Financial retirement literacy quiz

by July

Although this quiz is imperfect and may reflect some bias, it can give you feedback on how well you know the financial aspects of retirement planning.

2017 RETIREMENT INCOME LITERACY QUIZ

Your thoughts?

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Are you afraid of wiping out your savings?

by Lauren

There are very few financial decisions that I disagree with my husband about, but we don’t agree on whether we need long-term care insurance. I read this article and reminded him about my concerns about certain illnesses that can wipe out even large amounts of savings. I’ve seen this with some of my friends with parents or grandparents that lived for many years after a stroke, or even my grandmother that survived 9 years after she exhausted her savings at the age of 90.

Do you have concerns about this situation?

Long-term care insurance

by Sheep Farmer

My insurance agent recently asked me if I had long-term care insurance. When I told her that I did not, she told me that I should seriously consider purchasing it I am not quite 50, so LTC insurance is not something that I had given any thought to. I went home and started researching LTC. I looked up prices, statistics as to what percentage of the population needs long-term care, the length of time spend in long-term care, etc. I considered the longevity of my own family and that of DH. After much thought and research, I decided that we would be better off putting the same amount that the monthly premiums for LTC would be into an index fund. If we need LTC, we will be to self fund it, and if we don’t need it, then DD will stand to inherit quite a bit of money. What are your opinions on LTC? Have your or members of your family purchased it?

Buying a car

by lagirl

Finally after 13 years of driving my Corolla I am going to buy a new car. Some of you may remember I wanted the Lexus IS 250 but have recently become enamored with the new Civic. Clearly the Civic will be much cheaper. I test drove it and it feels very similar to my Corolla.

Any tips of negotiating through email? They told me that they don’t offer 0% financing but i know a lot of companies do.

Also, I’m interested in changing my insurance company as well-anyone have one they really like?

Interfamily financial friction

by Anonymous

This CollegeConfidential post must have hit a nerve because it generated so many comments.

Is this “greedy”? Really?

FIL passed away recently. FIL (and the sons) were terrible about money in the sense that they were always throwing wads of money at each other. “Here let me pay for that. No really I INSIST.” “No really WE INSIST.” Yada, yada.

Typical situation: When everyone was returning to base for the funeral week, SIL spent $200 to stock up the MIL/FIL house with food for the incoming hoard (it was empty for the season when they winter over in the south). H gave SIL $100 because MONEY. Not sure why it was our responsibility to pay for stocking the house (there are 5 siblings) since we live in the same place and were not the ones eating all that food, but that’s how it is. We’re wealthy – it’s not like it matters.

So people were spending hither and yon, and H and I had a discussion about whether everyone was going to keep track and start billing each other. We agreed that since MIL is not poor in any sense of the word, and all this tracking and billing would be a PITA (and why?), we would generally have MIL pay for her own expenditures as we went along.

Since she has a hard time getting around, one of the things I am trying to do now is pick up things at the market once a week or when I happen to be going I ask if she needs something. I get a separate bill and have them bagged separately and she reimburses me when I take them in. Tonight, I picked up a few things she asked for and made dinner at her house as well. H showed up and tried to waive off the $10 for her groceries. I took the money because that was the plan. Now he is having fits and says I’m just greedy. I basically told him to pound salt.

The initial comments indicate some readers believe other issues besides money are at play here.  But isn’t that usually the case?  Money can represent so many things — love, prestige, self-worth, independence, etc.

Misunderstandings can easily occur.  I was recently surprised when a relative insisted on compensating me for my Uber expenses after I did her a favor.  At first I was a bit surprised, as if she considered it a financial transaction instead of a favor.  Then I realized that she just viewed these types of things differently and did not want to burden me financially.  And I made a mental note that she would probably expect to be compensated if I asked her for a similar favor.

How does your family operate?  Do they “nickel and dime” expenses among each other?  Or do they tend to be more casual?  How are restaurant bills split?  Have you had major (or minor) disagreements?  Financial dealings between parents and their children can be particularly touchy.  Part of what makes these types of dealings potentially more complicated are discrepancies between family members’ wealth.  But even when everyone is in a similar financial position, misunderstandings can occur.

Have you ever borrowed or lent money to family?  How did that turn out?l

Bargain travel

by Grace aka costofcollege

Despite her initial doubts, this NYT travel writer gave a positive review of a trip she took using a bargain package deal.

Looking for a Bargain Vacation? Don’t Rule Out Hawaii

For years I’d seen online ads for surprisingly affordable prefab vacations — airfare and hotel, with maybe a car and a tour thrown in — through unexpected vendors like Groupon and Costco. I remember thinking, “Do people actually buy vacations through Costco?” To me, packaged bulk trips were the five-pound tub of mozzarella balls of travel. Sure, it’s a bargain, but how bland? What quality could you possibly get for that impossibly low price? I was, in short, the worst kind of travel snob.

I regularly check deals that come my way, mainly Groupon Getaway and Travelzoo.  But I’ve never tried any.  Sometimes they seem too good to be true and sometimes they seem to scrimp more than I’d like.  (Are the hotels lacking?  Can I get an aisle seat on the plane?)  Sometimes they don’t seem like such a great value when I start to compare low airfares and housing options that I could assemble on my own.  But I keep telling myself that one day I need to throw caution to the wind and buy a five-night inclusive trip to the Caribbean for under $600.  How bad could it be?

Here are three travel deals I recently came across, all departing from New York:

  • 11-day Thailand & China Tour w/Air for $1499 that includes hotels, transfers, daily breakfasts, and several tours including one of the Great Wall of China
  • London & Rome 6-Night Trip for $799 that includes air, hotels, transfers, daily breakfasts
  • Punta Cana 5-nights all-inclusive beach side resort including air for $589

Do these sound enticing to you?  Have you ever bought one of these deals or have you considered it?  Do you know people who’ve had good or bad experiences?  Do you avoid these mainly because they’re too conventional and you prefer more personalized travel?  In other words, are you a “travel snob”?  Any advice for someone who’s considering buying one of these deals?

Also, do you have any travel plans coming up or any dreamy destinations that you’d like to visit soon?

Financial education for kids

by Finn

Having a kid who’s close to graduating from HS, this article caught my attention:

5 Financial Concepts To Teach Your Teen Before High School Graduation

What do you think? Do you agree with the five concepts? Are there any others you think should be added? How do you plan to teach these concepts to your kids?

On a related note, do your kids’ schools offer classes in personal finance? My kids’ school offers one, but DS tells me he won’t take it because he’s already maxed out on the number of classes he’s allowed to take, and doesn’t want to give up any of them.

Next year they plan to offer some short courses, with personal finance being one possible subject. With the PSAT being moved from Saturday to a school day, the school decided to cancel classes on PSAT day, and instead offer things like personal finance seminars for the freshmen and seniors. Another possible time for some short classes is the weeks after AP testing.

How much have you saved?

by Finn

While this story is about college financial aid, what I found most interesting was the finances of the families involved:

An inside look at financial aid offers from private Franklin & Marshall College

For example, Student A comes from a family with an AGI of $400k, with $635k in home equity and $360k in assets not in retirement accounts. While recognizing the possibility that they could have millions stashed in retirement accounts, doesn’t that seem like a net value of less than $1M outside of retirement accounts is low for that level of income? Granted, I also don’t know what sort of special circumstances they might’ve faced, e.g., expensive medical treatments, long periods with much less income, but if we assume they didn’t face any of that, wouldn’t you think they’d have accumulated more?

Side note: This example does suggest that maximizing retirement account contributions is one way to maximize financial aid.

Looking through the other examples, while some families have assets that seem commensurate with their incomes, especially the families with low incomes, it seems to me that others should’ve been able to accumulate more assets, including home equity.

What do you think? I know I’m well above national norms in terms of how much I save, but do you think these levels of assets and home equity seem low relative to their incomes, taking into account where they live?

Credit cards

by Finn

A recent exchange of posts with Lemon brought this article to mind:

5 Signs It’s Time to Shop for a New Credit Card

How often do you shop for new cards? What criteria do you use in selecting which cards you get, and which cards you use?

We try to pay our balances every month, so we don’t really look at interest rates. What we look at primarily are rewards and annual fees. We value cash rewards over airline miles, due to its versatility, and the fact that we can use even small amounts of cash. We also look for cards with no foreign transaction fees, but since we don’t spend a whole lot of time outside the US, and already have a couple cards without those fees, that’s not a primary consideration.

We value the Discover Card cashback over others, because we can redeem cashback there by purchasing discounted gift cards from places we shop (e.g., Gap, Lowe’s). We once redeemed some cashback by buying several $100 gift cards for a hotel chain for $50 each, just before going on a trip in which we used those gift cards.

If you’ve found a card that offers a particularly good benefit, please share!

Vacation splurges

by Denver Dad

We are going to Iceland next month and we booked a tour for an obscene cost. It’s a helicopter ride to the Thrihnukagigur volcano and then you take an open elevator down to the volcano floor. It’s the only place on earth where you can go into the magma chamber. We went back and forth on it, and finally decided it’s a once-in-a-lifetime opportunity, and we figured if we’re going to do it, we might as well go all in and do the helicopter ride instead of hiking up.

What are the biggest splurges you’ve made on vacation? What was worth it and what wasn’t?

Choosing a Vacation Destination Based on its Economy

by Honolulu Mother

Vox put together this Vacation Index showing which countries are the best – and worst – bargains for vacationers at the moment. According to the article, it’s not intended to compare bang for the buck in absolute terms, but rather to show which countries are cheaper or more expensive than they usually are. Do you think the index is an accurate representation of that? Would you consider choosing a vacation destination based on it?

Our next vacation is to the very worst bargain listed, and yet the exchange rate is still better than it was the last time I was there. I think the index is looking at a relatively short-term timescale.

Graduation costs

by Grace aka costofcollege

This time of year many families are celebrating graduations, whether preschool, elementary school, middle school, high school, or college.  The costs can mount up, as discussed in this CollegeConfidential thread.

Cap and gowns, diplomas, yearbooks, photos, rings, invitations, dinners, parties, travel, and gifts are some of the typical expenditures.  If your child is receiving honors of various types, costs for awards dinners can mount up.  One parent with twins complained she would be spending several hundred dollars for those.  Other end-of-year expenditures like recitals and proms can also strain family budgets.

How lavish is your spending for graduation celebrations?  What is common among your friends and relatives?  What about spending for other types of milestones, like First Communions or bat/bar mitzahs?

That time of year, again

by Finn

We are well into that least favorite time of year for many of us: tax time.

While some may already be done, others are yet to start.

Do you have any tips to share? Potential gotchas?

Tax time is also a good opportunity to review financial decisions, and make adjustments. What have you learned from this tax season? What worked, and didn’t work, financially over the past year?