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Strategies For Improving Your Credit Score

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Your credit score is extremely important, nowadays. It determines whether or not you qualify for other credit accounts, and if so, what terms. It plays a factor in where you live, and it can even impact job opportunities.

That said, it’s crucial you do everything you can to improve and keep your score high.

What impacts your score?

There are five factors that play a role in calculating your credit score. They are listed below with percentages to discern how big of a role each one plays.

  1. Payment history (35%) – How frequently do you make on-time payments. This number should be 100%
  2. Credit utilization (30%) – How much credit have you used compared to how much you have available. For example, if you have $20,000 of credit available and used $5,000, you have a utilization rate of 25%. Credit rating agencies want to see it below 30%, but the lower, the better.
  3. Credit age (15%) – How old are your current credit accounts? The older, the better. This means that every time you open a new credit account, your credit age drops.
  4. Types of credit (10%) – Credit cards, loans, student loans, etc. Variety helps here.
  5. Number of credit inquiries (10%) – Hard credit inquiries negatively affect your score. Like the utilization, low numbers are better.

(Source)

What hurts your score

There are a few things that negatively impact your score. I’ll list the bad things from the list above, then I’ll list a few others.

  • Poor payment history – If your payment history is below 100%, you’re already starting from behind. Anything under 100% gets notched down.
  • High utilization rate – As I said, rating agencies want to see utilization rates under 30%, so anything over that will bring your score down.
  • Low credit age – Older accounts are better for your score
  • Only one type of credit account
  • A large number of credit inquiries
  • Bankruptcy – Negatively affects your credit score and stays on your credit report for 10 years.
  • Liens and judgments taken out against you – Negatively affects your score and stays on your report for 7 years

Starting from a low score

If you are starting from a lower score, it could be from past experiences (bankruptcy or liens), and if that’s the case, you can only improve. Unfortunately, time is your enemy right now until those drop off.

The first place I would start is to pay off your current debt. If you don’t have any open credit accounts, the next step is to open one.

Individuals with low scores will have trouble opening credit accounts, so I would start with a secured credit card.

A secured credit card is like a regular one, except you establish the credit limit with a deposit. The amount of your deposit is the amount of your limit.

This is a slow and steady way to improve your payment history and show the credit rating agency that you’re responsible.

Current credit accounts

Speaking generally, I advise people to keep their credit accounts open. The one exception is you do plan on closing a credit account, make it one you recently set up.

Getting rid of a new account will increase your credit age, which should increase your score.

New credit accounts

If you’re looking to increase your score, I’d recommend abstaining from opening any new accounts, unless you’re someone that needs to open that secured credit card to rebuild your score.

The other two exceptions would be opening an account for a credit card balance transfer or a personal loan for debt consolidation.

Opening new accounts hurt twice. One, you effectively lower your credit age. And two, when you apply for a credit account, it counts as a hard credit inquiry.

Don’t do it unless you have to, and if the long-term benefits outweigh the short-term penalties.

Pay down debts

Paying down debt is a slow way to improve your credit score, but it’s a tremendous way to improve your finances overall.

Less debt means less money needed to service that debt. Less debt means a lower utilization rate (number 2 factor).

Also, when you make debt payments [on time], you’re strengthening your payment history (number 1 factor).

I recently wrote an article, linked here, about paying down debts. Give it a read. In that article, you’ll also find helpful resources on similar topics.

Utilities

The last thing I would do is check to make sure your utility provider (for me, my local municipality has its own utility company) is listed on your credit report.

My previous utility company (WE Energies) did come up on my credit report. It’s another “credit type” and another way to strengthen your payment history.

Further reading:

A Guide to Credit Tradelines: What Do They Actually Do for Your Score?

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In 2018, the average credit score in the United States was 704, which is considered ‘Very Good,’ and it is. Some lenders may offer people with this score the lowest rates, but there is no guarantee.

If you are one of the many Americans who find themselves in this boat, then you probably want to improve your credit score so you can also be a member of the 800-Plus Club. To do so, you must learn and understand everything there is to know about credit tradelines and how they affect your credit report.

[Read more…]

5 Factors to Consider When Turning Your Passion Project into a Business

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You’re about to take a big step in your career: taking your former passion project and turning it into a legitimate business. It’s an exciting notion. After all, you’ve probably been hearing people tell you, “if you do what you love for work, then you won’t work a day in your life.” It’s a romantic idea, to be sure, but turning your passion into a stable business can actually be very difficult to do.

Before you quit your day job, you might want to consider these 5 factors before you turn your passion into a business.

1.   Is the Market Viable?

This is arguably the most important thing to consider before you launch your new career. You’re going to have to study the market carefully and ascertain whether or not there’s really money to be made in your line of work.

Be honest with yourself. Just because you love your particular passion, doesn’t mean there are lots of people out there who are willing to pay for your product or service—or maybe not enough to provide you with a comfortable living. It’s not a bad idea to start your passion project as a side business first so that you can better evaluate its financial viability.

It’s great that you’re gunning for your dream career, but it might not be worth quitting your day job if you’re going to go hungry or become house poor. And you might want to be making enough money to adequately prepare for retirement.

Now how exactly can you evaluate the market? Easy: look at local businesses (or online businesses, if you’re going into ecommerce) and see how they’re faring. Take note of how many employees they seem to have and how much they charge for their product/service.

2.   Managing Employees is Hard

When you initially worked on your passion project, before you took to the private sector, you probably didn’t have to worry about managing employees. You were probably just working for yourself. But if your company is going to grow, or if you’re going to produce enough work to be profitable, you might need to hire an employee or two, or ten.

Hiring and managing employees is difficult, and the latter is a day-to-day job in and of itself. Before you hire a new job candidate, be sure you run a background or credit check for employment purposes. A credit check is especially important if you’re going to be hiring an accountant—you don’t want to hire a financial advisor who has bad credit. On that note, be sure you carefully budget your business before you start hiring—there are lots of businesses that hire too many employees too quickly and are forced to lay people off.

There are some great tools you can use to help manage your employees. If you have part-time workers, use a scheduling app like Sling. If you have office-based workers, use a project management program like Asana to assign tasks and due dates for those tasks. And for inter-office communication, use any kind of messaging app, like Slack or GroupMe.

3.   You’ll Have to Worry About Legal Stuff

When you enter the business world, you expose yourself to all kinds of lawsuits. Some of these lawsuits might come from disgruntled employees or angry customers. Other times, you might get pestered by the IRS or by your local tax jurisdiction for late or inaccurate tax filings, or late sales tax remittance. It’s important that you find a reliable lawyer you can regularly consult with. A lawyer may be able to help you out of a legal crisis, or they could help you avoid one in the first place. A lawyer might sound very expensive, but there are several ways you can save money on legal fees.

4.   It Could Kill Your Passion

The worst thing about turning your passion project into a business is that it could possibly kill your passion outright. When you’re exposed to all the stress that comes with running a business—financial management, hiring, scheduling, legal fees, business development, and regulations, you might find that it spoils your pure, youthful love for whatever it is you do.

5.   You Could Live Your Best Life

But there’s also a chance that you make yourself far happier and more fulfilled than you ever were at your day job. Maybe you build a company that’s a massive success, or maybe you create a smaller company that brings you a little extra pocket cash. At the end of the day, the only thing that matters is if you’re happy. And if you’re able to get away from that job that leaves you bored to tears from nine to five and do something that you’re truly passionate about, you’ll be all the better for it.

Save Money on Legal Fees

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Don’t get me wrong – when you need legal advice, cheaper is not always better. Shopping for an attorney by price alone may not be the best strategy when you are facing important, life-changing events such as a criminal charge, a serious personal injury, or a difficult divorce. Nevertheless,  you can save yourself some money by following a few of these tips.

  1. Don’t assume that the largest law firm in town is the best. Large law firms tend to charge more than small firms and sole practitioners. If your legal needs don’t involve large corporate mergers, international business deals, or complex class action litigation, you may not need to hire a law firm whose billing rate starts at $500 per hour. Look for a smaller local firm that may be able to offer more personalized service while billing at a much more affordable rate.
  2. Sign up for a free consultation. Not all lawyers offer free consultations, but many do, especially those in the personal injury field. If you are in upstate New York and need a Niagara Falls personal injury lawyer, you may want to talk to more than one firm before you choose the one that is right for you. Be sure to ask about their fee schedule and the possible costs that could be involved with your case.  If you’re Virginia, consider ReidGoodwin personal injury lawyers. They’re a solid Richmond based firm and will do a good job for you.
  3. Be wary of slick TV ads. If you are injured by a medical device or product, you have probably seen ads on television for lawyers who handle cases like yours. You may even receive advertisements in the mail from law firms who want your business. Look at the fine print – Usually, the law firms that advertise on TV have to hire local attorneys to handle cases in your state, so why not eliminate the middleman? If you are in Massachusetts, for example, only a Massachusetts attorney may represent you in a Massachusetts court. Find an attorney in your state who has experience in the type of litigation you may need.
  4. Make sure you really need an attorney. Some states allow non-attorneys to handle certain tasks, like title searches and real estate closings. These services may be less expensive through a title company or other authorized provider.
  5. Remember: When you are being billed by the hour, the clock starts ticking as soon as your attorney picks up the phone, or as soon as you walk into his/her office. There is nothing wrong with that, but you have some control over how long your meetings and phone calls will take. Don’t waste your attorney’s time. In a divorce matter, for example, you do not want to pay $250 per hour to make your attorney listen to petty complaints about your spouse. Save that for your friends. Your attorney needs to know facts that are relevant to your case. Try to separate those from petty annoyances that will have no significance to your final outcome.

Write down a list of questions before you talk to your attorney. The less time you spend talking aimlessly while trying to remember what you wanted to ask, the less expensive your visit or phone call will be.

Don’t ask your lawyer to do tasks that you might be able to do. If you need to produce bank statements, for example, you can get them yourself rather than paying your attorney to do it. Ask your attorney if there is anything you can do; if the answer is “no,” then stand back and let him do his job!

My Thoughts On The Market

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Let me start by saying that I have no clue what is going to happen in the stock market in the next 12 to 18 months, what I do know are several of the factors that have a say in what happens.

If you guessed that at least one of those factors has to do with President Trump, then you’re right.

Trade

The big elephant in the room. Honestly, I have no idea how this is going to pan out. Obviously, it behooves both parties to get this rectified as soon as possible, but it makes sense for China to hold out until the 2020 elections.

If they make a deal now, the US has more leverage at the moment and will probably be on the winning side of things.

If they wait until 2020, they have a chance of getting a Democratic president elected, and more than likely, they’ll reverse course on trade.

I think the odds increase that a Democratic president will win because if a trade deal isn’t reached, the market will negatively react and if the market tanks while Trump is president, he’ll be in trouble.

The US also decided to slap tariffs on European goods. This matters because if a deal is made with Europe, that gives the US that much more leverage. They won’t need China as much, and it’s clear that China needs us. We’ll see what happens.

Interest Rates

You may have caught wind of the most recent jobs report. We added over 200,000 jobs last month, which was much stronger than expected.

You’d think that kind of surprise would be good for the market, wouldn’t you? Unfortunately, the strong jobs report signaled a stronger economy than previously forecasted.

A stronger economy gives the FED less of a reason to cut rates this month. Where it stands now, I don’t know what they will do at the next meeting.

I was certain they would cut, but that was before the jobs number. I think it will benefit us down the road if they don’t. The reasons I think that have been explained before, but I’ll give you a synopsis real quick.

Typically, in the normal business cycle, rates will start [generally] low and consistently rise in tandem with economic expansion. Once the expansion peaks, the FED will cut rates to promote borrowing, which translates into spending.

Here’s the kicker. The prime rate (the rate the FED controls and the rate that affects all other rates) needs to be at a certain level when the FED cuts. If the prime rate isn’t high enough, then the FED won’t be able to cut enough to stimulate the economy.

What does this mean?

The current economic and political environment in the US is like nothing we’ve ever seen before. Our respective parties are at each other’s throats, which doesn’t make cooperation easy.

The unemployment rate is as low as it’s been in 50 years, inflation is crawling, rates are still ridiculously low, and the market is making new highs.

The FEDs impetus for raising or not raising rates is the level of inflation. It’s lower than their 2% target so they took their foot off the gas.

We are at the end of an expansion, which means a recession is most likely on its way, if not in the works already.

If you have less than 15 years until retirement and reallocate your accounts to be a little more conservative than usual. If you have over 15 years until retirement, I wouldn’t make any adjustments (allocate according to risk tolerance, time horizon, and goals).

Keep in mind that if you shift to more conservative and the market continues to rise, you’ll lose out on some gains, but if the market tanks, that conservative tilt should help minimize the damage.

Types of Mutual Fund Fees and How to Reduce Them

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Do you know how much you’re paying for the actively managed mutual funds in your portfolio?

If you’re being honest, the answer is probably something like “not exactly.” That’s because mutual funds don’t always make their fees easy to understand, despite regulations requiring basic transparency from fund managers and issuers.

“My clients often ask me for plain-English explanations of the mutual fund and money management fees they see on their statements,” says San Francisco-based wealth manager Daniella Rand. “I don’t blame them. For those not steeped in money management, it’s a lot to keep track of.”  “I also find that the transparency of customer statements varies widely from firm to firm,” Rand continues.  “That is why The Rand Group has always spent as many hours as it takes to educate clients on what they are paying while making sure they are comfortable.  We’ve had far less questions since migrating our clients to Merrill Lynch, thanks to their #1 ranked statement industry-wide,” says Rand.  

Rand relies exclusively on “best in class” funds and money-managers to build custom portfolios for her clients, and she makes a point of educating prospective clients about the true cost of their existing investments. She’s not alone; many reputable wealth managers prize transparency and see their roles as, at least in part, educational and explanatory.

Want to know more about how your mutual funds make money? Here’s the skinny on calculating and reducing mutual fund fees.

Load Fees

Load fees come in several forms:

  • Front-end loads, taken when investors purchase shares in the fund
  • Back-end loads, taken when investors sell shares in the fund
  • Constant or level loads, taken at regular intervals during the investor’s hold period

Not all funds charge load fees. Funds that don’t charge loads are known as no-load funds; ask your financial advisor which type is suitable for your needs.

Management Fees

All mutual funds charge management fees, which are the most common (and usually largest) component of the expense ratio. The management fee covers the cost of the fund’s management — literally, its managers’ salaries. A given fund’s exact management fee is a function of how actively managed it is; funds that require constant attention carry higher fees than passively managed funds designed to mirror the performance of a benchmark index.

12b-1 Fees

The 12b-1 fee is the most interesting, and most misunderstood, type of fee in the mutual fund universe. This fee covers the cost of marketing the fund to new investors. Although it’s part of the expense ratio, federal regulation requires its inclusion in the fund prospectus; fund managers can’t conceal it by folding it into the management fee.

It’s worth noting that many mutual fund managers see 12b-1 fees as counterproductive or even harmful to investors’ financial interests, although this is far from a universally shared view and many advisors make compelling cases for the fee’s inclusion in the expense ratio. Still, a significant minority of mutual funds don’t charge 12b-1 fees.

Building a Better Investment Portfolio

Mutual fund managers are no longer free to set whatever price they wish and expect investors to happily pony up. By and large, today’s wealth management clients are far more sophisticated than that. We’re operating in a fee- and expense-conscious environment, and that’s largely a good thing.

By the same token, wealth management clients shouldn’t automatically assume that lower-cost mutual funds or money managers are superior to more expensive alternatives. Yes, it’s true that fees can reduce investment returns over time, but fees aren’t the only determinant of fund performance. In many cases, it makes sense to pay more for higher-quality instruments poised to grow faster than their fees can keep pace.

Of course, these considerations are best discussed with your financial advisory team. Just as no two fund managers are exactly alike, and no two funds contain precisely the same component mix, no two investors are identical. You owe it to yourself to build a better investment portfolio that works for you and no one else.

How To Cut Your Spending

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Do you know what could really help you reach your financial goals? Answer: If you had more money to work with! Cutting your spending is an integral part of your finances.

I’m not saying you need to cut out the things you love (insert Starbucks coffee, avocado toast, etc.). I’m saying you need to splurge on those things wisely, either by reducing their frequency or cutting out something else.

Let’s figure out ways we can cut our spending.

Track spending

How are you supposed to know what to cut spending on if you don’t know where your money is going?

Go back a few months and look for a “pattern.” Where is all of your money going? Bills, housing, transportation, debt payments, etc. are in their own category. Everything else that’s not considered necessary spending (minus groceries) goes in the discretionary spending category. Everything else that’s not considered necessary spending (minus groceries) goes in the discretionary spending category. Keep in mind, things will change if you’re living in an affordable city like Columbus, Ohio, rather than an expensive place like New York City.

This discretionary spending is what you need to pay attention to.

Grocery spending is necessary, but the amount can vary. Figure out what you typically spend, each month, on groceries and determine if that amount can be lowered. More often than not, it can. Just don’t go hungry.

Budget (and budget alternative)

The classic budget lists the necessary expenses (housing, groceries, debt, utilities, savings, and other bills). You then assign dollar amounts for other “unnecessary” expenses (take-out, clothes, etc.).

The dollar amount is what you’d like to spend on that item/category, and not go over. The purpose of a budget is to come to a total expenditure that’s less than your monthly income.

My approach is similar. I list the necessary expenses (excluding debt payments and savings). Just the things I need to pay (housing, streaming, utilities, insurance, and transportation).

Next is my grocery budget. This is a necessary expense, but I try to keep it relatively low. Between my son and I, the limit is $300 per month. Then I list debt payments and savings.

I calculated how much I needed to pay per month to pay off my debt by a certain date. My savings is automated and partitioned.

I have one savings account for emergencies, one for car repairs, one for holiday spending, and one for vacations. Once a week, money is automatically transferred from my checking to each savings account.

The amount of each transfer is less mathematical and is more about comfort. My retirement savings is done right away at the beginning of the month so I don’t have the chance to spend it away.

Whatever remains is mine to do with as I please.

No spend days

Have one day per week or a few days per month where you don’t spend any money.

I’ve seen some people go as far as having a no spend week! Implement these days at your discretion because obviously, you’ll still want to pay your bills and such.

Another cool idea is to restrict paying for certain items during particular times of the year. For example, you don’t buy any clothes during the month of September, or you don’t have any take-out/restaurant food in April.

Coupons/rewards/etc.

With smartphones, applying coupons to your purchases has never been easier. I use coupons.com. You can save which coupons apply to you and they can be scanned at checkout. From your smartphone!

Also, wherever you do your shopping, make sure you are a member/rewards member. There’s usually a sale for members. Excluding paid memberships (like Costco), being a rewards member is free and can save you money.

By the way, it costs money to shop at Costco, but their goods are very reasonably priced. They make their money on the memberships, and they sell all of their goods at cost. That means they sell a product at whatever price they paid to get it in the store.

Use price per unit/item

When you are making a decision about how much of something you need to buy, always use price per unit as your factor. The overall price of something may look less expensive than the bulk item, and it is at the time of purchase, but more often than not, the price per unit is lower for the bulk item.

It’ll cost you more when you check out, but through time, you’ll spend less money.

Quick hacks to cut expenses

  • Negotiate a lower interest rate on your credit cards
  • Balance transfer to 0% introductory APR
  • Personal loan to lower average credit card APR
  • Unplug unused electrical devices
  • Cancel unused subscriptions
  • Reduce entertainment expenses
  • Carpool to work
  • Keep tires properly inflated (better gas mileage)
  • Use LED light bulbs
  • Use a programmable thermostat
  • Lower the temperature on your hot water heater
  • Eat at home more/eat out less
  • Buy generic

Conclusion

Achieving financial success doesn’t have to be difficult and boring, though it does take some discipline. Small rewards are important. Without them, you’ll go crazy!

Cut the fat off of your budget, and you’ll see how much better it feels to make significant progress in your financial life.

How to Save Money on Summer Clothes for the Kids

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Kids grow just as quickly as the seasons change which is why many parents find themselves clothes shopping several times a year. With retail prices continuing to rise, buying comfortable, trendy, items for each of your children can cost you an arm and a leg. As summer is just around the corner, it’s a high probability that you’re wondering how you can shave some of those costs.

There may not be a way to keep your kids the same size for a few months, but you can save money on clothes with these savvy shopping tips below:

Hand Me Downs

Before you head off to the store to shop for kid’s clothes start by clearing out their closets. If you have children of varying ages and sizes, you can give your smaller children clothes previously worn by their older siblings. This would then reduce the number of clothes you need to buy for them.

Clothing Swaps

If you don’t have children of varying ages and sizes, that doesn’t mean you can’t take advantage of hand me downs. Instead, talk with other parents you know and host a clothing swap. This is where everyone would bring their children’s used clothes to your place. Everyone can sift through piles of clothes and grab things that fit their children for the summer.

DIY

If you have the time and resources, making clothes for your kids can save you a lot of money. Of course, you’d need to have a sewing machine, sewing supplies, fabrics, and patterns to put together nice outfits for each of them. If you’d like a little headstart, however, you could also order blank clothing at wholesale prices from vendors like ShirtSpace. Once the clothes arrive you can customize them with decorative prints and designs.

Yard Sales

Want to catch kid’s clothes at a bargain? Then, look no further than your local yard sales. People are constantly purging their homes and now is when they often put out their slightly used items for sale. You can find shorts, t-shirts, tank-tops, and other summer clothing items at a steal of a price. You can find yard sales by driving around your neighborhood, checking at traffic lights for flyers, and checking in the online classifieds.

Alterations

Another method to try when you want to save money on kids clothes is alterations. What some parents find is that their kids grow taller but don’t necessarily get wider. This means that long-sleeve shirts and pants often get a bit too short in the arms and legs. Just a few short alterations and you could turn them into short-sleeve shirts and shorts for the summer.

Flea Markets

Best described as a yard sale on steroids, flea markets are the perfect place to find good deals on summer clothes for kids. There are plenty of vendors with a variety of options to choose from. Whether they’re slightly used products or affordable merchandise purchased at wholesale prices, you can find a few basic outfits to send your kids off to camp with.

Deals and Coupons

Of course, you can’t talk about saving without the old tried and true methods like searching for deals and using coupons. Pay attention to sales papers and advertisements for deals on clothing for children and try to shop during those promotional periods. You should also check online, social media, and in the newspapers for coupons to use online and in stores to lower your purchase prices.

It’s almost summer and your kids will need tons of shorts, shirts, tanks, and other summer wear to get through the season. Though you probably can’t salvage much from the items they wore last year, you can cut back on how much you spend on your next shopping trip. The above suggestions can help you find kid’s summer clothes at a steal of a price. Now, instead of worrying about what they’ll wear this season, you’ll be trying to figuring out how to store everything.

Financial Planning For All Ages

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Don’t you hate it when you Google financial planning tips, and it spits out articles that don’t apply to you? This could be because you’re a different age than the article is directed towards or you’re in a different position.

Well, look no further. I’ve created a rough outline of how you can plan, regardless of your age or situation.

But I’ll be honest with you, a lot of this article will link to resources or previous articles that explain these topics in more detail, but I wanted to create a rough outline of how people in different age groups can plan.

Twenties

Ideally, you want to get a budget started, but nobody likes doing that. Instead, give your money a job. Figure out when you would like to have your debt paid off, then do the math to determine how much per month you need to pay.

List that payment plus housing, transportation, food, and other bills. That total tells you how much MUST go out, everything else is extra to do what you please.

In terms of saving for retirement, you have a lot of time to put money away, but if you start sooner, you’ll have to save less later. 10% of your salary is a good goal. If you can’t get there just yet, save what you can, but try to incrementally increase it over time.

Investment allocation here, as well as in your thirties and forties, should primarily be stocks. Not 100%, but definitely the majority of what you own.

Thirties

The financial plan in your thirties is similar to the one in your twenties. Pay down debt and save for retirement. However, at this point, you probably have more assets and you may have some children as well.

With the cost of tuition constantly rising, saving for their future education costs is important. The 529 is the most popular, and probably the best vehicle available to do just that. (Be advised: 529 plans do involve risk so please talk to your financial advisor prior to investing)

With more assets and children, comes more insurance. Make sure your property and belongings are adequately protected. Additionally, if your children depend on your income for support, life insurance and disability insurance are a must!

Fourties

Same story, different decade. Pay down (off) debt, save for retirement, and make sure you have adequate insurance. (Honestly, the save more, pay down debt, and have insurance is a great catch-all financial plan).

At this point, however, your retirement plans should become more detailed and concrete. Through your twenties and thirties, retirement planning essentially was just saving for retirement.

Now you should think about where you live and what you’ll do. You should also calculate if you’re on track and increase your savings if you’re behind.

Fifties

Hopefully, by the end of this decade, your debt will be mostly paid off, you have a good idea of what retirement will look like, and you’ve determined what needs to be done (if anything) for you to hit your target number.

As you age through your fifties, you should start thinking about adjusting your investment allocation. You don’t have as much time to gain back what you lose during a down market.

Reallocating to a 60/40 or 50/50 (stocks/bonds), depending upon your risk appetite, is a good way to reduce your risk and still participate in a bull market.

Sixties

Where you are at this stage in life depends on a few factors. Have you saved enough to live comfortably in retirement? Do you enjoy what you do? Are you healthy? Plans for Social Security?

If you haven’t saved enough, then you’ll probably have to work a little longer so you can save more. If you like what you do, then why not continue if you are able? If you don’t, consider a career change or (if you’ve saved enough) volunteering for a cause that’s meaningful to you.

If you are healthy, I recommend staying active and social as long as you can. Activity and a healthy social life are two of the three important variables for a fulfilling retirement.

Social Security and when to receive it is a huge decision. Obviously, I’m going to recommend waiting as long as you can so you receive a higher monthly benefit, but there are other things to consider.

Are you healthy? What’s your family history like? Do you have adequate savings/retirement income from other sources?

Health and family history help determine longevity. Poor health and/or poor family history may give you a reason to start receiving earlier.

There are calculators out the web (like this one here) that can help you discern what’s the best strategy for you. That’s to say, how do you optimize your Social Security and other retirement income so you receive the most possible?

Seventies

We’re living longer, healthier lives now, and down the road, the retirement age will probably make its way into the seventies.

If you have to work for the income, you’re not alone. As of 2017, the percentage of the population that are 70 or older and still working was 19%. Up from 11% in 1994. (Source)

My recommendation. Develop an income strategy that will a) afford you to live a somewhat comfortable lifestyle (obviously, cutbacks are necessary if money is tight) and b) help your savings last as long as possible.

There are a variety of calculators out there to help figure this out.

Conclusion

Financial planning is tough. As I said in the beginning, not many like to budget, so it’s important to give your money a job. $100 goes towards emergency savings, $1,000 to retirement, and $250 for debt repayment.

Do this, along with several of the other items I listed (as well as the ones linked below) and you’ll do just fine.

Helpful articles and resources: