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Category Archives: Financial Independence

These 5 Factors Will Tell You How Much You Really Need to Retire – The Motley Fool

Posted: December 9, 2019 at 8:41 pm

If you search the internet looking for how much cash you need to retire, you'll find estimates ranging from $1 millionto $10 million. That's about as helpful as a mechanical pencil with no lead, particularly if your retirement savings are currently well short of seven figures.

A definitive, realistic savings target for retirement is the cornerstone of your long-term savings plan. Without it, you're flying blind. So grab some lead for that pencil and let's figure out what your magic number is.

Image source: Getty Images.

As a first step, you should understand a concept called the 4% rule. Financial experts say that in retirement you can safely withdraw about 4% of your savings each year. If you have $1 million in your retirement plans,you can live off $40,000 annually. At that rate, your risk of running dry is very low. In later years, you can adjust that figure up for inflation.

The 4% rule is not an exact science. It doesn't account for volatility in the market or your unique financial situation. But it is useful to make ballpark estimates. Know that the numbers will be starting points for retirement planning, and will require adjustment as your finances evolve.

Before you pull out your calculator, think about the lifestyle that you want in retirement. There is an early retirement movement called FIRE, or Financial Independence Retire Early. Proponents of FIRE save high percentages of their incomes so they can retire before reaching 50. There is a caveat, though, and it involves lifestyle. Successful FIRE households live very frugally, which allows them to stretch $1 million in savings out for 40 or 50 years.

If that's your retirement outlook, awesome. You might consider moving to a city with a low cost of living, such as El Paso, Texas. According to a Move.org study, monthly living expenses in El Paso are just under $1,200. That means you could get by on less than $20,000 a year in income, assuming you have no debt. Using the 4% rule -- $20,000 divided by 4% -- you can translate that into total retirement savings of $500,000.And if you qualify for Social Security benefits, you'd need to save up even less.

But maybe you don't want to live out your days in El Paso, eating a brown bag lunchand walking around the park for fun. In that case, use your current lifestyle as a benchmark. Add up your living expenses for a year, and then make some adjustments based on your ideal retirement lifestyle. Will you drive less because you're not going to work? Gas expenses go down. Will you travel more? Vacation expenses go up. Don't forget to include income taxesplus any costs currently covered by your employer. Healthcare costs deserve their own discussion, so we'll talk about those below.

Once you have your annual expense total, divide it by 4% to find your ballpark retirement savings target. If your annual number is $75,000, for example, you'd need roughly $1.875 million to support your lifestyle for 30 years. That assumes no Social Security income.

You can account for Social Security by estimating your annual benefit by making a my Social Security account and subtracting your estimated benefit amount from $75,000. Then divide the result by 4% again to get your savings number. Say your Social Security benefit will be $12,000 annually. Your savings then need to support annual living expenses of $63,000, which brings your target savings goal down to $1.575 million.

Want to take a guess at what you might spend on healthcare costs in retirement? Here's a hint: It will be way more than what you spend on healthcare today. Fidelity estimated that a 65-year-old couple retiring in 2019 will spend $285,000 on medical costs in retirement. And consulting firmMilliman expects those expenses to be $369,000.

Before you disregard those figures as ridiculous, consider that a private room in a nursing home sets you back about $8,500 a month. And the cost of a full-time home health aide can be upwards of $4,000 monthly. One health setback can quickly turn into a pretty major financial setback.

Plan for healthcare costs by adding $250,000 to $350,000 to your target retirement number.

Debt repayments can skew your retirement planning because they're temporary. When we used the 4% rule above, we assumed the $75,000 in expenses would be necessary for the rest of your life. But that's not the case if $6,000 of that $75,000 is for debt payments. Once you pay off those debts, that expense goes away.

If you do have credit card balances, car payments, or personal loans, pay those off before you're done working. Same goes for the mortgage if you can swing it. Then recalculate your living expenses again, and the picture will look much brighter.

Your number crunching may reveal that you can live exactly until age 87. But consider your family and what you'd like to leave for them. At a minimum, plan on covering your own funeral expenses. But you could also think about things like college funds for the grandkids or ongoing care for a relative with special needs.

You could bequeath your home or other property to your loved ones for those purposes. Life insurance might be an option, too, if the costs aren't prohibitive. Or you could simply work an extra few years and save more. If you like the last option, increase your target retirement savings number accordingly.

Knowing roughly how much savings you need to retire is the first and most important step of retirement planning. Your next move is to ratchet up your savings, which may feel like you're running a marathon. But just keeping putting one foot in front of the other, and you'll be amazed how much distance you can cover.

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17 habits of self-made millionaires who retired early – Business Insider

Posted: at 8:41 pm

It takes a lot of diligence and dedication to retire early as a self-made millionaire.

Some have done it as young as 28, while others achieve financial independence in their 50s. Either way, early retirement isn't a feat everyone can manage.

As the FIRE (financial independence, retire early) movement has grown, Business Insider has spoken with many early retirees. They tend to share some common habits that helped them get to where they are today and maintain their financial independence.

Early retirees typically begin on the same path: assessing their financial state, cutting back on expenses, and diligently tracking their progress and spending habits. Once retired, they tend to spend even less and often move to areas with a lower cost of living, focusing on experiences and living a life they love filled with hobbies and travel.

Here are 17 habits of self-made millionaires who retired early.

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Can smart cities help their residents without hurting their privacy? – World Economic Forum

Posted: at 8:41 pm

We live in a world where information has been transformed into one of the worlds most precious commodities. Data is a significant driver of our economies and the backbone of the worlds most powerful technology companies.

Tech giants like Facebook, Amazon, and Google have consolidated their data-driven empires and expanded into new markets, where data fuels everything from dating apps and cloud gaming to automated shopping and online payments.

The cities of the future are also being built on data. These arent Jetsons-esque leaps to flying cars and robot assistants, but subtly significant changes to the hidden infrastructure and advanced systems that make cities work for millions of people every day.

Street sensors that reduce collisions and congestion, heated sidewalks that melt snow, buildings that predict when to heat, cool, and illuminate rooms, emergency and social services that know when and where people need helpthese are the kind of urban improvements made possible when data about the behavior of people and objects is collected.

Image: Sidewalk Toronto

The debate around ethical use of personal data in civic development is affecting local communities and global markets, and its heating up. Its been at the heart of the Sidewalk Labs smart city experiment in Toronto, the city where I live and work. The project, owned by Googles parent company Alphabet Inc., was announced 18 months ago with a proposal to build a $1.3 billion data-driven model smart city on a 12-acre waterfront land parcel known as Quayside. It has since been plagued by resignations, firings, civic resistance, legal action, and significant public concern. Waterfront Toronto, the tri-government body tasked with overseeing the project, stiffened its negotiating stance and on Oct. 31 pushed Sidewalk Labs to offer a deal with better terms for Torontonians on data governance and profit sharing, among other issues.

Public sector and tech community leaders around the globe have been watching. But while representatives of the city of Toronto held its own and reps from Sidewalk Labs listened to public pushback, the first-order question remains:

How can cities around the world benefit from data-enabled technologies without sacrificing privacy?

Privacy paranoia, or surveillance capitalism?

My job is to think about the future of smart cities. In Toronto, Ive worked with city, provincial, and federal governments, startups, corporates, academics, and civic activists to find workable solutions to this wicked question. Together, weve been able to map some of the uncharted territory between the polarizing extremes of privacy paranoia and surveillance capitalism.

Here are some significant challenges, along with the seeds of possible solutions, that Sidewalk Labs provocation has elicited from Torontos data experts.

Meaningful consent in the public realm is currently impossible

Unlike an app, streets and parks cant require their users to check a dialog box consenting to how their personal information will be used before granting access. In public spaces where personal information is collectedtake video footage that records peoples faces in a crowdthere is no easy way for people to opt out of giving their consent. Former Ontario privacy commissioner Anne Cavoukian has an answer to this: Privacy By Design, an international standard she pioneered.

When data collection is minimized and de-identified (the process of anonymizing data) at source, the risk of privacy violations can be dramatically reduced. And when no personal information is collected, consent is not required.

The most valuable insights require access to personal information

De-identifying data at source eases many privacy concerns, but it also strips the data of its most valuable details. Its a bit like building a powerful telescope to see far into space, only to put frosted glass over the lens. University of Toronto professors David Lie and Lisa Austin have proposed a solution in what they call safe sharing sites, a type of technical and legal interface for privacy-protective sharing of personal information.

The trick they propose is to encrypt personal information in a way that preserves the ability to run queries on the encrypted data. Analysts can ask questions that link together personal data, but they only ever see anonymized, aggregated results. All the questions and answers are recorded, creating an audit trail that allows regulators and courts to inspect how the data has been used and to penalize misuse.

Privacy laws are inadequate

Canadas current privacy laws were passed between 1983 and 1990, before Google, Facebook, big data and the Internet of Things. Meaning our current laws and policies are founded on strong principles, but they are in need of a significant refresh.

Digital strategies are under review in all three levels of Canadas government, but policy change is slow, and smart city technologies change much faster. Kristina Verner, vice president at Waterfront Toronto, has suggested a solution in the form of Intelligent Community Guidelines. Modelled after Waterfront Torontos highly successful Minimum Green Building Requirements, the guidelines would set a new standard for responsible data use that conforms with and exceeds all existing privacy legislation. The guideline terms would be developed based on feedback from public consultation, and enforced through contract law.

Legitimate institutions capable of city-scale data governance do not yet exist

In the wake of Cambridge Analytica, citizens are far less trusting of big tech to control their data. Privacy advocates are equally concerned with concentrating citizen data under government control, with warnings of something that could look like Chinas controversial social credit scoring system.

Who decides what data is collected, who it is shared with, and for what uses? My team at MaRSthe largest innovation hub in North America has proposed a new kind of organization: a civic digital trust. Such a body would be characterized by its political and financial independence, democratic legitimacy, fiduciary duty to city residents, and technical capacity to securely share data. Residents would form citizen assemblies to deliberate on allowable public benefit uses of city data. The civic digital trust would also ensure that the benefits of smart city data were equitably distributed to all.

There may be no silver bullet solution, but each of these seeds of solutions have shown early promise. To build on these smaller successes, we may at least have some form of silver buckshot: a portfolio of small and mutually reinforcing experiments in data governance that each solve into different aspects of the challenge.

But we cant afford to shoot first and ask questions later. Experimenting in the cities where we live, work and play demands the highest ethical standards, careful experimental design, safe-to-fail experimental sandboxes, and independent monitoring and evaluation. Nor can these experiments be carried out in isolation if the bigger data governance challenge is to be solved.

Solutions need to be developed and tested together, and in combination with other solutions from around the world.

Just as important as what is tested is who is at the table. If Sidewalk Labs has taught us anything, its that citizens need a central role in setting the agenda and a meaningful role in evaluating data governance solutions. Governments need deeper tech expertise and greater capacity in data governance and regulatory innovation to act as leaders in shaping our future cities. Developers need to operate with unprecedented transparency, openness, and responsiveness to gain and maintain the social license to operate.The Quayside initiative will continue to spin off lessons for cities around the world as it winds its way through evaluations and consultations toward a possible approval at the end of March 2020and almost certainly for years afterward.

One of the most important takeaways may be the development of a playbook for trusted data sharing based on a coordinated campaign of civic-public-private experimentation.

License and Republishing

World Economic Forum articles may be republished in accordance with our Terms of Use.

Written by

Alex Ryan, VP of systems innovation and program director, MaRS Solutions Lab

This article is published in collaboration with Quartz.

The views expressed in this article are those of the author alone and not the World Economic Forum.

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Letters to the editor: On financial abuse – Las Cruces Sun-News

Posted: at 8:41 pm

A woman signs a check at a restaurant in New Orleans. Nearly 70% of millennial women have experienced financial abuse by a romantic partner. That means, for every 10 women you know in that age group, odds are that seven of them have had a partner use money to control or manipulate them, according to a 2017 survey of 2,000 people ages 18-35 by CentSai, a financial wellness website.(Photo: Jenny Kane, AP)

These letters were published in the Dec. 8 print edition of the Las Cruces Sun-News.

Among the different ways people in relationships are abused, financial abuse is one form that is rarely spoken of. Financial abuse occurs in 99% of domestic violence cases. While it varies in each case, financial abuse can present itself through limiting daily spending, sabotaging employment or education, causing debt, preventing financial account access, or simply stealing money. These tactics are used to control and intimidate a partner into staying in the relationship. Although it is commonly seen in cases of domestic violence, it can also occur alone. Research shows financial abuse is one of the reasons victims are not able to leave abusive relationships. There are people who think it is simple to walk away, however, there are several underlying things such as these that prevent victims from doing so.

Further, financial abuse can have an impact that lasts for years depending on legal issues and prevent financial independence, or long-term security for the victim. That being said, more people should be knowledgeable of this control tactic in relationships. Knowing the signs of financial abuse can help allies give support to victims through emotional support, but also to direct them to available resources, both local and/or national. Finally, understanding the different forms of abuse can help voters this season make informed decisions on using legislation to help support survivors once out of abusive relationships, such as VAWA4ALL.

Rebecca Villanueva, Las Cruces

Recently, our TV screens have been bombarded with negative political ads demanding that Xochitl Torres Small vote against impeachment so that the president can get back to "working for you;"one would assume that means working for ordinary Americans. Two out-of-state PACs are funding these ads: the American Action Network and the Presidential Coalition. Both are "dark money" organizations, which means their donors can remain anonymous. Moreover, each was formed soon after the landmark Citizens United v. FEC Supreme Court decision allowed unlimited election spending by corporations .

The nefariousness of the Presidential Coalition is best left for a separate letter; suffice it to say that in May of this year, even the Trump organization suggested the Coalition be investigated (Swan, Jonathan. "Trump campaign wants David Bossie's organization investigated." AXIOS, May 8, 2019). Let us instead focus our attention on AAN.

The watchdog organization Issue One has unearthed many of American Action Network's principal donors. Millions have been given to AAN by the Pharmaceutical Research and Manufacturers of America and Aetna Insurance. Hundreds of thousands have been give by Crossroads GPS (founded by Karl Rove, who wrote the book on reaping political benefit from fostering divisiveness), and additional hundreds of thousands have been given by the American Petroleum Institute and Boeing.

Big Pharma, Big Insurance, Big Oil do these anti-impeachment Trump supporters sound like your friends and neighbors? Should we support the man who is obviously being supported by them? Before we are all seduced by these slick ads, it is wise to "follow the money."

Robert Wilson, Silver City

I was truly amazed by the latest column by Madeline Sanchez. She is listed as a nurse, but clearly, as this column shows, she must be a theoretical physicist of extraordinary ability. How else can one explain the alternative universe she lives in other than by proving the existence of parallel universes?

In her universe, Donald Trump is a disrupter and that is the reason he was elected and also the reason he is hated and reviled among those (sic) want to retain the status quo. In my universe, he is reviled because he is a serial liar with a narcissistic personality disorder who has destroyed years of careful diplomacy with no clear replacement for this destruction other than nationalistic hogwash. He is hated because he is the hater in chief who attacks without evidence or merit anyone who speaks again him. In my universe, most terror attacks of late have been by right wing adherents spouting support for Trumps policy of hate, notthe antifa groups roaming the streets who populate Ms Sanchez universe.

Finally, Ms Sanchez asks that we focus our attention on the true meaning of Christmas love for one another, indeed even our enemies.I agree. Perhaps Ms Sanchez can find the will to cross the boundary from her alternative universe into the here and now, recognize the hate and sheer incompetence flowing from the White House, call it for what it is, and truly recognize the message of Christmas Peace on earth, good will to men.

Steve McLary, Las Cruces

One of the biggest problems we face in the US is plastic pollution. 9.1 US tons of plastic has been produced since the 1950s. 100 billion bags are used by Americans every year. Because of plastic bags, New Mexico's rivers and national monuments have been polluted. This affects not only the environment but the community of New Mexico since our state attractions are one of the biggest sources of income. The economy gets 6.6 billion of its money from tourism alone.

My solution to the problem is to expand New Mexico's plastic ban to the whole state instead of only Sante Fe. Paper bags will still be available for the tourists who aren't able to use reusable bags but the paper bags will have 5- to 7-cent tax when purchasing them in any store. The tax will apply to all customers using paper except those who have benefits such as SNAP, WIC, etc. In these cases the tax will be covered.

I would also like to expand the program that Santa Fe has where they offer free reusable bags for anyone. Places will be located in cities of New Mexico where people can go to to get the bags so they don't have to buy them out of pocket, this will be possible from the funds we receive from the tax on paper bags.

The ban has been in motion for fove years now and according to an article from NM News Port written by Hayley Estrada and Steven DeAnda, retailers from Sante Fe mention how there has been a significant change to people using reusable bags. More reusable bags will lead to less pollution in our environment, protecting our income, our wildlife, and our environment.

Adrianna Melon-Lujan, Las Cruces

Recently, the El Paso Independent School District experienced the loss of a parent and a 7-year-old girl based on unsafe school zones and reckless drivers. Safety precautions need to be thought of very thoroughly and police presence in school zones should be increased immediately so that incidents such as these can be avoided at all costs.

We need to consider the safety precautions that are already in place and evaluate if they are enough to keep the school zone safe. For example, speed reductions need to be made more apparent for any driver on the street to see. This can include an increase in appropriate signage to alert drivers and also appropriate traffic lights.

I urge the community to begin alerting the local planning and zoning commission of these safety concerns and have legal action done to enforce traffic changes that would make school zones safer for parents and children. Another added benefit to school zones would be to implement properly trained crosswalk guards. The development of a training course for hired cross guards would allow for more qualified guards and therefore a safer school zone. These are the things the city of Las Cruces should consider to makes school zones safer for parents, children, and drivers.

Kaitlyn Jurgens, Rio Rancho

Diane Greenholdt's anger (Letters to the Editor, 4 Dec.) is understandable How long will the Republican Party keep changing diapers in the crib now called the White House?(Yet USA Today should not be blamed;reporting is their duty.By doing so, journalists are exposing the human stupidity.)

Ken Kawata, Las Cruces

Kudos to the mayor and council for approving money to start the process for a new mental health hospital!! Mental illness will be considered the number 1 disability worldwide in 2020 according to Clubhouse International!

Pamela Field, Las Cruces

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Im 25 and My Parents Want Me to Support Them! – The Cut

Posted: at 8:41 pm

The Cuts financial advice columnist Charlotte Cowles answers readers personal questions about personal finance. Email your money conundrums tomytwocents@nymag.com

Photo: H. Armstrong Roberts/Retrofile/Getty Images

I got into a heated argument with my dad the other day about my future plans. Im 25 and trying to save up enough to move out of my parents house by 2020, when their lease is up. Since I started working at 18, I have been paying all my bills and contributing about $250300 per month in rent. When I told my dad about my plan to move out, he was upset that I wouldnt be helping them out financially anymore, and said I was being ungrateful for not thinking of their impending retirement.

I do plan to help out my parents one day, once Im more financially stable. They are immigrants who have worked very hard to get my siblings and me where we are. They also dont have a 401(k) or any other retirement plans due to their legal status throughout the years. Its also normal in our culture to help our parents, and I understand that theyre getting older and want to stop working eventually.But I dont think its fair that they expect me to sustain them and myself at this point in my life. To me, it makes more sense for me to create my own life and then, once Im more established, pitch in a certain amount to help them every month. Whats my obligation here? And how can I talk to them about this without getting into huge fights? I feel so lost and confused.

Let me first point out that you are not ungrateful. You sound like a thoughtful, responsible daughter who wants to be there for her parents. But youre also an adult, and wanting to live independently is normal and healthy. So lets plot your graceful exit.

Your first obligation is to set up your finances so that you wont be in the same situation as your parents someday. As you mentioned, they worked hard to give you and your siblings a better life. They also taught you to be financially independent at a young age. Presumably, they want you to be financially independent at an old age, too which involves making smart decisions about your money right now.

To figure out your next steps, I called Cameron Huddleston, the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. Most parents dont want to be a burden to their children, she points out. Even in certain cultures where its more common for parents to expect support, I dont think any parent would want to compromise their child financially. Its worth noting that this could be part of your dads concern: He may think that if you leave home, youll be worse off, not better (along with him and your mom). If hes right, it shouldnt necessarily stop you, but youll need a very clear plan either way.

Huddleston recommends drawing up a concrete budget with short- and long-term goals. Ask yourself what your priorities are. What are you going to pay in rent when you move out? How much will you spend on groceries? What will you be saving? I would add: How about a three-to-six-month emergency fund in case something happens? And do you have your own retirement savings account set up yet? Its counterintuitive, but the earlier you start putting money into an IRA or its equivalent, the more your money will grow over time thanks to compound interest (and the less likely that youll have to lean on your own kids someday, should you have them).

Im not saying that your finances have to be perfect before you move out. You also dont have to make all of your decisions from the standpoint of saving money if that were the case, most of us would live with our parents (pretty miserably) all our lives. The point is, you want to make sure all your numbers add up, and put yourself in a good position to land on your feet.

You also mentioned siblings. Have you had a conversation with them about how you all are planning to help your parents down the line? Unless they also live at home, how did they manage to extricate themselves? If you can get at least one other family member in your corner, itll help you feel less alone.

Which brings you to your next step: having the talk. Youll want your parents to understand that you arent abandoning them. In the immediate future, this could include providing support that isnt monetary. When their lease is up, could you help them move to a smaller, more affordable place? If you end up living nearby, could you cook them dinner once a week, or help them with household chores occasionally?

To initiate the conversation, Huddleston recommends starting from a place of gratitude (especially considering your dads previous comments): You might say, I appreciate everything youve done for me. Youve helped me so much. Now I am at a point where I need to become a financially independent adult. Set up a time in advance so that they arent caught off guard (Could we have dinner together on Saturday? I want to talk to you about something).

And if things start to go off the rails, back away. When emotions take over, the conversation is not going to go anywhere good, says Huddleston. If that happens, simply say, Look, I can see that this is upsetting you right now. Lets think about it more and talk about it later. (This may take a Herculean effort on your part make sure youre going in with a cool head and practice saying this beforehand.)

Ultimately, your parents cant force you to live with them forever. This is your decision, and you want to make it as kindly and responsibly as possible. I agree that youll be better equipped to help them out again someday if youve had the experience of establishing your own household, and you can point that out to them. But remember, it doesnt have to be your whole argument wanting financial independence can be reason enough. And finally, dont be guilt-tripped about a hypothetical future. Plan as best you can, and when the time comes for them to really need your help, youll be there.

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What is a Savings Account: Why You Need it – MoneyRates.com

Posted: at 8:41 pm

The humble savings account is one of the most powerful financial tools available to help you reach financial goals.

Different from checking accounts that help you transact business with your money, a savings account is specifically designed to help you safely store and earn interest on your money.

Technically speaking, a savings account is a deposit account, usually federally insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC).

Banks offer several types of saving products like money market accounts, fixed investments and time deposits such as a certificate of deposit (CD). But the common savings account is certainly one of the most important accounts to have at any stage of life.

The main purpose of a savings account is to offer account holders a convenient way to save money.

It is difficult to keep track of savings when they are co-mingled with general funds - and that makes it all too easy to end up spending money instead of saving it.

Another purpose is to earn interest on your savings.

Even though funds on deposit in a savings account are liquid (can be accessed when you need them), savings accounts usually come with restrictions. The most familiar savings-account restriction is Regulation D, which limits the number of withdrawals or outgoing transfers to six per statement period. If you exceed that limit, there is a fee.

You may think charging a fee to access your own money is onerous, but there are solid reasons for this regulation - and it can actually help you become more financially secure.

Regulation D stems from the Federal Reserve. This rule requires banks and credit unions to impose fees or other penalties when you exceed the limit of six withdrawals per month per account. (Fortunately, ATM or teller deposits and withdrawals are not included.)

So how does charging a fee to access your money help you save?

If you think about it, Regulation D encourages savers to plan their withdrawals and overall finances. In effect, the fact that banks can charge an excess-withdrawal fee serves as a subtle deterrent to squandering your savings away on unnecessary things.

There is another purpose, looked at from a bank's point of view. Money in a savings account tends to be far more stable than checking-account balances. Therefore, the bank is allowed to hold back smaller reserves against those balances, which allows them to lend a larger percentage of savings-account balances.

Those loans are their main source of profit. When you see a bank advertise so many billions in assets, those assets are not buildings, but loans - because loans show on their books as assets (people owing them money).

In turn, banks pay interest on the deposits in savings accounts out of their profit. So this regulation fosters a kind of win-win proposition for both banks and savers. Savers are encouraged to keep their savings on deposit where they earn interest, and banks have a predictable source of funds for lending.

It's fairly easy to find and open a savings account; but by taking a little time to shop for a higher interest rate, you could save money faster.

"Competitive banks generally maintain the best rates over time," according to Richard Barrington, MoneyRates' Senior Financial Analyst, CFA.

MoneyRates.com specializes in monitoring the banking industry; and our studies show that the best savings accounts not only offer the highest interest rates, they do so consistently.

That's an important factor to remember when you're considering financial institutions, and here's why:

When banks offer high interest rates on a consistent basis,it's because they are making the choice to compete.

What that means for you is that, by finding one of the best savings accounts when you first open your account, you

All in all, finding one of the best savings accounts can pay off for you year after year.

Where to Find the Best Savings Account Rates

Financially successful people almost invariably have one or several savings accounts that they consider fundamental to their success.

But a lot of people have savings accounts. Does that mean all savings account holders are financially secure?

Not necessarily.

The secret is knowing how to use your savings account to accomplish financial goals, like eliminating debt or building a nest egg for retirement.

Think of it in terms of playing defense and offense in sports. Defense is where you are protecting your net worth and offense is where you're building it.

In the process of becoming financially successful, debt is the mortal enemy. One of the best ways to avoid debt is through the smart use of savings accounts.

Paying for emergencies

Say your furnace gives up the ghost on the coldest night of the year, and it'll cost $6,000 to fix.

A lot of people reach for their credit card at this point. And they know they'll be paying it off over the next year at a rate of $500 every month. For the first month, they'll have to add $145 in interest.

Ouch.

Over the year, they'll pay close to $1,000 in interest at prevailing credit card rates.

Obviously, the smarter way to handle your finances is, before said emergency strikes, to pay $500 a month into a savings account you set aside for emergencies. That's playing defense against paying unnecessary interest.

Financially successful people don't look at the microscopic interest rate the bank pays on that savings account. They see the $1,000 in credit card interest they'll save. Effectively, they are earning 29% on that money, in that they get out from having to pay it.

With an emergency fund, you can still pay the $6,000 bill with a credit card if you want the points - knowing that you'll simply pay off the credit card bill in full when it comes due at the end of the month.

The nice thing about an emergency fund is you don't know exactly which emergency will present itself.

It can be the furnace. It can be a car that breaks down. It can be a close relative's funeral in a far city. However, while we can't know the nature of the emergency, we know that life is life and some financially painful event can rear its ugly head, usually at the most inconvenient time. When that happens, having a savings account set up as an emergency fund ahead of time softens the blow, often by thousands of dollars.

Another example of the defensive use of a savings account is buying a car.

Cars are mechanical devices and they wear out, meaning it's a guarantee that they'll need to be replaced sooner or later.

Most people deal with this by taking out a car loan and making payments. Their monthly budgets are set up around those payments.

When the car is paid off, it's off to the dealer to get the next car, with the next set of payments - because they've become used to living with those payments. For the vast majority of Americans, making car payments is a part of daily (or rather monthly) life.

A better way, though, is by using a savings account, as follows:

Today's cars are built with sufficient quality that they usually outlast their payments.

Once the car is paid off, keep making those payments - only now make them into your savings account.

If your car payment was $500 a month, you'll have $18,000 in your savings account after three years. On top of the old car you're trading in, you either won't need a car loan for the new car, or you'll only need a tiny one. By keeping up this program, you'll be debt-free in no more than four years or so.

After that, you'll be able to buy a new car every three or four years without ever needing a car loan (and the monthly payment) again.

The same principle applies to vacations. Many put their vacations on a credit card and pay it off over a year, in time for the next vacation.

If you're going to take that vacation every year, it's far better to put the same payment into a savings account. As with the emergency fund, you'll effectively earn about 20% or whatever the prevailing credit card interest rate is.

The examples above can be viewed as using a savings account defensively to eliminate debt. However, there is another way one or more savings accounts can transform your finances from survival to prospering. Most personal finance experts agree there are four keys to financial success:

The defensive use of savings accounts addresses the third item on the list. Smart use of savings accounts can also be a key in implementing the fourth step, which is the most important.

It is impossible to retire or become financially independent without a sufficient nest egg. "Nest egg" is just another term for "investment." Unless you want to work until you keel over, building up an investment base, therefore, is the most important key to a solid financial future.

Unfortunately, many of the investment options available to the person on the street require more to get started than they have available. For instance, most brokerage accounts require a minimum of $500 or $1,000 to get started. Another good investment opportunity might be buying rental real estate, e.g. the house next door. Unless you received a large bonus or inheritance, you might not have enough for the down payment.

A savings account is the ideal way to bridge that gap.

Savings accounts usually have no minimum to get started. That makes them the ideal staging ground. Simply put money - whatever you have - into a separate savings account, and keep doing that. Soon enough it will have the minimum you need to make that investment you've been eyeing.

The humble savings account may be the least glamorous of all the products and services financial institutions offer but, properly used, it can be one of the most powerful tools to help you achieve financial success. It is an excellent way to execute the strategic side of finance - buffering you from financial emergencies as well as helping build funds to invest as you work toward financial independence.

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Requiring fourth year of high school math will leave more students behind – EdSource

Posted: at 8:41 pm

Elisha Smith ArrillagaDecember 5, 2019

In many years of advocating for educational justice in California, one of the things Ive learned is that well-intentioned policies can have unfortunate consequences.

Elisha Smith Arrillaga

The states high school exit exam, for example, was supposed to raise student performance when it was approved in 1999, but after about a decade, officials had to admit that not only was the test failing to improve outcomes, it also discriminated against English learners.

They dropped the test.

Californias 2010 truancy law, which held parents responsible when their kids didnt show up for school, resulted in some parents being arrested, charged and even jailed in what many considered a severe overreach of the criminal justice system.

Now, in an effort to address troublingly low graduation rates at California State University, we are in danger of once again adopting a well-meaning but misguided policy that will deepen already entrenched problems in our public education system.

To be fair, higher education officials have good reason to be concerned: too many CSU students, especially low-income students, struggle to complete their degrees. The six-yeargraduation rate for low-income students is just 56 percent.

For low-income black students, the average is 50 percent, and for Latinx students, its 54 percent. Clearly, CSU must do more to counter systemic inequities and better support its students.

However, a proposal being debated by the CSU Chancellors Office and Board of Trustees would offer little help while causing real harm by decreasing college access for students of color and low-income students.

CSU leaders are considering adding a new admissions requirement: a fourth year of quantitative reasoning (which could include various math and science courses). Right now, high school students must take math courses such as algebra and geometry or science courses such as biology, chemistry or physics.

The new requirement would mean students would also have to take courses such as statistics or coding to qualify for admission.

Having majored in mathematics, Im thrilled when students get access to advanced coursework in math and science. But, as most educators will tell you, adding a new college admissions requirement doesnt necessarily mean students will take more quantitative reasoning courses or will come away better prepared.

In fact, given the inequities that plague our states K-12 system, the proposed requirement would actually prevent many students especially those from marginalized communities from being eligible for the CSU system.

How? First, just because the state insists on students taking certain courses to qualify for college admission, that doesnt mean their schools offer those courses.

Its been 30 years since the state adopted the college preparatory course sequence known as A-G, and yet more than a third of California districts dont offer the necessary A-G courses. These districts tend to serve students of color and low-income students. Our research shows, for example, thatschools in low-income communities areless likely to offer advanced math courseslike Calculus and Physics.

There is also a shortage of high school teachers who are qualified to teach advanced math and science courses.In 2016-17, more than 12,000 substandard permits and credentials were issued in California and about half were in math, science and special education. More than two-thirds of these teachersworked in low-income communities.

To address the teacher shortage, CSU is touting itsplan to spend $10 millionover the next four years to recruit more math and science teachers, in part by providing more financial aid and creating new credential pathways.

But Long Beach Unified received a $7 million, 5-year grant to do the same, which suggests that it will take far more for the entire state to fill its schools with qualified math and science teachers.

Without sufficient access to college prep courses or teachers, students of color and low-income students are already shut out of the CSU system at a disproportionate rate. Adding another admissions requirement would double down on this inequity, creating an unnecessary barrier for these students.

Thats why the Education TrustWest and more than 60 other educational justice and civil rights groups areurging CSU trustees to reject the proposed requirement.

In addition, the classroom teachers and principals who spend each day with Californias students are lining up against it. The California Teachers Association, California School Boards Association, Association of California School Administrators and even CSUs own faculty have called on CSU to drop the proposal.

And yet, CSU trustees are still considering the idea; they will vote on it in January.

They should vote no and instead partner with the California Department of Education to advocate for increased funding for and access to A-G coursework and qualified teachers, especially in underserved schools and districts.

Given the linguistic diversity of California students, CSU should strive to quadruple the number of bilingual teachers. It should also continue to follow through on recent remediation education reforms that arealready showing results.

College remains a vital pathway to financial independence for countless young Californians. Our state university system is absolutely right to want more students to graduate. But denying entrance to those with the greatest need and unrealized potential is the wrong way to do it.

Elisha Smith Arrillaga is executive director of The Education TrustWest.

The opinions in this commentary are those of the author. If you would like to submit a commentary, please review ourguidelinesandcontact us.

Unlike many news outlets, EdSource does not secure its content behind a paywall. We believe that informing the largest possible audience about what is working in education and what isn't is far more important.

Once a year, however, we ask our readers to contribute as generously as they can so that we can do justice to reporting on a topic as vast and complex as California's education system from early education to postsecondary success.

Thanks to support from several philanthropic foundations, EdSource is participating in NewsMatch. As a result, your tax-deductible gift to EdSource will be worth three times as much to us and allow us to do more hard hitting, high-impact reporting that makes a difference. Dont wait. Please make a contribution now.

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Dreaming of an early retirement? Here is how you can FIRE your way to it! – The New Indian Express

Posted: at 8:41 pm

Express News Service

HYDERABAD: Fire (financial independence, retire early) is all the rage these days. Theres plenty of literature and attention given to the size of a corpus one should save to be financially independent. But if your goal is to retire early, the key also lies in keeping a limit on your annual withdrawals.

Among the options, the four per cent rule is popular, considered safe and is adopted globally. But it works on the premise that most of the savings comprise investments in stocks and bonds and hence withdrawals primarily include interest accruals and dividends.

Financial planners arrived at the four per cent figure using historical data on stock and bond returns over the 50-year period. But if your savings include sizeable bank deposits or small savings schemes, public provident fund etc, the percentage of withdrawals will have to factor in the fixed interest income component, unlike equities and bonds, where income is calculated based on hypothesis.

Theres no one-size-fits-all method to determine the withdrawal rate. Based on individual households expense, a conservative safe withdrawal rate should be arrived respectively to prevent depletion of retirement savings prematurely. Such a rate should be identified based on the portfolios value at the beginning of retirement. Knowing the withdrawal rate also informs how much you need to save for retirement.

Another alternative to the safe withdrawal rate is dynamic updating, a method that in addition to considering projected longevity and market performance, factors in the income you might receive after retirement and re-evaluates how much you can withdraw each year based on changes in inflation and portfolio values.

Irrespective of whether you follow a safe withdrawal rate or a dynamic approach, there are some dos and donts to be followed. First among them is adherence to the withdrawal rate. If you adopt a four per cent rule, ensure not to exceed it even once to avoid a spill-over affect on the portfolio.

Second is keeping pace with inflation. One way is setting a flat annual increase of four per cent per year, which is the Reserve Bank of Indias inflation band currently or adjusting withdrawals based on actual inflation. The former provides steady and predictable increases, while the latter effectively matches income to cost-of-living changes.

Lastly, the pre-determined withdrawal rates may not work if your savings include high-risk investments, prone to market volatility.

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Consumer Financial Protection Bureau Represents Unaccountable, Illegitimate Exercise of Power – Somewhat Reasonable – Heartland Institute

Posted: at 8:41 pm

David S. D'AmatoDavid S. DAmato is an attorney and adjunct law professor whose writing has appeared at the Institute of Economic Affairs, the Future of Freedom Foundation, the Centre for Policy Studies, the Ludwig von Mises Institute, Liberty Funds Online Library of Law and Liberty, the Foundation for Economic Education, and in major newspapers around the world.

DAmato is on the Board of Policy Advisors for the Heartland Institute and he is the Benjamin Tucker Research Fellow at the Molinari Institutes Center for a Stateless Society. He earned a JD from New England School of Law and an LLM in Global Law and Technology from Suffolk University Law School.

Established in 2011 as part of a series of reforms responding to the financial crisis, the Consumer Financial Protection Bureau (CFPB) will soon be at the center of a Supreme Court battle on the fundamental nature of the Constitutions separation of powers.

Government agencies such as theCFPB exist in a nebulous fourth dimension, outside of and free from ordinary constitutional constraints, empowered to act sometimes like a legislative body, sometimes like a judicial one, and sometimes like an executive/enforcement agency. Concentrated power of this kind is just what the three-branch structure of the Constitution was designed to preclude. Its authors believed that government bodies exercising all three of these kinds of power were bound to act tyrannously, with no real incentive for self-restraint.

And the CFPB is unique even among other such agencies in that its current structure prevents the president from firing its director except in cases of inefficiency, neglect of duty, or malfeasance in office. The Constitution, on the other hand, empowers the president to dismiss any officer of the executive branch at any time, for any reason. The current law not only insulates the CFPBs director from democratic accountability by neutering one of the presidents constitutional powers, it establishes a funding stream for the bureau that exists outside of Congress normal appropriations process.

The CFPB and its proponents have hailed this funding approach for ensuring that the CFPB is truly independent of Congress, meaning that the CFPB somehow exists as a thing apart from both political branches. Like other similar agencies, it amounts to a de facto annulment of the Constitutions three-branch system and, in principle, a disavowal of the rule of law. Should this provision of the law that created the bureau be found unconstitutional, the question remains whether the Court can separate it from the rest of the statute, that is, whether the rest of the lawand thus the bureau itselfcan be salvaged.

Brief and drafted in general (and frequently vague) terms, the Constitution is Americas political Rorschach test, apparently able to accommodate the full spectrum of mainstream political positions, everyone sure that her political positions are consistent with the legal requirements set out in its text. Without a philosophical mooringthat is, a principled appreciation of the idea of the separation of powers itselfit is easy enough to square just about any political system with the Constitution. The fight over the CFPB represents a much older one on exactly what kind of government Americans should have.

As political scientist Joseph Postell observes, the Progressive Era witnessed a fundamental rebuke of the theory of government by consent through elected representatives, regarded by progressive reformers as undemocratic and outmoded, and as antithetical to an administrative state that rested on expertise rather than political accountability.

It is unfortunately necessary to point out here that this style of administrative government, based on the arbitrary prerogative power of unelected officials, is not at all liberal, but is a conscious repudiation of liberalism, which stands for the rule of law (as opposed to the rule of expert discretion). The counter-revolution of Progressivism wanted a new kind of government in which trained, credentialed experts would act as the independent administrators of social and economic relations. Thomas C. Leonard explains: The state expert does not merely police unfair and inefficient trade practices; the state expert administers trade, in the same way that the business expertthe scientific manageradministers a large business organization, via planning, management, and centralized direction.

The problem is that, in the government context, independent just means not in any way accountable to the people, not responsive to the democratic process. Predicated on the fundamentally undemocratic idea that experts in government simply know better than either the people or our representatives, progressivism would have an independent expert body charged with solving every perceived social ill.

Government bodies should never act independently, at least not in the sense that progressives favor. Such bodies and their actions are legitimate only insofar as they represent the will of the people and are consistent with the rights of free and sovereign individuals. To the extent that independence means anything in the case of the CFPB, it means that a relative handful of bureaucrats, accountable to no one, should have the power to make rulesreally lawsthat all must follow. If the political term for this is independence, the more straightforward term is illegitimate exercise of power.

Anything approximating a good government, if such an idea can be invoked with any seriousness today, would be a mere service provider, offering, like a market actor, a needed service (protection) for a reasonable price. Todays U.S. government has no incentive whatever either to confine itself in such a way or to charge a fair price. It acts only as we should expect it to given the circumstancesthat is, given its independence from the will of the people and from the constraints provided by individual rights. It takes what it wants and does what it wants, quite without thought to that will or those constraints. A more effective check on the power of financial institutions would be for Americans to develop the sense that it is they, not federal government agencies, who should be independent. But dont hold your breath.

[Originally Published at Townhall]

Consumer Financial Protection Bureau Represents Unaccountable, Illegitimate Exercise of Power was last modified: December 9th, 2019 by David S. D'Amato

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Heres Why This 44-Year-Olds Happiness Grew After She Abandoned Early Retirement – Forbes

Posted: October 27, 2019 at 3:25 pm

When Lisa first learned about the financial independence, retire early (FIRE) movement she was stunned that so many people, often younger than her, could possibly save enough to retire. Reading the blogs and first-person stories invigorated her. She wanted to follow suit. It changed the way she and her husband spent money. They cut out restaurants, wore old clothes and avoided coffee shops, funneling all the extra cash into paying down debt and building retirement funds.

It really did motivate us, Lisa said.

But as someone who has worked in the pharmaceutical industry for a number of years, she never had a huge problem with her job. The more Lisa saved, though, the more she felt annoyed at going to work. The more she saved, the more she wanted to watch HGTV before bed. The more she saved, the more she couldnt understand why she should walk around in a coat with holes in it simply to prove that she was good with money.

Lisa and her husband abandoned their early retirement plans after realizing it isn't what they ... [+] wanted.

The whole effort made me unhappy, said Lisa, who asked to only use her first name since shes still working full-time. Thats why, four years after starting her FIRE goal of retiring young, Lisa and her husband decided to abandon the retire early portion of their savings plan. Instead, shes decided to focus on financial independence, but also not worry if they want to eat out on a Friday night.

Theres a fine line between frugality and feeling guilty over every dime that you spend in order to save a little bit more. Those that enter FIRE often ignore that line during the accumulation phase, saving as much as possible without regard to how it makes them feel today while sometimes sacrificing their health or well being. But its not a feat for everyone. For Lisa, this excessive frugality only became a hindrance to life.

It doesnt mean shes giving up saving. Or now, suddenly, going to rack up credit card debt. Instead, Lisa, who blogs about her experience at Mad Money Monster, is reevaluating her life again, figuring out what to keep and what to ignore when it comes to her financial independence (FI) strategy.

Abandoning Her Great Health Care Wasnt An Option

As they saved, one factor that grew increasingly concerning was the health and welfare of her mom. My mother depends on us for help for basic living expenses, Lisa said. She expects to care for her mother as she grows older. While Lisa was making strides paying back debt under the FIRE plan, she had to spend $2,000 on her mothers dental expenses.

Usually that cost comes out of pocket, and they expect to have to do the same with vision care and some other wellness needs.

This unknown complicated their financial picture. But also Lisa sees her moms situation, and then recognizes her luck with her current health care plan, which she describes as really good. The idea that she would walk away from that plan, simply so she could retire early shes about 60% of the way to her original FIRE mark she now views as selfish. And shes not comfortable with some of the other options out there for health care coverage, including the public markets or health shares.

For me to walk away from that [healthcare] would be kind of dumb, Lisa added.

Keeping A High Savings Rate

Despite rejecting the idea of early retirement at this point in her mid-40s, shes made great strides in reshaping her financial situation.

When she learned about FIRE, her and her husband had just walked away from buying a large, expensive home that would have put them in a tricky financial predicament. They thought they needed the big house because thats what people did after getting married. Instead of getting the house, shes paid off her student loans, two cars and some credit card debt. The family has also invested in two single-family homes, which they rent out, covering the mortgages.

Part of the reason Lisa quit her early retirement goal was because she was having to sacrifice too ... [+] much today for future possibilities.

At the peak of their saving they stashed away about 70% of their income. Now its closer to 50%. Still a strong level, but not with early retirement as the goal.

Lisas realization that theres little desire to retire before traditional age has given her the freedom to build wealth for other purposes. She has the financial knowledge now and shes using it to provide a large inheritance for her daughter one day.

I want to build legacy wealth for my family, she said. She has no problem staying at her job to grow that wealth.

But shes also in a much more secure position, whenever her job does go away.

Shes Not Deprived Of Time

Often when people say they want to retire in their 30s or 40s they have dreams of traveling across the world, seeing new sights and meeting new people. Thats not the case for Lisa. Im so content with and entrenched in the adult family life, she said.

She doesnt demand much more travel than the summer vacation her family already goes on. Meanwhile, her husband, who works in the film industry, never wants to retire because hes already found a job he would do even if he didnt have to work.

I feel like [were] not being deprived of time, said Lisa.

And now that she has clarified her goals, it makes going into work much easier.

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