MONEY Savings

When Good Investments Are Bad for Your Retirement Savings

Q: I have an investment portfolio outside of my retirement plans. That portfolio kicks out dividend and interest income. If I roll all that passive income back into my portfolio, can I count that toward my retirement savings rate? — Scott King, Kansas City, Mo.

A: No. The interest income and dividends that your portfolio generates are part of your portfolio’s total return, says Drew Taylor, a managing director at investment advisory firm Halbert Hargrove in Long Beach, Calif. “Counting income from your portfolio as savings would be double counting.”

There are two parts to total return: capital appreciation and income. Capital appreciation is simply when your investments increase in value. For example, if a stock you invest in rises in price, then the capital you invested appreciates. The other half of the equation is income, which can come from interest paid by fixed-income investments such as bonds, or through stock dividends.

If your portfolio generates a lot income from dividends and bonds, that’s a good thing. Reinvesting it while you’re in saving mode rather than taking it as income to spend will boost your total return.

But dividends can get cut and interest rates can fluctuate, so counting those as part of your savings rate is risky. “The only reliable way to meet your savings goal is to save the money you earn,” says John C. Abusaid, president of Halbert Hargrove.

It’s understandable why you’d want to count income in your savings rate. The amount you need to save for retirement can be daunting. Financial advisers recommend saving 10% to 15% of your income annually starting in your 20s. The goal is to end up with about 10 times your final annual earnings by the time you quit working.

How much you need to put away now depends on how much you have already saved and the lifestyle you want when you are older. To get a more precise read on whether you are on track to your goals, use a retirement calculator like this one from T. Rowe Price.

It’s great that you are saving outside of your retirement plans. While 401(k)s and IRAs are the best way to save for retirement and provide a generous tax break, you are still limited in how much you can put away: $18,000 this year in a 401(k) and $5,500 for an IRA. If you’re over 50, you can put away another $6,000 in your 401(k) and $1,000 in an IRA.

That’s a lot of money. “But if you’re playing catch-up or want to live a more lavish lifestyle when you retire, you may have to do more than max out your 401(k) and IRAs,” Taylor says.

Read next: How to Prepare for the Next Market Meltdown

MONEY consumer psychology

5 Foolish Money Myths You Can Stop Believing Right Now

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lina aidukaite—Getty Images

Drink your latte.

Whether you think of yourself as money-savvy or you’re acutely aware of where your personal-finance knowledge is lacking, it’s always good to make sure you aren’t managing your money on assumptions that are faulty to begin with.

Here are a few common money myths to kick to the curb.

Myth No. 1: Credit cards are evil

With the average credit card debt sitting at just over $15,000 per household, it’s easy to think that plastic is the irresponsible way to pay. Not so fast.

It’s not the method of payment that’s the problem; in fact, having credit cards can actually help your credit score. A full 10% of your credit score depends upon having a mix of credit types — installment credit, like a car loan, and revolving credit, like credit cards.

In addition, credit cards offer more security than any other form of payment, allowing you to dispute fraudulent activity without footing the bill.

Myth No. 2: Skipping your morning coffee will make you rich

Cutting back on small expenses might offer some breathing room in your budget over the long term, but money not spent doesn’t necessarily equal money saved. To grow that money, it would need to be put into a place where growth can occur — like an investment account or, at the bare minimum, a savings account.

You may think cutting out a daily expenditure is putting you on a path to financial independence, but that’s only step one.

Myth No. 3: It’s too risky to invest your money

The truth opposing this myth is simple — it’s too risky to not invest your money.

If you’re already diligent about socking away money each month, that’s a great start. But with interest rates sitting so low, money put into a savings account will likely lose more to inflation than it can make up in growth. That’s where investing comes in.

Through the power of compounding, a single $500 investment made at the age of 20 earning a conservative 5% return would be $4,492.50 at the age of 65. Imagine that scenario with ongoing contributions and larger returns. It would put any savings account to shame.

Myth No. 4: All debt should be paid before saving

Unfortunately, emergencies and unexpected expenses occur at all stages of life — even when you’re working to pay off student loans or crawl out from underneath credit card debt.

A study recently released by Bankrate found that 60% of Americans wouldn’t have the funds available to cover even small hiccups — like a $500 medical bill or car repair. Think about how many of those expenses you’ve run into in the last six to 12 months; probably at least one.

If you want to avoid incurring more debt as a result of life’s curveballs, work to save while paying off debt. This will give you a better chance of smooth sailing to the finish line.

Myth No. 5: You should borrow the most money offered to you

Wondering how much house you can afford? Don’t let the loan amount offered by the bank be your guiding light.

Those in the business of making loans are incentivized to offer the biggest loan possible that you’ll be approved for. So while they may be checking out your debt-to-income ratio, this simple equation doesn’t always offer an accurate snapshot of what you can actually manage to pay each month.

The same goes for credit card limits — having a $20,000 limit doesn’t mean your finances can easily handle paying back $20,000 worth of purchases.

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MONEY buying a home

Should You Ever Pay Cash for a Home?

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Laboko—Shutterstock

Consider what paying in cash will do to your savings — emergency, retirement and otherwise — in the short term.

While some of us may be struggling just to afford a down payment, there are people out there who are paying for their homes in full in cash. Finding a great property and forgoing all the bank paperwork and loan repayments may seem like a dream, but it can, in fact, be a mixed blessing. So, if you are looking to buy a home and could afford to pay all cash for it, should you?

Running the Numbers

A great place to start in this process is figuring out how much money you would save buying a home in an all-cash payout versus with time-based loan payments. Compare the sticker price to the eventual price tag of your home if paid for with a 15- or 30-year fixed mortgage with a down payment of around 20%. You will save money on interest, but it’s a good idea to factor in the loss of the mortgage interest deduction when it comes to tax time. Also, consider what paying in cash will do to your savings — emergency, retirement and otherwise — in the short term.

Pros

If you truly have the money available immediately and it won’t put you in jeopardy of going into debt if an emergency were to come up, you will most likely save money by not paying interest on a loan. You will also avoid all of the paperwork that comes with securing a loan, pesky closing costs and the often-frustrating loan process.

Your credit history also will not come into play, which may be beneficial if you have a shaky credit past or have run into trouble before while still having considerable savings. You will also have available equity in your home that you could likely tap in case you hit tough financial times. Furthermore, you can only lose the amount of money you have put in because you are not leveraged, meaning you do not need to get as concerned about market fluctuations.

Another benefit is mostly psychological — you actually own your house, giving you a sense of security and pride. Probably most importantly, you are a very attractive buyer to motivated sellers, giving you an edge over other buyers. The deal will be simpler and faster for both sides and buying in cash may even put you in a position you to get a better deal. After all, time is money.

Cons

Paying cash for your home likely means most of your savings or at least a lot of your money will be tied in one asset, leaving less money to invest in other, diversified assets. Also, real estate has a historically lower return on investment than stocks or bonds, meaning you could be losing out overall if other investments would have outperformed the interest on a mortgage.

Additionally, you are sacrificing liquidity, so it’s probably only a good idea to buy a house with cash only if you can afford it without emptying your emergency fund. A home can take months to sell, and borrowing against your home’s equity brings fees and borrowing limits into the equation. You further lose the financial leverage a mortgage provides because your payment is locked in and hopefully received a favorable interest rate. Lastly, you will not qualify for the tax deductions mortgage payers receive, which often total over $10,000 when itemized.

How you pay for your home is a very personal decision and paying in all cash will likely work for some people but not for others. This generally makes sense if the home’s price does not subtract a significant portion of your liquid assets and/or the interest rate you would pay on a mortgage is higher than what you could earn on other investments. It’s important to properly assess your financial situation and long-term investment strategies, the drawbacks as well as the benefits.

Read next: How Much Rent Can You Afford?

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MONEY consumer psychology

How Your Money Beliefs Are Hurting You

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Barbara Taeger Photography—Getty Images

We make things up about money and believe them.

What you believe about money drives your financial behavior. Finding out your beliefs is a key step to solving various problems, such as money conflicts in relationships.

Money doesn’t actually exist in reality. It isn’t gold or bank account balance or the pieces of paper in our wallet — it’s this conceptual thing, a promise, an agreement, delivered in measurable units, which we later exchange for something we want.

To grapple with this concept, we make things up about money and believe them. These beliefs act like a kind of programming language, which I call Money Operating Systems.

Your Money OS is a very basic belief about money that influences all your financial behavior. This system you install, unwittingly, controls how much you save and spend, whether you invest, how you invest, how you negotiate for a salary and how you feel about all of that.

Your past experiences with money, starting with your early memories of it, created your Money OS. It also came from your parents or the environment you were raised in.

Recognizing your belief helps you tackle your money woes, or those with your partner. Here are five of the Money Operating Systems I see most frequently:

  1. “There will always be enough money.” People with this belief can be high earners, but sometimes they’re average earners who just live a simple lifestyle. If you have this belief about money, you need to be careful. Make sure you understand how much money you need for your financial future. Over-optimism causes under-saving.
  2. “If I am good, the universe will give me what I need.” A positive world outlook doesn’t lead to productive financial behavior. Saving and investing rarely happen, because these folks believe that their financial health is a function of virtuousness.
  3. “Money makes me valuable.” They are often the people who drive the big flashy cars, and they work to have other people perceive them as successful. Money intertwines with their self-worth. Their ego grows with their bank account. But if they are unsuccessful, their confidence suffers.
  4. “There will never be enough money.” This one is pretty self-explanatory, and very common. People with this money belief will be either over-spenders or under-earners, and they keep creating the circumstances to prove this outlook true. They may justify holding on to poorly paid positions or overspending their high income.
  5. “Money is bad, the root of all evil.” These people believe that business and capitalism are responsible for social ills. They often righteously live without a lot of material possessions. Their negative opinion of money usually leads to destructive financial behavior.

These are only some of the beliefs that determine what is possible in your financial life. It took me some time to be analytical about my own money. I recognized my own system and how it kept me locked in cycles of overspending and feelings of worthlessness, and I’ve since transformed my experiences with money.

So where do you begin to see yourself here? What about your honey?

Hilary Hendershott, MBA, CFP, is founder and Chief Executive of Silicon Valley-based Hilary Hendershott Financial.

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MONEY Kids and Money

5 Things New Grads Need to Hear From Their Parents (Even if They’d Rather Not)

college graduate with parents
Getty images

Young adults say they wish they had started saving sooner.

One of the hardest things about letting a newly licensed driver leave the house in your car is this: They don’t know what they don’t know (but if you taught them to drive, you may have some ideas). They will learn, perhaps the hard way, and you won’t be there to offer warnings and commentary.

Finances are a lot like that. You’ve taught them, they’ve graduated from high school or college and now they are entering the real world — and figuring out that there are some gaps in their knowledge. Maybe their parents didn’t tell them, or maybe they weren’t listening when the parents did, but here’s what newly minted adults — asked via social media — told us they wished they had known more about money.

1. Compound Interest

They now wish they’d put baby-sitting and lawn-mowing money into retirement accounts. The young adults who responded to our question were big believers in putting away money early. They just wish they’d known sooner.

2. How to Invest

They want to know what they should be doing with the money they sock away. Some wish they had known how to invest in college. Some of them remember hearing their parents or grandparents talk about getting crushed in the market during the recession. But by now, the markets have rebounded, and they know that those who held on when the ride got scary have been rewarded.

3. How Taxes Work

Some states have income tax, and others don’t. Some municipalities tax the money you earn. Sales tax can be twice in a new state what it was in one’s home state. Who knew? And is there a way to figure out how much to take home in one’s paycheck after the deductions? They wish they understood taxes a little better.

4. Credit & Credit Score Management

“My dad always told me never to get a credit card,” said one. “My friend actually told me that I needed it to eventually get a house, new car, etc. So I’m building credit now when I could have been doing that throughout high school and college.” Others said they are learning late about precisely what it takes to build or rebuild credit. (Interestingly, no one complained that parents didn’t warn them about debt — parents are presumably doing a great job there.)

Experts suggest checking your credit scores and credit reports regularly so that when you do decide to take on debt (perhaps to buy a home or car), you can qualify for the best rates. Regularly monitoring your credit can also clue you in to possible identity theft if there is a large, unexplained change in your scores.

5. Buying vs. Renting

Whether they’re shopping for a home, car or furniture, new grads want to feel confident they’re making a good decision. Some wonder if renting to own is a good compromise.

There are a good many resources online to help with understanding all of these topics, and the millennials who described the gaps in their knowledge seem fully capable of finding them. Still, it can be confusing because some of the information is conflicting or just plain wrong. And none of it answers the question, “Mom, Dad … what do you think?”

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MONEY retirement planning

This Is the Best Way to Protect Your Retirement Savings

multicolored padlocks arranged to make a dollar sign
John Kuczala—Getty Images

Tip one: Don't let market pundits scare you.

When investors feel especially anxious, they may be tempted to move all their wealth into cash, bonds, gold, or some other “conservative” investment. But over the long run, the best way to protect your life savings is through diversification, not concentration. Every asset class—even cash—has its own vulnerabilities, and could be risky under certain conditions. Fixating on a single version of the future, and holding your wealth in a single investment, generally reduces your financial security.

Here is why: The biggest threat to your portfolio is an unexpected crisis. The crisis you already anticipate—the one some pundit is warning against, and the one that has you looking for safety—probably won’t matter much in investment terms. Remember the Y2K bug? Computer programs contained an error in date handling as we approached the millennium 15 years ago. Some observers predicted widespread catastrophe, with computerized systems failing in unison. But governments, companies, and markets had ample warning. The bug was fixed. Investors who went overboard preparing for the worst, wasted time and money.

As for those unexpected market eruptions, history tells us that investments generally bounce back. If you avoid panic, you can prosper anyway. I retired at 50, because I held on to investments through the late 1990’s dot-com bust and the 2008-2009 Great Recession. It didn’t matter that my financial path had steep ups and downs: It still led me to the summit.

And this is where where owning a diverse set of assets really helps you out: It keeps you from panicking, since you’ll likely have some assets doing well or at least holding up while others are falling.

Another problem with building your portfolio around the possibility of a crisis is that you may ignore other less dramatic, but far more likely, risks. Among them:

You could pay too much in taxes. We all lose a portion of our assets to the government regularly, via the tax system. The essence of legally avoiding taxation is to reduce your taxable income. The best approach while still working is to maximize tax-sheltered savings plans and associated employer matching. And, since nobody can predict the future tax environment, tax diversification — holding a mix of taxable, Traditional retirement, and Roth accounts — is a wise strategy. Once retired, you can live frugally in a low tax bracket, and enjoy a zero percent long-term capital gains tax rate.

You could take a hit to your income. Recessions are an inevitable part of the business cycle. The best preparation is to have plenty of cash on hand, and live frugally. An emergency fund gives you flexibility and protection during any kind of economic hardship. Fixed income from bonds or annuities provides cash flow and peace of mind. Avoiding debt is always advisable, and can be critical to your financial survival during a recession: Loss of job or income can threaten your ability to make payments.

Inflation could erode the value of your cash. Inflation of some sort is “baked in” to the modern monetary system. Policymakers target about 2% annually. That means the playing field for cash, which most investors assume is “safe,” is tilted against you. Many argue that higher future inflation will be the only way to dispose of our massive public debt. But, for all the fear and loathing it inspires, many forms of inflation are relatively easy to defend against. By definition, almost any asset other than cash or fixed income will increase in value with inflation: stocks, real estate, commodities, Treasury Inflation-Protected Securities (TIPS). Owning low-cost stock-based index funds and maximizing Social Security are the best inflation hedges available to most of us.

Financial security means surviving and prospering under any scenario. Proven behaviors will help: live frugally, exercise patience, maintain liquidity, and remain flexible. But one principle trumps them all: Diversification is your single most powerful tool against widespread risk.

Darrow Kirkpatrick is a software engineer and author who lived frugally, invested successfully, and retired in 2011 at age 50. He writes regularly about saving, investing and retiring on his blog CanIRetireYet.com.

MONEY retirement planning

9 False Moves That Could Derail Your Retirement

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Biehler Michael—Shutterstock

For many of us, retirement is a great unknown. In your 20s, it seems so far away that it’s easy to figure you’ll start saving when you have more money. Of course, if you wait until you have “extra money,” you might never start at all.

But 20-somethings aren’t the only ones who do things that sabotage their retirement. Their parents may be putting their own retirement at risk by, for example, borrowing money to pay for a wedding, just when they should be turbocharging their own savings, especially if they started late.

So what are we to do? We don’t know that we’ll live to be 85 and still healthy enough to travel, or that the stock market will crash just before we retire. And yet we hope to plan as if we do know. Some of us dream about retirement — and many of us sabotage it at the very same time. Here are some money moves you may regret down the road.

1. Raiding Your Home Equity

Home equity can seem like a a piggy bank when you’re short on cash. And a “draw period” on a home equity line of credit before repayment of principal is due can make it feel almost like free money. Worse, it feels like you are borrowing from yourself. After all, you built up that home equity, right? But if you spend it now, you won’t have it later. And should you decide you want to sell or get a reverse mortgage at some point, that decision can come back to haunt you. You will walk away with less from a sale or be eligible for lower payments from a reverse mortgage. Either way, Retired You could suffer from the decision.

2. Unplanned Roth IRA Withdrawals

Some experts recommend Roths as vehicles to save for a first home or as a place to park an emergency fund because the money grows tax-free. If you have planned to use the money for a first home, you can withdraw up to $10,000. It can also come to your rescue for unforeseen expenses (particularly tempting because, after five years, you can withdraw principal penalty-free). Its flexibility is both an advantage and a temptation, since raiding your retirement account now robs you of those funds and their compounding interest down the road.

3. Failing to Put Away Anything

For many of us, it’s easier to wait to save until we’re “more established” or until we’re making a little more money. Why aren’t we saving? Because there’s no extra money! The problem, of course, is there may well never be any extra money. Most of us don’t come to the end of the month and try to figure out what to do with all the money that’s left. Saving needs to be in the budget from the beginning. It’s often easiest to automate this.

4. Helping Adult Kids Financially

But they’re your children. And everyone makes mistakes. (Or maybe they think you did when you didn’t save thousands for a wedding.) There are exceptions, of course, but if you do help out financially, be sure you minimize your own costs or that you do not jeopardize your own retirement. It’s not usually a good idea to let them grow accustomed to a parental supplement. Relationships and money can be fraught, too. So think very carefully before you make your help monetary.

5. Co-Signing for a Child or Grandchild

They are just starting out and don’t have much of a credit history. Or they want to take out private student loans, and all that’s standing between them and next semester is your signature. The car they are financing, the lease they are signing … if your signature is on it, you are on the hook. If they pay late, your credit could be affected. And should you need a loan, this obligation will count as your debt for purposes of determining eligibility. Student loans can be particularly risky. In many cases, they can’t be erased in bankruptcy. If you have already co-signed on a loan, it’s important to check your credit regularly to see how it’s affecting your credit.

6. Failing to Have a Plan B

You probably hope or assume your good health (and that of your spouse, if you are married) will continue. You may be planning to stay with your current employer until you reach full retirement age. But people fall ill, or they get laid off before they planned to leave the workforce. Do you have a reserve parachute? Your standard of living won’t be as high, but knowing that you have a plan can make the situation a little less worrisome.

7. Poor Investment Choices

Even if you’ve managed to sign up for the 401(k) at work or to open an IRA for yourself, choosing the wrong funds or failing to diversify can set you up for failure. A target-date fund can be useful, but only if you choose the appropriate target. (If you’re in your 50s and choosing a 2050 target retirement date, you may get really lucky and see big gains — but you could also see big losses and not have much time to recoup them.) Likewise, it’s smart not to put all your nest eggs in the same investment basket. Do your own research or find a planner to find a mix you are comfortable with and that is appropriate for your age and goals.

8. Not Making Changes When Needed

Are your investments changing with your goals? And are you keeping track of all of your investments? If you’ve had several jobs (and several 401(k)s), it’s a good idea to do some consolidation. Keeping track of funds in several investment houses can make figuring out minimum withdrawals much more difficult once you are retired. Keep accounts organized.

9. Taking Social Security As Soon As You Can

In many cases, it’s better to wait. Your payment will be higher, although if you take it younger, you will get it for more years. Claiming it the minute you can may be tempting, but if you come from a family with a history of people living well into old age, consider whether you think the smaller checks will be worth it. (You can calculate a “break-even” age of how long you would have to live to collect as much as you would have had you started younger — so that checks from then on truly are additional money.) Conversely, if no one in your family has ever turned 80, you may want to opt for the earlier payout. And, of course, your financial situation when you retire will have a say. If you can’t make ends meet without Social Security, then you should take it.

Another mistake? Making all your plans — including retirement — for later. A life of sacrificing for a “later” that may or may not come is not much of a life. They key is balance. We’re not suggesting you never take a vacation, never give to a cause that is close to your heart or buy the car you’ve desperately wanted (and can now afford) so that years of self-denial will pay off someday … maybe. But it is good to know that if you live a long life, you’ll have the financial resources you need.

Read next: Can You Pass This Retirement Quiz?

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MONEY Savings

5 Things to Consider Before Switching Bank Accounts After College

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West Rock—Getty Images

Finding a bank account that doesn’t charge a minimum balance fee should be your top priority.

When you graduate from college armed with a degree, a strong work ethic and an open mind you can do anything — even navigate your banking future. Your financial needs are going to change in the “real world” and that means your bank account should too.

“There’s not necessarily a difference in the products, but what’s different is how you’re using these banking instruments,” says Bellaria Jimenez, CFP and managing partner at MetLife Solutions Group in New Jersey. “After college your first emphasis is on understanding your budget.”

Since your inflow of money, your bills and even your location might be different, you need a bank account that reflects your new life situation. As you get ready to switch bank accounts, there are a few factors to consider.

If you already have a student checking account or savings at a bank and you’re happy with the service so far, then switching over to a non-student account will be simple. Choosing a new bank and a shiny new account will take a little more thought.

Choosing a bank

Think about your physical banking needs.

  • Go local. If you plan to live and work in one place, you could consider a local credit union or bank.
  • Think national. if you plan to travel or aren’t sure where in the country you’ll end up, then a national bank might be the way to go.
  • Look for broad access. If you want to stick with a local bank, but you plan to travel, find one that partners with ATM or other networks that have nationwide access.
  • Online only. If you don’t need a bricks-and-mortar location, then an online only bank could be the right fit too.

Next, learn about the ATM network your bank is in to ensure you’ll have access to cash wherever you go. Then, get a feel for its mobile offerings. Banking apps may offer ATM locators, bill pay, mobile deposits, person-to-person payments and more.

Compare checking accounts

Not all checking accounts are created equal, Jimenez says. She adds, “There are so many banks competing for your money so there are great opportunities to see what banks are giving you the best opportunities.”

Compare accounts based on balance requirements, fees and any possible additional benefits. Check the fine print for these fees:

  • Overdrafts
  • Overdraft protection
  • Maintenance
  • Checks
  • Debit cards
  • Bounced checks
  • Minimum balances

Finding a bank account that doesn’t charge a minimum balance fee should be your No. 1 priority, says Phil Schuman, director of financial literacy at Indiana University. “You probably don’t have a whole lot to put into an account to begin with, so research accounts to make sure they’re not going to charge you for the money you have,” he says.

Opening the account

To get your new bank account started, close your current checking account first or take out only enough money for an initial deposit in your new account. If you keep your old account running and it requires a minimum balance, avoid fees by making sure the amount you have there doesn’t drop below the requirement. The minimum initial deposit amount will vary on an account-by-account basis. You’ll also need to provide a bank with your Social Security number as well as photo identification, such as a driver’s license, state identification card or passport.

Change your settings

Once you have a new bank account, remember to switch account information on any automatic bill payments you have and remove any linked accounts on shopping websites. To make sure you receive your paycheck, change over your direct deposit from work, or find out if it’s offered.

Make monitoring your bank account either online or through a mobile app part of your routine to check on balances, avoid overdrafts and ensure no errors are made.

What about savings accounts?

When you start working, it’s time to kick off good saving habits. A basic savings account with low minimum balances will be a good way to transfer money from your checking into a rainy day fund. Your savings may not be much of an investment, however — typical accounts offer annual percentage yields of 0.01% on all balances. Higher-yield savings accounts are possible, you just have to look. Start with the NerdWallet high-yield savings account comparison tool.

“The interest rate on savings accounts is so small that it’s not going to accumulate much. The fees are what to look out for,” Schuman says.

When you’re thinking about graduating from your current bank account, take the time to do your homework. This way, when you enter the working world, you’ll have the banking savvy to take control of your finances.

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MONEY Longevity

Will Living Too Long Ruin Your Retirement?

cupcake ruined by excessive amount of melting candles
D. Hurst—Alamy

Our life spans are getting longer, but we won’t all make it to 95.

“Longevity risk”—the possibility that people will live longer than expected, putting a strain on Social Security, Medicare, public and private pension funds, their own retirement savings, and the planet in general—has become a hot topic recently. Former hedge fund manager and Soros strategist Stanley Druckenmiller recently predicted that the aging population will precipitate a major economic crisis, while the Wall Street Journal took a more sanguine approach by devoting a whole section to “How to Add Life to Longer Lives.”

But before you start reciting “The first person to live to 150 has already been born”—a highly speculative prediction by Aubrey de Gray that Prudential decided to turn into a billboard—it’s worth taking a step back to see how longevity might impact your own retirement plan.

First off, according to the Society of Actuaries, which released new mortality tables late last year to help pension plans more accurately estimate their payouts, people are only going to live about two years more than had been previously thought. (For men who make it to 65, overall longevity rose from 84.6 in 2000 to 86.6 in 2014; for women age 65, longevity rose from 86.4 in 2000 to 88.8 in 2014.)

These figures are broad averages, so can be used as a starting point in trying to figure out your time horizon, but there are many other variables to consider, such as, are you single or married? Single people don’t live as long as married people. For that matter, is your retirement plan based on how long either member of a couple might live—or the more likely scenario of just one person being alive for a certain portion of retirement? As financial planner Michael Kitces has pointed out, planning for the former can lead to overly conservative projections.

Your job also has an effect on how long you’re likely to live. As a new paper by the Center of Retirement Research points out, public sector workers live longer than private sector workers because the former, on average, tend to be more highly educated, which is another predictor of life span. At the same time, white collar workers, not surprisingly, live longer than blue-collar workers with physically demanding jobs. Rich white collar workers live longest of all, which suggests in some horrible Darwinian way that longevity risk may somehow take care of itself.

But the biggest factor of course is your family health history, and while that’s not something we can control, it’s certainly worth doing a bit of research to find out what kinds of diseases felled your relatives, as well as taking a hard look at your own exercise and eating habits. The issue of life span is really more a medical than a financial question, so you’d probably be better off addressing it with your doctor or a gerontologist than a financial advisor. With proper planning, you can turn longevity from something that’s currently being framed as a “risk” back into something to look forward to.

Konigsberg is the author of The Truth About Grief, a contributor to the anthology Money Changes Everything, and a director at Arden Asset Management. The views expressed are solely her own.

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