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ByCurtis Watts

2020 Business and Life Review

Welcome to my 2020 Business and Life Review!

Usually, I separate my travel and business annual review content into two separate blog posts, but this year I’ve decided to combine it into one.

2020 was a different kind of year, and I’m sure nearly everyone would agree with that statement.

It was a tough year for a lot of people, and I completely understand.

I feel very grateful for the life that I get to live, but it was a hard year for me as well. I lost two important family members in my life, my grandma as well as my dog who was my best friend for almost 14 years.

 

Family

I wasn’t sure if I wanted to include this section in this life update, as I’m also talking about travel and business, and honestly, it just seems odd to have it all in one.

I went back and forth so many times, and I’m still unsure of it.

But, it just doesn’t seem right to me to not include it, as this is all a part of my life.

Good and bad things happen, and will happen throughout a person’s lifetime.

I do feel guilty writing about the passings of two of my favorites, and at the same time also writing about business and travel. Anyways…

Me and my grandma around 4 years ago.

My grandma passed away in the summer of 2020. She passed away at the age of 97.

I spent a lot of time growing up with my grandma, as she watched us everyday after school when we were kids and lived in Chicago.

She lived in the building just behind us, so I saw her all the time.

She didn’t speak much English (and I don’t speak Korean), although she took daily/weekly English classes even in her old age so that she could at least make hand gestures and talk to us as best as she could.

I remember as a kid, she would make me plain ramen (with no seasoning!) and I was always so confused as to why she would throw the seasoning packet away and make it taste bland. But I couldn’t tell her easily because I didn’t know how to tell her in Korean. After months of eating noodles in plain water, I figured out how to tell her. She thought it was weird that I liked watery noodles but she made it because she thought I liked it, haha. That is a story that always makes me laugh.

She was also a world traveler, and went to so many amazing places.

Also the kindest woman ever, and she was so great to us. I will forever miss her.

– – – – – – – – – – – – – – – – – – – – – – – – – – – –

 

This picture was taken about one week before she passed away.

My favorite girl passed away – Sailor. My best friend, the sweetest sweetie pie, the best adventure buddy, passed away in December of 2020.

We adopted Sailor when she was just two months old. I had just turned 18 about a week earlier, and just graduated from high school. Wes and I were moving in together (we were crazy kids), and decided to adopt a puppy that a friend was trying to find a home for.

Shortly after, I found out that my dad had brain and lung cancer, and that he did not have much time left. Sailor was there through all of the tears and sadness (I leaned heavily on her), and always brought me joy.

She has climbed some of the tallest mountains in the U.S., sailed to many islands, and been to some of the most scenic spots around.

It was very sudden, and before she could get to a vet (the vet was actually on her way to the boat). The vet thinks it may have been a fast moving cancer, as she didn’t show signs of it when she was just at the vet shortly before.

I’m still processing what this means as she was such a huge and beautiful part of my life for the past almost 14 years.

I am heartbroken and miss her so much. I was dreading this time for awhile, as I knew she was getting older, and it’s been much harder than I could have ever imagined.

Now, I’m not really sure how to transition to the next section, but below I will be switching to my travel and business review for 2020.

Like it was for nearly everyone – 2020 was a weird year, full of highs and lows.

 

Hanging out during lockdown on the boat in Puerto Rico.

Travel in 2020

2020 started with us in the Exumas in the Bahamas. We have spent a decent amount of time in the Bahamas the past couple of years on our boat, and it’s an amazing place to be, especially on a boat!

We then sailed to the Dominican Republic in February and spent around a month. We saw whales, went up the only cable car in the Caribbean (and it goes up around 2,500 feet!), rented a car and drove around the country, and more.

Then, we sailed to Puerto Rico in March. Shortly after we arrived, the lockdown started, and it was very strict. It has loosened since, but the first several months they had some of the strictest rules in the world. You could only grocery shop on certain days according to your license plate, you weren’t allowed to go outside (not even to let your dog use the bathroom), and more.

We had planned on hopping down the island chain and spending hurricane season in Grenada, but everything changed.

We stayed in Puerto Rico for around 3 months, pondering our next move.

Since we live on a boat, we had to figure something out, as hurricane season was approaching and we are not allowed to stay in the “Hurricane Box” during hurricane season because of our boat insurance policy.

So, we had two options, sail to Grenada or sail to the U.S. The sail to Grenada would have been about 3 days.

We decided to sail to the U.S. as we weren’t sure what the state of the world would be like, especially after being in such a strict lockdown for 3 months in Puerto Rico. Plus, we wanted to be outside of the Hurricane Box, and if you’re going north then that means heading all the way back to the U.S. Also, we had a lot of boat work that we needed to get done, so going to Annapolis seemed like an easy choice.

It was a 1,300 nautical mile sail and took us 9 days. It was our longest passage, and it was just me, Wes, and our two dogs. Our highest speed was 14.5 knots, and we hit 12 and 13 quite often. We caught fish, saw a submarine, dealt with Tropical Storm Bertha, and more. Our dogs did amazingly well on the passage, and it was a wonderful time.

We spent several months in Annapolis, Maryland for hurricane season and got a ton of work done on SV Paradise, including a major electrical refit. We can now run everything off of our lithium batteries and our solar, including running the watermaker, our washer/dryer, water heater, and more. Since I know I’ll be asked, the company we used for our electrical refit was Marine Electric Systems in Annapolis, and I highly recommend them.

Hurricane season ended in November, and then we’re required by insurance to head south to avoid winter weather on our boat. We did some offshore hops and we’re now in sunny Florida!

We’re not sure what we’ll be doing in 2021, but decisions have to be made eventually because hurricane season comes every year. We have a few ideas but I won’t be sharing anything just yet – you’ll just have to wait and see! 🙂

Fortunately, we’re fairly off-grid and self-sufficient on SV Paradise, so we can safely live on our boat, even in a time like this.

Note: If you want to follow my travels and life more, please follow me on Instagram. 

 

2020 Business Year In Review

2020 was definitely a weird year for businesses.

Many businesses failed, while many others thrived. Working from home and/or starting your own small business is now at an all-time high as well.

I am very grateful for the business that I get to run, and I am excited to grow it well into the future.

While I no longer disclose exact income numbers due to privacy reasons (and so that I, as well as others, don’t feel the need to “keep up” with others), income was at a good level in 2020.

Here’s what my income has looked like in the past:

  • In 2013, my business income totaled $116,519. This was the year that I quit my job to blog full-time.
  • In 2014, it totaled $163,929. This was my first full year of being self-employed with no day job.
  • In 2015, I made $320,888. I think this was the year where I fired all of my freelance clients and started just working on my blog. This helped me to grow my income significantly because I was FOCUSED!
  • In 2016, I made $979,321. This is the year where I created my first product (Making Sense of Affiliate Marketing).
  • In 2017, I earned $1,536,732.
  • In 2018, I earned over $1,500,000 (I stopped disclosing exact numbers in 2018).

It’s crazy to think that I have now been blogging for over nine years. What started as a fun little blog with no goals (I was even anonymous!), has turned into a great business for me.

If you want to start a blog of your own, I have a free How To Start a Blog Course.

2020 was a weird year, as we all know.

Even though I had a ton more free time due to lockdowns, I didn’t get as much work done as I had hoped. My mind was all over the place a lot of the time, which led to me wasting a lot of time.

But, I have heard that was normal for a lot of people for 2020. So, if you experienced the same – do not feel bad about yourself!

I didn’t take part in many interviews, didn’t release any new projects, and I was barely on social media. I really don’t know what I spent so much of my time on, to be honest.

Luckily, around 2019, I slowed down significantly when it came to working, and it helped tremendously. I wasn’t feeling burned out or anything with Making Sense of Cents. But, I knew that I needed to be more mindful of how I use my time online. I no longer want to be hooked to my laptop and phone for both personal and business social media browsing/blogging.

And, after several years of blogging full-time and spending 100+ hour weeks on my blog, it’s been nice to relax and focus on other areas of my life.

I will be completely honest – income did not grow in 2020 over 2019 – but it was still a great amount.

Thankfully, all of the hard work that I’ve put in over the past several years has paid off.

In case you are new to this blog, the main areas I earn a living from include:

  • Affiliate Marketing – This is the largest chunk of my income.
  • Sponsored Partnerships
  • Courses – Making Sense of Affiliate Marketing Course and Making Sense of Sponsored Posts
  • Display Advertising – I use Adthrive. Another great option is Mediavine.

Three articles that I recommend reading:

  • How I Successfully Built A $1,000,000+ Blog
  • How I’ve Made Over $1,000,000 From My First Course Without a Big Launch
  • 10+ Of The Best Free Blogging Resources

Thank you to all of my readers for being here with me on this journey! I’m so glad that I can share everything with you.

 

Anchored in Puerto Rico.

Affiliate marketing results in 2020.

Affiliate income was at a great level this past year.

Not much changed from the previous year, and everything is fairly passive when it comes to affiliate marketing income on Making Sense of Cents.

I am hoping to start ranking for more blog posts through SEO, which will hopefully increase my affiliate income further and grow my audience on Making Sense of Cents.

The areas that I am working on to improve my affiliate income include:

  • Planning out 2021 for affiliate offers. I’m not really much of a big planner, so this is something I’m always working on. This will help to keep me organized and better prepared.
  • Learning about SEO and applying techniques to my blog. This past guest post has made me super interested in taking SEO seriously – The exact template that helped my site earn $95,000 in affiliate income last year.
  • Continuing to improve and build a high-quality funnel. I want to have a high-quality funnel where I continue to give valuable information to my readers, and keep them happy for the times when I may not have the greatest wifi.
  • Continuing to grow the reach of Making Sense of Cents. Traffic has been a little stuck lately, and I want to change that! I want to see what I can do to grow the traffic, as that will help me to reach new readers.
  • Analyzing popular blog posts to see how they can be improved for the future.
  • Seeking out new affiliate products to promote, and seeing what else my audience is interested in.

If you want to learn more about affiliate marketing, I recommend getting the free guide 10 Easy Tips To Increase Your Affiliate Income. With this time-saving cheat sheet, you’ll learn how to make affiliate income from your blog. These tips will help you to rapidly improve your results and increase your blogging income in no time.

 

Sponsored partnership results in 2020.

Sponsored partnerships were great in the first few months of 2020. But, when the world’s events hit in March, things slowed down drastically. This is because companies were waiting to see how everything would play out.

But, in the summer of 2020, it all picked up like crazy.

I had so many offers in my email inbox that I actually had to turn good offers down.

I believe that 2021 will be a great year for sponsored partnerships, and I already have many lined up for the year.

Plus, the first few months of each year are usually the best for me, as that’s when advertisers tend to be looking for a lot of bloggers.

You can learn more about sponsored partnerships in my free guide 8 Easy Tips To Make Money From Sponsored Posts On Your Blog.

 

Hiking in Puerto Rico (before the lockdown).

Goals for 2021.

I’m hoping that 2021 will be the year of growth for both myself and Making Sense of Cents.

After taking much of 2019 off, and a lot of 2020, I’m ready to get back to it for 2021.

My goals for 2021:

  1. Grow Making Sense of Cents. I’d like to grow in terms of readers and income, and there are two main things that I plan on doing in order to help with that (see #2 and #3 below)
  2. Get featured in the media more. I’m currently taking a course on this subject and I’ll be sharing more information on it soon! In the meantime, you can sign up for the freebie –  2021 Publicity Calendar – This contains 179 story ideas, dates, and hooks to help you create endless media attention and buzz! If you want to get featured in magazines and popular websites, this is something that you will definitely want to sign up for.
  3. See growth from SEO. I took an SEO course that I really enjoyed, and ever since then I have been soaking up all of the SEO knowledge that I can. I am hoping that 2021 is the year of explosive growth from SEO for Making Sense of Cents. The free course I recommend taking is The SEO Starter Pack (FREE Video Training).
  4. Get at least three months ahead on Making Sense of Cents posts. I’m currently around 3 months ahead in content, and I’d like to continue the streak that I am on.
  5. Be more present. My main goal in 2021 (just like with previous years) is to be more present.
  6. Read 5 books. I have only read one book lately that wasn’t work or sailing/boat-educational related. I would like to get back to reading books that have nothing to do with trying to learn something, haha.
  7. Start learning a new language. I know I won’t be fluent, but I’d love to learn a new language. I took 3-4 years of French in high school, and that’s the one I’m trying to learn right now through Duolingo. It’s a good language to learn when sailing about the world, so wish me luck!
  8. Learn how to dive. We would possibly like to add scuba equipment to our sailboat so that we can explore the water further as we sail about the world. So, that means I actually have to learn how to do it. This is definitely a huge goal of mine for this year!

I hope you enjoyed this 2020 year in review blog post. It’s always interesting putting these types of blog posts together so that I can reflect on the previous year.

And, it’s nice to take a look at it once this next coming year is over as well.

How was 2020 for you? What questions do you have for me? Share in the comments below!

The post 2020 Business and Life Review appeared first on Making Sense Of Cents.

Source: makingsenseofcents.com

ByCurtis Watts

Why It’s the Year of the Side Hustle

Side hustles have always been a good way to earn more money and better your finances. With so many people in debt while wages have fallen flat, they’ve become especially popular over the past decade. Now, with the coronavirus pandemic, we’ve seen them shoot ahead in popularity even further. 

According to a recent survey by credit-building platform, Self, just over half of Americans plan to start a side hustle as a direct result of the pandemic. The numbers get really interesting when you break them down by age, too. The majority of Millennials (around 70%) plan to start a side hustle, while only a few — around 20% — of Boomers have the same idea. 

Coronavirus and Unemployment: Changing How People Earn Money

Unless you’ve been living under a rock, chances are you already know the heavy toll the pandemic has taken on the economy. Still, it’s worth taking a second look at the numbers. By May 2020, after everything shut down, the number of unemployed people in the U.S. shot up even higher than figures during the Great Depression. It ranged higher than 14 million unemployed people, compared to the Great Depression’s peak of 8.8 million unemployed. The unemployment rate at its peak in 2020 was 16%. 

Today the economy is reopening and the unemployment rate has gone back down, but still stands twice as high as normal — 8% — as of August 2020. Even if you are lucky enough to be back at work today, chances are good that you’re still not earning as much as you were before. Your hours might’ve been reduced, you might’ve missed out on pay raises, or you might’ve suffered a pay cut. 

If you’re still unemployed, the picture isn’t any better. The extra $600 weekly unemployment assistance dropped off at the end of July, leaving many people with normal piddly paycheck amounts. 

Finally, even if you’re one of the lucky ones who’s been totally unaffected by all of this, at least you’ve seen the devastation that can happen and maybe you’re spurred on to make sure that doesn’t happen to you. No matter which segment you fall into, everyone’s seeing how important diversifying your income with a side hustle is right now. 

12 Most Popular Side Gigs of the Year

Whether you call them “side hustles” or not, people have been finding creative ways to earn a little extra on the side ever since economies have existed. But today, with COVID, some side hustles are more popular than others. Here are some of the most popular side gig options this year:

1. Deliver Groceries and Food

With so many people trying to keep their distance, one hot job that’s been booming is food delivery workers — specifically, through apps like DoorDash, GrubHub, UberEats, Instacart, Shipt, and more. All you need is a car and a smartphone. And while your chances of being exposed to COVID are greater than if you’d found an online gig (please, avoid this one if you’re high-risk!), contact-free delivery options are making it a bit safer. 

2. Transcribe Audio Files

If you’re looking for a good way to boost your typing speed and listen to (potentially) interesting conversations, give transcription a try. You can find partner websites that’ll send you audio files or advertise your services in writer’s groups. All you have to do is type out the audio accurately and send your transcription back to the partner. 

The startup cost on this side gig is low — all you need is a computer and internet, which you might already have if you’re reading this. Beyond that, a small investment in a foot pedal — a hands-free way to start and stop audio — keeps your hands on the keyboard so that you type faster and earn more money in the process. 

3. Tutor a Student

The education system is a mess right now. Many kids are stuck at home and are falling behind in their studies. Parents are at their wit’s end, and looking for ways to help their children grow and stay entertained. That’s where you come in. There are many opportunities to tutor students online, and if you and the other party is comfortable, you can even meet up in person for socially-distanced learning.

4. Pet-Sitting and Dog-Walking

Even though normal travel isn’t really a thing right now, there still are more people than ever travelling locally. Many people can only stay in their home so long without going stir-crazy, after all. A lot of pet sitters are finding that business is booming right now, and you can get in on the action, too. 

Apps like Rover and Wag! make it easy to get started. Even if you can’t watch someone’s pup for them, you can still offer your services as a dog walker and get out of the house while still distancing yourself from other people. 

5. Freelance Writing or Starting a Blog

Do you have an interesting story? Would you like to write about other people who do? If so, now’s a great time to start your own blog or freelance writing side hustle. Blogging takes a lot of work and time before it really pays off, although if it does, you can earn a lot of money. Freelance writing might be more lucrative right off the bat, and you can even leverage your new blog as a way to showcase your writing to earn work with paid clients. 

6. Become a Virtual Assistant

With so many people working entirely online these days, an entire new industry of workers have cropped up: virtual assistants. As a virtual assistant, your job may be as varied as the people who hire you. You might find sources for interviews, keep track of tasks in a database, answer reader emails, make graphics, write blog posts, and more. And since it’s entirely virtual, your potential client list is global. 

7. Take Surveys

This side hustle might not replace your day job, but if you have a few extra minutes while you’re watching TV, baking, or spending endless hours listening in on Zoom meetings, you can earn a bit more cash. There are a lot of places to earn money with surveys, so be sure to try your hand at more than one. 

8. Web and App Development

Techy skills are in demand right now, especially with so many people working online. If you know a bit of code — or want to learn — now’s a great time to get started with this side hustle. You can find work through Fiverr and Upwork, or advertise independently elsewhere. If you know how to develop apps, see if you can come up with any ideas to make quarantine life easier for everyone — that would be a hit for sure. 

9. SEO Developer

The only option most local businesses have to reach potential customers these days is online. But the mom-and-pop pizza shop down the road probably isn’t up to snuff when it comes to advertising on Google and social media. These skills are especially in demand right now, and there are many courses you can take to learn more and start this side hustle immediately. 

10. Write eBooks

Are you good at coming up with stories? If you’ve got some time on your hands and you don’t have any pressing money concerns, writing ebooks can be a great way to set up a passive income strategy that’ll keep paying you throughout the future. Just like with blogging, it can be a risky strategy since it may not pay off immediately. But if you have a passion for words, a creative imagination, and an entrepreneurial spirit, this could be a great side hustle for you.

11. Social Media Strategist

Companies often aren’t SEO experts, and they aren’t social media experts either. But if you were raised alongside Instagram, Facebook, and Twitter, and love mastering the newest social media channels, this could be a great side hustle for you. You’ll need to learn how to work with brands and companies to represent them online so that they sell more products — and in turn, can pay you the big bucks. 

12. Do Odd Jobs

We’ve covered some of the websites you can use to earn money during the pandemic right now, but it bears repeating here. Websites like TaskRabbit, Fiverr, and Upwork have many more opportunities than what we’ve listed here. 

For example, you could help with mowing lawns, helping someone move to a new house, delivering things from stores, designing printable PDFs, teaching someone how to play guitar, and more. The opportunities are endless, and it’s free to browse and see what small odd jobs are available in your area. 

The Bottom Line

The year 2020 will probably go down in most people’s books as one of the worst on record. It’s important to acknowledge the bad that’s happening, but it’s also important to look forward, too. Even in the midst of all of this craziness, there is an opportunity for growth and a way to better your finances. No one can pinpoint when a pandemic will happen, but you can plan your financial response to big events like this. 

The post Why It’s the Year of the Side Hustle appeared first on Good Financial Cents®.

Source: goodfinancialcents.com

ByCurtis Watts

How to Save for Retirement in Your 20s, 30s, 40s, 50s and 60s

You probably don’t need us to tell you that the earlier you start saving for retirement, the better. But let’s face it: For a lot of people, the problem isn’t that they don’t understand how compounding works. They start saving late because their paychecks will only stretch so far.

Whether you’re in your 20s or your golden years are fast-approaching, saving and investing whatever you can will help make your retirement more comfortable. We’ll discuss how to save for retirement during each decade, along with the hurdles you may face at different stages of life.

How Much Should You Save for Retirement?

A good rule of thumb is to save between 10% and 20% of pre-tax income for retirement. But the truth is, the actual amount you need to save for retirement depends on a lot of factors, including:

  • Your age. If you get a late start, you’ll need to save more.
  • Whether your employer matches contributions. The 10% to 20% guideline includes your employer’s match. So if your employer matches your contributions dollar-for-dollar, you may be able to get away with less.
  • How aggressively you invest. Taking more risk usually leads to larger returns, but your losses will be steeper if the stock market tanks.
  • How long you plan to spend in retirement. It’s impossible to predict how long you’ll be able to work or how long you’ll live. But if you plan to retire early or people in your family often live into their mid-90s, you’ll want to save more.

How to Save for Retirement at Every Age

Now that you’re ready to start saving, here’s a decade-by-decade breakdown of savings strategies and how to make your retirement a priority.

Saving for Retirement in Your 20s

A dollar invested in your 20s is worth more than a dollar invested in your 30s or 40s. The problem: When you’re living on an entry-level salary, you just don’t have that many dollars to invest, particularly if you have student loan debt.

Prioritize Your 401(k) Match

If your company offers a 401(k) plan, a 403(b) plan or any retirement account with matching contributions, contribute enough to get the full match — unless of course you wouldn’t be able to pay bills as a result. The stock market delivers annual returns of about 8% on average. But if your employer gives you a 50% match, you’re getting a 50% return on your contribution before your money is even invested. That’s free money no investor would ever pass up.

Pay off High-Interest Debt

After getting that employer match, focus on tackling any high-interest debt. Those 8% average annual stock market returns pale in comparison to the average 16% interest rate for people who have credit card debt. In a typical year, you’d expect a  $100 investment could earn you $8. Put that $100 toward your balance? You’re guaranteed to save $16.

Take More Risks

Look, we’re not telling you to throw your money into risky investments like bitcoin or the penny stock your cousin won’t shut up about. But when you start investing, you’ll probably answer some questions to assess your risk tolerance. Take on as much risk as you can mentally handle, which means you’ll invest mostly in stocks with a small percentage in bonds. Don’t worry too much about a stock market crash. Missing out on growth is a bigger concern right now.

Build Your Emergency Fund

Building an emergency fund that could cover your expenses for three to six months is a great way to safeguard your retirement savings. That way you won’t need to tap your growing nest egg in a cash crunch. This isn’t money you should have invested, though. Keep it in a high-yield savings account, a money market account or a certificate of deposit (CD).

Tame Lifestyle Inflation

We want you to enjoy those much-deserved raises ahead of you — but keep lifestyle inflation in check. Don’t spend every dollar each time your paycheck gets higher. Commit to investing a certain percentage of each raise and then use the rest as you please.

Saving for Retirement in Your 30s

If you’re just starting to save in your 30s, the picture isn’t too dire. You still have about three decades left until retirement, but it’s essential not to delay any further. Saving may be a challenge now, though, if you’ve added kids and homeownership to the mix.

Invest in an IRA

Opening a Roth IRA is a great way to supplement your savings if you’ve only been investing in your 401(k) thus far. A Roth IRA is a solid bet because you’ll get tax-free money in retirement.

In both 2020 and 2021, you can contribute up to $6,000, or $7,000 if you’re over 50. The deadline to contribute isn’t until tax day for any given year, so you can still make 2020 contributions until April 15, 2021. If you earn too much to fund a Roth IRA, or you want the tax break now (even though it means paying taxes in retirement), you can contribute to a traditional IRA.

Your investment options with a 401(k) are limited. But with an IRA, you can invest in whatever stocks, bonds, mutual funds or exchange-traded funds (ETFs) you choose.

Pro Tip

If you or your spouse isn’t working but you can afford to save for retirement, consider a spousal IRA. It’s a regular IRA, but the working spouse funds it for the non-earning spouse. 

Avoid Mixing Retirement Money With Other Savings

You’re allowed to take a 401(k) loan for a home purchase. The Roth IRA rules give you the flexibility to use your investment money for a first-time home purchase or college tuition. You’re also allowed to withdraw your contributions whenever you want. Wait, though. That doesn’t mean you should.

The obvious drawback is that you’re taking money out of the market before it’s had time to compound. But there’s another downside. It’s hard to figure out if you’re on track for your retirement goals when your Roth IRA is doing double duty as a college savings account or down payment fund.

Start a 529 Plan While Your Kids Are Young

Saving for your own future takes higher priority than saving for your kids’ college. But if your retirement funds are in shipshape, opening a 529 plan to save for your children’s education is a smart move. Not only will you keep the money separate from your nest egg, but by planning for their education early, you’ll avoid having to tap your savings for their needs later on.

Keep Investing When the Stock Market Crashes

The stock market has a major meltdown like the March 2020 COVID-19 crash about once a decade. But when a crash happens in your 30s, it’s often the first time you have enough invested to see your net worth take a hit. Don’t let panic take over. No cashing out. Commit to dollar-cost averaging and keep investing as usual, even when you’re terrified.

Saving for Retirement in Your 40s

If you’re in your 40s and started saving early, you may have a healthy nest egg by now. But if you’re behind on your retirement goals, now is the time to ramp things up. You still have plenty of time to save, but you’ve missed out on those early years of compounding.

Continue Taking Enough Risk

You may feel like you can afford less investment risk in your 40s, but you still realistically have another two decades left until retirement. Your money still has — and needs — plenty of time to grow. Stay invested mostly in stocks, even if it’s more unnerving than ever when you see the stock market tank.

Put Your Retirement Above Your Kids’ College Fund

You can only afford to pay for your kids’ college if you’re on track for retirement. Talk to your kids early on about what you can afford, as well their options for avoiding massive student loan debt, including attending a cheaper school, getting financial aid, and working while going to school. Your options for funding your retirement are much more limited.

Keep Your Mortgage

Mortgage rates are historically low — well below 3% as of December 2020. Your potential returns are much higher for investing, so you’re better off putting extra money into your retirement accounts. If you haven’t already done so, consider refinancing your mortgage to get the lowest rate.

Invest Even More

Now is the time to invest even more if you can afford to. Keep getting that full employer 401(k) match. Beyond that, try to max out your IRA contributions. If you have extra money to invest on top of that, consider allocating more to your 401(k). Or you could invest in a taxable brokerage account if you want more flexibility on how to invest.

Meet With a Financial Adviser

You’re about halfway through your working years when you’re in your 40s. Now is a good time to meet with a financial adviser. If you can’t afford one, a financial counselor is typically less expensive. They’ll focus on fundamentals like budgeting and paying off debt, rather than giving investment advice.

A woman waves her hands in the air as she overlooks a mountainous view in Alaska.

Saving for Retirement in Your 50s

By your 50s, those retirement years that once seemed like they were an eternity away are getting closer. Maybe that’s an exciting prospect — or perhaps it fills you with dread. Whether you want to keep working forever or retirement can’t come soon enough, now is the perfect time to start setting goals for when you want to retire and what you want your retirement to look like.

Review Your Asset Allocation

In your 50s, you may want to start shifting more into safe assets, like bonds or CDs. Your money has less time to recover from a stock market crash. Be careful, though. You still want to be invested in stocks so you can earn returns that will keep your money growing. With interest rates likely to stay low through 2023, bonds and CDs probably won’t earn enough to keep pace with inflation.

Take Advantage of Catch-up Contributions

If you’re behind on retirement savings, give your funds a boost using catch-up contributions. In 2020 and 2021, you can contribute:

  • $1,000 extra to a Roth or traditional IRA (or split the money between the two) once you’re 50
  • $6,500 extra to your 401(k) once you’re 50
  • $1,000 extra to a health savings account (HSA) once you’re 55.

Work More if You’re Behind

Your window for catching up on retirement savings is getting smaller now. So if you’re behind, consider your options for earning extra money to put into your nest egg. You could take on a side hustle, take on freelance work or work overtime if that’s a possibility to bring in extra cash. Even if you intend to work for another decade or two, many people are forced to retire earlier than they planned. It’s essential that you earn as much as possible while you can.

Pay off Your Remaining Debt

Since your 50s is often when you start shifting away from high-growth mode and into safer investments, now is a good time to use extra money to pay off lower-interest debt, including your mortgage. Retirement will be much more relaxing if you can enjoy it debt-free.

FROM THE RETIREMENT FORUM
Military pension & SS
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Re-locating
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Trish Young
TSP and mortgage
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Saving for Retirement in Your 60s

Hooray, you’ve made it! Hopefully your retirement goals are looking attainable by now after working for decades to get here. But you still have some big decisions to make. Someone in their 60s in 2021 could easily spend another two to three decades in retirement. Your challenge now is to make that hard-earned money last as long as possible.

Make a Retirement Budget

Start planning your retirement budget at least a couple years before you actually retire. Financial planners generally recommend replacing about 70% to 80% of your pre-retirement income. Common income sources for seniors include:

  • Social Security benefits. Monthly benefits replace about 40% of pre-retirement income for the average senior.
  • Retirement account withdrawals. Money you take out from your retirement accounts, like your 401(k) and IRA.
  • Defined-benefit pensions. These are increasingly rare in the private sector, but still somewhat common for those retiring from a career in public service.
  • Annuities. Though controversial in the personal finance world, an annuity could make sense if you’re worried about outliving your savings.
  • Other investment income. Some seniors supplement their retirement and Social Security income with earnings from real estate investments or dividend stocks, for example.
  • Part-time work. A part-time job can help you delay dipping into your retirement savings account, giving your money more time to grow.

You can plan on some expenses going away. You won’t be paying payroll taxes or making retirement contributions, for example, and maybe your mortgage will be paid off. But you generally don’t want to plan for any budget cuts that are too drastic.

Even though some of your expenses will decrease, health care costs eat up a large chunk of senior income, even once you’re eligible for Medicare coverage — and they usually increase much faster than inflation.

Develop Your Social Security Strategy

You can take your Social Security benefits as early as 62 or as late as age 70. But the earlier you take benefits, the lower your monthly benefits will be. If your retirement funds are lacking, delaying as long as you can is usually the best solution. Taking your benefit at 70 vs. 62 will result in monthly checks that are about 76% higher. However, if you have significant health problems, taking benefits earlier may pay off.

Pro Tip

Use Social Security’s Retirement Estimator to estimate what your monthly benefit will be.

Figure Out How Much You Can Afford to Withdraw

Once you’ve made your retirement budget and estimated how much Social Security you’ll receive, you can estimate how much you’ll be able to safely withdraw from your retirement accounts. A common retirement planning guideline is the 4% rule: You withdraw no more than 4% of your retirement savings in the first year, then adjust the amount for inflation.

If you have a Roth IRA, you can let that money grow as long as you want and then enjoy it tax-free. But you’ll have to take required minimum distributions, or RMDs, beginning at age 72 if you have a 401(k) or a traditional IRA. These are mandatory distributions based on your life expectancy. The penalties for not taking them are stiff: You’ll owe the IRS 50% of the amount you were supposed to withdraw.

Keep Investing While You’re Working

Avoid taking money out of your retirement accounts while you’re still working. Once you’re over age 59 ½, you won’t pay an early withdrawal penalty, but you want to avoid touching your retirement funds for as long as possible.

Instead, continue to invest in your retirement plans as long as you’re still earning money. But do so cautiously. Keep money out of the stock market if you’ll need it in the next five years or so, since your money doesn’t have much time to recover from a stock market crash in your 60s.

A Final Thought: Make Your Retirement About You

Whether you’re still working or you’re already enjoying your golden years, this part is essential: You need to prioritize you. That means your retirement savings goals need to come before bailing out family members, or paying for college for your children and grandchildren. After all, no one else is going to come to the rescue if you get to retirement with no savings.

If you’re like most people, you’ll work for decades to get to retirement. The earlier you start planning for it, the more stress-free it will be.

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

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

Source: thepennyhoarder.com