MONEY Ask the Expert

Why It Pays to Spend Down Your College Savings Plan Quickly

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Robert A. Di Ieso, Jr.

Q. I have enough in my daughter’s 529 to pay her full tuition for freshman year. Should I? — Andrea B., Location withheld

A. Yes, it’s best to use the savings sooner rather than later, says Raymond Loewe, an adviser with United Planners Financial Services. Given that your time horizon is short and the stock market has had a good run, it’s best to realize those tax-free gains now. Plus, spending down the 529 early could improve your odds for financial aid in future years, albeit slightly. Every $100 used can be worth $6 in aid, says Loewe. One caveat: The IRS won’t let you snag an education tax credit and take the 529 tax break for the same expenses. So to get the full $2,500 American Opportunity credit, for example, you’ll want to pay at least $4,000 with other money, says Joe Hurley of Savingforcollege.com.

More on college savings:

MONEY Ask the Expert

How to Know When Your Car is Really a Lemon

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Robert A. Di Ieso, Jr.

Q. My new car has been in the shop for a month. Will a “lemon law” be of help? — Mark Wisner, Morrisville, N.C.

A. Assuming your car is deemed a lemon, you’re entitled to—your choice—either a replacement car or a purchase price refund (see below). The definition of “lemon” varies by state; in your home of North Carolina, a car qualifies if it has been out of service for a total of 20 business days over 12 months or has been ­repaired for the same problem at least four times. The car must have fewer than 24,000 miles on it and be less than 24 months old.

Before submitting a claim, notify the manufacturer in writing of the problem (via certified mail) and give the company a reasonable chance to fix it, says Rosemary Shahan, president of Consumers for Auto Reliability and Safety. Check your state attorney general’s office for details, and carefully document your complaints and attempted repairs.

LEMON LAW

MONEY Ask the Expert

Help, My Spouse Is Afraid of Stocks. What Should I Do?

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Robert A. Di Ieso, Jr.

Q: I just got married, and my husband and I are both contributing to 401(k)s. But he is very conservative with his investments and keeps very little in stocks. We have more than three decades till retirement. How can we align our 401(k)s so we both feel comfortable?

A: It’s certainly not unusual for a couple to have different attitudes about how to manage their money. Spouses often aren’t on the same page when it comes to personal finances. But when you are investing for retirement, being too conservative can make it harder to reach your long-term goals.

“You need some of the risk that comes with investing in stocks, or you won’t have enough growth to fuel your portfolio for the long run,” says San Diego financial planner Marc Roland. And the younger you are, the more risk you can afford to take with your retirement money.

That’s because you have more time to ride out the anxiety-inducing downturns in the markets. Financial planners recommend using your age and subtracting it from 110 to get the percentage of your portfolio that you should keep in stocks. A 30-year-old, for example, should have roughly 80% of their holdings in equities.

So how do you mesh that guideline with an asset allocation that doesn’t panic your husband when the market drops?

First, understand that asset allocation isn’t the only important factor you should consider. How much you put away has more impact on your retirement savings success than how you invest your money. When you’re decades from retirement, it’s hard to know exactly how much you’ll need for a comfortable lifestyle at 65. But one rule of thumb is that you’ll need 70% of your pre-retirement salary to live comfortably. You can get a good ball park estimate with a calculator like this one from T. Rowe Price.

The more you are contributing to your 401(k)s, the less risk you have to take on, says Roland. If you’re both saving at least 10% of your income, and you boost that rate to 15% or more as you get older and earn more, a balanced portfolio of about 60% in stocks with the rest in bonds would work, says Roland. (That ratio of stocks to bonds is a bit conservative for investors in their 20s, who could reasonably stash as much as 80% in equities.)

To achieve that overall mix, the more aggressive spouse can invest 80% in stocks, while the risk-averse spouse can hold the line at 40%, assuming you are contributing similar amounts to your plans. “That blend will give them an appropriate asset allocation but each portfolio is tailored to each person’s risk tolerance,” says Roland.

Related links:

MONEY Health Care

Why Your Spouse Could Start Costing You More At Work

Wedding rings with health cross on them
Burazin—Getty Images

As health care costs climb, firms are rethinking how much they should spend on coverage for their workers’ husbands and wives.

Q. I hear my company will start charging even more for my spouse to sign up for my health insurance. Why is that?

A. This summer, companies are busy choosing health plans for 2015. And the discussions in the boardrooms are about as heated as the air outside the office, according to Randall Abbott, a senior consultant with Towers Watson. Abbott has been in nearly a dozen meetings in the past three weeks that have addressed one particularly fraught topic: how much companies shell out for health care for their workers’ spouses.

Struggling to rein in health care spending and worried about having exceptionally rich benefits that trigger Obamacare’s so-called Cadillac tax in a few years, businesses are looking for ways to pare back insurance costs. And spousal coverage is often floated as a possible cutback, Abbott says. Many firms have figured out that they spend at least as much—and often more—on coverage for spouses than they do on the workers themselves, so they are rethinking the approach to coverage.

That could mean a higher health insurance premium next year. Just how much higher won’t be clear until this fall, when you sign up for next year’s plan.

“It is a very charged topic,” says Abbott. “Many organizations have prided themselves on being family friendly, and they talk about their employees and family as part of the corporate family, but actions like this are starting to restate the deal between employers, employees, and family members.”

Businesses are not required to offer coverage to spouses—though most large firms do.

Many companies have already been passing on higher costs, hoping spouses will think twice before jumping onto the employee’s plan. This year, half of firms with more than 1,000 workers had spouses pay more for their health premium than workers do, according to Towers Watson’s research.

One-quarter of large firms charge spouses more for coverage when they have access to employer-sponsored coverage at their own job but turn it down. Another 15% plan to go that route in 2015. How much more? On average, couples pay an extra $1,200 a year.

“We think the surcharge will grow not necessarily because all employers think it is a great idea, but it almost becomes a defensive measure to make sure your plan doesn’t become a dumping ground for spouses,” says Abbott.

Some employers require spouses with other coverage options to sign up for that employer plan. Ten percent of firms used that strategy this year, and 13% plan to add the rule next year.

Of course it isn’t always possible for a firm to know if a spouse has access to an employer-sponsored plan through his or her own job. “It is generally done on the honor system,” says Abbott. But if your spouse submits a claim, that may offer clues. For example, a work-related accident might reveal that he or she works at a large firm, where benefits are typically offered.

Only 2% of large companies have stopped paying any of the premium for spousal coverage.

While most of the attention so far has been on partners and spouses, employers are also eyeing what they spend on coverage for workers’ children. Previously most large firms had two rates: individual and family. Now the lineup at most companies includes an individual, couple, and family rate. A few even go as far as to base your premium on the number of children in your family. “This has become one more plan feature that is enormously important for employees and their spouses to understand,” Abbott says.

MONEY Careers

Why You Should Tell Your Boss About the Job You Really Want

Gear shift from Sales to Marketing
Shifting to a new department can be tricky. Sarina Finkelstein—Alamy

Q: I want to apply for an opening in another department at my company. Should I tell my boss?

A: In most cases, yes. Telling your manager you are going for another position may be awkward, but if she hears about it second-hand—and that’s a real possibility with an internal opening—that’ll be an even more uncomfortable conversation. Worse, the news could create a rift in your relationship that could make it tougher to do your job.

It’s not about asking for permission, says Heather Huhman, founder & president of Come Recommended, a job search, digital PR, and HR technology consultancy. It’s about maintaining a good relationship. “A good manager will respect your career goals and understand that few people want to be in the same job forever,” says Huhman.

Explain why you’re seeking the job. Maybe it’s an opportunity to take on more responsibility or earn a promotion. Or, if it’s a lateral move, the position will give you a chance to learn new skills or expand your areas of expertise so that you can move up the company ladder later. Whatever the reason, be clear that it’s not because you don’t like your boss or what you’re doing—even if that’s the case, there’s nothing to be gained from that kind of honesty.

Talking your boss also has a potential upside, especially if you’re a valued worker: If your manager learns more about your ambitions, she may create opportunities that will keep you. If not, well, then you’ll have a better sense of where you stand.

Ideally, your boss will be supportive and may even offer a recommendation that helps you land the job. At the least, you’ve ensured that your manager won’t get wind of it from someone else.

But if you think your manager will take the news personally or, more importantly, undermine your bid, don’t tell her in advance, says Huhman. When you interview, ask to keep the process confidential until you are further along.

If you do get the job, offer to help find and train a replacement. You’ll still be working at the same organization and maybe even collaborating on projects with your old team, so make the transition as easy as possible for your boss. If you stay on good terms, you’ll have a valuable contact in the organization, which can pay off. “You never want to burn any bridges,” says Huhman.

Have a workplace etiquette question? Send it to careers@moneymail.com.

 

TIME Ask the Expert

How to Stop Your Child From Spending a Fortune on Mobile Games

A few taps and swipes, and the costs can start to add up

Forget huge voice and texting bills. Kids these days are racking up massive charges on their parents’ phones without making a single call. Popular children’s games for devices like Apple’s iPhone and Amazon’s Kindle Fire are allowing kids to spend disconcerting sums buying in-game items, according to the Federal Trade Commission. The titles are often free to download, but the games then entice users to spend real dollars to purchase access to new levels and prizes.

Now the FTC is targeting Apple and Amazon, claiming the companies’ confusing billing systems have made it too easy for years for kids to make unauthorized purchases. (In one complaint, a consumer told the FTC her daughter spent $2,600 by repeatedly tapping on a single iOS game.) “There was a blurring of the line between real money and virtual money in these games,” says Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “Parents were not given the information to oversee their kids and make sure this didn’t happen.”

Apple agreed to pay at least $32.5 million in refunds to consumers earlier this year for such charges, but Amazon has resisted FTC appeals for a settlement, arguing that its practices are not deceptive. “Our experience at launch was responsible, customer-focused and lawful,” Amazon wrote in a July letter to the FTC. The dispute will be settled by a federal court. Meanwhile, parents will need to monitor their kids more closely.

FOR MORE FROM EXPERTS, GO TO time.com/asktheexpert

MONEY Ask the Expert

How to Invest Your First 401(k)

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Robert A. Di Ieso, Jr.

Q: I just started my first job after college, and I want to sign up for my company’s 401(k). How should I invest it?

A: By saving in a 401(k) plan while you’re still in your 20s, you give yourself a huge advantage—you’ll actually need to save less money for retirement than someone who gets a later start, thanks to the power of compounding.

But figuring out how to invest that money can be daunting. According to a survey by Charles Schwab, half of people find explanations of their 401(k) investments more confusing than their health care benefits. Another 46% say they don’t know what their best investment choices are, while 34% say they feel a lot of stress about how to allocate their 401(k) dollars. The sheer number of fund choices can also be overwhelming: the typical 401(k) plan offers 19 investment options, according to the Plan Sponsor Council of America.

The good news is that when you’re starting out, you can keep it simple, says Jane Young, a fee-only financial planner at It’s Not Just Money in Colorado Springs. If your company offers a target-date fund (nearly 70% do), that can be a smart choice. With a target-date fund, you get an instant all-in-one asset mix that gradually shifts to become more conservative as you approach retirement. A 25-year-old worker who plans to retire at 65 might choose a 2055 target-date fund. It would keep the bulk of its assets in stocks, which provide growth but are more risky than bonds or cash. When you’re young, you can afford to keep more in stocks, since you have decades to recover from bear markets. (If you want to minimize risk, you could opt for a more conservative target-date fund—you don’t have to choose one with your retirement date.)

If your plan doesn’t offer a target-date option, build a portfolio yourself using core funds, such as an S&P 500 stock index fund and an intermediate-term bond fund, says Young. Look for the lowest-fee funds, which will allow more of your money go to work for you. (For more on selecting good, low-cost options, see how we choose our Money 50 list of recommended funds.) A reasonable mix for someone in their twenties: 20% of assets in a bond fund and 80% in stocks. In the equity portion of your portfolio, invest 50% in large company stocks, 25% in international stocks, and 25% in small and mid-size companies.

Ultimately how much you save for retirement is more important than how you invest it. So be sure to put away enough to get your employer’s full matching contribution. Keep increasing your savings rate until you are contributing 10% or more—some investing experts suggest that Millennials save at least 15% of income (including your company match) to ensure a secure retirement. And by diversifying and opting for low-cost funds, you will make the most of your 401(k) plan.

MONEY Ask the Expert

The Best Ways to Access Cash Abroad

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Robert A. Di Ieso, Jr.

Q: My 23-year-old daughter will be leaving for France and Spain next week. What is the best and safest way for her to carry money? —K. Bird, Charlotte, N.C.

A: Assuming she’s going for a short time—anywhere from few weeks to several months—her best option will be to carry a debit and credit card issued by an American bank, says John Gower, senior banking analyst at NerdWallet. But she’ll want to be strategic about which institutions she gets these cards from and how she deploys them.

Typically, U.S. banks charge a fee of 1 to 3% of the total transaction amount each time you use a debit or credit card internationally. If you use your debit card to pull out funds from ATMs abroad, you’ll also get hit with an international ATM fee that’s typically around $2, though Gower has seen banks charge upwards of $5. That’s in addition to whatever the ATM you use will charge. So your daughter could be looking at costs of $10 or so each time she takes out $100. This may tempt her to just take out large sums at once, but carrying large amounts of cash through foreign cities isn’t ideal either.

Instead, to cut down on those ATM fees, consider having her open an account with a U.S. bank that has international branches in her destination so she can avoid the international ATM fee. (Citibank is one with many branches overseas.) Or she could open an account with a bank that has international partnerships. Bank of America, for example, is part of the Global ATM Alliance and because of this allows its customers to use their cards at any member banks’ ATMs for free.

Since credit cards offer greater fraud protection than debit cards, Gower recommends that she have a credit card with her as well. The best choice: A card aimed at international travelers that waives foreign transaction fees and has “chip and pin” technology, meaning a microchip is embedded in the card. Because most European countries use this style of card, she will decrease the chances that stores will have trouble reading her card. MONEY likes the GlobeTrek Rewards Visa from Andrews Federal Credit Union, which she can join by signing up for free with the American Consumer Council. This chip-and-pin card has no annual fee and no foreign transaction fees.

If your daughter gets this card, she’d be well advised to use it for her everyday purchases—rather than paying the 3% foreign transaction fee her debit card will charge. Of course, this only makes sense if she’s responsible enough to pay her bill off in full every month.

Does she have plans to be away for quite a while—maybe studying abroad for a year? In that case, she should consider opening an account with a local bank. While there can be hassles involved with understanding another country’s banking rules, she will avoid out-of-network ATM fees and have a debit/credit card that is more universally accepted than an American card might be, says Gower. But she should also keep a U.S. account active in case of emergency, so that someone at home can easily transfer funds to her.

No matter which option your daughter goes with, she’ll want to bring at least two different types of electronic payment. That way if her debit or credit card isn’t accepted by a store or is stolen she has a backup option. She’ll also want to alert her financial institutions prior to departure of where she’ll be going and how long she’ll be there so that the provider doesn’t cancel or halt her card thinking the charges are fraudulent activity.

MONEY Health Care

Why Your Boss Isn’t Dropping Your Health Plan (Yet)

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Robert A. Di Ieso, Jr.

Obamacare requires most employers to offer coverage next year, but fears persist that many will dump workers onto the insurance exchanges instead. Fear not, for now.

Q: I’ve heard that some firms may drop their health plans and have workers purchase a plan on the government exchanges. Will that happen to me?

A: Nine months after the launch of the controversial health insurance exchanges, confusion hasn’t died down over what exactly health reform means for the average American. A new poll found that 65% of workers are very or somewhat worried that their firms will drop health coverage and have employees go it alone on the new federal and state insurance exchanges.

Such a move would hurt, at least in workers’ minds, according to the survey of 1,240 likely voters by Morning Consult, a digital media company. Half said that if their employer exited the benefits business, they would be negatively affected; only 16% expected to benefit from such a switch.

Even though Obamacare requires firms with 50 or more workers to offer insurance or owe a fine starting in 2015, the concern is that some will opt to pay the fine, since individual coverage can cost two to three times as much—and substantially more for a family plan. What’s more, employers with fewer than 50 workers that already offer health benefits—even though they are not required to—may decide to get out of the business now that all workers have the alternative of buying coverage on an exchange.

Are workers right to worry about getting dumped? As long as you work for a large firm, you shouldn’t lose sleep over the issue, at least not yet, says Beth Umland, director of research for health and benefits at consultant Mercer. Earlier this year—well after the exchanges went live—an overwhelming 94% of big firms reported that they will keep offering health coverage for the next five years, Umland says. That percentage has remained consistent since Mercer first asked the question in 2008.

Separate research from the National Business Group on Health, which represents large employers, also found about 95% of those firms plan to stick with the status quo, says CEO Brian Marcotte.

A wait-and-see approach

Big business remains committed for lots of reasons, experts say. For one, good benefits are crucial to attracting talent. More than 90% of workers say health-care benefits are as important as pay, according to Mercer. In the Morning Consult poll, more than half of respondents say they would consider looking for a new job if they had to shop for coverage.

Company leaders are also uncertain about how premiums and plan features on the individual market will evolve after last year’s shaky launch. Until the exchange offerings become more predictable, executives are unlikely to send their employees there, with or without a subsidy to buy coverage, says Tracy Watts, who leads the health care reform group at Mercer.

Even then, large firms may not go that route. “The math doesn’t work for most firms,” says Watts. Today your boss pays its share of your health premium with pre-tax dollars. If the firm decides to offer you a subsidy to buy your own plan instead, the loss of that tax benefit means it would likely have to dole out more for you to get the same plan—or risk facing worker backlash.

Smaller firm, bigger risks

You’re more likely to be moved to an exchange if you’re at a firm with fewer than 50 workers. About one-third of small businesses that offer coverage today say they are considering getting out of the game, up from only 23% a year ago, says Mercer’s Umland.

You also face a higher likelihood if you work at a firm with a large low-wage or part-time workforce, such as a store or hotel, says Marcotte. Many firms in those industries do not offer health insurance to all their workers today. Rather than add them to the plan, companies may decide workers are better off on the exchanges, where they can qualify for government subsidies only if their boss fails to offer an affordable plan.

Keep in mind that while most firms say they’ll remain in the game for the foreseeable future, they’re not nearly as confident over the long haul. “Health care is changing pretty rapidly right now,” says Marcotte. “So they’ve got to look at it every year.” By then, though, you too should have a better sense of how you’d fare on your own too.

MONEY Ask the Expert

How to Ask Your Parents for a Bigger Share in Their Will

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Robert A. Di Ieso, Jr.

Q: I have two siblings. My parents help out my sister a lot. My brother and I are doing ok financially. My parents plan to leave money equally to all three of us. I don’t think that’s fair. How can I say something without looking greedy? – John, Portland, Maine

A: If your parents are already giving your sister significant financial help, receiving equal amounts of money in their will may seem unfair. But that’s how most people do it, says lawyer Ann-Margaret Carrozza of MyElderLawAttorney.com.

The odds are small that the kids in any family will end up with identical financial outcomes, and those differences may not be easy to address in a will, which is a final document of your parents’ wishes for their family. “Most parents have a strong desire to treat their children equally,” says Carrozza.

Still, it makes sense ask your parents about their intentions. How do they view the financial help they’ve provided your sister? If they think of the money as a gift, then that’s the end of the conversation. If your parents consider it a loan that will be paid back, suggest that they formalize the arrangement with a promissory note and keep that document with their estate papers. Either way, find out what your parents’ goals are for their legacy, and get it in writing so there’s no confusion.

By having the conversation with your parents now, you can head off possible conflicts down the road. “When there’s an unequal distribution of assets in the will, the chances that the heirs not treated favorably will contest the will go up dramatically,” says Carrozza. That’s something to be avoided, given the high emotional and financial cost of a legal battle.

Consider yourself fortunate if you do get something from parents. Only half of American retirees are planning to give an inheritance to their children, according to a recent HSBC survey. (Those that did leave a bequest gave an average $177,000.) And a US Trust survey found that two out of three of affluent parents viewed spending on travel or personal experiences as more important than leaving a financial inheritance to their family.

“At the end of the day, what parents do with their money is up to them,” says Carrozza.

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