Crunching the numbers on college costs has been a particularly grim task for parents of incoming freshmen this year.
With most Americans doing a lousy job saving for their Golden Years, Barack Obama says the government has to step in.
How bad is inflation for your portfolio? Let us count the ways.
For families with children heading off to college, this has been the year from hell. First, a record number of applicants made 2008 the most competitive year ever for college admissions. Then the credit crunch hit the college market in a big way, igniting fears of a drought in financing for all students this fall.
From groceries to gasoline, everything is costing more. As schools compete to be the best by expanding campuses and adding research centers, the cost of an education is growing.
Question: I am reluctant to get a financial planner. Will they do an analysis of your portfolio? Does that commit me to use them? How do you get their advice without hiring them as a financial planner?
Question: I'm looking for a financial planner. Should I find one with who is a Certified Financial Planner (CFP)?
A lot of jobs are in trouble in today's tough climate, but doom and gloom are the bread and butter of a personal financial planner.
You might be listening to the symphony of financial experts extolling the virtues of a 401(k) plan, often touted as the best way to save for your golden years. But that's not necessarily the case.
Patrick and Laura Matheny began saving early for their children's college education. After stashing some $50,000 in college savings accounts for their son Daniel, now 20, and their daughter Natalie, 18, they began paying down their mortgage in earnest with the intention of tapping their home equity once the bills began rolling in.
Crunching the numbers on college costs has been a particularly grim task for parents of incoming freshmen this year.
With most Americans doing a lousy job saving for their Golden Years, Barack Obama says the government has to step in.
How bad is inflation for your portfolio? Let us count the ways.
For families with children heading off to college, this has been the year from hell. First, a record number of applicants made 2008 the most competitive year ever for college admissions. Then the credit crunch hit the college market in a big way, igniting fears of a drought in financing for all students this fall.
From groceries to gasoline, everything is costing more. As schools compete to be the best by expanding campuses and adding research centers, the cost of an education is growing.
Question: I am reluctant to get a financial planner. Will they do an analysis of your portfolio? Does that commit me to use them? How do you get their advice without hiring them as a financial planner?
Question: I'm looking for a financial planner. Should I find one with who is a Certified Financial Planner (CFP)?
A lot of jobs are in trouble in today's tough climate, but doom and gloom are the bread and butter of a personal financial planner.
You might be listening to the symphony of financial experts extolling the virtues of a 401(k) plan, often touted as the best way to save for your golden years. But that's not necessarily the case.
Patrick and Laura Matheny began saving early for their children's college education. After stashing some $50,000 in college savings accounts for their son Daniel, now 20, and their daughter Natalie, 18, they began paying down their mortgage in earnest with the intention of tapping their home equity once the bills began rolling in.
Paying for college is rarely easy, but this year parents and students could have a tougher time securing the necessary financing.
Americans are becoming increasingly worried about saving for their retirement as the nation's economic outlook continues to darken, according to a new survey of workers and retirees released Wednesday.
As college acceptance letters arrive this month, families will be celebrating the good news (we hope!), then bracing for the grueling process of figuring out how to pay for four years' tuition.
Question: I have a continuing debate with a classmate of mine regarding why a financial adviser does not include calculations/spreadsheets when determining asset allocation. My classmate claims it is trade secrets. I claim that the adviser doesn't know how to do/explain the calculations and blindly plugs the client's financial information in a system and reports the answer. Who do you think is right?
At first glance, Justin and Kim Ritchie seem in perfect financial sync. The couple, who grew up on the same street in Georgia and both went to college in Atlanta, are saving more than half of their combined six-figure income so they can buy a bigger house in their hometown of Bonaire, Ga., cover college tuition costs for sons Giuseppe, 2, and Gianluca, 1, and retire together before they hit 60.
The credit crunch is hitting the college classroom.
Question: It's my understanding that starting in 2010 the rule that prohibits you from converting from a traditional IRA to a Roth IRA (for modified adjusted gross incomes over $100,000) will be eliminated. If that's the case, can I convert all types of IRAs - deductible IRAs, nondeductible and even rollover IRAs that contain money moved from a 401(k) plan? How long do I have to do this? Do the new conversion rules expire at some point? --Hussam, Bergenfield, New Jersey
Question: I'm 23 and make $50,000 a year. I put 8% into a 401(k) with a 4% match and $1,800 a year into a Roth IRA, but I would like to start saving to buy a house. I currently have $10,000 in an online savings account that earns 5% interest. Are stocks too risky for money I want to spend in the next couple years? Will bonds make more than 5% a year?
Question: I'd like to reduce my tax liability for 2007. Can I still make a contribution to my 401(k) or to an IRA and have it count toward the 2007 tax year? Or is too late for me to do that now? --J. Scott
Question: I'm 24 and my employer matches up to 5 percent of my salary in my 401(k) plan. If I want to save, say, 8 percent of my salary, would I be better off putting it all in the 401(k), or limiting my 401(k) contribution to 5 percent of pay and putting the rest in a Roth IRA? -Dave Meyer, Corpus Christi, Texas
Question: I pay $300 a month on my credit-card balance of roughly $11,000. I have an extra $350 a month that I can use to further reduce my credit-card balance, or that I can invest in a Roth IRA. Which will give me the biggest bang for my buck? - William Scott, Spotsylvania, Virginia
The credit crunch may be bleeding into the student loan industry. Here's what it could mean to your wallet and how to protect yourself.
Question: Is now a good time to move more of my portfolio from domestic mutual funds into international funds? - Brett Phillips
Students relying on college loans will soon feel the pinch from the subprime mortgage crisis, according to a report by financial aid guide FinAid this week.
Question: I'm 46 and have about $350,000 set aside in my workplace retirement savings plan in what I would call a moderately aggressive mix of stock and bonds funds. I contribute the maximum every year to this plan, and my wife and I also contribute to Roth IRAs (although not the max).
Question: I'm 46 and have about $350,000 set aside in my workplace retirement savings plan in what I would call a moderately aggressive mix of stock and bonds funds.
Question: I've been out of college a year and I want to be sure I'm on the right track to retire early. I currently contribute 5 percent of my salary to my 401(k), which is matched in full by my employer, plus I invest $200 a month in a stock fund. I just got a raise and am now trying to decide whether I should consider putting some of that money into an IRA or boost my investment in the stock fund. What do you suggest?
As you invest your money, shop for a home or tackle any one of the many financial decisions you have to make over your lifetime, do you sometimes wish you'd paid more attention in math class? Do you find yourself having to "run the numbers" and wondering how?
Question: I know I can protect my portfolio against inflation by investing in TIPs and against market volatility by diversifying my investments. But how can I hedge against adverse U.S. dollar movements? - Brian Canes, Scarsdale, N.Y.
Question: I have a chance to pick up two ocean-front condos on the east coast of Florida for about $85,000. I was thinking of buying them in an all-cash deal with my IRA account, but I'm not sure whether you're allowed to own real estate inside an IRA. Can I do this? - Bernard Grossman, Hallendale Beach, Florida
Question: I'm 59 years old, earn $125,000 a year and plan on working until I am eligible for full Social Security benefits. I have about $1.6 million that's invested in a number of retirement accounts (mostly tax-deferred, but I have a Roth IRA too) and I own an investment property worth about $390,000.
You probably don't know what your federal tax liability will be for 2007, and Congress certainly isn't helping. Lawmakers have yet to pass a temporary fix to the Alternative Minimum Tax, to prevent 21 million of us from having to pay the so-called wealth tax.
Question: My employer offers a 401(k), but no match. Given that I'm already maxing out my Roth IRA, would I be better off investing in a taxable account rather than contributing to my no-match 401(k)? - Luis Gonzalez, Denver, Colorado
Question: I have a company managing my IRA, they charge a high fee - up to 2.5 percent depending on the account. I see in their quarterly report that they often don't beat the Lipper averages for certain sectors. With such a management fee, should I expect to consistently beat the averages?
Question: My father-in-law is 58 years old and has about $300,000 saved for retirement. He plans to retire with this amount plus whatever he can save in the next seven years. I expect he will qualify for only a little in the way of Social Security. I've read that retirees shouldn't withdraw more than 4 percent to 4.5 percent of their nest egg annually in retirement. But my father-in-law claims he can easily get a double-A or triple-A rated bond that will pay 6.5 percent to 7.5 percent, so a higher withdrawal rate should be no problem. Am I right to be concerned about his retirement security? - J. Jordan
Question: I have a modest salary and can set aside only $50 a month toward my nine-year-old son's college fund. My problem is that the 529 college-savings account I would like to open requires a minimum of $1,000. I don't want to raid my savings account to open this fund, so what I should do to begin saving for my son's future college expenses? - Shelly Losoya, Sacramento, California
Target-date funds are the rare eat-your-vegetables financial product that have actually caught on with investors. These funds hold a mix of stocks and bonds that changes as an investor's anticipated retirement year approaches. For instance, the equity allocation of the Fidelity Freedom 2045 shrinks from 90% in 2005 to 40% by 2045.
Question: I want to estimate the effect inflation will have on my retirement income. For example, if I have a retirement income of $60,000 a year and inflation runs 3 percent a year, how much will inflation affect my buying power in say, 10 or 20 years? How do I do this? Is there some sort of formula I can use? - Carl Willis, Atlanta, Georgia
The stock market got a nice bump Wednesday following an interest rate cut by the Federal Reserve. On Thursday, the market gave back all those gains - and then some.
Question: I contribute 15 percent of my salary to my 401(k) and put money into an IRA and a taxable investment account, but I don't have much investing experience. I've heard that I should rebalance my portfolio each year, but I'm not sure how to do that.
Question: I'm 30 years old and invest regularly in my 401(k). So far, my account has been doing well, but I wonder whether that might change when retiring baby boomers stop making investment contributions and begin taking money out of their retirement accounts. Are we in for a bump down the road when the boomers retire? - Jason, Salt Lake City, Utah
The Dow Jones had its third worst day of the year on Friday. Add to that worries about the economy and estimates that by 2017, Social Security will start paying out more in benefits than it collects every year in taxes.
The average total cost of a private four-year college rose to $32,307 for the current school year, but the rate of increase has slowed compared to public school prices, according to a report released Monday.
Dear FSB: I'm thinking of withdrawing funds from my IRA early to invest in building the next phase of our guest ranch - Mongolian-style yurts - on the land we own. My partners and I expect the expansion to generate solid revenues. Should we consider using retirement savings as a source of capital?
After years of watching stocks go almost straight up, it became pretty easy to forget how temperamental the market can be. Until mid-July, when the subprime mess gave Wall Street its worst scare in nearly five years, stocks were basking in the glow of the second-longest uninterrupted bull run in history.
Question: An adviser helped us set up an IRA account and on his recommendation we began investing in a target-date retirement fund that charges a 6.5 percent sales fee. We've asked him to switch us to another target-date fund that has no sales fee and invests in low-cost index funds, but he says the fund we're in now has a shot at better returns because it's actively managed. Do you think we should stay with the fund our adviser recommended? - Dinh Ho
To everything (turn, turn, turn) there is a season (turn, turn, turn) ... a time to enroll in a retirement plan and a time to withdraw, a time to put your money in savings and a time to transfer it to a money market account. Decade by decade, financial freedom can be yours -- Suze Orman swears it's not too late.
Question: I'm 44, and after maxing out my 401(k) and Roth IRA, I still have about $400 a month I'd like to invest outside these accounts for early retirement. Would you suggest I invest this money in an annuity? - Angie Tyrie, Hinton, West Virginia
Why spend decades carefully cultivating your 401(k) plan, only to fritter away your hard-earned investment gains through taxes or penalties when you change jobs or retire?
Question: If you contribute to a traditional IRA, after many years most of your account value will be in the form of investment earnings, which are taxable when you withdraw them. With a Roth, on the other hand, your balance will be tax-free. So it seems to me that the advantage of tax-free withdrawals from the Roth in the future greatly outweighs any tax-deduction benefit you get from a traditional IRA. Doesn't that make the Roth a better deal? - Daniel Siroky
Question: I'm 25 years old and I would like to retire in my 50's. I already contribute to my 401(k), but I'd like to fund an IRA as well. How do I do that? - Steve Henry, Lakeland, Florida
Britain will guarantee the security of personal savings accounts at all banks up to $70,000 (£35,000), the government said Monday, matching the security extended to Northern Rock customers during last month's run on deposits.
Question: I need to rebalance my portfolio and move some money out of stocks. I don't want to touch the total stock market index fund in my 401(k), so I'm thinking of selling individual stocks I own in tax accounts that aren't doing as well as I would like. But I don't want to take a huge tax hit. What should I do? -Linda, Dover, N.J.
Question: My daughter is 16 and has earned about $2,000. I'm trying to convince her to put some or all of it into a Roth IRA. If I'm able to convince her, what investments would you recommend for her since this is money she won't touch for 40 or 50 years. - Marianne Morris, Santa Barbara, Calif.
Democratic presidential candidate Joe Biden released a plan Wednesday to protect Americans' retirement savings and even help children begin to sock away money.
Question: Our granddaughter fully funds her 401(k). But to give her an incentive to save even more, we give her $2,000 a year to invest in a Roth IRA, provided she invests $2,000 of her own money first. She recently married, however, and now her and her spouse's combined income make her ineligible to fund a Roth. We'd like to continue our matching-fund arrangement with a non-deductible IRA. Is that possible? - Lauri Shafer
Some Countrywide Financial Corp. employees sued the mortgage lender Wednesday, claiming they suffered heavy losses in their 401k retirement accounts after the company failed to warn them about the depth of its financial troubles.
House and Senate negotiators reached an agreement Wednesday to boost aid to college students, a deal that calls for slashing roughly $20 billion in government subsidies to banks that issue student loans.
Question: I'm 34 and am concerned about how to invest my retirement savings in this market. I currently have 100 percent of my portfolio in a mix of funds that invest in large-to-small-cap stocks as well as international funds. But I'm wondering how much I should change that mix given these turbulent times. What do you suggest? - Brian, Mitchell, South Dakota
Like most 19-year-olds, Jennifer Leon took a job to help save extra money for a secret splurge. Unlike her peers, though, her splurge was retirement. "I could already see myself older, stepping out of my beach house and right onto the sand," says Jennifer, who worked as a bank teller back then.
Question: I'm 65 and my husband is 70. We're both retired and receiving Social Security and pensions. We have about $150,000 in traditional IRAs, but we don't want to take money from these accounts for another 10 years, unless we're forced to. We're also wondering how our IRA funds should be invested. We're thinking 80 percent in stocks and 20 percent in bonds. Does that make sense to you? - Dana Chaoxia, San Francisco, California
Question: I've read that if I withdraw roughly 4 percent of my retirement savings each year to live on, my money will last virtually forever. But does this 4 percent include the money my portfolio already kicks off in dividends and interest? Or is the 4 percent withdrawal on top of that? - Doug Martin, Syracuse, New York
You're no hedge fund trader or big-time lender, but the subprime mortgage fallout is putting a dent in your portfolio, too.
Parents beware - financial aid scams are growing. Complaints are up 60 percent last year, according to the Better Business Bureau. Here's what you need to watch out for.
Question: In a world of globalization, should you invest a larger portion of your assets in foreign equities? I'm in my mid-40s and currently have about 40 percent of my money in both international and emerging markets, but I wonder whether I'm taking too much risk. - Hung Lee, Annandale, Virginia
Parents beware. Financial aid scams are growing. Complaints were up 60 percent in 2006, according to the Better Business Bureau. Here's what you need to watch out for.
Question: I've contributed to a Roth IRA in the past and plan to do so again this year. My wife isn't employed, but I was wondering whether I can make a Roth IRA contribution for her too. If so, can we have a joint account or do we need two separate IRA accounts? - Raj, Edison, N.J.
Question: My company 401(k) plan has no match. So I'm debating whether I'd be better off contributing to the plan or instead just buying index funds on a monthly basis. What do you think? - Matthew
This past Thursday was the second worst day of the year for the Dow Jones Industrial Average. But remember, it was just a week ago today that the Dow closed above 14,000 for the first (and only) time.
Question: My wife and I are in our 30's and have $380,000 invested in three annuities and $166,000 invested in 401(k)s, one of which I'm still funding with 6 percent of my paycheck. Do you think it makes sense to have so much invested in annuities at our age? - Craig, Clinton, Michigan
Question: About six months ago, I invested a chunk of money into four separate mutual funds. When would you recommend adjusting the balances so each fund is back to its original percentage of my portfolio? - John R., Arlington, Virginia
Question: I'm in my early 30s and have yet to save for retirement. Unfortunately, my job doesn't provide a pension or a 401(k), so I need to rely on myself to save money. Can you give me some advice on how I can get started? - Annette, Ewing, New Jersey
Question: I'm 25, make about $50,000 a year and invest $150 a month in an insurance policy for retirement. I do plan on contributing to my workplace retirement savings plan soon and also hope to open a Roth IRA, but in the meantime my adviser has suggested I increase my investment in the insurance policy to $300 a month. What do you think I should do? - Rob
Question: I contribute to my 401(k), but a firm that doesn't offer a 401(k) recently bought my wife's company. We both contribute the maximum to Roth IRAs, but I'm wondering what we can do to make up for the loss of her 401(k). Since she no longer has a retirement plan at work can she now also contribute to a traditional IRA as well as a Roth? - Chris, Austin, Texas
ANNE SCHUETTE, SADLY, WAS NOT SURPRISED WHEN HER mother Dorothy died in 2003 after years of battling cancer. But discovering that her mother had left her and her two siblings $400,000 each was a shock. "I had no idea she had that much money," says Anne, 48, who described the revelation as "bittersweet."
Question: My wife and I are planning to retire next year when I'll be 59 and she'll be 60. Together we have about $600,000 in a 401(k), plus I have a pension that I can take as a lump sum of approximately $1 million or as an annuity that will pay $60,000 a year to me or my wife as long as one of us is alive. I'd prefer to take the lump sum and invest the money myself. I'm thinking of laddering bonds plus investing in some mutual funds to hedge inflation. What do you think of my plan? - Peter, Princeton, New Jersey
WITH ALL DUE RESPECT TO BEN FRANKLIN, death may be certain, but taxes are not. At least not the amount of taxes you will have to pay on your retirement savings. Yes, Uncle Sam lies in wait for the day you retire, but you can still control how much money you fork over in the end. Inside, we have the tools you'll need to build a better retirement plan and keep your savings intact. You'll want to make your IRA plumb and level by placing exactly the right asset classes into it. You'll want to know why a high-yield stock can be better than a bond. You worked hard to build your savings. Why not keep as much as you can? OPEN FOLDOUT
Question: My understanding is that due to the tax-deferred nature of retirement accounts, I ought to steer risky investments like international funds and individual stocks into my IRA and 401(k), while keeping mainstays like bonds and large-company stocks in taxable accounts. Is this a good policy? - Gary Banks, Santa Fe, New Mexico
Anne Schuette, sadly, was not surprised when her mother, Dorothy, died in 2003 after years of battling cancer. But discovering that her mother had left her and her two siblings $400,000 each was a shock. "I had no idea she had that much money," says Anne, 48, who described the revelation as "bittersweet."
Question: My wife recently left her job and is going to work part-time for herself. We have been advised by our financial adviser to roll her 401(k) into something called an "IRA annuity." What are the benefits and drawbacks to doing this as opposed to simply rolling the money into a regular IRA invested in low-cost mutual funds? -Todd, Lebanon, Pennsylvania
The chairman of the U.S. Senate education committee Tuesday introduced legislation to cut government subsidies to student loan companies, but the cuts were milder than some expected and lender stocks rose.
Moving the U.S. Congress closer to overhauling the troubled student loan industry, the chairman of the Senate Education Committee Monday unveiled proposals that would affect major lenders.
Last November, Dave Hanrahan, 37, of Vineland, N.J., decided to try something different to improve the returns in his retirement account. Rather than putting his money into the latest hot stock or ...
Question: I am 31 and have $200,000 in savings. According to the savings calculator on your site, I need to save only about 6 percent of my salary, assuming I make around $80,000 a year.
Question: How do I find and evaluate a good financial planner? I have always done my own savings and goal setting, but I am not a professional. I've worked hard for my money and have always been hesitant to entrust it to someone else. - Robert, Thomaston, Connecticut
As a teenager, Lori Smith decided she would someday adopt children. "I promised myself that I would help kids who needed homes," says Lori, now 41 and a mom to three little Smiths - two of whom she and husband Steve, 40, adopted from China. "What I didn't know was that I should have started saving back then."
Question 1: We have over $23,000 in student loans. My husband has already consolidated when the rates were high. We are at an 8.5 percent interest rate. Is there nothing else we can do make the interest better? -Tracey, Colorado
When Allison Gage gave birth to her first child three years ago in Minneapolis, it should have been a joyful moment. Instead, she was worried sick about her elderly parents, Baldwin and Linda Yeung. The couple live 2,000 miles away in Sonoma, Calif. and hadn't returned any of her phone calls.
These common mistakes could send your retirement savings up in smoke. Find a better way to divvy up your investment pie.
Launching a business was Ryan McBryde's first priority, but a close second was finding the best way to save for retirement. Specifically, the 38-year-old professional land surveyor - and now owner ...
Question: My wife and I are currently renting, but we'd like to buy a house. Problem is, we happen to live in somewhat expensive area where single-family homes cost at least $300,000. Our combined income is low and we barely have enough savings for even a small down payment.
It's a good thing you got that college education. You can put it to good use navigating the complex maze that is the student loan industry as you consider whether to consolidate your federal student loans.
What would you do with a million bucks? That's easy. But what about five grand? With a handful of broad goals in mind, here are Money Magazine's picks.
Question: I don't understand the rule that you need 85 percent of your pre-retirement salary in retirement. After all, if you're contributing 15 percent to a 401(k) or other savings plan and you're paying Social Security and other taxes, you're already living on much less than 85 percent of your salary. And if you pay off your mortgage before retiring, I figure you're still ahead of the game if you shoot for 70 percent. What do you think? -Clifford, Orange, Conn.
The prospect is anything but appealing: You - and possibly your offspring - will have to borrow gigantic sums to pay those college bills soon coming due.
Question: My wife and I are working parents in our mid-40s. We max out our company savings plans and currently have about $200,000 in various 401(k) and IRA accounts.
The stock market hit yet another high last week and analysts attribute this to a number of blue-chip companies reporting higher profits. We're going to tell you how to take advantage of this.
Question: I'm 26, single and have no student loans, credit-card debt or car payments. After much consideration I've decided to forego saving money for a house or retirement for now and instead use my savings for a 15-month around-the-world trip in 2009 while I'm still young.
Question: I'm 25 and recently switched employers. Although my new company provides a lucrative profit-sharing plan that everyone is automatically enrolled in after one year of work, my new employer does not offer a match in the 401(k). I can budget approximately 20 percent of my income for retirement savings, but I'm confused about how to allocate those savings.
Late Sunday night, student loan giant Sallie Mae, or SLM Corp. as the company is officially known, became the latest major American corporation to succumb to the advances of private equity. Sallie will be sold to a consortium of two private equity firms - JC Flowers and Friedman Fleischer & Lowe - and two banks that have their own student loan businesses - JP Morgan and Bank of America - for some $60 a share, or $25 billion. That represents a premium of almost 50 percent based on Sallie's stock price before word of the deal began to leak.
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