Use Retail Therapy to Make a Small Fortune

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Dear Rich Lifer,

You’ve heard the saying when it comes to trading stocks: buy low and sell high. The same strategy applies to making money buying items in stores.

This is called retail arbitrage, and it can make you a small fortune pretty quickly if you know how to do it right, and with Black Friday and the Holidays right around the corner, there has never been a better time to try it out.

E-commerce revenues are projected to grow to 4.88 trillion US dollars in 2021. If that number sounds high, consider that Amazon is already more valuable than all major brick-and-mortar retailers combined.

Amazon’s $1 trillion valuation is so big, it’s larger than Walmart, Target, Best Buy, Macy’s, Kohl’s, JCPenney, and Sears combined. What’s interesting though is nearly half of Amazon’s sales come from third-party sellers — independent sellers who offer a variety of new, used, refurbished, and collectible merchandise.

Most of these third-party sellers take advantage of Amazon’s ‘Fulfillment by Amazon’ program, called FBA for short.

How FBA Works

If you shop on Amazon, you’ve sometimes ordered a product that doesn’t arrive in Amazon’s traditional brown box. This is because a third-party seller has handled the fulfillment and shipping part of the sale.

Fulfillment by Amazon on the other hand, lets third-party sellers turn the fulfillment and shipping part over to Amazon. You send your products to Amazon, and they store your items until they sell.

When someone buys one of your items, Amazon ships it to the customer on your behalf. The whole process is explained in this short video.

How to Make Money With FBA

There are tons of things you can resell on Amazon for a profit, so you’re never going to be too limited figuring out what to sell. But my recommendation is start with toys.

It’s one of the most popular retail arbitrage categories because it’s so easy to get started. And some FBA sellers make good money doing it, think upwards of $10K per month during the holiday season when there’s even higher demand for popular toys.

The toy reselling strategy is simple: start by searching online for retailers selling toys at huge discounts, buy the toys, ship them to Amazon’s FBA warehouse, and if you choose toys with enough demand, you’ll see your inventory sell through in no time.

Popular toys generally resell very quickly, especially when they’re becoming scarce in regular stores. It’s not uncommon to resell all of your stock within a week of listing the items, sometimes even within hours.

If you want to resell toys through FBA, start by shopping clearance sections at retailers. Also remember that Amazon FBA accepts both new and used items, which is great if you have some mint-condition toys lying around that you wouldn’t mind getting rid of. Otherwise, look for popular or perennial toys that are likely to be hot sellers.

One other thing to be aware of is Amazon offers a 100% guarantee on products.

If something is damaged in shipping or the customer decides they don’t like it, you’re responsible for the return. Amazon also charges storage and order-fulfillment fees that you’ll need to keep in balance.

How to Boost Profits While Buying Inventory

To really ramp up profits, ask yourself how you’re going to buy items you plan to sell through FBA. The best way in my opinion is through reward cards and discount gift cards.

Before you buy items to sell on FBA, figure out which gift cards you need to buy for those items. For example, if you are going to buy toys from Kohl’s, you’d want to buy those toys with a Kohl’s gift card.

You should use your rewards credit card to buy the Kohl’s gift card from a discount gift card site like Gift Card Rescue or Gift Card Granny.

Then, when you make the purchase using the gift card, you’ll get even more rewards. Also search coupon sites like RetailMeNot to save on the Kohl’s purchase and make that discounted gift card stretch even further.

To recap: Earn rewards on your credit card, increase the value of your gift card by buying it at a discount and combining it with online coupons, and then, after you make your purchase, sell the purchased items through FBA at a profit.

Just be sure to pay off your credit card in full every month, or else you’ll get hit with interest that could cancel out all your hard work.

In Conclusion

There are a ton of resources available online to help you sell products through Amazon’s FBA program.

The more you learn about retail arbitrage and the FBA process, the better prepared you’ll be when you start using FBA to earn extra money yourself. But don’t spend too much time researching.

The best way to learn is simply by getting started. Either shop online or go to your local Walmart and dig through the clearance sections until you find a winner.

To a richer life,

Nilus Mattive

Nilus Mattive

The post Use Retail Therapy to Make a Small Fortune appeared first on Daily Reckoning.

The Big 4 Retirement Worries and How to Beat Them

This post The Big 4 Retirement Worries and How to Beat Them appeared first on Daily Reckoning.

The #1 concern most Americans have when it comes to retirement is paying for health care.

According to a recent survey from Merrill Lynch and Age Wave, those age 65 and over ranked health as their greatest source of worry.

With rising health care costs and longer life expectancies, it’s no wonder covering medical expenses tops most retirees list of retirement worries.

Add to that an unpredictable future for our Social Security system, market corrections, and uncertain taxes, it’s reasonable to feel a bit on edge these days.

However, Americans do retire successfully. Studies tend to show current retirees being less concerned about these issues than those approaching retirement. They have the benefit of experience, I guess.

Although I can’t predict your future, a bit of insight and planning can still go a long way to help ease some of your retirement worries.

So today, I’m going to debunk four of the biggest worries nearly all retirees have on their mind.

Retirement Worry #1: Health Care

You see healthcare top many retirement lists and studies as a major concern because many health issues are age related.

While you can’t control your genetic makeup, you can make good choices when it comes to eating healthy and exercising regularly. In addition, I find simply giving people their options when it comes to healthcare coverage can ease a lot of the uncertainty.

Here are the basics…

Most people become eligible for Medicare when they turn 65. Medicare is made up of several parts.

Medicare Part A is hospital coverage. It’s generally free, with some exceptions.

Medicare Part B is medical insurance, and you pay a premium for coverage.

Medicare Part C, aka Medicare Advantage, is an optional replacement for traditional Medicare. You might pay more for an optional Part C plan.

Medicare Part D is your prescription drug coverage. Pard D costs will vary.

So unless your prior employer has your health insurance covered for life, you’ll most likely go onto Medicare.

Choosing the right plan depends on your health status, family history, and budget. It’s also not a bad idea to consider a Medicare Supplement plan, or a Medigap policy.

A major reason to consider a Medigap policy is if you plan on traveling.

Traditional Medicare doesn’t cover you when you travel outside the U.S. But, most Medigap policies do.

The last thing you should consider is long-term care insurance. The data isn’t pretty. Coverage is expensive and your alternative of no coverage can be worse.

The main things to consider here are whether or not your assets are needed for someone else to maintain a certain standard of living. And, whether or not you’re looking to leave a legacy.

Those are two major questions you need to ask before you consider long-term care insurance.

Retirement Worry #2: Outliving Your Money

The second biggest worry is fear of running out of money. With longer life expectancies and rising costs, the amount of money it takes to maintain a comfortable standard of living in retirement is significant.

Step one is to figure out how much you’ll need saved to retire comfortably. You can do this a number of ways but my suggestion would be to find a few different retirement calculators and run the numbers.

Once you have a few different sets of numbers, choose the worst case scenario and build your savings plan around that number.

The sooner you know how much you should have saved the better. Sometimes it can seem like a pension, Social Security and some modest savings will be enough. But that isn’t always the case.

Inflation and other uncontrollable factors can quickly eat away at your savings. It’s important to keep your spending to a minimum early in retirement, this way you give your money time to grow and you’ll have extra saved should you run into trouble later on.

Retirement Worry #3: Not Enough Cash Flow

This worry might seem similar to the second, but it comes from a different place. A lot retirees worry that their income won’t be enough to cover basic living expenses.

The fate of Social Security is up in the air. It likely won’t disappear but it could be significantly reduced, leaving a lot of retirees struggling to pay their bills.

The fix here is putting in place a solid drawdown strategy. The most common strategy is the 4% rule, where you withdraw 4% of your savings in the first year of retirement, and each year after that you take out the same dollar amount, plus an inflation adjustment.

For example, if you have $1,000,000 in retirement savings, the first year you would withdraw $40,000. Then, over the course of that year, inflation runs 3%. The next year, you’d withdraw $41,200.

There are a number of different drawdown strategies, the point being that having a sufficient cash flow is critical in retirement.

Retirement Worry #4: Debt

The last big worry is paying down debt. This worry probably wouldn’t have topped the list 20 years ago. But today retirees carry a lot more debt.

Bigger mortgages, multiple credit cards — it’s a major issue that retirees face. It’s not that you can’t ever have debt in retirement, but you need to be able to manage it.

If you can, pay off your credit cards before you retire. You don’t want your retirement savings getting eaten up by high-interest payments.

In some cases, you’ll want to go into debt. Maybe you need to replace your vehicle and the interest payments are low enough that it makes sense to take out a car loan.

You might also downsize or buy a second vacation property with a mortgage. So long as you’re not relying on debt to fund your retirement and you have a plan in place to manage the debt you owe, you can overcome this worry.

The bottom line is that it’s natural to feel some anxiety about retirement. With the right plan is place and a grasp on what’s to come, you can mitigate most of your fears fairly easily.

To a richer life,

Nilus Mattive

Nilus Mattive

The post The Big 4 Retirement Worries and How to Beat Them appeared first on Daily Reckoning.

The Big 4 Retirement Worries and How to Beat Them

This post The Big 4 Retirement Worries and How to Beat Them appeared first on Daily Reckoning.

The #1 concern most Americans have when it comes to retirement is paying for health care.

According to a recent survey from Merrill Lynch and Age Wave, those age 65 and over ranked health as their greatest source of worry.

With rising health care costs and longer life expectancies, it’s no wonder covering medical expenses tops most retirees list of retirement worries.

Add to that an unpredictable future for our Social Security system, market corrections, and uncertain taxes, it’s reasonable to feel a bit on edge these days.

However, Americans do retire successfully. Studies tend to show current retirees being less concerned about these issues than those approaching retirement. They have the benefit of experience, I guess.

Although I can’t predict your future, a bit of insight and planning can still go a long way to help ease some of your retirement worries.

So today, I’m going to debunk four of the biggest worries nearly all retirees have on their mind.

Retirement Worry #1: Health Care

You see healthcare top many retirement lists and studies as a major concern because many health issues are age related.

While you can’t control your genetic makeup, you can make good choices when it comes to eating healthy and exercising regularly. In addition, I find simply giving people their options when it comes to healthcare coverage can ease a lot of the uncertainty.

Here are the basics…

Most people become eligible for Medicare when they turn 65. Medicare is made up of several parts.

Medicare Part A is hospital coverage. It’s generally free, with some exceptions.

Medicare Part B is medical insurance, and you pay a premium for coverage.

Medicare Part C, aka Medicare Advantage, is an optional replacement for traditional Medicare. You might pay more for an optional Part C plan.

Medicare Part D is your prescription drug coverage. Pard D costs will vary.

So unless your prior employer has your health insurance covered for life, you’ll most likely go onto Medicare.

Choosing the right plan depends on your health status, family history, and budget. It’s also not a bad idea to consider a Medicare Supplement plan, or a Medigap policy.

A major reason to consider a Medigap policy is if you plan on traveling.

Traditional Medicare doesn’t cover you when you travel outside the U.S. But, most Medigap policies do.

The last thing you should consider is long-term care insurance. The data isn’t pretty. Coverage is expensive and your alternative of no coverage can be worse.

The main things to consider here are whether or not your assets are needed for someone else to maintain a certain standard of living. And, whether or not you’re looking to leave a legacy.

Those are two major questions you need to ask before you consider long-term care insurance.

Retirement Worry #2: Outliving Your Money

The second biggest worry is fear of running out of money. With longer life expectancies and rising costs, the amount of money it takes to maintain a comfortable standard of living in retirement is significant.

Step one is to figure out how much you’ll need saved to retire comfortably. You can do this a number of ways but my suggestion would be to find a few different retirement calculators and run the numbers.

Once you have a few different sets of numbers, choose the worst case scenario and build your savings plan around that number.

The sooner you know how much you should have saved the better. Sometimes it can seem like a pension, Social Security and some modest savings will be enough. But that isn’t always the case.

Inflation and other uncontrollable factors can quickly eat away at your savings. It’s important to keep your spending to a minimum early in retirement, this way you give your money time to grow and you’ll have extra saved should you run into trouble later on.

Retirement Worry #3: Not Enough Cash Flow

This worry might seem similar to the second, but it comes from a different place. A lot retirees worry that their income won’t be enough to cover basic living expenses.

The fate of Social Security is up in the air. It likely won’t disappear but it could be significantly reduced, leaving a lot of retirees struggling to pay their bills.

The fix here is putting in place a solid drawdown strategy. The most common strategy is the 4% rule, where you withdraw 4% of your savings in the first year of retirement, and each year after that you take out the same dollar amount, plus an inflation adjustment.

For example, if you have $1,000,000 in retirement savings, the first year you would withdraw $40,000. Then, over the course of that year, inflation runs 3%. The next year, you’d withdraw $41,200.

There are a number of different drawdown strategies, the point being that having a sufficient cash flow is critical in retirement.

Retirement Worry #4: Debt

The last big worry is paying down debt. This worry probably wouldn’t have topped the list 20 years ago. But today retirees carry a lot more debt.

Bigger mortgages, multiple credit cards — it’s a major issue that retirees face. It’s not that you can’t ever have debt in retirement, but you need to be able to manage it.

If you can, pay off your credit cards before you retire. You don’t want your retirement savings getting eaten up by high-interest payments.

In some cases, you’ll want to go into debt. Maybe you need to replace your vehicle and the interest payments are low enough that it makes sense to take out a car loan.

You might also downsize or buy a second vacation property with a mortgage. So long as you’re not relying on debt to fund your retirement and you have a plan in place to manage the debt you owe, you can overcome this worry.

The bottom line is that it’s natural to feel some anxiety about retirement. With the right plan is place and a grasp on what’s to come, you can mitigate most of your fears fairly easily.

To a richer life,

Nilus Mattive

Nilus Mattive

The post The Big 4 Retirement Worries and How to Beat Them appeared first on Daily Reckoning.

Control Your Frivolous Spending in 6 Easy Steps

This post Control Your Frivolous Spending in 6 Easy Steps appeared first on Daily Reckoning.

One of the downsides to saving large sums of cash is it starts to burn a hole in your pocket.

When I was a kid, my grandparents would occasionally give me a $10 bill after I’d go visit for a week. I had zero tolerance for saving back then, so I would spend it on candy and comic books almost immediately.

Since then, I’ve built up a pretty good tolerance against spending cash. I’ve seen too many financial struggles and missed opportunities to not have a decent stockpile of cash in my bank account.

As of late though, my tolerance against spending is being tested. With a looming bear market, hoarding cash doesn’t feel like a bad investment.

The problem is this extra money starts tempting you. And, the last thing you want to do is waste your hard saved cash on something frivolous.

So, what should you do?

Here are 6 “easy” tips to help you control spending. I say easy because none of these require any extra discipline or extravagant measures. All you’ll need is a calculator, a pen and pad of paper.

The fastest way to boost your savings is by not spending what you have. If you want to accumulate more money, you need to learn some tricks to keep your spending urge at a minimum. Here are some tips I like:

Tip 1: Calculate How Much in Gross Income Is Needed to Buy

How much does it cost to buy a $90,000 Porsche 911 Carrera? It takes about $136,000 in gross income at a 30% effective tax rate. At a 25% effective tax rate, it requires $2,700 in gross income to purchase the newest $1,799 Macbook Pro.

Whatever you’re thinking about buying, multiply it by 1.5x to find out how much it really costs before tax. Suddenly, what you want to buy doesn’t seem as affordable.

Tip 2: Calculate How Many Hours of Work It Takes to Buy

If you work a salaried job, then you likely don’t pay much attention to your hourly rate.

However, understanding how much labor is required to afford something is sometimes the best strategy to give yourself some pause.

For example, to buy a $9,000 second-hand Rolex Submariner will take about 450 hours driving for Uber at $20/hour after operating costs. If you drive for 40 hours per week, that’s almost 11.5 weeks worth of work to purchase one watch.

Tip 3: Save 50% of Your After Tax Income Every Year

This might sound challenging, but I promise it’s not. As long as you’re maxing out your 401k and saving a certain percentage of your after tax income before you spend, you can afford to do whatever you want with your money after that.

But one idea I like is to max out your 401k and then save 100% of every other paycheck. Since most employers pay out twice a month, you can easily save at least 50% of your after tax income every year by following this plan.

It’ll be painful for the first 6 months, but after that you’ll adjust your living standards and it becomes easy.

Tip 4: Compare Yourself to Other People

If you make more than $35K a year, you’re in the top 1% of global income earners. Appreciate what you have compared to the billions of other people who weren’t lucky enough to be born in a developed country.

According to the UN world food program, some 795 million people in the world do not have enough food to lead a healthy active life. Simply comparing your circumstances to those less fortunate is sometimes enough to curb those impulse buys.

Alternatively, you can try motivating yourself by comparing your wealth and career success to other people your age who are doing better than you. Depending on your personality type, this can be really motivating and force you to keep boosting your savings in order to catch up.

Tip 5: Establish a Spending Goal

There’s a rule I like which states that whatever you want to buy, you should try to make at least 10x that amount first. For instance, if you want to buy a $30,000 car, try making $300,000 first. This is a tough rule to stick to but it forces you to achieve certain financial goals tied to big rewards.

What you’ll find is after spending all this time earning and saving enough to reach your big goal, you might lose the desire to actually buy what you originally thought you wanted.

Make your spending goals challenging so when you reach them it’s worth the pain to make the purchase.

Tip 6: Visualize the Opportunity Cost of Your Purchase

If the S&P 500 averages 7% a year for the next 10 years, you’ll have doubled any money you invest today in the index. Therefore, the $9,000 watch or $30,000 car you buy today might be worth $18,000 and $60,000 respectively in the future. Visualizing opportunity cost is one way to prevent spending, but it’s hard because it’s difficult seeing that far into the future. One easy way to see the future is by running your finances through a retirement calculator. You’ll quickly see whether you’re on track to retirement or not.

Boosting savings is not rocket science. Yes, it requires some discipline but if you follow these simple tips on how to curb your spending, you’ll build a high tolerance and see your bank account grow.

To a richer life,

Nilus Mattive

Nilus Mattive

The post Control Your Frivolous Spending in 6 Easy Steps appeared first on Daily Reckoning.

5 Financial Rules of Thumb You Need to Break

This post 5 Financial Rules of Thumb You Need to Break appeared first on Daily Reckoning.

One of my favorite Seinfeld episodes is when Kramer storms into Jerry’s apartment and starts complaining about another golfer who picked up his ball in the middle of the fairway to clean it.

Kramer goes on to say that he penalized his friend a stroke for breaking the rule.

Elaine then asks, “What is the big deal?” and Kramer replies, “Hey, a rule is a rule, and without rules there’s chaos.”

The same can be said for personal finance.

Without money rules, chaos can ensue. However, there are some rules of thumb I believe you should be breaking if you want to get ahead.

Some rules are outdated, and some simply don’t apply to everyone’s individual financial circumstances. So why bother follow a rule that makes no sense?

Here’s my list of 5 financial rules of thumb you should consider breaking:

1) Use Your Age to Determine Asset Allocation

During the 1980s and 1990s, it was standard to give the following asset allocation advice:

“Subtract your age from the number 100 and that is the percentage of your portfolio you should have invested in equities, with the remaining percentage in fixed income, adjusted each year as you age.”

Under this rule, at age 30, for instance, you should keep 70% of your portfolio in stocks and the rest in bonds and other relatively safer securities. At age 65, you invest 35% of your assets in stocks.

The idea behind the rule is to gradually reduce investment risk as you age. But that doesn’t always work. Americans are living longer and retiring later.

Your retirement savings strategy should be adjusted to meet a bigger nest egg. At the same time, the yield on a 10-year Treasury Bill is roughly 2.5%, down from a peak of nearly 16% in the 1980s.

And with the stock market soaring over the past decade, it might not have made a lot of sense to dump a large portion of money into fixed income when you could reap greater gains.

My advice, rebalance your portfolio each year, look at your target retirement age, what you plan on using your funds for in retirement and your risk tolerance.

2) Pay Off Your Mortgage as Fast as Possible

For most, a mortgage is the largest debt they’ll ever owe. So from a risk tolerance point of view, it makes sense to want to pay down the debt as fast as possible.

Although this really only makes sense when interest rates are outpacing the stock market. If interest rates are double digits and investment returns average 7%, yes, it makes sense to pay down your mortgage faster.

But, the majority of homeowners today have a mortgage rate of less than 5%, and are seeing average annual returns above 7%.

So it’s better to make your payments on time, take your mortgage interest deduction on your federal income taxes and have more money invested for higher returns.

3) You’re Throwing Away Money If You Rent

Owning a home is part of living the American dream. And there’s been long held debates over whether or not renting is akin to flushing money down the toilet.

The way I see it, you have to live somewhere and renting affords you a life free of many of the  unpredictable expenses homeownership offers. Not having to pay mortgage interest, property taxes, maintenance and repairs can be a big plus if there are good opportunities to put your money to work elsewhere.

Renting also means you have the flexibility to move to where opportunity exists. If you’re tied to a home, you might not be able to pick up and move to a more lucrative job opportunity in a neighboring state.

Obviously, there are benefits to owning a home too, so take this advice with a grain of salt.

4) Spend No More Than 30% of Your Income on Housing

The 30% rule is a common budget benchmark for housing costs. The gurus tell you to cap your rent or mortgage at under 30% of your monthly income.

This rule of thumb stems from housing regulations from the late 1960s. A US Census Bureau study said the Brooke Amendment (1969) to the 1968 Housing and Urban Development Act established the rent threshold of 25% of family income in response to rising renting costs.

The rent standard later rose to 30% in 1981, which has since remained unchanged, according to the study.

But this 40 year old standard may not be realistic for a lot of people today. A Harvard University study found in 2015, nearly 21 million renters — almost half of the country’s renters — spent more than 30% of their income on housing across the country.

Rather than think 30%, think what can I afford? Look at how much you earn, how much debt you owe, and where you live, your rent could be more or less than 30% of your paycheck.

If you find your rent is eating away most of your paycheck, consider ways of making more income or consider moving somewhere with lower costs.

5) Withdraw 4% of Your Savings In Retirement

When you retire, it’s been said you should start withdrawing 4% from your portfolio in your first year of retirement, increasing withdrawal each year enough to cover inflation.

If you have $2 million saved, you would take out $80,000 for the first year. If the annual inflation rate is 2%, then you withdraw $81,600 the following year ($80,000 plus 2%). And you continue this trend for the next 30 years.

This rule was created on historical data by financial advisor William Bengen in 1994. Where this rule falls short is it doesn’t take into account life’s ups and downs.

Your investment performance might lag one year because of a poor market or economic conditions. Bengen also assumes retirees have a portfolio split between stocks and bonds. He later revised the rule to 4.5%, using a more diversified portfolio.

My advice to you is be flexible and revise your spending rate based on your needs and portfolio performance. Early retirees might have a smaller nest egg, and need to withdraw less than 4% to make their savings last.

And someone with major health concerns and a shorter horizon might want to enjoy more of their savings with the time they have left.

As you can see there is no one-size-fits-all book of rules for personal finance. Use money rules as guidance, but use your best judgement on whether or not a rule should be broken or not.

To a richer life,

Nilus Mattive

Nilus Mattive

The post 5 Financial Rules of Thumb You Need to Break appeared first on Daily Reckoning.

Big Time Gains from Part-Time Gigs

This post Big Time Gains from Part-Time Gigs appeared first on Daily Reckoning.

Dear Richer Lifer,

The first few days of retirement are invigorating and strange. Should you set an alarm? Should you get to the gym early, or sleep in and enjoy a few days of extra rest?

Your schedule is fluid and you find yourself relishing all the extra time on your hands. Want to go play golf mid-morning? Sounds great. Have lunch at 3pm? Sure, why not! That hobby you have been wanting to pursue? Try it out!

A few days turns into a few weeks, and if you’re like a lot of people, you’ll find yourself filling the hours in weird ways. You watch some tv, read a few books, take naps…

Then boredom sets in. The hours and hours of open time that were once so appealing, are now dull.

You may be surprised to find that you wish you were working again! Not necessarily full time, don’t get me wrong, but a few hours at a time just to stay engaged and energized.

You might find that you miss the fulfillment you used to get from working. Maybe you don’t find yourself wishing for your 40 hour a week, 9-5 grind, but you do want to be on a team again. There is something special about working toward a common goal you enjoy with others.

Or maybe you aren’t bored, but you might find you could use a little extra cash, now that all those retirement dreams of travel and leisure are here. Some additional spending money when you’re visiting the tropics might come in handy, or get you on the plane in the first place.

No matter what your reason, you may find you want to pick up a part time job.

Here are some part time jobs that are perfect for retirees:

Driving for Uber / Lyft

I can’t tell you how many times I’ve chatted with my Uber driver and had them say some version of: “I retired a few years ago and I wanted a way to fill the time. Uber is perfect – I wish I’d done this years ago!”

With flexible hours and a low barrier to entry, Uber and similar driving gigs are an easy way to get started making part time income. This is so popular with retirees that more than half of all Uber drivers are age 61 and up. If you want a gig that’s interesting, variable, and available to you on demand, ride-share driving might be perfect for you!

Translating / Tutoring In A Foreign Language

If you speak more than one language, you’re in luck. Translators and foreign language tutors are always in high demand.

Like teaching, you can look for positions at local companies or go it alone and offer one-on-one lessons. Best of all, you can often offer this service online. So if you don’t want to leave your home, you don’t have to!

Acting As A Park Ranger / Docent

Maybe your heart yearns to be in the great outdoors, or maybe you really dig the Paleolithic Era. Either way, you can find a great part time gig at National or State Parks or a local museum.

These amazing resources are always in need of friendly, dependable staffers, so find your favorite park or museum and offer your time and talent.

Real Estate

If you’re looking for a position with lots of opportunities to meet people and share your knowledge of your hometown, real estate is a great option. You can become a licensed agent with just 4-6 months of training, and as for the income potential, the sky’s the limit.

If you’ve got a great community of friends already, real estate is great in that case, too – you can quickly build a network of potential clients with people you already know.

Consulting

If you have considerable professional experience you may find that consulting can be a fantastic gig for you. Companies, small or large, may be able to benefit from your knowledge.

In order to get started, decide on some areas of specialty and update your LinkedIn profile so people know you’re available to help them. Don’t forget to reach out to past colleagues, too. With a little effort, you can have a thriving and lucrative consulting job in a short amount of time.

Freelance Writing

If you have considerable professional experience you may find that consulting can be a fantastic gig for you. Companies, small or large, may be able to benefit from your knowledge.

In order to get started, decide on some areas of specialty and update your LinkedIn profile so people know you’re available to help them. Don’t forget to reach out to past colleagues, too. With a little effort, you can have a thriving and lucrative consulting job in a short amount of time.

Offering Childcare

Parents and grandparents have experience in one extremely useful, high-demand skill set — childcare. Wherever there are people, you’ll find moms and dads who need all the help they can get.

You can offer your services as a babysitter, or get certified through your state and offer complete childcare services. If you want to make a big difference in a child’s life, you can even move into foster care and take in kids who need help temporarily. While this isn’t the typical part time gig you might have been thinking of, it certainly is an invaluable way to give back.

House Sitting / Pet Sitting

Perhaps working with people isn’t your thing, but you love dogs. Pet sitting could be perfect for you. You can offer your services on sites like Rover.com or sign up for local Facebook groups and reply to anyone who needs help there.

If you want something even easier than checking on Fido and Fluffy, then look into house sitting. This easy gig is little more than checking on someone’s home from time to time and making sure their plants don’t die while they’re out of town, so it’s perfect for someone with extra time on their hands.

There are just a few ways you can earn some side income in your retirement years. If one of them piques your interest, give it a shot! If you find you want to try something else in the future, you can always change.

After all, the best thing about retirement is the flexibility to do what you enjoy, so factor in what you like, and you’ll find new satisfaction every day.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

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6 HUGE Social Security Mistakes

This post 6 HUGE Social Security Mistakes appeared first on Daily Reckoning.

One of the biggest Social Security mistakes I see people make is claim their benefits too early.

According to the Center for Retirement Research at Boston College, 60% of seniors are applying for social security benefits before full retirement age.

If you turned 62 last year, your full retirement age will be 66 years and six months. Full retirement age will continue to increase in two-month increments each year until it reaches 67.

Even though you’re eligible to start claiming benefits at 62, it’s ill-advised. Monthly payments are reduced by 25-30% if you claim at 62, depending on your birth year.

In theory, claiming Social Security benefits should be straightforward — after working several decades, fill out an application and get a monthly benefit check for the rest of your life.

But, you and I know it’s not that easy. There are strategies to consider if you want to maximize your benefits, and there are several mistakes that could cost you thousands of dollars over the course of your retirement if you’re not careful.

Here are just a few mistakes I see people make that could easily be avoided.

Mistake #1 – Claiming Benefits Too Early

I already explained why this is not advised for most retirees. But if you already chose to claim benefits early and now are second-guessing your decision, there are some recourse steps you can take.

Specifically, you are allowed to withdraw your Social Security application and re-claim benefits at a later date, but two conditions apply.

First, you must withdraw your application within the first 12 months of receiving benefits. And second, you have to pay back every cent of benefits you’ve already received. Which can be a lot of money if you weren’t planning on withdrawing.

This is why you should be certain. There are some perfectly good reasons for claiming benefits before your full retirement age, but it’s important to weigh all your options before you make moves.

Mistake #2 – Not Understanding the “Earnings Test”

If you’re still working and haven’t yet reached full retirement age, your benefits can be withheld based on your earnings.

Here are the two “earnings test” rules for 2019:

  1. If you will reach full retirement age after 2019, $1 of your benefits will be withheld for every $2 you earn in excess of $17,640.
  2. If you will reach full retirement age during 2019, $1 of your benefits will be withheld for every $3 you earn in excess of $45,920. This is prorated monthly, and only the months before your birthday month are counted.

To be clear, benefits withheld under the earnings test aren’t necessarily lost. They can be returned in the form of increased benefits once you reach full retirement age.

People who think they can be fully employed and collect their Social Security benefits are often caught off guard when the Social Security office tells them they made too much money and have to repay some of the benefits.

Once you reach full retirement age, you can earn as much as you’d like with no reduction in benefits.

Mistake #3 – Assuming Social Security Is All the Retirement Income You Need

23% of married couples age 65 and older and 43% of unmarried seniors rely on Social Security for 90% or more of their income. Not only is this unsustainable, it’s not how Social Security was designed. The original intent was that Social Security would account for about half of your retirement income.

In reality, the average American can expect Social Security to replace about 40% of their income. The rest needs to come from other sources, like pensions and retirement savings.

Typically you’ll need 70% to 80% of your pre-retirement income to maintain your quality of life after retiring.

Mistake #4 – Not Checking Your Social Security Earnings Record

Do you check your Social Security statement each year? If not, now is a good time to create an account at www.ssa.gov and check it out.

Your Social Security statement has lots of valuable information, including your estimated retirement benefits, disability benefit eligibility, Medicare eligibility and benefits for your potential survivors.

But maybe the most important reason to check your statement every year is to ensure it’s correct. Recently, the SSA said there was about $71 billion in Social Security-taxed wages that couldn’t be matched to any earnings records, and only half of this was eventually resolved.

Because your future benefits are based on your earnings record, it’s important to make sure you keep tabs on this number.

Mistake #5 – Remarrying without Understanding the Consequences

If you’re collecting an ex-spousal Social Security benefit and you remarry, that benefit goes away. And if you remarry someone who is 10 or 20 years younger than you, you might not qualify for spousal Social Security benefits for awhile.

So make sure you understand how remarrying will impact your benefits. Also consider, if your ex-spouse passes away, you will step up to their full benefit amount — not the most pleasant thing to think about but important to consider.

Mistake #6 – Assuming Social Security is Tax Free

A surprising number of people I’ve talked to don’t realize they may have to pay income tax on their Social Security benefits. It depends on how much retirement income you have. But you don’t have to be considered “high income” to be taxed.

If your combined income is greater than $25,000 for single filers or $32,000 for married couples filing jointly, as much as 50% of your benefits could be taxable. If your combined income is greater than $34,000 (single) or $44,000 (joint), as much as 85% of your benefits could be subject to federal income tax.

It really depends on how significant a source Social Security will be for your retirement income. If you have a pension and significant 401(k) income, likely a portion of your Social Security benefits will be taxed.

If Social Security is your prime source of retirement income, you’re unlikely to be taxed. Consider this when estimating how much income you’ll need in retirement.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

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Endless Summer of Low Interest Rates

This post Endless Summer of Low Interest Rates appeared first on Daily Reckoning.

My summer is in full swing.

South swells are rolling through the ocean…

The California sun is shining in all its glory…

The water temps are balmy (at least for the Pacific)…

And there’s enough daylight to put in a full day of work and still surf for hours on end.

Of course, there are still plenty of things that can ruin my best-laid plans.

The wrong tide… onshore winds… simply too many people out in the water.

In today’s market, I think central bank policies are the biggest wild card of them all.

I will be the first to say that members of the Federal Reserve – and most global central bankers – are all very smart people.

At the same time, they are not immune to the same foibles that plague the rest of humankind.

They want to keep their jobs and their power. Some may be overconfident in their own abilities.

Others may actually be scared by the massive responsibility they have.

The list of emotional baggage goes on and on. But the point is that over the last two decades, U.S. central bankers have repeatedly turned toward easier and easier money at every rough patch in the road.

And now they’re discovering that it is nearly impossible to reverse course in any meaningful way.

Current Interest Rates

For a little while, it seemed like they were actually getting us back to some semblance of normal.

In my mind, “normal” is around 5%. I say this because the long-term average Fed Funds rate is 4.8%.

Right now, we’re at a targeted range of 2.25-2.5 and an effective rate of 2.41%.

You’d think half of normal is low, but it’s actually high based on the last two decades.

Take a look…

As you can see, ever since the original tech bubble popped, the Fed has only managed to get its interest rate target back above 2.5% for a relatively brief period before another bubble – this time in real estate – rose up and popped.

Now, after finally tip-toeing back up over the last several years, we’re already hearing talk of a new round of rate cuts.

Based on Fed-funds futures, market participants are essentially certain that we will see a rate cut at the end of this month… and they see a 16% chance it will be for half of a percentage point!

What a massive reversal!

Take a look at the Federal Reserve’s so-called “dot plots,” which show each individual voting members’ forecasts for interest rates going forward.

This first one is from June, 2017…

As you can see, most FOMC members were expecting rates above 2.5% by this year and holding somewhere between 2.75% and 3% beyond.

Now here’s the one from June, 2019…

Notice that seven members of the FOMC now expect rates to go back below 2% this year and to stay there in 2020…

Five see that continuing all the way through 2021…

And 14 of 16 FOMC members now believe rates will be at 3% or lower in 2022 and possibly beyond.

There’s always some new reason why rates need to stay low (or go lower still).

This time around, it’s a nebulous batch of uncertainties.

How Market Uncertainty Affects Rates

As Chairman Jerome Powell told the House Financial Services Committee during his two-day stint on Capitol Hill last week:

“It appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook. Inflation pressures remain muted.”

You might also translate that as, “President Trump wanted lower interest rates and has essentially forced our hand”… or as “we’re doing everything we can to avoid a Japan-style deflationary period… or both… but I digress.

The point is that it feels like the U.S. is in an endless summer of below-normal interest rates.

And things could go lower still.

Heck, in Europe they’ve been employing negative interest rates – a perverse arrangement where it actually costs people to park their money – since 2014.

Just remember that the weather can change quickly – it can get hotter or cooler, and it’s entirely possible for a storm to blow in… one that can’t be stopped by any amount of monetary policy.

For me, all of this simply argues for a renewed focus on income-oriented investments… especially at the value end of the spectrum.

Specifically, I continue to believe that dividend stocks give the best combination of immediate income… continued capital appreciation potential… and the chance for growing yields even if interest rate targets stay low for years to come.

Many of my favorite names have been lagging just as other parts of the markets look fairly overheated.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

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Until the Tax Man Do Us Part

This post Until the Tax Man Do Us Part appeared first on Daily Reckoning.

Are you planning a wedding for this year? Congratulations!

Whether it’s going to be one with hundreds of guests in a grand setting or something much more intimate… like a ceremony on the beach with a few close family members and friends… you have a lot going on now.

What to wear, whom to invite, what to serve, where to go on a honeymoon are surely on your checklist.

Furthest from your mind is what getting married will mean for your income taxes. But between now and next April, it will pop up. So the sooner you know what to expect, the more time you’ll have to plan, which could be especially important when it comes to…

The Marriage Penalty

If the two of you will pay more taxes as a married couple than you would if filing as two single persons, you are getting hit with the marriage penalty.

The Tax Cuts and Jobs Act that took effect last year eliminated the marriage penalty for many couples. Others might still feel the pain.

Let’s Start with the High Earners…

Two people without children each earning $500,000, taking the standard deduction, and filing as singles would be in the 35% bracket. If they marry, their combined income will be $1 million. That will push them into the 37% bracket and translate into $7,264 of additional income taxes.

Source: Tax Foundation

For our million-dollar couple and those with slightly more modest incomes, the 0.9% Medicare surtax could consume a piece of their paycheck. When single, the threshold amount was $200,000. For a married couple it’s $250,000.

So two singles each earning $150,000 don’t have to worry about this tax. Once they are married, though, their combined income will be $300,000 — exceeding the threshold by $50,000. 

Additional tax: $450

Then there’s the Net Investment Income Tax (NIIT).

The NIIT is a 3.8% tax on certain sources of income, including: interest, dividends, and capital gains.

As a single-filer, you’ll owe this tax if you have net investment income and your modified adjusted gross income (MAGI) is more than $200,000.

After you’re married and file jointly, the tax kicks in when the two of you have a combined MAGI of $250,000.

Now let’s look at…

Lower Income Folks…

Perhaps you’re not in the million-dollar club or even close to it. In fact, you’re way at the other end of the scale.

Then you might be familiar with the earned income tax credit. Keep in mind that a credit is different from a deduction in that a credit could result in a refund even when your tax bill is zero.

This credit is available to low earners and qualified working taxpayers with children.

The maximum amount of the credit is:

  • $529 with no children
  • $3,526 with one child
  • $5,828 with two children
  • $6,557 with three or more children

Say you and your future spouse each earn $40,000 annually and each have a child. In 2018, you were both eligible for a $3,526 tax credit since the threshold was $41,094 for a single filer. In other words, the two of you received a total of $7,052 in tax credits.

However, when you file for 2019, your combined income will be $80,000 — far exceeding the $52,493 married filing jointly limit.

So you can kiss that $7,052 goodbye.

Source: IRS

Tax Implications for Retirees…

Retirees tying the knot could see more of their Social Security benefits taxed.

If you file as an individual and your provisional income (total adjusted gross income, nontaxable interest, and half of your Social Security benefits) is less than $25,000 — you won’t owe tax on your benefits.

Provisional income between $25,000 and $34,000 will mean up to 50% of your benefits will be taxable. If your income is more than $34,000, up to 85% of your Social Security is subject to tax.

Logic would tell you that after you’re married these thresholds would double to $50,000 and $68,000 respectively.

Sorry, but logic plays no role here.

In fact, for married couples filing jointly the initial threshold is only $32,000. Between $32,000 and $44,000, you may have to pay tax on up to 50% of your benefits. And if it’s more than $44,000, up to 85% could be taxable.

 Filing status

Provisional income

Amount subject to income tax

 Single 

 Under $25,000

 0

 $25,000 – $34,000

 Up to 50%

 Over $34,000

 Up to 85%

 Married filing jointly 

 Under $32,000

 0

 $32,000 – $44,000

 Up to 50%

 Over $44,000

 Up to 85%

Regardless of your Income…

The amount you can deduct for state and local taxes (SALT) is capped at $10,000 for singles and married couples. This would only affect you if you itemize, which few do since the standard deduction is now $24,400 for married filing jointly.

Still, single taxpayers who do itemize and live in high tax states, like California and New Jersey, could see part of their deduction disappear after they tie the knot.

The Tax Policy Center has a handy tool that will calculate how much federal income tax two people might pay as individuals vs. as a married couple.

If you find that your taxes will increase after marriage, you could look into ways of reducing taxable income such as contributing to a traditional IRA or your employer’s qualified retirement plan, like a 401(k).

Also if there will be a big difference in the amount of tax you’ll owe, you should fill out a new Form W-4 so you don’t get any surprises come tax time.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

The post Until the Tax Man Do Us Part appeared first on Daily Reckoning.

How to Tell If You’re Frugal or Just Cheap

This post How to Tell If You’re Frugal or Just Cheap appeared first on Daily Reckoning.

Billionaire investor Warren Buffett is often labeled frugal.

He lives in the same house he bought back in 1958 for $31,500.

He never spends more than $3.17 on breakfast, and up until 2014, was driving the same 2006 Cadillac DTS.

It wasn’t until his daughter told him it was embarrassing that he traded up for the new XTS model.

Contrast Buffett’s frugal lifestyle to this story shared on Reddit a few months ago:

RE: What’s the cheapest/stingiest thing you’ve seen someone do?

My grandmother, as she didn’t own a computer, had to mail in all her bill payments. One month she didn’t get her water bill or it was delivered to someone else by accident. Whatever the cause, her next bill was for both that month and the previous month and included a late fee that was less than the cost of a stamp.

For the rest of her life she skipped the bill one month and then paid both the next because she saved a few cents by using just one stamp instead of two. This was a woman who had somewhere around a million dollars in the bank when she died.

There’s a fine line between frugal and cheap. And I’ll be the first to admit I sometimes toe that line. But for many Americans, frugality is a necessity.

Credit card and student loan debt are at the highest they’ve ever been. On top of that, inflation seems to be outpacing wage growth.

These factors make minimizing spending and reducing expenses that much more critical to the average household.

Nevertheless, it’s easy to take frugality too far. Here are a few telltale signs that you’ve crossed over from being frugal to just plain cheap:

Leaving a Bad Tip or No Tip At All

You know you’re cheap when you go to a restaurant and don’t leave your server a tip. If you think, “well, I’ve already paid for the meal therefore I shouldn’t have to tip,” you’re justifying your cheapness.

Waitstaff rely on tips as part of their income. Legally, they can be paid as little as $2.13 an hour plus tips. If the tips aren’t enough to bring their earnings up to the federal minimum wage of $7.25 an hour, their employers must add enough to make up the difference, but no more.

Instead of stiff-ing your server, you can save money by eating at a buffet or restaurant where you serve yourself. Or, you can save money by picking up your order rather than having it delivered or dining in.

Cheapos Buy-and-Return Shop

Another sign you’re cheap is if you buy-and-return shop. This is when you buy an outfit for a special event, you leave the tags on, wear it and then return it the next day to get your money back.

I’ve seen my cheap friends do this with appliances and power tools they needed for a season or one-off jobs. It’s not cool. Typically, what happens to these returned goods are the stores have to sell them at a discount since they’re no longer new, or they get scraped, adding to the waste in our landfills.

If you can’t afford to buy new, consider shopping at consignment stores or find used tools on ebay or Craigslist.

Rebate Double-Dipping

If you’re buying a product with a $25 mail-in rebate and you think it’s a great deal, you might be tempted to buy two. However, at the bottom of the coupon it usually says one rebate per household.

To get around this, you fill out a second form using a different mailing address, like a PO box. Legally speaking, this is a form of fraud – and since you’re using the postal system to do it, it can be prosecuted as mail fraud.

But even if you don’t get caught, you’re still being extremely cheap and it’s unfair to the manufacturer.

Instead of trying to double-dip your rebates, look for ways you can stack them. For instance, use a discounted gift card to make a purchase using the rebate code. This way, you save on the gift card plus you get the savings from the rebate.

Stealing Supplies

Your boss might not pay you enough, but that doesn’t mean you can pilfer pens, paper, markers, or sticky notes. Sure, these small office supplies might not seem like a big deal but it’s still theft.

The same goes for condiments at restaurants. If you’re stuffing your purse or wallet with ketchup, mustard, sugar or jam packets, you’re not being frugal, you’re being cheap.

This kind of petty theft hurts companies over time. Your company bought those supplies for office workers to use at the office, and taking them home costs the company money – which in turn leaves less money in the budget to pay you what you really deserve.

Similarly, restaurants have to cover the cost of all those condiment packets by raising their menu prices.

Regifting

There’s an art to regifting and it really boils down to thoughtfulness. If your budget is tight and you decide to regift, don’t gift someone you love something they’ve either given you as a gift or have seen you around using it.

Secondhand gifts don’t always have to be your own. If you find a nice cashmere sweater or leather jacket at a thrift store, your brother or sister won’t care if you paid $10 or $150 for it if it’s been something they’ve always wanted. It’s the thought that counts.

The Bottom Line

There’s a fine line between cheap and frugal. If you find yourself crossing over to the cheap side, think of who your cheapness is affecting. You might be saving a few dollars by being cheap, but you risk hurting your relationships and your own savings in the long run if you continue to be stingy.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

The post How to Tell If You’re Frugal or Just Cheap appeared first on Daily Reckoning.