Can You Put Off Funding Your IRA if You Plan to Retire Late?

If You Have a Wells Fargo Savings Account, You Should Switch ASAP. Here’s Why

By: Steven Porrello |
Updated
Nov. 7, 2023 – First published on Nov. 7, 2023

These days, storing your savings in a Wells Fargo account pretty much serves one purpose: Quick access to cash at brick-and-mortar banks or ATMs. But if you have savings you’re not spending anytime soon, a Wells Fargo Way2Save Savings account ranks high in the worst places to keep your savings. No offense if Wells Fargo is your favorite bank, but it’s time to stop leaving money on the table. Here’s why. Wells Fargo can’t compare to today’s top high-yield savings accounts As of writing this, the Wells Fargo Way2Save Savings account has a 0.15% APY, which is not only lower than the national average (0.60%) but also several times lower than today’s top-paying savings accounts. At 0.15%, you’ll earn about $15 annually for every $10,000 you save. Not exactly the most exciting reward for saving money. By comparison, many of today’s top-paying savings accounts have rates above 5%. Case in point: the Western Alliance Bank High-Yield Savings Account via Raisin. This account has a mouth-watering APY of 5.26%, no fees, and a low opening deposit of $1. At that APY, you’ll earn $526 for every $10,000 you save. That’s 35 times more than the $15 you would have earned in your Wells Fargo Way2Save Savings account. Of course, the major benefit of the Wells Fargo Way2Save Savings account is that you can access your savings at Wells Fargo branches or via ATMs. That’s important if you withdraw cash frequently, as online banks will make you transfer the money electronically to an account with ATM access. But even if accessing cash is important to you, there are still better options than the Wells Fargo Way2Save Savings. For example, the SoFi Checking and Savings account gives you a cash back debit card and access to over 55,000-plus fee-free ATMs. Plus, it has a decent APY of up to 4.60%. That’s not the highest APY I’ve seen, but it’s not bad for an account that combines checking and savings into one. What about the Wells Fargo Platinum Savings account?Now, the Wells Fargo Platinum Savings account does have a compelling offer right now. New savings customers can lock into a promotional APY of 4.62% when they sign up for a new Wells Fargo Platinum Savings account before Jan. 9, 2024, and maintain a daily minimum balance of $10,000. The emphasis there is on “new.” According to the fine print, this offer is for new savings customers who don’t currently have a Wells Fargo savings account — whether that’s Wells Fargo Platinum Savings or the Wells Fargo Way2Save Savings. So if you’re already a Wells Fargo client, the bank will likely assign you the account’s regular APY, which ranges from 0.25% to 2.51%, depending on balance.Again, if you’re saving money at Wells Fargo, there’s no question about it — you’re missing out on higher interest rates. You may have good reasons for using Wells Fargo, such as having greater access to your savings. But if you’re fine with online banking, then trust me — you deserve better than a rock-bottom APY. Take a look at today’s top-paying savings accounts and see how much more you could be earning for your savings. 

Have a Chase Savings Account? You’re Probably Missing Out on $400-Plus per Year

By: Steven Porrello |
Updated
Nov. 24, 2023 – First published on Nov. 24, 2023

Chase is the largest bank in the U.S., and one of the largest in the world. It has over 4,700 brick-and-mortar locations, more than 15,000 ATMs, and around a couple trillion in bank deposits. But for all this banking power, there’s one thing Chase doesn’t have: a savings account that can compete in today’s high-rate environment. Seems as if a big bank like Chase would have at least one savings account that earned high interest, right? Truth is, banks lose money when they pay high interest rates and will forgo offering them if they don’t need to attract customers. As the largest bank in the U.S., Chase is doing just fine and doesn’t need high rates to bring in more deposits. But that leaves Chase clients in a bit of a conundrum. Just how much money are you missing out by keeping it in a savings account at Chase? Well, when you start to crunch the numbers, it can be a lot. The average American is probably missing out on $400 per year Today’s most competitive rates on savings accounts are sitting at a two-decade high of about 5.25%. Most of these savings accounts are through the company Raisin, which is essentially a marketplace for finding high-yield savings and CDs. Last I checked, the highest rate on Raisin was 5.30% on a Customers Bank High-Yield Savings Account, followed by both VyStar Credit Union and DR Bank at 5.29%. How much could you make on 5.30%? According to a recent survey of U.S. Family Finances by the Federal Reserve, the median savings in 2022 was about $8,000. If you saved $8,000 in the Customers Bank High-Yield Savings Account powered by Raisin, you would earn about $424 within a year. In contrast, a Chase Savings Account pays out at a rock-bottom APY of 0.01%. At that rate, it’s almost pointless to do the math but if you like your copper Abes, you’d make about $0.80 on $8,000 in 12 months.When is a Chase savings account worth it? I’m not going to lie — I have a Chase account. I don’t keep a lot of money in it, but I do keep some. The reason is that I live four blocks from the Chase bank in downtown Portland and like the security of having some money within reach. When I need to withdraw cash (rare but it happens), I can just go in person and use the ATM. And when I need to deposit cash — birthday money, thanks Mom — I can do it without jumping through hoops. If you want banking convenience like this, a high-yield savings account through Raisin or any other online bank will likely frustrate you. Raisin is a case in point: When you deposit money in a Raisin-powered account, you transfer it from an external account (which could be a savings account at Chase) into a service bank (Lewis & Clark Bank), which is then transferred into a custodial account at the bank account of your choice (a Customers Bank High-Yield Savings Account or a Western Alliance Bank High-Yield Savings Account, for example). If you want to withdraw this money, you have to transfer it back to your external account, which could take a few business days. For those who need cash fast, each nail-biting day might make that high yield not worth the stress. So you might have to diversify. Truthfully, it’s best to keep a little money within easy access for emergencies, but not so much that you miss out on today’s high rates. If you’ve engorged your Chase Savings Account, take a look at some other top-paying savings accounts to see how much you could earn in interest. If your savings is anywhere near the median — $8,000 — you could potentially pick up at least $400 on your savings. 

Are CDs a Good Investment for 2024?

By: Steven Porrello |
Updated
Nov. 28, 2023 – First published on Nov. 28, 2023

Certificates of deposit (CDs) offer high guaranteed returns in exchange for locking your money up at a bank or credit union for a term that you choose. While lackluster in previous years, CD rates have taken off in 2023, aided in large part by the Federal Reserve’s continued interest rate hikes. These days, it’s not rare to find a short-term CD paying out at a rate above 5%, with some paying out as high as 5.70%.With only a few weeks left in 2023, many of these CDs look like good investments going into the new year. But are they? If you’re thinking about investing in one soon, let’s take a look at what we know.Short-term CDs could make great investments, but don’t ignore longer termsRight now, you can find the highest rates on short-term CDs, like those ranging from three to 18 months. For example, on Raisin’s CD marketplace, all the CDs paying above 5% are within that short-term range.This isn’t a coincidence. Rather, it reflects the expectation that interest rates will fall sometime in the future. Banks want to keep their CD rates competitive, but if they’re paying 5.70% for five years, they could end up losing money.If your goal is to earn interest at a high rate, a short-term CD could be a good investment, especially if you’re hesitant to lock into a longer term. Now might even be the best time to build out a CD ladder, combining short and long terms to stretch out today’s high rates for longer periods.That said, I wouldn’t ignore long-term CDs on the grounds that their rates are lower today. It’s possible the Fed could start reversing course in 2024, hiking down rates to a more sustainable level. If that holds true, today’s short term CDs could very well mature at a time when CD rates are much lower. You might lock into a 5.70% CD for six months, but a 4-year CD at 4.50% could freeze an elevated rate for a few years longer.A no-penalty CD could make a good investmentA major problem with CDs is that they come with early withdrawal penalties. These penalties are often equal to a few months worth of interest, though some could be as high as six to 12 months. If you withdraw from your CD before your term is up, you’ll pay this penalty, which could sometimes result in you losing money.One way around this is to get a no-penalty CD. These CDs typically have a very brief no-withdrawal period, usually seven days or less, after which you can liquidate your CD account with no penalty. Traditionally, no-penalty CDs have low interest rates compared with regular CDs with the same term. But in today’s high rate environment, you could easily pick up a no-penalty CD with an APY above 5%.For example, Raisin has several no-penalty CDs on its marketplace. As of writing this, the highest paying no-penalty CD comes from Greenwood Credit Union with a 5.37% APY and 12-month term. Other close contenders include Technology Credit Union (5.36%, five-month term) and Mission Valley Bank (5.35%, three-month term).What’s great about these CDs is that you could break your contract to capture a different APY or longer term at a later date. Let’s say, for instance, that the Fed indicates it’s going to start lowering interest rates in 2024. You decide you’re going to lock into a 4% rate on a 3-year CD. If you have your money tied up in a no-penalty CD, you could easily navigate out of the contract and open a new CD account. Likewise, if you have emergency savings, a no-penalty CD could help you earn at a higher interest rate, though I would recommend you consider a high-yield savings account first.Will CD rates stay elevated in 2024?CD rates are at a two-decade high, but they won’t stay this high for much longer. Once the Fed feels confident inflation is under control, it won’t be long before rates start to fall. I’d say if you’re in the market for a CD, now is a great time to lock into one of today’s top paying CDs. Take a look at different terms and see how much interest you could earn in 2024.

Does Your Income Make You Upper Class, Middle Class, or Lower Class?

By: Christy Bieber |
Updated
Sept. 5, 2023 – First published on Sept. 5, 2023

Incomes vary widely across the United States, with some people making many times the amount that others earn. If you’ve ever wondered how your personal finances stack up, and what “class” your income officially puts you in, here’s what you need to know.What income do you need to be upper, middle, or lower class?Based on 2021 data, here’s what you would need to earn in order to be in each class:Lower class: This is defined as the bottom 20% of earners. Those in the lower class have an income at or below $28,007.Lower middle class: This is defined as individuals in the 20th to 40th percentile of household income. Earnings among this group are between $28,008 and $55,000Middle class: The middle class is officially those whose earnings put them in the 40th to 60th percentile of household income. The income range is $55,001 to $89,744.Upper middle class: Anyone with earnings in the 60th to 80th percentile would be considered upper middle class. Those in the upper middle class have incomes between $89,745 and $149,131.Upper class: Finally, the upper class is the top 20% of earners and they have incomes of $149,132 or higher.Take a look at these numbers and see where you fall based on your own earnings. And remember, this is a snapshot in time — your earnings can change throughout your life, and so can your class designation.Will your success be determined by your income and class?It’s probably not a surprise that those in the upper classes or in the upper middle class do have a higher net worth than those in the lower class or the lower middle class. But the disparity is greater than you might think. While the median net worth of those with incomes of $149,132 or higher is $805,400, the median net worth of those in the lower class is just $12,000.Your income impacts how easy it is for you to build wealth. If you make more money, it is easier to save it and invest it in a brokerage account where it can work for you. If you make less money, then you may struggle even to cover the necessities out of your checking account, much less to buy valuable assets that help you grow richer over time.But that doesn’t mean people who don’t make a lot of money can’t be a financial success. A lot depends on what you do with the money you actually have, including how much you spend and how much you save.There are plenty of people who make over $100,000 a year who live paycheck to paycheck, and plenty of people with incomes that put them squarely in the lower or lower middle class who have diligently saved and grown quite wealthy over many years.Here’s how you can improve your standingDon’t be discouraged if you aren’t in the class you hope to be. For one thing, you have opportunities to increase your income by taking the following steps:Learning new job skills: You could obtain a certification, take part in a management training program at work, or take some classes to develop skills that may help you get promoted (such as computer training courses or public speaking classes), depending on your industry.Take on a side hustle: The average side hustle brings in $483 per month, which is a good amount of extra money that could make a meaningful difference in your income.Work some extra hours: If your company allows you to work overtime, take advantage of it, as many people are paid time and a half for overtime hours.Negotiate your salary: According to Pew Research, when workers negotiated for higher pay, 28% said they received the extra money they asked for and 38% indicated they were given more than originally offered but less than their ask. Whether you are getting a new job or staying at your current job but feel you’re underpaid, it doesn’t hurt to make a request for more money — especially if you can find salary data to back up the fact that others in your industry are paid more.And even if your earnings never put you in the top 20% of earners, you can still have a rich life and end up with the financial security you deserve — especially if you prioritize saving as much as you can for as long as you can.

I Love Costco — but Here Are 3 Products I Won’t Buy There Again

By: Maurie Backman |
Updated
Nov. 21, 2023 – First published on Nov. 21, 2023

I shop at Costco weekly. And most weeks, I pick up groceries such as milk, cheese, fruits, veggies, and snacks.Although I’m a bit set in my ways when it comes to Costco buys, I’m also more than willing to take a chance on a new product. Case in point: A few years ago, I bought these Kirkland cashew clusters on a whim, and they’ve become one of my favorite snacks to bring along on a hiking trail.One of my favorite things about shopping at Costco is trying out different products. And another thing I love is reaping savings thanks to Costco’s ultra-low prices. But I’ve also had my share of Costco purchases that just haven’t worked out. These items fall into that category — and I probably won’t buy them at Costco again.1. AvocadosThe price of avocados at Costco varies based on the season as well as supply. But usually, a six-pack of avocados at Costco is equivalent to roughly three or four avocados at a regular supermarket where I live. That’s what tempted me to buy avocados at Costco in the past. But I won’t do that any longer because I’ve realized that avocados are just not a product I can buy in bulk.I’ve found that when I buy a batch of avocados, what’ll happen is that they’ll be rock hard…until they aren’t. But it doesn’t help me to have six avocados ripen at the same time. And yes, I’ve tried the paper bag method. I find that it shaves maybe half a day off of the ripening time, which means spacing things out doesn’t really work.Consumers often risk losing money to food waste by buying the wrong products in bulk. So think carefully before doing the same, especially when it comes to produce that isn’t ripe and ready to eat at the time you’ve bought it.2. Kirkland paper towelsKirkland paper towels tend to be a lot cheaper than Bounty, my go-to brand. A 12-count online costs $22.49, which is $2.19 per 100 square feet. Bounty costs $4.57 per 100 square feet, or $29.99 for a 12-pack of rolls. That’s clearly a lot more expensive.But there’s a reason I’m loyal to Bounty — the stuff works. And when you have a household full of kids, you need a good paper towel.Although I normally find Kirkland products to be high in quality, its paper towels are the one exception. As such, I don’t see myself buying them again.You may have a certain budget you’re trying to stick to for things like toilet paper and other household essentials. But it’s important to recognize when it pays to spend a little extra. In this example, Kirkland paper towels are considerably cheaper than Bounty. But if you need four sheets of Kirkland to do the job of one sheet of Bounty, you’re not really saving money in the end.3. Sandwich breadBecause my daughters take a sandwich to school for lunch almost every day, we go through bread somewhat quickly in my house. But I still find Costco’s two-pack of sandwich bread to be too large a quantity to buy at once.It’s similar to the avocado issue — only with the bread, I don’t have to wait for it to become edible, because it’s edible as soon as you bring it home. But because of that, I find that it tends to get moldy somewhat quickly. By the time I’m only part of the way into my second loaf, I have to toss it out.Buying in bulk can often be a big source of savings. But it’s important to know which bulk items do and don’t work for you. For me, bread is a no. Before you go shopping, think about your eating habits. You may find that even if you go through a lot of bread, you’re better off paying a little bit more at the regular supermarket and buying one loaf at a time.Costco is a wonderful place to shop. But these three products no longer have a place on my Costco list.