What’s America Saves Week?

You might wonder “What is that?” America Saves Week is coordinated by America Saves and the American Savings Education Council.  Started in 2007, the week is an annual opportunity for organizations to promote good savings behavior and a chance for individuals to assess their own saving status.  Typically, thousands of organizations participate in the week, reaching millions of people.

The 2016 annual America Saves Week survey  assessing national household savings revealed:

  • Just two out of every five U.S. households report good or excellent progress in meeting their savings needs.
  • Fifty-two% are saving enough for a retirement with a desirable standard of living.
  • Only 43 percent have automatic savings outside of work.
  • More men (74 %) report saving progress than woman (67 %).
  • Those with a savings plan with specific goals (55 %) are making much more savings progress than those without a plan (23 %). Try saving at work: it is one of the most effective ways for people to save automatically. There are at least three ways you can promote automatic savings.

So, what can you do to start saving?

  • Try saving a portion of your pay automatically into a separate savings account through direct deposit.
  • Open or add to work-sponsored retirement accounts.
  • If your employer doesn’t offer a retirement plan, consider opening a myRA account.

myRA (my Retirement Account) is a new retirement savings program that helps you take control over your future. It is simple, safe and affordable retirement account created by the United States Department of the Treasury for the millions of Americans who face barriers to saving for retirement. https://myra.gov/how-it-works/

 

Susan Taylor

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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The Match: Is it enough?

If your employer matches your contributions to a retirement plan, then it is smart to contribute at least that much.  For example, if your employer matches your contributions up to 3%, then it’s smart to contribute at least 3% of your income. If you don’t, you’re turning down part of your paycheck.

Does that mean that if you’re maximizing your employer match, you’re saving enough for retirement? Not necessarily.

Your employer’s decision about how much they’ll match is not based on how much investment is needed to keep you secure. That decision is up to you.

Only you can decide how much to save toward your future.  Only you can decide to give up certain spending now, in order to have a more secure lifestyle in the future.  Our earlier post describes tools for assessing your progress toward a secure retirement.

Employers who offer a match typically match employee contributions up to 3-5% of income.  If it is a dollar-for-dollar match, then making full use of a 3% match means a total of 6% of your income is being put toward retirement (3% from you plus 3% from your employer).

Based on typical life expectancy and investment returns, experts now estimate that lifelong savings of approximately 15% of income is needed in order to provide retirement income equivalent to pre-retirement income. Of course, workers who will have other sources of retirement income (such as rental income or a traditional pension like IPERS) can achieve full income replacement with lower savings rates.  On the flip side, some workers may decide they don’t need full income replacement, and will be satisfied with a lower retirement income; a lower savings rate may work for those workers as well.

Bottom line? Planning for a secure retirement is up to you. Don’t rely on your employer’s match to determine how much you will save!

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Don’t Be Fooled by Scams…. Sweetheart

My friend’s grandmother recently received a disturbing phone call. The caller told her, “You don’t know me, but your granddaughter is in jail in Michigan and needs money wired immediately,” The caller also said, “I’m calling from a pay phone and you can’t call back.” My friend’s grandmother identified this as a ‘Grandparent Scam,’ didn’t send the money and hung up!

I’ve discovered recent Iowa police department and Attorney General reports indicate scammers are posing as relatives or friends, calling or sending messages to urge people to wire money immediately. Victims report that they request cash to help with an emergency — like getting out of jail, paying a hospital bill or needing to leave a foreign country. Their goal is to trick you into sending money before you realize it’s a scam.

Iowa Scams are coming in all forms but have the same characteristics. The most recent Sweetheart Scam’ has the same ‘warning signs’ in that the Sweetheart’s online dating suitor has an emergency and needs money wired immediately and can’t meet face-to-face.

Here’s what I tell friends, family and clients to do  if someone calls or sends a message claiming to be a family member or a friend desperate for money:

  • Resist the urge to act immediately, no matter how dramatic the story
  • Verify the person’s identity by asking questions that a stranger couldn’t possibly answer
    • Post some questions near your phone so you don’t have to think about them when stressed
  • Call a phone number of a family member or friend that you trust
  • Check the story out even if you’ve been told to keep it a secret
  • Don’t wire money and don’t send a check or money order by overnight delivery or courier
  • Report possible fraud at ftc.gov/complaint or by calling 1-877-FTC-HELP
  • Iowa Attorney General requests victims also report to local law enforcement

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Author
Carol Ehlers
Human Sciences Specialist, Family Finance
712-732-5056
xehlers@iastate.edu

 

Joyce Lash

Joyce Lash

Joyce Lash is a Human Sciences Specialist in Family Finance who wants to keep you ahead of the curve on financial information.

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Medical Costs and Taxes

Medical costs are often misunderstood and missed on tax returns. The most common misconception, which I hear as a volunteer preparing taxes at the VITA sites, is the belief that the full dollar value is going to be used to reduce income. There is a threshold that you have to pass before any expenses will be counted. Ten percent of your adjusted gross income is the threshold. You can estimate what your threshold will be by looking at last year’s 1040 line 37: if it shows an amount of $40,000, then there is no need to report your medical expenses if they are less than $4,000.

I also find that not everyone knows what is an allowable expense. Over the counter drugs and expenses that were paid with funds from a Flex account or HSA don’t count. On the other hand some expenses are overlooked: mileage to and from a medical appointment, meals and lodging are the most common. The allowance per mile is $.19, not huge, but it can add up if you live in a rural area and are referred to a specialist or clinic in another community. Lodging and meals at a hospital are allowed for parents and other adults when essential for medical care. If the lodging is not at the hospital you are allowed $50 per person, but not meals.

Start now, as a new year has begun, to keep a log of medical expenses, including a record of trips, even if it turns out that you aren’t able to use them on your tax return. No one knows what the coming year holds – a 12 month period can include emergencies and unexpected costs. At the end of the year it will be better to have the data on record than to have to dig for the information.

For a complete list of allowable expenses check out IRS Publication 17 (pdf), Your Federal Income Tax Guide; medical expenses are included in Chapter 21.

Joyce

Joyce Lash

Joyce Lash

Joyce Lash is a Human Sciences Specialist in Family Finance who wants to keep you ahead of the curve on financial information.

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The Push of A Button

A while back, I saw a big red EASY button sitting on a counter in an office. When I first saw them on TV, I thought it was just a cute marketing gimmick. I didn’t realize you could actually buy one until I saw the button in an office. My first thought was WHY.  The button serves no purpose other than remind you of the company and its advertisement. Then my next thought was “wouldn’t it be cool if you could just push the button to order something?!”  Reason led me to dismiss that as a ridiculous idea…you would need a separate button for every product you might want to buy.

Well, wouldn’t you know it…there are now buttons out there that do just that!

A major online retailer has created “order buttons” for more than 250 products. With the push of a toilet paper button, the brand of your choice is ordered and delivered 2 days later to your home. AMAZING! You could have a button for dish soap stuck on the front of the dishwasher for when you run out of dish soap; one in the medicine cabinet for when you run out of toothpaste; and several others in the cupboard for ordering coffee, filters and creamer.

On the up side, there are certain products where I always buy the same brand without comparing prices. For example, my toothpaste is recommended by my dentist. So, as long as the “order button” price is cheaper (with the free shipping) than what I could buy locally, ordering with the push of a button would be fine. By contrast my brand of toilet paper does not have an “order button;” my only “order button” option would mean changing to a more expensive brand.  I’m not going to do that, so I would still choose to buy toilet paper at my local store.

When new and innovative ways of buying food and household items catch my attention, I always pause to consider how I could use that method to ease the difficulties of the elderly in my community, where we are 25 miles from the closest grocery store.  Since most of the elderly in my community do not have wireless internet, an “order button” system would not work for them. Perhaps I could consider taking their orders and becoming their local distributor …  hmmmm…

Have you found a use for “order buttons” in your home?

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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Too Many Clothes…

There are just two basic ways to deal with clothing clutter:  1) get rid of it, or 2) organize it. Most people need to do some of both when it comes to their closets.

Decide What to Get Rid Of

Prepare by arming yourself with three large containers plus a laundry basket, using a 3-container variation of the Clear the Clutter Strategy. Designate one bag or box to hold items for each of these means of disposal:

  • Garbage
  • Give away/donate
  • Yard sale or resale/consignment shop (Note: If you are not planning to sell anything, you’ll only need two containers.)

Items that belong to someone else or in other rooms should go in the laundry basket. For example, you  might discover a pair of your child’s socks mixed in with your stuff.

Sorting. Place like items together. Group items by type and then by color. For example, gather all your pants or trousers. Then group them by color.  Examine and try on each piece of clothing, then make a decision: keep it or not? If not, place it in one of the containers.

Organizing. What about the clothes that you are keeping?  Put them back in your closet or drawer—but be strategic.  You may want to leave out only clothing that is in season. You can reduce the clutter in your bedroom closet by storing out-of-season clothes in a box or another closet. When you switch your clothing at the change of the season, it is a perfect time to sort through and dispose of clothing that you no longer want.

Special Situations. If you have clothing of different sizes that you feel you must keep, you may wish to minimize clutter by storing them separately; keep only those items in the size you are currently wearing in the most accessible drawers or sections of your closet. Items that are worn infrequently, such as special-occasion clothing, can also be placed in a separate closet in order to keep your regular closet better organized.

Preventing Non-useful Purchases.  Make a list of clothing items that you need and carry it on your smart phone. Refer to it when you are shopping, to help you focus on purchasing planned items rather than spontaneous choices that may not match other items in your wardrobe.

Susan Taylor

Susan Taylor

Resources are important whether you are looking to rent your first apartment, pay your bills, buy your first home or send your child to college. There are many ways to save money to reach your goals, and hopefully ISU Money Tip$ will be one of them. I enjoy traveling, needlework and am a novice gardener.

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Roth vs. Traditional – Understand your Options

If stepping up your retirement planning is part of your new year’s resolution, one key is to understand the pros and cons of traditional tax-deferred accounts in comparison with Roth accounts.  Individual Retirement Accounts (IRAs) come in both “flavors,” and many employer accounts have both options as well.

The differences between Traditional and Roth affect your retirement in two main ways:

  1. How much money you’ll be able to spend in retirement after taxes; and
  2. Flexibility of withdrawals in retirement (this is affected in a couple of different ways).

Whether you are saving for retirement or are already retired and need to decide when to withdraw from which account, understanding the differences matters.  To better understand how those differences play out and how you might put them to work for you, ISU Extension and Outreach has a new on-line mini-lesson (20 min).  It’s part of our collection of retirement resources, which includes mini-lessons on five other topics and sixteen printable publications.

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Year-End Statements = Opportunity

In the last ten days I have received year-end statements from all three of my retirement accounts.  The arrival of these financial statements presents great reminder to do a retirement check-up.  Now is the time to do a calculation to see whether your retirement investments are on track to give you a comfortable retirement.

There are many retirement calculators on-line; most investment firms have them.  They’re not all the same; different calculators present information in different ways, using different assumptions and perhaps emphasizing different aspects of the situation.

Calculators often have built-in assumptions about things like inflation, life expectancy, or investment return.  With that in mind:

  • Try to identify the key assumptions built into each calculator.
  • Use a variety of on-line calculators, rather than sticking with just one. Looking at the different responses you are given by different tools will make you familiar with a wider range of possibilities.

Most on-line calculators are commercial; they are posted by companies that have products or services to sell. Keep that sales motive in mind as you review the information you receive.  Occasionally, a tool will subtly steer consumers toward a particular type of product.  By being aware, you can avoid making decisions based on biased information.

Fortunately, there are free non-commercial retirement calculators available on-line as well. Here are two provided by non-commercial organizations:

  • Ballpark E$timateThis tool is, as its name suggests, a ballpark estimate.  It doesn’t go into great detail.  It is especially appropriate for people who are a long way from retirement, don’t have detailed retirement goals, but just want to be sure they’re on track.
  • Department of Labor Retirement Calculator This tool provides detailed on-line worksheets for examining retirement expenses as well as your income.  It is particularly useful for those who are fairly close to retirement and ready for more detailed planning.

If you work with a financial adviser, he or she plays a key role in your retirement planning; even then, however, it is wise to take an active role in the planning.  Your adviser will be the first one to tell you that you must be the one to make the final decisions.

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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December Online Shopping = January Ads

I shopped online for new ornaments in December. Now, when I open a Facebook page or other online site with ads in the side bar, that’s all I see. Prior to December it was a favorite shoe company.  Why am I seeing just those marketing ads?  Answer: I’m being tracked.

When I opened ornament sites a “cookie” was added to my web browser- the software program I use to visit the web. It’s used by the web browser to deliver ads the next time I log in. The web browser utilizes this information by sharing it with other advertising networks (presumably to generate operating funds), and they build a history of the types of sites I visit.

Can I just set my computer to delete cookies when I exit?  In this age of tracking it won’t help much. New technology uses device fingerprinting. It’s a technology that tracks without cookies and connects information about you through smart phones, tablets, laptops, and desktops. It explains why I’m getting ads for office furniture on my personal tablet. Smart TV’s and those clever new WIFI systems that do home tasks for you can also be connected to tracking software.

Do you have control? Yes, but it requires working with your browser settings and paying attention to details when you set up a device. Online Tracking is an article recently published by the Federal Trade Commission that includes more details about different forms of tracking as well as tips for limiting the amount that occurs on your personal and work devices.

We consumers will probably always be playing catch-up with technology, but we can exercise some control.

Joyce

 

Joyce Lash

Joyce Lash

Joyce Lash is a Human Sciences Specialist in Family Finance who wants to keep you ahead of the curve on financial information.

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The Cost of Convenience

This week, Boise, ID, (where my daughter lives) received huge amounts of snow which they are ill-equipped to handle…they have a limited number of snow plows which are used to clear only the major highways. Most snow events melt in less than 8 hours so residential streets are left to melt, which typically isn’t an issue. Following this huge snow event, however, my daughter has been unable to get to the grocery store; they have been without milk for 4 days now AND more snow and freezing rain is predicted for tomorrow. This is a problem for someone with 2 little ones at home.

Now desperate, my daughter has begun checking out grocery-delivery services. For an order of $150 or more, one store will deliver for a $6.95 fee if you want the groceries delivered in a one-hour window.  A 2-hour delivery window costs $3.95; and a 4-hour window is only $2.95. If your order is less than $150, the fee is $9.95.  

Another store in her area offers a grocery pick-up service for $5. You order and pay for your groceries online and pick your groceries up, curb-side…never setting a foot in the store.

My daughter sees other benefits, besides convenience, and thinks this way of shopping could become a habit. With 2 little ones sitting in the cart when she shops, she is more likely to make unplanned purchases; that doesn’t occur when ordering groceries for delivery. The app used to order the groceries has a bar code scanner so as items are used at home, you can create your shopping list by scanning the can label before tossing it in the recycle bin.  The app easily allows you to compare prices and shop by aisle. A search for canned tomatoes will show you all choices/brands with a per unit price displayed. Redeeming coupons is as easy as scanning their bar codes. The app also tracks frequently purchased items for quick reference.  

These two store chains are typically more expensive than the huge deep discount store (which is like a big warehouse where product is in boxes on the shelves and you bag your own groceries). My daughter does not choose to shop there because of the challenge of shopping with two little ones in tow. So, since she has already made the decision to shop at the more expensive store, why not take advantage of the delivery service? (especially now that her car is stuck in 15” of snow at the bottom of her driveway!)  What services in your community do you find available and worth the extra cost?

Brenda Schmitt

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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