start on socking away money for her hopefully golden years. "I started this blog last July with $176,000 in retirement savings. Now I'm down to $146,000, notwithstanding the money I keep putting in," writes Grace, who plans to retire in 10 years. That drop, "when I allow myself to think about it, scares me to death." Yet she continues to invest $1,025 a month in index and growth funds. She tells herself she's right to keep buying when the market is down because it inevitably will come back up. She asks, "When do I find out if I passed the test?"
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Posted
Mar 26 2008, 06:32 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This post comes from partner blog The Dough Roller. An earlier version appeared on MSN Money here. Traditional retirement looks like this: work until you're 65 or so, and then stop working until you die. More recently, views of retirement have begun to change, as more and more "retirees" are forced to work long after 65. There is a major problem with the traditional approach to retirement, which I'll come to in a moment. But first, how would you answer the following question: How much of your life today is spent doing what you want to do when you want to do it? If I were to answer that honestly, the answer would be about 20%. Yuck! And I don't hate my job. I wouldn't work where I do if I were independently wealthy, but I have a good job, work with good people, and earn a good wage. But I still work. I still get up five days a week, spend one hour getting ready for work, 50 minutes commuting to work, about nine hours at work, and then another 50 minutes returning home. Under the traditional views of retirement, I will keep doing this same routine for the next 24 years, then I'll stop cold turkey and do who knows what until the end of my days. I started The Dough Roller in part because I don't like the traditional way of looking at retirement. And what's worse -- here's the major problem I mentioned a moment ago -- I believe that looking at retirement as something that happens decades from now for many of us is one of the major reasons why so many people don't save for retirement. It's just too far away to worry about, many believe. I want to change that way of thinking, so consider the following questions:
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Posted
Apr 25 2008, 08:04 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This post comes from Trent Hamm at partner blog The Simple Dollar. My big, overarching dream is to achieve true financial independence. By that, I mean that I have enough money saved and invested that I can live off the interest and investment income -- a point that I've discussed before as the crossover point. This is a huge goal, one that I won't achieve for many years no matter what path I choose. I dream about achieving this goal about the time my final child graduates from high school -- roughly 25 years from now.
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