The Penny Hoarder

Here’s What to Do Instead of the Outdated Financial Advice Your Parents Gave You
No, Social Security Isn't Going Broke. 5 Shortfall Myths, Busted
Do You Qualify for Any of September’s Class-Action Settlements?
Unison Can Give You up to $500K Without Taking Out a Loan or Refinancing
Avoid Natural Disaster Scams with These Smart Tips
Preserving 401(k) for Retirement Is Step in Right Direction
Dear Penny: I'm a Single Stay-at-Home Mom, so Men Assume I'm Broke

Here’s What to Do Instead of the Outdated Financial Advice Your Parents Gave You

Posted: 01 Sep 2021 01:05 PM PDT

Some of the links in this post are from our sponsors. We provide you with accurate, reliable information. Learn more about how we make money and select our advertising partners.

Pound the pavement. Just go and deliver your resume in person. Get out there and shake some hands, why don't ya!

We've all heard these financial pearls of wisdom from our parents (and not always because we asked). Despite their best intentions, a lot of these tips from our elders are, well… outdated. To say the least.

Here are six pieces of advice from our parents that simply don't apply to us anymore — and some smarter options.

1. Work Your Way Through College

Working your way through college used to be an option — back when tuition cost a reasonable amount. That was a long time ago, though.

Most colleges' tuitions have easily doubled or tripled since the 1980s and '90s. Working a job while you attend college can help pay the bills, but it won't pay for college. That's why so many of us are saddled with student loans.

Once you graduate, refinancing could help you pay off your loans faster and save money in the long run. By combining multiple loans into one, you'll replace your federal and private loans with a single private loan.

In addition to simplifying the repayment process, refinancing can reduce your interest rate and lower your monthly payments.

2. Keep Your Money in a Savings Account

This is standard parental advice: Open a savings account. That's the best way to save money.

Yeah, OK, fine. The problem is, with interest rates so low, a savings account these days will pay you pretty much zero interest. You may as well stick some cash under your mattress.

However, a debit card and digital account called Aspiration lets you earn up to 5% cash back and up to 16 times the average interest on the money in your account.

Not too shabby! You just have to get with the times and move beyond using a brick-and-mortar bank.

Enter your email address here to get a free Aspiration Spend and Save account. After you confirm your email, securely link your bank account so they can start helping you get extra cash. Your money is FDIC-insured and they use a military-grade encryption which is nerd talk for "this is totally safe."

3. Always Buy a House — It's a Great Investment

This is an oldie but a goodie. I can still hear my parents: Why are you still renting? When are you going to buy a house? It's a great investment!

The problem is, buying a house isn't for everyone, especially with the price of homes being so astronomically high these days.

It's easy to make a compelling case for either choice. Renters don't have to worry about the housing market or mortgages; buyers get tax breaks and a way to invest in their future.

There's no one right answer, because every financial and living situation is unique and people's priorities change over time. Where you plan to live — and how long you plan to live there — is a huge factor in whether it makes more sense to rent or buy a home.

4. Buy Savings Bonds

What are savings bonds? You might remember them as something boring your grandparents used to give you for your birthday.

Savings bonds are an old-school, super-low-risk kind of investment. Most savings bonds earn interest for 30 years. But the problem is, they won't really earn you much money. For example, series EE bonds have a low interest rate of 0.1%.

These days, you're better off investing your money in stocks. Sure, the stock market can be a little volatile, with stock prices going up and down. But historically, investing in the stock market will earn you a 7% profit over time.

Whether you've got $5, $100 or $800 to spare, you can start investing with Robinhood. Both investing beginners and pros love it because it doesn't charge commission fees, and you can buy and sell stocks for free — no limits. Plus, it's super easy to use.

What's best? When you download the app and fund your account (it takes no more than a few minutes), Robinhood drops a share of free stock into your account. It's random, though, so that stock could be worth anywhere from $2.50 to $200 — a nice boost to help you build your investments.

5. If You Don't Have a Degree, You'll Never Find a Job

Sure, a lot of careers require a college degree. But a lot of jobs don't. Higher education isn't for everyone, and there's no law that says you have to go rushing into college.

Did we mention that college is super expensive now? Student loans are a huge burden. Americans collectively have $1.5 trillion in student debt. Graduates with student loans typically owe $20,000 to $25,000, and at least 20% of them are falling behind on their payments.

There are other options. For example, have you considered bookkeeping? You could earn up to $69 an hour by starting your own bookkeeping business, according to Intuit, the creator of QuickBooks.

You don't have to be an accountant or good at calculus to be successful at bookkeeping. As long as you're motivated, a company called Bookkeepers.com will teach you everything you need to know. It's one of the leading training courses in the field, and it even gives you the first three classes for free.

It's helped thousands of people launch their own businesses, including Daniel Honan, a military veteran and former painter. He signed up for Bookkeepers.com, and now he's making $50,000 a year. It only took him three months to get started, taking one class a week. Oh, and he makes his own schedule.

If you're just a little curious, you just have to submit your email address here to take the first free class. If you stick with it, you could be running your own business in just a few months.

6. Depend on Social Security and Pensions for Your Retirement

First of all, you probably don't have a pension. Pensions mostly aren't a thing anymore, unless you work for the government.

You shouldn't depend entirely on Social Security for your retirement, either. Social Security is designed to be a supplement, not your entire retirement savings.

To retire comfortably, you need to steadily funnel a healthy percentage of your wages into a 401(k) account — it's literally one of the smartest things you can do for your future. And if your employer matches each contribution, that could mean hundreds of thousands of extra dollars in your account when you retire. It's free money!

But if you can't take advantage of this employer benefit because you need all of your paycheck every month, a company called Lendtable will give you the cash.

We know it sounds too good to be true. But if your employer has a 401(k) match program, this is money they already have earmarked for you. By using Lendtable, you'll be able to unlock that free cash.

Let's say you make $50k a year and your employer matches your 401(k) contribution up to 4%. If you put $0 in your retirement account this year, you get $0 from your boss. If Lendtable gives you the 4% of your salary your employer is willing to match, you get $2,000 from your boss, minus Lendtable's share of the profit. (This comes from the extra money you've earned, so there's no sacrifice on your part.)

It takes three minutes to answer a few questions about your eligibility and sign up for an account.

Once you've gotten your full match amount from your employer, Lendtable will take the money they lent you back, plus a small share of your profit. If there's a penalty from your retirement account provider for taking money out, Lendtable will cover that, too.

The risk for you is basically nonexistent, so not taking advantage of your employer match with Lendtable's offer would make Future Millionaire You bow your head in shame. Get started here.

Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. His dad gave him sound financial advice: "Never bet against the house."

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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No, Social Security Isn't Going Broke. 5 Shortfall Myths, Busted

Posted: 01 Sep 2021 12:00 PM PDT

A new trustee's report provides some scary projections about Social Security's future. Social Security's trust is now expected to be depleted by 2034. That's one year sooner than originally estimated, in part due to the economic shock of COVID-19.

Taken out of context, the numbers look frightening. But if you understand how Social Security works, you'll see that things aren't quite so dire.

5 Things Everyone Gets Wrong About Social Security's Shortfall

You may hear that "Social Security is going broke" or that Social Security won't be around for you. Neither statement is true. Here are five common myths about Social Security's future.

1. Myth: Social Security Will Run Out of Money in 2034

The truth: Social Security now pays more in benefits than it rakes in through payroll taxes. But workers are still paying into the system. As long as they continue to pay in, Social Security won't go broke.

For decades, Social Security took in more than it paid out in benefits. That's how it amassed $2.9 trillion in reserves. The latest projections estimate that those reserves will only last until 2034. At that point, Social Security will still bring in money from payroll taxes. But payroll taxes alone would fund just 78% of Social Security's obligations.

2. Myth: You'll Only Get 78% of Your Projected Benefits

The truth: It's true that Social Security will only have enough to pay 78% of projected benefits by 2034. But that's if Congress does nothing. That seems highly unlikely. Social Security is widely popular with voters across the political spectrum.

Lawmakers could raise the full retirement age, as they did in 1983. They could also increase the payroll tax rate or raise the ceiling on payroll taxes. In 2021, workers pay Social Security taxes only on the first $142,800 of earnings. Congress could also borrow more money to make up for the impending shortfall.

3. Myth: If You're in Your 20s or 30s, You Shouldn't Expect Benefits

The truth: Again, even if Congress takes no action, Social Security could still pay for 78% of the benefits it's promised come 2034. Even the youngest workers can expect to receive benefits someday. By 2095, payroll taxes would still cover about 74% of scheduled payments.

4. Myth: The Government Drains Social Security to Pay for Other Programs.

The truth: Social Security has two trust funds: One pays retirement and survivor benefits. The other pays disability benefits. Both are funded through payroll taxes. Neither is used for the general fund, which finances the federal government's operations.

There's a bit of truth to this myth, though: Social Security invests its money in U.S. Treasury securities. These are bonds issued by the federal government. Bonds are debt instruments. The investor (Social Security in this case) is the creditor, and the issuer (the federal government) is the debtor. The federal government then pays that money back to Social Security, plus interest.

Treasury securities are among the safest investments in the world. They're backed by the full faith and credit of the U.S. government, which has never defaulted on its debt.

5. Myth: Covid-19 Will Have a Dire Impact on Future Benefits

The truth: The trustee's report estimates actually weren't as bleak as many forecasters feared. But it's too early to determine COVID-19's long-term effects on Social Security.

Hundreds of thousands of lives have been lost to the pandemic. That tragedy lowers Social Security's short-term costs because fewer people will receive benefits. Forecasters estimate that mortality will remain higher until 2023.

The reduction in costs has been overshadowed by the drop in payroll taxes caused by massive unemployment in 2020. Immigration and birth rates both fell steeply during the pandemic. Both decreases are expected to decrease Social Security revenue over time.

What Does This Mean for You?

Don't panic over the latest trustee's report. You can still expect Social Security to be around in 2034 and beyond.

One reality to prepare for as you plan for retirement: Your Social Security checks won't stretch nearly as far as they did for your grandparents. Social Security cost-of-living adjustments, or COLAs, lag behind the actual cost increases seniors face. Benefits have lost 30% of their purchasing power since 2000, according to The Senior Citizens League.

Social Security replaces about 40% of earnings for an average worker who retires at age 65. Benefits are expected to replace a shrinking percentage of income for younger generations.

It's essential to start saving for retirement as soon as possible. If your employer offers a 401(k), contribute at least enough to get your company match. Also consider saving in an individual retirement account (IRA).

You can still count on receiving Social Security someday. But your monthly checks should only be one component of your retirement plan.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to AskPenny@thepennyhoarder.com.

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Do You Qualify for Any of September’s Class-Action Settlements?

Posted: 01 Sep 2021 11:00 AM PDT

Many class action lawsuit settlements have deadlines coming up in September, from brands like Kellogg's and Shutterfly to Walmart and Kroger.

Read on to find out if you qualify to file a claim and get some cash.

Kellogg 'Healthy' Cereals $13M Class Action settlement

If you purchased "heart healthy" or "lightly sweetened" Kellogg breakfast cereals, you could be eligible to claim a share in a $13 million settlement.

The Class includes anyone in the United States who purchased one of the following products for household use between Aug. 29, 2012, and May 1, 2020:

Kellogg's Original Raisin Bran and Kellogg's Raisin Bran Crunch cereals in a package stating "heart healthy"
Kellogg's Smart Start Original Antioxidants cereal in a package stating "heart healthy" and/or "lightly sweetened"
Kellogg's Frosted Mini-Wheats Bite Size (Original, Maple Brown Sugar, Strawberry, or Blueberry varieties), Big Bites (Original variety), Little Bites (Chocolate or Cinnamon Roll varieties), or Touch of Fruit in the Middle (Mixed Berry and Raspberry varieties) cereals in a package stating "lightly sweetened"

The plaintiff had alleged that while the products were advertised as being "lightly sweetened" or "heart healthy," they actually contain large amounts of added sugar, making them unhealthy.

Each claimant will receive a different payment amount based on the number and type of covered products they purchased, but the estimated average award is expected to be about $16.09.

Claims in this settlement must be submitted by Sept. 7, 2021.

Minted Data Breach $5M Class Action Settlement

If your personal information was compromised during a May 2020 data breach at Minted, you may be eligible to claim about $43.

The Class is made up of all U.S. residents who had a Minted account, or who provided Minted with their name, address or other personal information via email, the Minted website or other online communication on or before June 27, 2020.

The Minted class action lawsuit accused the company of failing to take appropriate steps to safeguard consumer data stolen during the data breach.

Class Members who file a valid claim are expected to receive about $43, depending on how many claims are filed.

Claim forms must be submitted by Sept. 16, 2021.

Walmart Military Leave Pay $14M Class Action Settlement

Walmart employees who took short-term military leave may be eligible to participate in a $14 million class action settlement.

The Class includes all current and former employees who work or worked for Walmart at a location in a jurisdiction covered by the Uniformed Services Employment and Reemployment Rights Act (USERRA) — i.e., the United States and its territories — between Oct. 10, 2004, and Dec. 31, 2020, who took short-term military leave of 30 days or less in one or more years while they were employed with the company during that period, and who, during such leave, did not receive the regular wages or salary they would have earned had they continued to work their normal work schedules.

The plaintiff's class action alleged Walmart violated USERRA by failing to provide fully paid leave for such employees.

Each Class Member submitting a valid claim form will receive a proportionate share of the settlement fund based on the amount of short-term military leave they took during a calendar year in which they worked at Walmart, compared to the amount identified on all Class Members' claim forms.

The deadline to file a claim is Sept. 16, 2021.

Smoke salmon on an everything bagel sits on a blue plate.

Mowi USA Ducktrap Salmon $1.3M Class Action Settlement

Consumers who purchased Ducktrap River of Maine smoked salmon can claim as much as $25 without proof of purchase thanks to a $1.3 million class action settlement.

Anyone in the United States who purchased a covered Ducktrap River of Maine smoked Atlantic salmon product with packaging that included the phrases "sustainably sourced," "all natural," and/or "from Maine" between March 1, 2017, and May 13, 2021, is considered a Class Member.

The plaintiff alleged Mowi USA misled consumers by marketing the products as being sustainable and all natural, when in fact they are not from Maine, not sustainably sourced, and treated with artificial chemicals.

Each claimant will receive up to $2.50 for each package purchased. Without proof of purchase, these claims will be capped at 10 packages, for a total of $25. There is no limit for claims submitted with proof of purchase.

The claim deadline is Sept. 10, 2021.

Big Picture Loans Settles State Law, RICO Violation Claims for $8.7M

Online lender Big Picture Loans has agreed to an $8.7 million settlement benefiting certain borrowers.

The Class includes anyone who executed a loan agreement with Big Picture Loans or Castle Payday between June 22, 2013, and Dec. 20, 2019.

The plaintiffs had alleged Big Picture Loans and Castle Payday had made and collected loans with higher interest rates than legally allowed and lending to consumers without having a license, among other accusations.

Class Members' payouts will depend on the total number of claims filed, the amount of interest the Class Member paid, and other factors.

File your claim by Sept. 10, 2021.

My Little Steamer Class Action Settlement

If you purchased a My Little Steamer Go Mini or Deluxe, you may be eligible to take part in a settlement over alleged product safety issues.

Anyone who purchased a Joy/JM-branded My Little Steamer between Jan. 1, 2002, and Dec. 31, 2020, is eligible to make a claim.

Ingenious Designs allegedly violated consumer protection laws and became unjustly enriched by selling the unsafe products.

Awards will vary, but Class Members who file valid claims will be eligible to receive as much as the full purchase price of the steamer, depending on when the purchase was made and whether they have proof of purchase and destruction.

There is no claim form deadline for this settlement.

Shutterfly Illinois Biometric Privacy $6.75M Class Action Settlement

Certain Illinois consumers will benefit from a $6.75 million Shutterfly settlement resolving privacy-violation claims.

The Class is made up of Illinois residents who appear in a photograph maintained on Shutterfly at any time between June 11, 2014, and the date of final approval of the settlement, currently set for Sept. 8, 2021.

The plaintiff in a class action lawsuit alleged Shutterfly violated the Illinois Biometric Information Privacy Act (BIPA) by obtaining, collecting and storing Class Members' biometric data via facial recognition software without first obtaining consent.

No proof of purchase is necessary. Class Members who file a valid claim will depend on the number of claims filed.

Claim forms must be submitted by Sept. 14, 2021.

A woman looks surprised as she reads something on her laptop while sipping coffee.

Washington Post Auto-Renew $6.8M Class Action Settlement

If you live in California and your subscription to The Washington Post (WaPo) renewed automatically, you may be able to claim part of a $6.8 million settlement.

The Class includes anyone who, from July 29, 2016, to and through April 1, 2021, enrolled in a digital WaPo subscription using a California billing address and who, during that same period, was charged and paid at least one automatic renewal fee in connection with the subscription.

The Washington Post was alleged to have violated California law by automatically renewing subscriptions and charging subscribers without providing the required disclosures or obtaining proper authorization.

Class Members will receive varying awards — depending on their subscription status and whether they file a claim — such as credits of $10 to $20 for free weeks of access or a cash payment.

Claims are due by Sept. 19, 2021.

Citronella Candles, Pest Foggers $3.6M Class Action Settlement

Consumers who purchased certain citronella candles and pest foggers may be eligible for a payment of up to $14 without proof of purchase as part of a $3.6 million settlement.

Anyone living in the United States who purchased any of the covered products for personal use between May 4, 2015, and June 7, 2021, is eligible to file a claim.

The plaintiffs filed their class action lawsuit against United Industries Corp., maker of Cutter, Repel, Black Flag, and other bands, alleging they marketed the products using misleading claims about the products' efficacy.

Class Members who can submit proof of purchase will be eligible for a full refund of their purchase price for up to six units. Those without proof may claim $7 for up to two units, for a maximum total of $14. Final amounts may be adjusted depending on the number of claims filed.

The deadline to file a claim in this settlement is Sept. 20, 2021.

Kroger Bread Crumbs $780K False Advertising Class Action Settlement

If you live in California and bought Kroger bread crumbs, you may be able to make a claim in a class action settlement resolving claims of false advertising.

The Class includes all California residents who purchased Kroger Bread Crumbs in California between Jan.1, 2010, and Dec. 31, 2015, for personal or household use and not for resale or distribution.

The grocery chain falsely advertised the product as having "0g Trans Fat," according to a class action lawsuit.

Those who submit a claim without providing proof of purchase can claim an estimated $17.50, while those who can provide receipts may claim up to $100.Claims must be filed by Sept. 20, 2021.

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Unison Can Give You up to $500K Without Taking Out a Loan or Refinancing

Posted: 01 Sep 2021 10:51 AM PDT

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If you're looking for more than a few thousands bucks in extra cash, it seems like the only options are doing a cash-out refinance on your home or applying for a HELOC or other interest-laden loan.

Between added debt and interest payments, are you really getting the most out of your money? And what if you don't want to take on even more debt?

Another option you have is called a home co-investment — and a company called Unison is letting people take advantage of their home equity now for a share of the home's increase in value (or any potential loss) later. All without any monthly payments or interest.

Get Up To Half a Million Dollars to Update Your Home, Consolidate Debt or Plan Your Retirement

All the things you would want to do with the money from your home equity loan or cash-out refinance, you can do with a home co-investment — without a monthly payment.

Unison will invest up to $500,000 or up to 17.5% of your home's value — determined by an independent appraiser. It won't affect your current mortgage, and Unison doesn't take any ownership of your property. Then they'll wire the co-investment amount, minus a 3.0% transaction fee and settlement costs, straight to your bank account.

What you do with that money is up to you. A lot of people use it to upgrade their home and increase its value. But if you want to use it to go back to school or put it into the stock market and let it grow, you can.

When you sell your home, if the home value increases, Unison will share the profit. If the home value decreases, in most cases, Unison will share in the loss with you. Just like any other investment, they know there's always a risk alongside any potential reward. Either way, you can access the equity in your home now — without a refinance or home equity loan.

Here's an example: If your home is worth $300,000 right now, Unison can give you up to $52,500 as an investment (minus the transaction fee and settlement fees — so it doesn't come out of your pocket).

If you sell your house 10 years in the future for $400,000, Unison gets their investment back, plus their share of the profit. But if you sell your house for $200,000, Unison's share of the loss would exceed the amount of the co-investment you received, and you would not owe Unison. The amount Unison can lose is limited to its initial investment in the home.

Take 2 Minutes to See How Much Cash You Can Get

To get started, just enter your home address and email to see if you prequalify — and how much Unison can invest with you. Once you complete your application, if you're approved, you can have cash in your bank account — without monthly payments or additional debt.

It takes just minutes to get started and see how much of a co-investment Unison can make. What will you do with your money?

Kari Faber is a staff writer at The Penny Hoarder.

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Avoid Natural Disaster Scams with These Smart Tips

Posted: 01 Sep 2021 09:45 AM PDT

Hurricane Ida in Louisiana, wildfires in vast parts of the West and recent flooding in Tennessee have upended many people's lives and damaged their homes and property, not to mention where they shop and work.

When natural disasters are over, there's nothing people want more than to quickly get their homes and lives back to normal. But when thousands of people need roofers with plenty of roofing supplies or help clearing fallen trees and repairing windows, "quick" isn't part of the equation.

Making matters worse is that every natural disaster is followed by people trying to take advantage of those who have suffered the most. And in the case of Hurricane Ida, thousands of people in New Orleans will be without power for days or weeks, contributing to the panic and sense of urgency. This is when disaster victims are at their most vulnerable and scammers know this.

There is federal disaster assistance available for people who have been affected by Hurricane Ida. Details on how to apply for FEMA relief.

Thanks to the internet, disaster scamming is an active and profitable industry. Whether it is a request for charitable donations or offers to help rebuild properties or connect power lines, there are bad apples lurking, waiting to take advantage of unwitting injured parties or Good Samaritans.

As much as you want work done NOW don't rush into anything if you are uncertain of the person or organization that is offering help. Same for those of you ready to make a donation to aid others.

Here is some guidance along with governmental websites that can provide you information and protection from illegal charity requests or illegitimate cleaning crew contractors.

Watch Out for Scamming Work Crews

In the immediate aftermath of a natural disaster, the first thought of homeowners is the cleanup of their property. Scam contractors will attempt to lure you into signing up for a cleanup job.

The Federal Trade Commission offers several tips to avoiding scam contractors or work crews, plus what to do after work is done (or promised and paid for) and you feel you've been wronged.

Among the tips about hiring recovery assistance:

Make sure any cleanup crew you work with has a license to do such business, has a business website or social media page.
Expect them to offer a complete contract with services rendered and completion date information.
Call the number on its contract and see if someone other than the contractor standing in front of you answers.
Do not pay by cash, and do not pay for services before they are rendered. Reputable firms will agree to that demand; the criminals will not.
Protect your personal information such as Social Security and bank account numbers. Be suspicious if someone asks for this information.

Anyone claiming to represent a federal agency will have proper identification, will offer contact information to check on their identification, and will not request money for fees for building permits, grants or permits.

Know the Charity You are Talking To

The American Red Cross, The Salvation Army, and the National Organization for Victim Assistance are relief organizations with well-established infrastructure and commitment.

If you get any contact from a disaster relief effort that you have never heard of, check them out with a Google search and investigate the organization's website before making any donations.

The Federal Trade Commission offers Scam Watch, a link on its main site offering warnings about scam offers you can receive when a natural disaster has struck. It also offers a detailed explanation of how official charities work.

If you choose to make a donation, do so using a credit or debit card or check, rather than cash. That will allow the transaction to be tracked if there is any question of its validity.

Federal Agencies Do Not Contact You

If you are receiving an unsolicited email, text or phone call from a government official, it is almost certainly a scam.

The federal government, as well as state and local agencies, conduct almost all of their application processes from their websites and by email. The Federal Trade Commission, The Federal Communications Commission, and the Consumer Financial Protection Board all have easy-to-use interactive websites to provide information and offer assistance.

If you receive a solicitation from someone who does not seem official, demand a website and check it out. And, if the website is not a .org or .gov, it is a private business.

That does not necessarily mean they are illegitimate, but it does mean you should check on them through the Better Business Bureau.

Use All of Your Trusted Resources

The Federal Trade Commission, the Federal Emergency Management Agency, and your state and local government disaster relief agencies can help you identify properly licensed and insured contractors as well as properly licensed charities. The American Association of Retired Persons provides helpful information in its efforts to protect older citizens.

If you are trying to repair insured property, contact your insurance company immediately to begin claim proceedings, and contact the company whenever you are considering a company to do your repair work.

You have another unofficial resource to consider. Your neighbors are in the exact same boat you are in. Talk to them about any relief efforts or contracting work you are considering. There is safety in numbers, and in times of need, the community can provide such safety and reassurances.

Kent McDill is a veteran journalist who has specialized in personal finance topics since 2013. He is a contributor to The Penny Hoarder.

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Preserving 401(k) for Retirement Is Step in Right Direction

Posted: 01 Sep 2021 09:00 AM PDT

After years of systematically saving for what once looked like a faraway retirement, you're beginning to look ahead. You're reviewing your 401(k) and other retirement accounts, and you're getting ready to live the dream.

Congratulations! Many Americans don't have nearly enough retirement money set aside. You should appreciate your success.

But don't start kicking back just yet. As much as you've planned and worked to get to this point, there's still much to do. After all, you will now have fewer years to fully recover from any missteps with investment choices or fluctuations in the stock market. So your decisions matter even more at this stage.

To make the most of your retirement money once retirement is within reach, here are six steps to take.

1. Understand Your Retirement Money and Financial Life Stage

A financial advisor will frequently divide clients' financial lives into five stages. The names may vary, but here's the gist:

Early career
Family/growing career
Prime earning years
Pre-retirement
Retirement

Each period has different concerns. The first three focus on accumulating wealth. The next two stages focus on harvesting what you've managed to accumulate.

If retirement is changing from a distant goal to something more definite for you, welcome to stage 4: pre-retirement.

The timing for pre-retirement will be different for everyone depending on your investments, not to mention market volatility and other factors. But a good rule of thumb is five years in advance of your actual retirement.

At this phase, you'll want to start thinking differently about your investment choices. Just like a sports team that's way ahead at the end of the game, this phase focuses on avoiding mistakes instead of trying to run the score up.

For instance, chances are you will want your portfolio to be less volatile. That will help ensure a predictable, comfortable fifth stage, which is, of course, retirement.

2. Update Your List of Financial "What Ifs?"

Planning is a continual exercise of asking "what if?" until you've found the right balance between achieving your most treasured goals and the risk of running out of money too early. But if you're like most investors, you either haven't written up a formal financial plan or, if you have, you haven't updated it for quite a while. That time has come.

Your up-to-date plan will help you understand your next steps. For instance, you will need to:

Estimate the amount of income you can safely draw from your portfolio during retirement.
Calculate any effects of large purchases or sales you want to make when you retire.
Consider your new tax bracket once you are no longer working.
Plan how your estate should be transferred.

Once you have this information, you can reassess your financial goals to make sure that, first, they are still meaningful and, second, you can afford them.

3. Consider Hiring a Professional to Look After Your Retirement Accounts

Unfortunately, employers aren't able to give specific advice about how to invest your 401(k) investments for pre-retirement. Since all these topics can be complex — and costly to get wrong — now is the time to get advice from a pro or schedule an appointment with your advisor if you haven't had one in a while.

If you need to find a financial advisor for advice about your retirement funds, it's a good idea to find someone holding the Certified Financial Planner® designation, which means they have established experience in planning, completed a rigorous course of study and are required to follow a code of ethics.

Good financial advisors tend to be expensive, but the wrong advice is even more costly. For example: withdrawing money from your retirement account too early can lead to costly penalties.

You can save money by only hiring an advisor when you need one. Try to find a planner who works on an hourly basis or, if you have a large account balance, charges a fixed fee.

4. Get Your 401(k) Ready for Retirement

The term you'll hear is "preserving 401(k) for retirement," which essentially means making sure you optimize the return on your 401(k) investments in this stage of your financial life. You'll want to ratchet back risk so a few bear markets over the years won't decimate your savings.

Here are some basics to consider when preserving 401(k) for retirement:

You can reduce risk by diversifying more and shifting part of your portfolio to more predictable assets such as high-quality fixed income, dividend-paying stocks, preferred stock and cash or money market funds.
Unless you go entirely cash — that's usually a bad idea — your portfolio's value will still fluctuate after you're retired. Bond and high-dividend-paying stock prices tend to move in the opposite direction as interest rates. One way to insulate against that is to have some money coming due every year so it can be invested at the current interest rate. That's called "laddering" your bond portfolio.
Since stocks have historically grown faster than inflation, you should plan on holding at least some stocks.
Low-cost mutual funds can help you stay diversified when you have fewer dollars to put in the stock market.

Remember, even in retirement you still won't be done trying to grow at least some of your money. You're going to be retired for a long time! Inflation will nibble away at your purchasing power, so preserving 401(k) for retirement is an important step.

5. Don't Rush to Roll Over Your 401(k) Account

If your 401(k) has enough low-cost investment choices and you don't have a complicated estate to leave behind, you may not automatically need to roll over the funds into an individual retirement account when you retire.

Why a 401(k) Rollover Might Be a Bad Idea

If a financial advisor recommends you roll your 401(k) account into an individual retirement account (IRA), first estimate the cost of investing into a whole new portfolio and then get a second opinion.

There can be a lot of paperwork and expense involved in a rollover in exchange for very little value. And if it's done wrong, you could trigger costly tax consequences.

Why a 401(k) Rollover Might Be a Good Idea

There are times when rolling over your retirement money to an IRA makes sense.

Even the most wonderful employers can have outdated retirement plans. Retirement-plan laws and investment products have evolved over the years. If your plan provider hasn't updated its investment options in years, you might be better off having more control and options in an IRA.

6. Be Ready to Adjust Your Plans

If you've walked through these steps and you don't like what the numbers are telling you, don't panic. It's better to know now than be caught short when you need your investments the most. There's no better time to adjust your retirement plans and perhaps work with a financial advisor on new retirement investment goals.

Contributor Sam Levine holds Chartered Financial Analyst® and Chartered Market Technician® designations and has written on finance topics since 2003. He is an adjunct professor of finance at Wayne State University in Michigan.

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Dear Penny: I'm a Single Stay-at-Home Mom, so Men Assume I'm Broke

Posted: 01 Sep 2021 05:00 AM PDT

Dear Penny,

I'm a 30-year-old woman. Sixteen months ago, just a few weeks into the pandemic, I lost my husband. As a result, my two young children and I each started receiving monthly Social Security benefits. Our checks combined are enough that I was able to quit my job and become a stay-at-home-mom to my girls, ages 5 and almost 2.

I also purchased a new, nicer home in a beautiful upper-middle-class neighborhood, and this is my only existing debt. I manage money well. My credit score is great. I have a security cushion, savings accounts for my kids, and even a special account for vacations and fun money. I will receive this money until my children turn 18, so I have some time to re-establish a career down the road. For all intents and purposes, I'm financially stable for the foreseeable future.

I'm interested in dating again, and I've tried a little, but one of the first questions I'm asked by a potential partner is, "So, what do you do?" And when I respond that I'm a single, stay-at-home-mom, most men seem to assume that my life must be a dumpster fire. Or they immediately follow up with, "How do you stay afloat if you don't work?" And then I'm forced to jump into saying I'm a widow perhaps sooner than I'd like, and it scares men off. Emotional baggage is scary, I get it…

What can I say to make myself sound as stable as I am? Is there a way to divert the "what do you do?" question without seeming like I'm withholding something sketchy? Or a way to make it sound better so men won't turn and run for the hills?

Sincerely,

Single, Stable and Stereotyped

Dear Single,

If only dating didn't seem so much like a job hunt. Too often, it feels more like an exchange of resumes than getting to know a person.

Your letter is a good reminder about why we shouldn't make assumptions about one another's finances. There are plenty of people with good jobs whose finances truly are a dumpster fire because they spend beyond their means or they're buried under a mound of student loans. Likewise, there are people like you who are in great financial shape without working a traditional job.

I think you can keep your message straightforward. When someone asks you what you do, try something like: "I worked in X industry for a number of years, but I'm in such a solid position that I decided to quit my job to focus on my daughters for now."

Someone who respects your boundaries will accept that this is what you're comfortable sharing in the moment. You don't owe anyone more than that. If they pressure you for more specifics, treat it as a big red flag. It's pretty invasive to ask someone you barely know or haven't met how they pay their bills.

If you're using dating apps, try taking the lead when you match with someone. Ask him about one of his pictures, or mention something the two of you have in common. Often, we default to work talk when we don't have anything else to talk about. The same applies if you meet a guy IRL who you'd be interested in going on a date with. Try to establish rapport before you exchange "What do you dos?"

If you're on the apps, you could also mention a few things on your profile that convey financial stability without directly saying, "My life is not a dumpster fire." For example, you could say that you just bought a home or ask for travel tips for a vacation you have planned.

I understand why you wouldn't want to bring up the fact that you're a widow during an initial conversation with someone. You've endured a heartbreaking loss. But it's inevitable that this will come up relatively soon. That may not be such a bad thing. If a guy can't handle the emotional baggage, it's best to find out soon, before you've invested significant time and energy.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com.

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Wednesday, September 1, 2021