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Category: Personal Finance

Find important information on Personal Finance from the experts at Ubiquity Retirement & Savings. Get important news that can affect your personal finances, along with tips and advice from our team of financial experts. Call Ubiquity today for a Free Consultation at 855.466.5825.

Preparing for the unexpected with emergency savings can be difficult, particularly if you don’t have that safety net to rely on. Some of life’s most exciting and scariest moments come from surprises we never see coming. An unexpected expense ­– hospital bills, losing your job, etc. ­– can seriously impact your financial well-being in the moment, and in the future.

To better prepare for an unexpected emergency, we’ve assembled tools to help you build a sturdy financial plan that protects you. Setting up an emergency fund, stepping up your budgeting skills and giving up on bad financial habits are all crucial steps to avoid an unexpected financial disaster.

1. 6 emergency fund myths you should stop believing

It’s easy to make excuses not to save money for a rainy day or emergency fund. Maybe you feel like you’re buried in too much debt, don’t make enough money or saving for retirement is hard enough! But according to this WiseBread article, you are never too young, old, poor or rich to stash away some extra money to prepare for life’s unpredictable twists and turns.

2. Survey: How Americans contend with unexpected expenses

According to this Bankrate study, 43 percent of respondents were forced to reevaluate their financial plans due to an unexpected expense. While you can’t predict the future, you can prepare for all the uncertainties it can bring. Should you dip into your savings, take out a loan, tighten your budget or utilize your credit? Check out this survey to find out what method is best for you.

3. Create a “life happens” fund in addition to your emergency fund

Have you mastered your savings and feel ready to take a break? Not so fast! This Lifehacker article suggests that in addition to an emergency fund, you should have a “life happens” fund for expenses that don’t necessarily qualify as emergencies, such as routine health care costs, car repairs or veterinary bills. That way, you avoid depleting your emergency stash and have the reassurance that you are covered for any minor snags.

 

Everyone is guilty of falling into bad habits, especially given the fast-paced world we live in. While juggling our careers, families and other personal responsibilities, it’s easy to forget to take care of ourselves and we frequently lose focus on long-term goals.

Oftentimes, that lifestyle negatively affects our finances, and before we know it, we’ve fallen into a pattern that threatens to derail our future.

No one is immune to becoming a victim of bad financial habits. Wondering if you are guilty? Here are three common ones that can affect anyone.

1. Ignoring the status of your finances

Whether your finances are stellar or unsatisfactory, it’s important to keep a pulse on them and consult with a professional so you stay in good financial shape. Too often, people bury their heads in the sand and try to enjoy blissful ignorance when it comes to their finances – but it never ends well.

This bad habit affects people on both ends of the spectrum: For example, someone can be in a tremendous amount of debt and may ignore seeking a solution to avoid confronting the realities of their situation. On the flip side, if someone is well off, they may miss the opportunity to save money that is already at their disposal.

The way to overcome this bad habit is to start paying closer attention to your finances. Regardless of whether you’re living paycheck-to-paycheck or if money is no object, you need to be keenly aware of your spending and saving patterns, and, if necessary, adjust them so you’re on the right course.

A big component of this bad habit is that people avoid talking about money with their spouses and families, but this is an extremely dangerous rut to fall into, especially for those who are in trouble financially – staying hush-hush won’t solve your problems.

While these conversations can be uncomfortable, it’s important to make them happen.

2. Believing you’re already maxing out your savings

Sometimes, when peoples’ finances are in a good spot, they get complacent and start to spend frivolously. It’s certainly important to reward yourself for your hard work, but you should also focus on saving extra money when you can.

You might be tempted to spend bonuses, tax returns and other windfalls on vacations or shopping sprees when you know you’re already allocating a certain amount to your nest egg. However, don’t get tricked into the mindset that extra cash should burn a hole in your pocket just because you are already contributing to retirement savings.

Find a balance between steadily contributing to savings and enjoying life. Know that you can always stash some extra cash away in a 401k (the max contribution limit is $18,500/year for people under 50 in 2018), in an IRA or in a rainy day fund. You never know when it will come in handy!

3. Not updating your retirement savings strategy

Have you recently moved, started a new job, got married or had children? These are examples of times when it is important to check in on your financial plan and make sure your retirement savings strategies are appropriate for how your life has changed. It’s your retirement and it’s up to you to take charge.

While some of these milestones in life can be overwhelming, it’s important to ask yourself: What can I afford to save? There is certainly a domino effect to outdated savings strategies that don’t reflect your current and future life and those in it. If you don’t take the opportunity to revise how you save now, you could be missing out on keeping hard-earned dollars down the road.

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This week’s question comes from Casey who asked whether you need a spouse’s consent before taking a loan from your 401k.

While we always stress the importance of leaving your money in your retirement account, sometimes unforeseen expenses arise where you need to borrow or loan yourself money. Here, we answer Casey’s question and give some other great tips on the deal with taking a loan from your 401k!

Get more on 401k by downloading our Definitive Small Business 401k Guide

Hey there present-day Lisa – it’s me, future Lisa,

I just wanted to send you a big huge THANK YOU, because your smart savings plan has resulted in a kick-ass retirement for me and hubby. That’s right, we bought our flat in Paris, and we spend the days sipping red wine and sampling gorgeous French cheeses. C’est le paradis!

Remember that Louis Vuitton bag that you were going to buy in 2012, but instead chose to take that money and throw it into your 401k? Well, that decision has paid off for you ten-fold, because now that you are living the good life here in Paris, you can shop the boutiques all the days because you don’t have to work anymore. I know there were times when you had to sacrifice the wants and be responsible, but trust me, you are a lot happier now for it. You don’t have to rely on your kids to support you; instead, you get to spend precious time with your grandchildren because you don’t have to worry about working.

Retirement is great!

It seems like just yesterday that you took your first job out of college, and they handed you all the new hire forms, one of which was enrollment in a 401k plan. I know at the time you didn’t really know what it was, only that your parents told you that you should start saving, so you did. And that money grew. And grew and grew and grew and those years that seemed SO FAR in the future went by in a flash. Yes, the market went up and it went down, but overall those few dollars you saved back when you were 21 years old have grown into a few million dollars by now.

Plus, your husband was also super responsible and squirreled away lots of cash into savings all while telling you that you were “over-budget” for the month. Maybe he exaggerated just a little bit, but he knew you would want to spend it and he knew he had to save for your future. I just gave him a big thank-you kiss for that one! Merci, Mon Cherie!

When you were in your twenties, retirement seemed really far away, but now that you are in your late-thirties, you realize that time goes by faster than you want it to and now you have a family to think about. Making a few sacrifices now to invest in your future is not only the SMART decision, it’s the ONLY decision.

So thank you, again. I am off to grab a croissant and browse around the Louvre. They have a new Chagall exhibit and you know how much you love his paintings.

A bientôt,

Future Lisa

I have always been a diligent saver, scared at the thought of racking up huge credit card debt or not being able to pay my mortgage. Lucky for me, my husband is the same way and we have always been good about saving money. Having that “rainy day savings fund” has always been an integral part of our monthly budget, a safety net in the event of something unexpected. We have always heard that it’s a good idea to have at least six months salary saved up in case of a job loss or medical emergency, but it wasn’t until recently that we discovered just how important this was.

Imagine you are in a life-or-death situation, and to navigate it you need a little bit of money. You’d want to be certain that you had the money to spare, right?

The Importance of Emergency Savings

Dexter rests after surgery

Rewind 14 years, when I used to work for a pet rescue organization. During that time I trapped, socialized and nurtured back to health a small white kitten just three weeks old who I named Dexter. Dexter has been with me throughout many important life events – my marriage, the birth of my child, and countless other memories. He sits with me on the couch, sleeps with me at night and provides me constant companionship, along with my two other cats.

A few weeks ago I noticed Dexter limping, and a few days later he suffered a fall jump whereupon he fractured his left heel. An emergency room visit, exam, and x-rays set me back $450, but that was just the beginning. It was during that visit that we found out that it was more than just a fracture, in fact, Dexter had bone cancer.

The follow-up visit to the vet for more x-rays and bloodwork totaled $527, so by that point, we had already placed almost $1000 on our credit card, but how could I not provide care for my pet of 14 years when he was limping around in pain? I couldn’t bear to see him suffer so I met with the oncologist who laid out my options.

To put in bluntly, either we proceed with amputation surgery to remove his leg (and the tumor), or my cat spends the rest of his (shortened) life in pain while cancer spreads throughout his body. If we want to end that pain early, well… you can figure out what that option was. Without even a second glance at the estimate of $3,200 I asked the oncologist to proceed with the surgery because regardless of the cost, I wanted to give Dexter the best life and medical care that he needed.

I could choose to do this because I had been a diligent saver all of these years. I didn’t have to rack up huge credit card debt or take out a small loan because I had squirreled away money in my savings account in case of an emergency. Sure it was hard to put my extra money in the bank and not buy those shoes but at the end of the day, who gives a hoot about material goods when I was able to save a life!

It’s been two weeks now since his surgery and Dexter is adapting to life with three legs. The fibroid sarcoma was removed and the vet told me that there is a 75% chance that it would not have metastasized (fingers crossed!). If within a year his follow-up x-rays are clear, then Dexter will have beaten cancer!

I certainly don’t know what the future holds. Did I extend his life by a few months or a few years… that’s yet to be determined. But I do know that however long he is with me, living pain and cancer-free, it was all worth it. And it was all made possible by the fact that I had an emergency savings account!

*November is National Pet Cancer Awareness Month. If you have a furry companion, please educate yourself on the signs and facts of cancer.

Finance is Personal

Dylan Telerski / 20 Nov 2017 / Personal Finance

Hands stretched out on a laptop working

It’s easy to become overwhelmed with information being thrown at you about retirement and personal finance. But finance is just that– personal. Finding the right information for you and The Future You is easier said than done, but it’s important to make time to educate yourself and learn more about the issues that can affect you.

The stories in this week’s installment reveal how finance impacts everyone differently. As you’ll see, there are tough questions that all people – regardless of gender, age and job status – need to ask in order to successfully plan the retirement of their dreams.

1. Are Millennials financially doomed?

Millennials, time is on our side when it comes to saving for retirement…right? According to this CNBC article, we Millennials face more financial constraints than Gen X or Baby Boomers, and time might not be enough to reverse the damage. Taking care of aging parents and dealing with lackluster wage growth and staggering levels of student debt is taking a toll on our financial futures. However, we can reclaim our financial independence, and this article can help!

 2. $13 trillion retirement gap called a gender crisis

We’ve all heard of the gender wage-gap, but how much of an impact does it have on retirement? According to Sallie Krawcheck, a former executive at Bank of America Corp. and Citigroup Inc., a whole heck of a lot! This Bloomberg article explains how women’s lower earnings and longer lifespans have created a gap between their assets and post-retirement needs that is contributing to an overall $13 trillion retirement gap among Americans. This article offers details on what can be done to narrow the gap.

3. How Millennials and Boomers are killing Gen X’s retirement savings

Gen X is often referred to as the “sandwich generation” because they are simultaneously taking care of their kids and aging parents. As a result, they frequently tap into retirement resources to support children with higher levels of student debt and parents with unreliable Social Security income. It’s contributing to a serious deficit in what they need to retire: Members of this generation have saved, on average, only 30 percent of what they expect they will need for retirement! While it may seem like Gen X-ers can’t catch a break, it’s never too late to adopt good financial habits that can help you achieve your retirement dreams.

4. Quiz: we know when you’re going to retire

This Buzzfeed quiz is an awesome example of how personal finance can be fun, entertaining and eye-opening when you get to know your money. Many factors, such as salary, marital status and whether you have kids, affect when you will retire. When weighing your options for retirement, don’t forget the most important question—how do you want to retire? If you make a good financial plan and stick to it, there is no reason to compromise on what’s best for your future you.

What comes to mind when you hear the word “retirement”? Perhaps you picture spending all of your days with family – playing daily rounds of golf, traveling the world or enjoying an endless stream of beachside cocktails. Ultimately, people equate retirement with relaxing – not with collecting a paycheck.

However, what if in between the leisurely activities you voluntarily chose to work throughout your retirement? There are actually some valid reasons for having a job throughout retirement, regardless of whether it’s part- or fulltime. Here are three:

1. You’ll stay active.

Sure, the idea of 24/7 relaxation and having no responsibilities sounds great in theory, but the reality is that many retirees are used to having a routine, and will get bored soon after retirement.

Having a job is a way to maintain your social structure. We’re not suggesting you have to continue working in the same field, especially if it was a high-stress career. Instead, choose something that allows you to be involved in your community and interact with others. Just because you retire, doesn’t mean your social life needs to as well.

2. You’ll receive a steady cash flow.

People who are about to retire, or have already retired, are very cognizant of their cash flow. If you’re no longer collecting a steady paycheck from a job, where will your money come from? Retirees rely on items such as rental properties, investments, patents, Social Security or any number of things, but the most reliable source of income is a job.

By working throughout retirement, you’ll maintain a steady cash flow. This is especially useful to retirees who are wholly dependent on Social Security, which unfortunately can’t always pay all the bills.

Even if you have cash flow sources outside of Social Security, the income generated by a job can help you pay for luxuries during your time off.

3. You can Influence what you leave behind.

No one wants to leave behind a legacy that includes outstanding debt, especially because your kin will become responsible for it. When you are about to retire or are in retirement, it’s really important to reflect what you’re leaving behind.

If you are entering retirement and still have outstanding debt, one way to whittle it down quickly is to work, especially if you choose a job that intersects with a hobby. You won’t have to worry about the debt going unpaid and will be doing something you enjoy at the same time.

Certainly, the decision to continue working throughout retirement is a very personal one. However, many retirees find it enjoyable due to the social interaction, continued responsibilities and financial advantages.

Have you ever heard of the three-legged stool of retirement? Back in our parents’ and grandparents’ time, this is how the sources of retirement income were explained: Social Security, pensions, and personal savings.

While this model may still be floating around in personal finance textbooks, it’s as outdated as a 1970s leisure suit. The truth of the matter is two of these three stool “legs” are not as supportive as they once were and most savers today cannot rely on them for their retirement success. To make matters worse, the remaining leg of the stool is failing people left and right because they don’t realize the other two legs don’t exist anymore.

So what happened to the stool to make it a pogo stick – and a very unstable one for many people, particularly Gen-X and Millennials?

1.     The future of Social Security is not in “our” hands

The first leg of the stool that is uncertain is Social Security.

Younger generations may think they can rely on Social Security based on what is taken out of their paychecks each pay period, but the system is looking sparse due to a large number of Baby Boomers filing for Social Security – in fact, 10,000 Boomers per day.

As it stands, Social Security is projected to be insolvent by 2034. Ultimately, the lifespan of a supportive Social Security system remains a political hot potato.

2.     Company Pensions won’t save you

Only a few lucky individuals can look forward to receiving a pension once they retire. In fact, only one in five private sector employees has access to a defined benefit pension plan. Even successful companies such as Boeing, Clorox, and Lockheed Martin have either frozen this benefit or trimmed it completely out of their budgets.

This leg has basically been nonexistent for years as more and more companies swap out a defined benefit plan in favor of a defined contribution plan – putting the onus of retirement income squarely on your shoulders.

3.    Personal savings are woefully inadequate

The last – and only somewhat-reliable – leg of the stool left are personal savings.

Unfortunately, many people don’t plan accordingly for this new reality. Unlike the other two legs on the stool – which, as we already covered, are pretty much non-existent anyway – personal savings is not something that another person or entity is responsible for providing. This is the leg of the stool that you alone must plan for.

You can only control the controllable, and that starts with your personal savings strategies. Don’t wait for the Social Security system to fix itself and employee pensions to make a comeback (Spoiler alert: That’s never happening). Your future is in your hands!

How Compound Interest Works

Andrea Sobotor / 27 Sep 2017 / Personal Finance

Stacks of coins growing

What is Compound Interest? 

Merriam-Webster defines compound interest as:

Interest computed on the sum of an original principal and accrued interest.

Let’s put that in friendlier terms. Compound interest gives you interest on top of your original investment and additional interest.

Imagine you have $100,000.00.

If you were gaining a 10% annual return, then you would end up with $10,000 added to your original investment. In this case, your end balance would be $110,000 in year one.

In year two, the markets are great, and you are getting a 10% rate of return on $110,000, leaving you with an ending balance of $121,000. You earned $10,000 in year one. You earned $11,000 in year two. In year three, using this same math, you’d earn $12,100.

If you carry that out for 30 years or more, you could be sitting on a very comfortable nest egg.

Learn more about how much you should be saving for retirement

Retirement on a Shoestring

Andrea Sobotor / 8 Aug 2017 / Personal Finance

Retirement? No. Work till your dead? Yes.

My father is older than my mother, although he is very much like the glamorous southern bell that admits his age to NO ONE. He had the tiniest pension in the world from his jet-setting career that may or may not have been used to purchase a house, and so, retirement is Social Security.

My traditional family halted dramatically when he chose to chase dreams rather than a paycheck. I mean, not that dad isn’t a show-stopping artist, because he is. And in his hay day, he was making some pretty large bills on paintings, because people used to have money to blow on art. Do you remember those days? You know, before the downfall of our economy, when we all had tons of (pretend) money?

Here’s a timeline of events:

  • Dad quits the job, becomes an artist, we move to Maui because Oregon’s economy went through a major bottoming out.
  • We live in a house the size of a shoebox (700 sq. ft.) and there are amazing amounts of tourist dollars from all over the world flowing through the island. Unrealistic sums of money. The kind you wipe your tears of joy with – if any of it was yours…
  • Hawaiian market bottoms out, my mother would like to be closer to her aging parents and sisters, and we move back to the family farm, which, if you are a Harry Potter fan, looks like the Weasley House.
  • Dad retires with a savings account in the teens (as in five-figures) and takes Social Security, which is well below the national average check of around $1,200 – in fact, it’s less than half of that.
  • Mom gets a job that she still works at today, and has a 401k plan through her work.
  • Health premiums are through the roof! Dad gets on Medicare, mom stops paying over $1,000 per month for his insurance.
  • Even with Medicare, dad and mom pay more in healthcare premiums than all other bills combined.

Okay, that brings us to a pretty current status. Mom works like a mad woman and supports my dad. She cooks, cleans, sews… all the stuff that moms used to do traditionally. She also has a firm grip on what it’s going to take to retire – for both of them.

Her 401k is the ONLY thing that ensures they have a future at all. Despite the fact that the market tanked and she lost over half of her savings – she spoke with her Advisor, and he said the following:

“Stay the course.”

Good advice. She did, and now her 401k has bounced back to where it was and on her current trajectory, she’ll be able to retire at around 66 (though she is going to try to wait to 70). Her house is paid off, but unfortunately, it is in the middle of nowhere, about 30 miles away from the nearest hospital, riddled with scary stairs, and lots of farm work…

I’ll tell you what’s going to happen. Our family is going to combine. Aunts, uncles, sisters, cousins, friends, whomever – we’ll live under one gigantic roof and combine resources. We’ll create the family compound and take care of one another. And it won’t be taboo anymore. Kids moving back home or parents moving in with kids will be the new show of success. If other countries can make it a successful go, so can we.

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© 2019 Ubiquity Retirement + Savings
Privacy Policy
44 Montgomery Street, Suite 3060
San Francisco, CA 94104
Support: 855.401.4357

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