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4 Ways to Improve Your Finances in Retirement

By U.S. News & World Report

It takes years of consistent saving and prudent investment decisions to amass enough money to retire comfortably. And the need to effectively manage your money doesn’t stop when you leave your job. You must continue to make sound financial decisions in retirement to help your money last the rest of your life. Here are a few ways you can improve your finances in retirement.

The 4 percent rule. Once you retire, it’s your responsibility to make sure your money lasts throughout your lifetime. One strategy to do this is to withdraw 4 percent of your initial portfolio balance each year, and adjust that amount for inflation in retirement. But it can be difficult to stick with a consistent 4 percent withdrawal rate, because your retirement expenses might fluctuate from year to year. When stock market values tank, finding a way to withdraw less from your portfolio will help your nest egg to recover faster. And if some of your costs increase in retirement, you might want to change your buying patterns rather than increasing your withdrawals.

Delay taking Social Security. You don’t know how long you will live in retirement, which makes it difficult to know how much you can safely spend each year. Those who delay taking Social Security benefits get an increase in monthly payments, which is also indexed for inflation for the rest of their lives. You will never really run out of money as long as you have Social Security payments coming in. However, by waiting until 70 to collect, you are giving up eight years of additional income that can be used for discretionary expenses in exchange for higher payments after age 70. Those who delay Social Security checks might have to sell more investments to pay for expenses until they sign up, which means a smaller portfolio earning investment gains. Delaying Social Security can be hugely beneficial, but it’s not a forgone conclusion that it’s the right choice for everyone.

Work one more year. Working an extra year gives you more income to add to your retirement savings, and allows your existing savings to grow for an extra year. Even a part-time job can improve your finances and allow you to withdraw less from your portfolio. However, you need to weigh the benefits of having more money in the coffers against the freedom gained by retiring earlier. Working one more year comes with stress, and 12 fewer months of enjoying the money you worked hard to accumulate. Some over-savers end up working longer than they need to in an effort to give themselves extra security.

Find a more optimal way of managing your assets. You can definitely spend too much time looking at your retirement plan. Especially for those who enjoy managing money, it’s easy to fall into the trap of thinking there’s going to be a better way. What ends up happening is that sooner or later, you make suboptimal moves that end up costing you money. Making changes to your investment portfolio often triggers taxes and fees. The best way to manage your retirement finances is to take a serious look at developing a plan, set it in motion and then stop tinkering. You probably won’t find the perfect plan, but you can set up a diversified portfolio that will generate consistent investment growth throughout retirement.

David Ning is the founder of MoneyNing.com.

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4 Ways to Improve Your Finances in Retirement originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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