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Don’t Let Divorce Ruin Your Finances

Divorce is an emotional trial — but it’s also a financial one.

According to a 2012 report by the U.S. Government Accountability Office, divorce or separation led to a 41% drop in income for women and a 23% drop for men.

Though data from the Centers for Disease Control and Prevention show that the divorce rate has been trending down, most people need only look around their social circle to see that splits are still a common fate. It’s a life-changing event, but it doesn’t have to ruin your finances — or your retirement. Here’s how to protect your financial future if your knot comes untied.

Take stock of your cash flows

Having some idea of how money comes into and goes out of your bank account is always a good idea, whether a divorce is on the horizon or not. But this kind of information is especially important when you’re about to split up. You need to know not just where your money comes from — how much you partner earns and how much you earn — but also what your expenses are.

Once you have a current picture, you can go down the line and estimate how each expense will change with the divorce. Some items, like housing, may fall. Others, such as auto insurance, can rise when you’re a single buyer rather than part of a married couple.

Get creative about income

Now that you’ve taken stock of your expenses, you’ll have good insight into how much income you’ll need post-split and whether you’re looking at a shortfall. If statistics prove true, there’s likely to be a gap, so the next step is to consider how you can fill it.

People are often loath to downsize — there are so many emotional ties to your home — but it may be the best way to lower costs. Also, consider ways to earn more income in a pinch: Rent out a room, open extra space to a service like Airbnb or moonlight at the local coffee shop.

If your divorce happens when you’re on the brink of retirement age — the rate of such so-called “gray divorces” has doubled since 1990, according to the National Center for Family and Marriage Research — you may have more leeway. “You may have delayed applying for Social Security, but maybe you need to do so when you’re divorced,” says Lili Vasileff, a certified financial planner and president of Divorce and Money Matters, a financial planning company based in Connecticut. “Or maybe your investments are positioned for growth, and now they need to be positioned to generate yield.”

If possible, bide your time

There are plenty of situations in which this wouldn’t be an option, but in the case of a friendly separation, you might consider putting off the full legal split if you’re bordering on a financial milestone. Two examples Vasileff offers: Medicare eligibility at age 65 and the 10 years of marriage needed to be eligible for Social Security benefits on your ex-spouse’s record.

If you’ll lose health insurance coverage by dropping off your spouse’s insurance and you’re bumping up against Medicare eligibility, waiting can save you significant money. Medicare can be considerably cheaper than COBRA or an individual health plan.

Younger partners who aren’t close to qualifying for Medicare may still benefit from some extra time on a spouse’s health insurance, perhaps until landing a job with their own coverage.

Examine your shared retirement benefits

Marital property — a term that includes retirement assets — is divided up equally in community property states. In other states, the law may require equitable distribution, which means what it sounds like: fair, but not necessarily equal.

In either case, you may be granted a portion of your spouse’s 401(k) under a qualified domestic relations order. You’ll typically want to roll that balance into an individual retirement account to preserve its tax-deferred status. (Here’s more on how to roll a 401(k) into an IRA.)

Be sure to weigh the tax treatment of assets as you divvy them up. While $100,000 in a brokerage account sounds equal to $100,000 in a traditional IRA, the tax treatment of those accounts changes the value significantly. Because a traditional IRA holds pretax contributions, distributions will be taxed as ordinary income in retirement. A $100,000 balance could quickly turn into $80,000 or less after taxes. Money in a brokerage account, on the other hand, will carry a much lower tax burden on capital gains, interest and dividends.

Revisit your beneficiary designations

It makes the news when a big-shot mogul accidentally leaves all of his assets to a previous wife, leaving his current one in the lurch. But it happens to lower-net-worth folks, too, and it can be just as damaging to your heirs.

The beneficiaries you designate on retirement accounts and life insurance policies trump any wishes you’ve outlined in your will, which means keeping them up to date should be a top priority. Everyone should do an audit once a year or so, but it’s crucial to give everything a deeper look after a major milestone like divorce.

Arielle O’Shea is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @arioshea.

Updated June 22, 2017.

How to Responsibly Handle an Inheritance

There are plenty of horror stories about sizable inheritances squandered on fast cars and glittering parties. But careful planning and good advice can help people use their good fortune in a way that creates lasting value.

Consider these steps to make sure the money you receive after a loved one dies is used to best advantage.

Keep your own counsel

“Don’t tell anybody,” says Johanna Fox Turner, a certified financial planner with Milestone Financial Planning in Mayfield, Kentucky. “People would just come out of the woodwork wanting you to invest in their good ideas.”

Turner advises talking to a trusted family member or friend who has no expectation of receiving a share of the money. She also favors fee-only financial planners who are paid a straight hourly rate for giving you advice instead of making commissions on the investments they sell you, which can lead to conflicts of interest.

Take your time

“Take a deep breath,” Turner says. “Talk to advisors. Get some perspective.”

She has seen many people who are anxious about letting a significant sum of money sit in a savings account earning very little interest then rush to make investment decisions and make mistakes as a result. She says the potential gains from quick moves are outweighed by the risks of poor choices.

When Jamie Schweser (who later changed his surname to Schwesnedl, after marrying) received $1 million at the age of 26 because his parents sold their business, he spent a lot of time talking to other young people who had been in similar situations. Schweser found them through Resource Generation, a nonprofit organization that helps younger heirs learn about charitable giving. His parents encouraged him to think carefully about how he used the money, but didn’t discourage him from making his own decisions.

“We trust your judgment, but think about it before you do anything,” Schweser remembers his parents telling him.

Make a financial plan

Before you decide whether to use part of the money to pay off debt, to invest for your future or to donate to charity, it’s best to create a long-range financial plan. Then it can become easier to put the money to work.

For many, an inheritance doesn’t top five figures. Yet others may be more fortunate. Among families in the top 5% by wealth, the average inheritance was $1.1 million, according to 2014 information from the Federal Reserve.

No matter how much you inherit, however, having a plan for what to do with it is a good idea.

“People think financial planners are for rich people,” Turner says. “They’re really more suited to middle-income people.”

She estimates that a comprehensive financial road map takes around 5 hours for a qualified planner to help you develop, and the result is a clear set of priorities that enables you to allocate resources efficiently to achieve your goals.

Consider taxes

In most cases, inheritances aren’t taxed unless you live in a state that has an estate tax. At the federal level, an estate tax kicks in when the total value tops $5,490,000 for one person this year. When it comes to gifts to family members, taxes are levied after you receive $14,000 in one year from the same person.

Ultimately, Schweser says, he ended up giving away 75%  — $750,000 — of his parents’ gift. He kept enough to buy a house and top up a rainy day fund to serve as a cushion against emergencies. Later he went to work for Resource Generation for a time. Now 44, he owns a bookstore with his wife in Minneapolis and receives income from a couple of rental properties.

But even if extreme giving isn’t your priority, modest charitable contributions can be a win-win, both emotionally and from a tax standpoint. Turner says some of her clients feel guilty about taking tax deductions for charitable contributions, but she disagrees.

“Once you have the motivation to give, why not take advantage of what the law allows?” she says.

Enjoy it

Depending on the size of an inheritance, it’s not a bad thing to have a little fun. Once you’ve made a financial plan and allocated the money accordingly, there’s something to be said for treating yourself.

For smaller inheritances, Turner recommends using 10% as fun money. If it’s a larger amount, she thinks $10,000 is a nice round number that could be spent on something enjoyable. But she emphasizes that a financial plan is crucial before this decision is made. Otherwise, it’s too easy to buy a nice car. And then another one three years later. And then another.

“If you envision yourself five years from now or 10 years from now and looking back,” Turner says, “do you want to have a lot of used cars?”

No matter how you use the money, you have to live with your decision.

“Do something that will be a story that you like telling,” says Schweser, who still feels good about his decision to give the bulk of his windfall away. “Whatever you do, you’re going to end up telling that story to yourself over and over again, or to other people, so make a good story.”

Turner recommends thinking about the person who left you some of their wealth.

“This is their hard-earned money,” she says. “This is in their memory. You want to honor that memory and be a good steward.”

What does good stewardship look like? That part is up to you.

Virginia C. McGuire is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @vcmcguire.

Image via iStock.

5 Questions When Shopping for a Brokerage Account

A price war has broken out among online brokerage firms in recent months. In an effort to lure investors, industry leaders such as Charles Schwab, Fidelity Investments, TD Ameritrade and E-Trade have slashed trading commissions.

The price war has driven the greatest decrease in trading costs in seven years, says Richard Repetto, an analyst at investment banking firm Sandler O’Neill and Partners. “It’s a good time for investors as the costs to trade decline and advancements in the online trading space make it cheaper and more efficient to invest,” Repetto says.

Price cuts at online brokerage firms Provider Previous per-trade commission Current per-trade commission* Charles Schwab $8.95 $4.95 Fidelity Investments $7.95 $4.95 TD Ameritrade $9.99 $6.95 E-Trade $9.99 $6.95; $4.95 for frequent traders defined as 30+ trades per quarter *As of June 16, 2017


Why would you want a brokerage account? If you want to buy and sell stocks, bonds and mutual funds, among other investment vehicles, you need one. But which one? As competition grows, so do your choices.

“Evaluate what type of investor you are, how often you trade and what services you want,” Repetto says. “It’s gotten so cheap now, and the range of choices has widened … some provide little cost to trade but little in the way of recommendations. If you want more advice services — not just call-center help — that is also a big consideration.”

Here are some key questions to ask when choosing a broker.

1. How much cash do you need to start?

Different brokers have different account minimums depending on the types of services you want. Some allow a $0 minimum to open a retirement account such as a traditional individual retirement account or a Roth IRA; others can require anywhere from $500 to $10,000 to begin trading. And some brokers will waive the initial deposit if you set up automatic monthly deposits.

A common rule of thumb: Don’t invest cash you’ll need in the next five years so your investments have the opportunity to grow and ride out market contractions.

2. What are the costs?

People shopping for their first brokerage may simply look for providers with the lowest trading fees. That could be a good strategy if you plan to make a lot of trades. But trading commissions are only part of the picture. Other costs may include annual fees, inactivity fees and additional charges for access to different trading platforms and research, so factor those into your evaluation as well.

3. What types of assets can you trade?

As an investor, what kind of assets do you want to buy? The ability to trade individual company stocks, exchange-traded funds and mutual funds is standard for most brokerage accounts, but the selection of funds can widely vary. If you plan to trade currency, futures or options contracts, check that the broker offers those products. Also, note whether the associated fees and account minimums differ from what you’d pay to trade equities.

4. How much help does the brokerage offer?

How much hand-holding will you need? If you’re a first-time investor, probably a lot. Some brokerages offer online or in-person consultations with financial advisors, which may be attractive to newbies. If you’re a DIY investor, the depth and usability of the brokerage’s research tools also will be a factor.

Select a broker whose educational tools and advice services match your investing comfort level.

5. Is the platform right for you?

Like test-driving a car, get behind the wheel of any brokerages you are considering and ask yourself: Do I like how this feels? One of the best ways to do this is through a broker’s demonstration account or virtual trading, also known as “paper trading.” Many brokers also have videos showing how the platform works, which are worth watching before you commit.

This is a bigger factor than you might think: An April 2016 survey by NerdWallet and E-Trade found that site usability and tools were a top reason traders said they’d switch platforms, behind fees and commissions.

If you get buyer’s remorse down the line — for example, you’re trading more than you anticipated or are paying for advisory services you aren’t using — you can always switch. You’ll want to watch for any broker-change fees from your current provider, but any promotional deals from your new broker could remove their sting. After all, if there’s one thing the price war has revealed, it’s that you have plenty of options.

Kevin Voigt is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @kevinvoigt.

How to Use PayPal to Make Money Online

When it comes to turning your website into a money-making business, PayPal is a popular choice for handling transactions. The service is known for being secure, convenient and fast — payments can show up in your account within minutes of a sale. But there are costs associated with using PayPal to process payments, so you’ll have to weigh the options to ensure you’re getting the best deal.

Here’s a breakdown of the company’s offerings to help you decide.

PayPal’s options for online businesses

First you’ll have to choose between a business and a premier account. Both carry a standard fee for online payments and invoicing: 2.9% plus 30 cents per transaction within the U.S.

PayPal recommends a premier account for casual sellers — those who don’t rely on their site for a steady source of income and plan on purchasing as well as selling. To access this account type, you first have to get a business account and then downgrade to the premier account. The business account, on the other hand, requires you to operate under a company or group name.

Keep in mind that there are additional fees for each account type for things like chargebacks and refunds. And extras, like recurring billing, have costs associated with them as well.

After you’ve decided on an account type, you’ll need to compare PayPal’s payment and checkout products.

 Key feature(s)Additional costs (beyond the standard 2.9% plus 30 cents per transaction)Best for Payments StandardQuick setup, lets you accept credit cards, debit cards, PayPal, and PayPal Credit From there you can add link and invoices to your payment options, at no additional costNoneGeneral billing Payments ProWorks with credit cards, PayPal Credit, and PayPal; has a virtual terminal option (to accept phone, fax and mail orders online); it’s also compatible with many existing checkout systems$30 per monthKeeping the checkout process on your site (rather than directing buyers to PayPal’s site) and customizing the checkout experience Payments AdvancedWorks with many popular checkout systems$5 per monthHousing the checkout process on your site, as long as you don’t need a virtual terminal (like the one offered in the Pro account) Express CheckoutWorks with many popular checkout systemsNoneQuick checkouts for sites that already accept credit cards

PayPal also has a partner service called Braintree that delivers a similar checkout experience to Payments Pro. It offers a standard checkout at no extra cost beyond PayPal’s basic transaction fees, with the option to upgrade to a higher-priced, but more customizable checkout service. If your customers prefer paying with virtual cash and accounts — think Apple Pay and Bitcoin — it’s your best bet.

Adding PayPal to your site

Once you have a PayPal business or premier account, you’ll need to give customers access to your products. Depending on which service you select, you may need to insert a link to your PayPal account, add a contact form, insert a bit of code onto your website or create a button through PayPal’s site.

Read more about adding PayPal to your site here.

Alternatives to PayPal

If you dislike the idea of paying fees or don’t want to use PayPal, there are alternatives that can get the job done.

If you already have a Google account, Google Wallet could be a solid option. There are no fees to send or receive money, but it’s only available for businesses that are sole proprietorships (rather than registered corporations). Otherwise, sites like Amazon Pay (which carries the same standard rate as PayPal for domestic transactions) and TransferWise (for international payments) are worth looking into.

Devon Delfino is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @devondelfino.

What to Do When Your Ex Is Your Business Partner


Kim Leach and her ex-husband were high-school sweethearts. But after 21 years together — 16 of them wedded — a series of rough patches led to their divorce. With two kids, a house that they’d almost paid off and years of accumulated belongings, the split was bound to be painful and time-consuming.

And there was another wrinkle: The couple jointly owned a small business.

There’s no recent research on the exact number of couple-owned businesses, but in 2000, some 3 million of the 22 million U.S. small businesses were managed by couples.

For these couples, divorce throws a wrench into business management. “When dealing with your ex-spouse, it adds an extreme layer of complication to every decision,” says Shawn Leamon, a certified divorce financial analyst.

Leamon helped Nerdwallet identify three common ways joint owners might deal with a business during the divorce process, and when to consider each.

1. The buyout

A buyout, the most common way couples divvy up business assets during a divorce, allows one person to become the sole owner by buying the other’s portion of the business. This can be done either as a “bulk” buyout, using cash reserves or a business loan, or by setting up a payment plan over a certain time period.

Leach took this route, and her husband bought her out of their Oklahoma fitness center. But she was focused on getting custody of her kids and ignored her lawyer’s advice: to have the business appraised and charge interest during the agreed-upon seven-year buyout period.

Instead, she estimated the business’s value at $100,000 and agreed to a $50,000 buyout over seven years with no interest. The business turned out to be worth closer to $200,000 or $250,000.

“Fear overwhelmed me too much,” says Leach, who acknowledges that her conservative approach stemmed from a fear of rocking the boat. “I’m a very confident woman … but when you’re in that situation, everything is an unknown, so you do gamble a little bit.”


If you can, pay for a neutral appraisal: Business appraisals can be expensive, ranging from a couple thousand dollars to more than $30,000, but Leamon says they’re worth it. It’s easy to under- or overvalue a business, and hiring a neutral party helps ensure a fair deal for everyone.

Consider the future: The longer the payment period, the more likely it is that the spouse who keeps the business will default on payments or shut it down. In her book, “The Little Divorce Survivor’s Handbook,” Leach says that if she could do it over again, she’d negotiate an upfront buyout instead of an installment plan. “You can’t foretell the future,” she says. “You need to plan like this is all you’ve got coming your way.”

2. The compromise

A riskier option involves running the business as usual, with both parties maintaining control of the company. If you and your ex try this tactic, it’s crucial to develop defined business roles and clear expectations.

It might also be a good idea to review your business structure and legal documents to make sure they reflect your position in the company.

In Leamon’s opinion, staying in business together is the least ideal scenario. A financial advisor since 2010, he says he’s never seen this strategy work in the long term.

“You’re getting divorced for a reason,” he says. “When trying to maintain and run a business together, it adds an extraordinary amount of stress.”


Leave the personal at home: Your relationship with your ex is now strictly business. Work isn’t the time or place to bring around the new boyfriend or girlfriend, or even discuss those new relationships, Leamon says.

Review your legal documents: This is especially important come tax time, when your divorce might impact federal business taxes.

3. The walk away

Divorce is a good time to start fresh in your personal and business lives. If you decide to move on to a new venture, you and your ex can either sell the company to a third party or close up shop.

Selling a business is messier than you might think. It can take time to find a buyer, and the longer the divorce process takes, the more likely it is that something — your relationship, the business, the economy — will take a turn for the worse.

If your company is a franchise, it likely has specific requirements for future owners, which can narrow your candidate field and lengthen the selling process further.

Having a personal connection to the business can also make it hard to sell. So in certain circumstances, shutting down may be the best option. Small businesses often carry a heavy debt load, Leamon says. “Sometimes it’s cleaner to close it than try to dig yourself out of a giant hole.”


Think beyond cash: You can split profits from a sale 50/50, but your share can also be factored into the overall settlement. Can’t decide who gets the lake house? Consider trading your profit for the vacation home.

Keep it clean: If you decide to close your business, tie up loose ends first. “Business issues, when not properly closed, can haunt you for years,” Leamon says. It’s not as simple as just signing a few documents; you should also review potential issues such as back taxes and lawsuits.

Regardless of the outcome, Leamon stresses the importance of finding a workable agreement. “If you can’t resolve it between your attorneys and you, a judge will decide what ultimately has to happen,” he says. “If you can’t come up with a solution, a solution will be forced on you.”

To navigate the process, try mediation or enlist the help of a divorce advisor to make sure you’re not saddled with an outcome that neither of you desires.

Jackie Zimmermann is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @jackie_zm.

3 Ways to Quickly Boost Your Retirement Savings

Few people feel entirely confident they’re saving enough for retirement.

Why? The numbers can be vague — how long your savings will need to last; your cost of living in retirement; what the stock market will do between now and then. And money is tight, especially as U.S.household debt hits record highs.

These and many other unknowns can combine to make retirement seem a bit like a pipe dream. You can’t resolve all of these issues in a few hours — some, like market volatility, are largely out of your hands — but you can take steps to feel more in control of your goals. Here are three ways to jump-start your retirement savings in one afternoon.

1. Determine your savings target

You kept your calculator from 10th grade algebra, right? It will come in handy — just kidding. Figuring out how much you need to save for retirement sounds much harder than it actually is. It starts with the kind of math you can do on an iPhone: You’re essentially estimating how much you spend today, which gives you an idea of how much you might spend in retirement.

To get started, many people can simply lop off 20% of their current annual income to account for things you won’t have to pay for in retirement, such as payroll taxes, savings contributions and power suits. The remaining 80% is probably pretty close to what you spend on everything else each year. It’s what financial advisors call your “replacement ratio,” and it tells you how much of your preretirement income you’ll need to maintain your lifestyle in retirement.

Then, you need to determine how much you should save to build a nest egg big enough to provide you with that income. To do that, plug your current income, how much of that income you think you’ll need every year in retirement, the amount you’ve already saved and your age into a retirement calculator.

For example, NerdWallet’s retirement calculator will give you a monthly savings target, which is easier to manage than a total savings goal — knowing you need $2 million total for retirement can be daunting; knowing you need to save $1,000 a month gives you a more tangible goal, even if you have to work up to it.

2. Save first and automate your savings

It’s a common disappearing act: You’ve earmarked retirement savings, whether mentally or in an actual spreadsheet, but by the time the end of the month rolls around, there isn’t any money left. This is part of the value of a 401(k): Your contribution is swept into that account directly from your paycheck; there’s no time for it to take a stroll through the shoe store on its way there.

Not everyone has a 401(k), of course, but even if you do, it can be useful to supplement that account with an individual retirement account you fund directly. If you do that, make your monthly contribution as early as possible — immediately after your first paycheck each month, if you can swing it.

When you do that, you’re spending after you’ve saved, rather than saving what’s left after you’ve spent. And here’s a little-known fact: Many companies will allow you to split up your direct deposit, electing to have a portion sent to an IRA and a portion to your bank account, which essentially mimics the ease of a 401(k) contribution.

3. Consolidate and reduce fees

The benefits of a 401(k) dwindle a bit once you leave the job that offers it: For one thing, you can no longer contribute to the account.

There still may be perks — 401(k)s have a reputation for being expensive, but the investments offered by some larger plans may actually be less expensive than what you’ll find on your own — but depending on your career stage and how many times you’ve switched jobs, these accounts can pile up. If you’ve accumulated a 401(k) graveyard, it’s time to evaluate your options.

Administratively, it can make sense to roll these old accounts into an IRA, especially a low-fee account you manage yourself. You’ll cut out any fees you were paying to your old employer’s plan, and you can select low-cost investments like index funds and exchange-traded funds.

Rolling over is a simple process — this 401(k) rollover guide can help you. Your IRA provider will be glad to lend a hand in exchange for your business, and you can initiate a direct rollover so the money goes from plan to plan without touching your hands. If you don’t already have one, you can open an IRA with a few clicks online.

Arielle O’Shea is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @arioshea.

This article was written by NerdWallet and was originally published by Forbes.

Mortgage Rates Wednesday, June 21: A Mixed Bag

Help! I Lost My Debit Card

A lost debit card probably means one of two things: You misplaced it, or someone stole it. Either way, don’t let panic set in.

Taking the necessary steps can limit any immediate damage and protect you from further risk.

1. Report the loss or theft

Report the loss to your bank or credit union as soon as you realize the card is missing. Cancel the debit card and make sure that a new one is sent your way.

2. Report bogus charges

Check your recent payment history for transactions you didn’t make. Jot down the details of any fraudulent charges, including the amount, merchant, location and processing date. Pass that information along to your financial institution, including the date and time you reported that your card was gone.

3. Follow up

After calling your bank or credit union, you may want to follow up by email or letter, repeating the information you’ve already provided. This serves as your written confirmation of the report, which the card issuer may request if it conducts an investigation. If you don’t have it, you may not be credited for any losses. You can use any secure messaging service that the bank offers, including online or mobile apps.

» MORE: You don’t have to pay for credit card fraud

Next steps

Your card issuer typically has 10 business days to investigate and an additional three to report its findings to you, according to the Consumer Financial Protection Bureau. If the investigation takes longer, the bank or credit union must temporarily credit your account for the disputed amount, minus a charge of up to $50. From there, the bank may have as many as 90 days to resolve the issue, depending on the nature of the transactions.

Who owes what in case of debit card theft

Debit cards don’t have the strong fraud protections you get with credit cards. Still, federal law limits liability for a stolen or lost bank debit card, but only if you act quickly. The amount of money for which you’re on the hook is determined by how quickly you report the card as missing:

  • If you contact your financial institution within two business days of the discovery and fraudulent charges have already been made, the most you’ll be responsible for is $50
  • Wait longer, and your liability increases to $500
  • If you don’t inform your card issuer for more than 60 days after receiving your next statement, you’ll be on the hook for all unauthorized charges

Many major prepaid debit card issuers offer similar protections, according to the CFPB, but there may be some variation. Check the fine print to see what kinds of protections you get for each of your cards.

How to reduce your risk going forward

Taking a few precautions can reduce your risk of future debit card losses:

  • Keep your bank’s information accessible. You won’t have the customer service number that’s printed on the back of your card when the card is lost or stolen. Write that number down, along with your account information, and put it somewhere safe but accessible.
  • Monitor transactions. Keep an eye on your checking account on a daily basis and take action if you come across any suspicious transactions.

By following these steps, you can ensure that a missing debit card doesn’t lead to a financial catastrophe.

Spencer Tierney is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @SpencerNerd. NerdWallet’s John Gower contributed to this article.

Updated June 21, 2017

New Grads, Don’t Make These 401(k) Mistakes

Day One at your first job typically goes a little something like this: Show up; feel relieved you are dressed appropriately; attempt to hide that relief; attend orientation; marvel at the concept of paid vacation days; hide in the bathroom to avoid the 401(k) election form.

At that point, if you’re anything like 22-year-old me, you call a lifeline. I dialed my brother, who gave me a brief 401(k) rundown, asked if the company would match my contributions — they would — and told me to sign up. He probably used the words “free money,” as people tend to when describing the benefits of a 401(k) match.

They do that because it is actually free money: When your company matches your contributions, they’re compensating you in addition to your salary. Your own contribution, on the other hand, is pulled out of your paycheck, and needless to say, that was a sticking point for me. I would have gotten behind the idea of free money I could pocket immediately, but free money I wouldn’t see for 45 years didn’t excite me, especially when it meant taking home less money every month. I opted out.

I stayed at that job for a year. Assuming a 6% annual return, my decision will cost me around $50,000 in retirement savings, more than I made in a year at that job. It’s a mistake I still think about. Don’t be me: If your new 401(k) comes with matching dollars, contribute whatever percentage of your salary is required to earn them. Then avoid these four other 401(k) missteps:

1. Using the waiting period as a savings vacation

Your 401(k) paperwork may not come during orientation — some employers levy a waiting period before new workers are eligible to join the plan; there may be an additional wait before you’re offered a match.

It’s a convenient excuse to put off saving, but it isn’t a good one; there are other options. One is a Roth IRA, an individual retirement account you open on your own. A Roth is especially well-suited to entry-level workers, because you get to lock in today’s tax rate: You pay taxes on your contributions, but any earnings and distributions in retirement are tax-free. (Here’s a full rundown on Roth IRAs.)

In a lot of ways, saving for retirement is about throwing a bone to old-age you, and a Roth is a very big bone. It also gets you into the habit of saving. When you’re finally eligible for that 401(k), participating will feel like a breeze rather than a new burden on your budget.

2. Settling for the default election

Increasingly, employers are making 401(k) participation the default option. You have to opt out if you don’t want to participate.

That allows our inertia to work for us, rather than against us, and leads to increased participation: According to human resources consulting firm Aon Hewitt, 83% of workers in their 20s participate in their retirement plan when they are automatically enrolled, compared with just 33% who participate when they have to enroll themselves.

But even if your plan opts you in, your work is not done. An earlier study from Aon Hewitt found the average contribution rate was actually lower in plans with automatic enrollment, likely because the default rate is set too low and workers fail to adjust it. Your goal should be increasing your contribution rate by 1% or 2% a year, until you’re saving 15% of your income, including the employer match. That 15% is a general guideline aimed at allowing you to replace 70% to 90% of your income in retirement. (If you want a more personalized goal, use a retirement calculator.)

Be sure, too, that you’re in the investments you want to be. Most plans with automatic enrollment put you into a target-date fund, which aligns with the year you plan to retire and automatically adjusts its investment mix to be more conservative as you age. These funds can be a great, relatively hands-off solution, but they also can be significantly more expensive than selecting a few low-cost funds on your own.

3. Swallowing a pricey plan

Speaking of expenses: There’s a chance your 401(k) has high ones, especially if you work at a small company. You’ll pay fees on the investments you choose, plus administrative fees if your employer passes those along — costs for things like paperwork to make sure the plan stays on the right side of the law.

It’s up to you to know what you’re paying — a 401(k) fee analyzer can do the math — and take steps to shave high costs. That could mean reevaluating the investment selection a couple of times a year to see whether new, cheaper options have joined the table. Typically, 401(k)s have a curated selection of mutual funds, often around 20 in all.

Another option for reducing high 401(k) fees is to contribute just enough to get your employer match, then shift additional savings to an IRA. Investments you choose within an IRA will still have fees, but you’ll have access to a wider selection so you can shop around for the lowest costs. You’ll also avoid the administrative fees of a 401(k). If you max out the IRA — the 2017 IRA contribution limit is $5,500 — pause to smugly pat yourself on the back, then resume contributions to your 401(k).

4. Cashing out instead of rolling over

It’s hard to imagine at this point, but one day you may leave this shiny new job for something even shinier, and unless you have an especially low-cost 401(k), you’ll probably want to take your savings with you. Good options for doing so include rolling over the balance into your new employer’s plan, if possible, or into an IRA. You’ll want to evaluate the fees of the new accounts before making a decision.

Bad options include cashing out and pocketing the savings. You’ll pay a 10% penalty, plus income taxes — in other words, you could kiss a third or more of that hard-earned balance goodbye.

Arielle O’Shea is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @arioshea.

This article was written by NerdWallet and was originally published by Forbes.

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