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Walker: Don't Expect to Retire at 65
Tweet Share on Facebook October 9, 2008 Comment (6)Yesterday, David Walker, former head of the Government Accountability Office, criticized both presidential candidates for failing to lay out a plan for cutting the national debt. He has long railed against the lack of spending controls and mounting government debt, and this financial crisis has made his perspective especially relevant.
As for consumers who don't have enough money for retirement, Walker says some people will just have to work longer—and he argues that's not a bad thing. The economy needs workers to grow, and health studies suggest people live longer when they continue working. So, in his view, we should be happy when we have to keep working well after age 65.
You can catch Walker in the new film, I.O.U.S.A.: One Nation. Under Stress. In Debt ., and companion book by the same title.
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Financial Crisis Benefits Obama
Tweet Share on Facebook October 9, 2008 Comment (4)We know that Americans have lost millions in the stock market in recent weeks, but how will that affect the election? Will the fact that you've lost money, or feel less certain about the economy, change your vote?
Political experts say that for some voters at least, the answer is yes. Thomas Mann, senior fellow at the Brookings Institution, points out that historically, voters hold the party of the president responsible for bad economic times, and that hurts Sen. John McCain. He says, "We've had elections with bad economic conditions, during periods of war, and in periods of an unpopular president. In virtually all of those times, the opposition party has managed to win a comfortable election." Since all three of these situations are in effect now, Mann expects a victory for Sen. Barack Obama.
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Podcast: Black Women and Money
Tweet Share on Facebook October 8, 2008 Comment (1)For this week's Alpha Consumer Podcast, I interviewed Rhonda Mims, president of the ING Foundation, and Valerie Brown, president of the ING retail annuities market segment. The ING Foundation recently completed a survey on black women and money that highlighted the group's generosity—more than a third had lent family or friends more than $1,000 in the past year—as well as the need for financial planning, something shared by all demographic groups.
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Mims and Brown recommended a website, finra.org, that allows consumers to check up on financial planners. They also offered these tips:
- Use an automatic savings plan.
- Start with a workplace retirement plan.
- Join an investing club for women.
- Resist impulse purchases.
- Use credit cards sparingly.
You can also hear the Alpha Consumer Tip of the Week on opening those pesky plastic packages.
Meanwhile, if you're wondering whether this morning's Fed cut will affect you, here's an explanation of how it could lower rates for credit cards, auto loans, and mortgages.
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How to Pick a Good Retirement Calculator
Tweet Share on Facebook October 7, 2008 Comment (3)We’ve been talking a lot about retirement calculators lately, but how do you pick a good one? A Web search for “retirement calculator” will bring you all kinds of free, online tools. But not all of them are equally useful. Some ignore inflation while others assume an overly optimistic view that income will grow by 3 percent a year or that the rate of return on investments will be 10 percent.
I prefer calculators that let you decide all the variables. They require more effort, but then you can see for yourself how a rate of return of 6 percent, or 3 percent, would affect future retirement income. Here are other factors to look out for:
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Audio: Choose a Retirement Calculator
Tweet Share on Facebook October 7, 2008 CommentOver the weekend, I spoke with WTOP about why retirement calculators can be helpful and what to look for when choosing one. Listen now, download in
iTunes, or subscribe via RSS feed. -
How to Save Money on Wine
Tweet Share on Facebook October 6, 2008 Comment (12)Facing the news that the stock market has plunged more than 300 points isn't the best way to start a Monday morning. As possible bank failures loom and our retirement accounts lose value, I think it's an ideal time to focus on what we do have. There are plenty of ways to frugally enjoy life, as many of our grandparents who lived through tougher times well know.
With that in mind, I'm continuing the "business of pleasure" series, which looks at industries—including coffee, chocolate, and now wine—that bring us enjoyment. I interviewed Tyler Colman, author of Wine Politics: How Governments, Environmentalists, Mobsters and Critics Influence the Wines We Drink. Before you tell me that wine is one of the first luxuries that should be cut during tight times, consider this: There are simple ways to reduce spending on wine without eliminating it altogether, such as buying bottles at the liquor store and refraining from ordering a glass with dinner at a restaurant. This month's Food & Wine magazine recommends plenty of bottles under $20. (If you're like me, anything over $8 is a splurge, and there are plenty of tasty bottles for less than $10, too.)
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Saving During Tough Times
Tweet Share on Facebook October 3, 2008 Comment (7)Today's guest entry comes from Roderick Simmons, founder of the blog Helping You Live Better :
In addition to a weakening economy, our country has experienced some of the worst natural disasters in American history over the last three years. As a Mississippi resident, I experienced Hurricane Katrina firsthand, and I've put together these money-saving tips to help people rebound from such tough times:
- Look for coupons before shopping. Major retail and grocery stores, including Walgreens, Wal-Mart, Rite Aid, and Kroger post their coupons online, so you can see what's on sale prior to shopping. Rite Aid has instant coupons that you can use for online purchase, and Walgreens has coupons you can print out. Or, you can register and receive a weekly E-mail.
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Using Online Retirement Calculators
Tweet Share on Facebook October 2, 2008 Comment (6)I could have taken a vacation to Greece with the money I've lost in my retirement account this year. When I told my husband that my 401(k) balance had plunged 17 percent since January, he said the solution was to stop looking at it.
He has a point, but there's something to be said for embracing the shock of just how paltry many of our nest eggs have become. According to a recent report by the Transamerica Center for Retirement Studies, most of us guess how much money we'll need once we stop working. Only 1 in 10 people does any sort of calculation at all. That might help explain why, on average, Americans are on track to replace less than 60 percent of their income during retirement. Financial experts generally recommend that retirees replace at least 80 percent, given the rising costs of healthcare.
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Financial Adviser: Breathe With Me
Tweet Share on Facebook October 1, 2008 CommentAlexandra Armstrong, a financial planner in Washington, has been fielding four or five calls a day from customers, especially those in retirement, worried about their investments. Her advice: Stay the course. "We think things will eventually get better," she says.
The biggest concern retirees have, she says, is that their income will go down. Armstrong tells them that while she can't promise them that companies won't cut their dividends—and indeed, some companies already have—it won't mean a material change in their income, which also comes from other sources such as money market funds.
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William Isaac: Confidence Is Key
Tweet Share on Facebook October 1, 2008 CommentWilliam Isaac, chairman of the Federal Deposit Insurance Corp. in the 1980s, says banks need confidence, not a bailout. "I don't see how the expenditure of $700 billion will give people any confidence in the economy. It's not going to happen," he says. Instead, he'd prefer tax incentives and investment credits or even tax cuts directly to consumers, which could boost spending, at least in the short term.
In fact, Isaac thinks the bill, if passed, could hurt the economy by undermining confidence. Says Isaac, "I think the dollar could decline and commodity prices could go up," as oil already has.
