From the Editor’s Desk

Andrea Norris-McKnight

 

Do You Really Need a Newer Car?

Hello My After 50 Friend!

My husband’s car just went back into the shop. Again. It is nearly 15 years old, but we haven’t bought him something newer because of the high used car prices.

If you’ve been putting off buying a new used car because of the hefty price tags, you might be happy to hear that used car prices have been gradually trending downward this past year. Recently Autoweek reported that according to consumer price index data, used car prices dropped 11.6% between Jan. 2022 and Jan. 2023. Since July 2022, prices have been falling about 1.4% per month.

Does that mean it may be a good time to buy another car? It might be if your old car is no longer worth repairing, and you can pay cash for another car. But auto loan rates are still high for those who would need to borrow and many dealerships continue to have limited inventory. Also, taking on a car payment might not be the best thing for your budget right now. I know it isn’t for our budget.

We’ve decided to try to get at least another six months out of my husband’s car. However, our unique circumstances make it possible. I work from home and rarely need to drive much during the day, so he can drive my car to work during the week. Also, my husband is a teacher, and during the summer when he isn’t working, we rarely need more than one car. So our goal is to get to August before he returns to work and then see whether used car prices and auto loan rates have dropped. It also helps that we have a good friend that works at the auto shop that repairs our cars, and he usually gives us a discount on repairs.

Not every household can get by with one car as we can, but it might work for some. See Could You Give Up Your Car?

Not every car with mechanical problems needs to be replaced, but some do. If you’re unsure whether it makes sense to keep paying for auto repairs or if it’s time to get another vehicle, Should I Repair or Replace My Car? A Mechanic’s Advice can help you evaluate your options. If you decide to pay for repairs rather than another car, Auto Repairs and Maintenance For Less may help you save a bit.

Here’s to a comfortable retirement,
Andrea

Frugality Is Personal So Make It Your Own

Hello My After 50 Friend!

I recently read an article of comments from various people regarding frugal habits that some folks feel aren’t worth doing. I’m not so sure I agree with many of them.

One was about phantom power used by the many appliances and devices we keep plugged in 24/7. The advice was to stop unplugging your stuff to reduce energy costs since you simply aren’t saving that much. I’m sorry, but frugal advice is not one-size-fits-all.

Newer devices, electronics and appliances indeed use far less energy than older models. However, in our house, many of our electronics are old. My son still uses a gaming system bought in 2007. Our DVD/VCR combo, which we still use, is as old as my daughter, who is well out of college. We even have a TV that we bought somewhere around 2002. I have no doubt we’re saving energy by shutting off the power strips each night to which our old electronics are plugged in.

Another comment was that there is no point in avoiding hobbies to save money. I question this person’s definition of frugality. I know plenty of frugal folks with hobbies. Most don’t give up spending money on hobbies unless the budget gets exceptionally tight. Frugal folks simply find ways to save money on or even make money with their hobbies.

The same goes for having pets. Apparently, one commenter thinks that frugal people don’t have pets and argued that pets provide many emotional benefits to owners. I do think that if your budget is already stretched to its limit, adding a pet can cause financial hardship and stress — which can easily outweigh any emotional benefits a pet might provide. But frugal folks certainly do have pets. We have a dog, a cat and a leopard gecko. I use the many Dollar Stretcher money-saving tips for keeping our pets and budget healthy and happy.

I could argue many of the “tips” and opinions from this article about dropping frugal habits, but the bottom line is this. Frugality is personal. My frugal rules and tips aren’t necessarily suitable for your lifestyle and vice versa. But by reading frugal ideas and advice from others, you’re bound to find several tips that do work for your lifestyle, and that will help you save. Many of you know we have a Dollar Stretcher Tips newsletter. Twice per week, subscribers receive seven tips and a “My Two Cents” from other frugal readers that can help you save both money and time. We only feature 6 of the 14 weekly tips on the tips page on the site each week. You can subscribe here if you’d like more.

Here’s to a comfortable retirement,
Andrea

Don’t Be Surprised If Your Auto Insurance Rates Increase Significantly This Year

Hello My After 50 Friend!

As many of you know, I live in Florida. We just got our renewal on our car insurance. We’ve had no tickets or accidents — but our premium is jumping about $600 per year. My parents, who also live in Florida and have near-perfect driving records, saw a similar increase this past month. So I did a bit of research.

According to the latest State of Auto Insurance in 2023 survey by ValuePenguin (LendingTree), 45 states expect drivers will see a significant auto insurance increase this year — the biggest we’ve seen in the past six years. The survey reported, “The average annual rate increase across the U.S. is 8.4% — up from 1.3% in 2022.” The only states that may not see an increase are California, Washington D.C., Hawaii, Vermont and Wyoming. Illinois, Arizona, Georgia and New Hampshire will likely increase the most.

So what can you do to keep your insurance premium under control? First, make sure you’re getting every discount for which you qualify. (See Do You Know About These Auto Insurance Discounts? or for drivers closing in retirement — Stretching Auto Insurance Dollars as You Approach Retirement) Second, be a careful driver. According to the survey, “Drivers with a traffic violation or accident could see an average car insurance rate increase of 52% in 2023.” Also, re-evaluate your insurance needs. Do you own your car outright? Consider dropping any coverage that isn’t required. (See Do I Have Enough Auto Insurance? and Auto Insurance: How Much Liability Coverage Do You Need?) Or raise your deductible if you have enough savings to cover it if needed. (See Is Raising Your Insurance Deductible a Good Idea?) Just make sure you fully understand how any changes to your insurance will affect your coverage and your finances if something happens. Dropping coverage and raising deductibles aren’t financially sound choices for everyone.

Finally, shop around for cheaper coverage. We have a tool powered by the folks at Bankrate.com and Coverage.com (both owned by Red Ventures) that will allow you to enter your basic vehicle information once, which will get passed on to multiple auto insurers and can save you time contacting individual agencies and providing all of your information each time. The tool will then provide a list of specific insurers from which you can request quotes. Some insurers will require additional vehicle information beyond the basic information initially entered.

If you use this tool, you may get phone calls and emails from insurers from which you choose to get quotes. Sales calls can be annoying, but answering these calls and spending a few minutes speaking with a few agents could save you quite a bit of money. I have used this tool and others like it when shopping for various types of insurance. Any time I have told an agent that I have already found other coverage, I have not received any further phone calls from them. Emails or texts will typically have an unsubscribe option. The fact is, even in our digital world, to find the best rates, you usually have to speak with people directly.

Below you’ll find the comparison tool. Simply enter your zip code to get started:

Here’s to a comfortable retirement,
Andrea

Top Financial Regrets of People Over 50: Not Working Longer and Claiming Social Security Too Early

Hello My After 50 Friend!

Before the holidays I was discussing some of the top financial regrets of people over 50 based on the University of Michigan’s ongoing Health and Retirement Survey. A few of them were probably not too surprising — not enough lifetime income and not saving enough. A third was not investing in long-term care insurance. (You can find them here if you missed them).

The last two major regrets go hand in hand for many retirees: Not working longer and claiming Social Security too early. Sure, some folks retire before collecting Social Security benefits. But many people need their benefits in order to retire. If you’re closing in on retirement, here are three expert interviews that offer advice on determining when to retire and collect Social Security:

Also, the decision to leave your job isn’t always your own. If you lose your job while in the home stretch to retirement, here are some actions steps to take for your unplanned retirement.

Here’s to a comfortable retirement,
Andrea

Top Financial Regrets of People Over 50: Didn’t Save Enough

Hello My After 50 Friend!

This week we’re continuing to explore the top five financial regrets of people over 50 based on the University of Michigan’s ongoing Health and Retirement Survey. The two regrets we’ve mentioned in the past two issues of After 50 Finances include too little lifetime income and not having long-term care insurance. (You can find them here if you missed them). It probably is no surprise that not saving enough is a major regret and a fear that many people in or approaching retirement have.

If you can still take advantage of catch-up contributions via your retirement accounts, the 2023 contribution limits are as follows:

  • 401(k) Limits: The 2023 401(k) contribution limit is $22,500. Those 50 and older can make catch-up contributions of $7,500. This means those 50 and older can contribute a total of $30,000 to their 401(k).
  • IRA Limits: The limit for IRA contributions in 2023 is $6,500. The catch-up contribution total remains $1,000. So you can contribute up to $7,500.

So how can you put more into retirement savings? You can earn more or spend less so that you have more money to sock away.

Depending on your situation and whether you are pre- or post-retirement, spending less might be easier than earning more. Subscribing to our Dollar Stretcher newsletter can help you trim costs. While we do feature Dollar Stretcher articles in this newsletter, you’ll get more frugal living articles in your inbox by signing up for The Dollar Stretcher.

Another money-saving newsletter we offer is Dollar Stretcher Tips. These tips come from our frugal readers who have been providing us useful money-saving tips for more than 20 years now. You’re likley already doing some of the money-saving suggestions now, but you may get a few new ideas every week that can help you save just a little more. You can subscribe to Dollar Stretcher Tips here.

And if you’d like some tips on finding more money for retirement savings, here are just a couple we’ve featured in the past:

Here’s to a comfortable retirement,
Andrea

Top Financial Regrets of People Over 50: Too Little Lifetime Income

Last week I mentioned a recent survey regarding the top five financial regrets of those over 50. One of the regrets revealed by the survey was a lack of long term care insurance. I provided a list of links to some of our LTC articles if that is a topic you have not yet given much thought in your retirement planning. You can find it down below if you missed it.

According to the survey, another top regret is too little lifetime income. The less you earn during your working years, the less you pay into Social Security and the less you get in benefits when you retire. Depending on how close you are to retirement age, there might not be much you can do about this one. But if you are closer to 50 rather than 70, you might have a decade or two to increase your income. This might entail finding a higher paying job or working a second job. Or maybe you can start your own side business. Your options will depend on your situation, but it is certainly something to which you should give some thought if you do have a number of working years yet ahead of you. Here are a few articles that may help:

Here’s to a comfortable retirement,
Andrea

Top Financial Regrets of People Over 50: LTC Insurance

Hello My After 50 Friend!

Yesterday I happened upon the results of a survey on the top financial regrets of people over 50. Some of those surveyed were still in the retirement planning phase while others were well into retirement. This month I’d like to explore each of these regrets and point you to some article that can perhaps help you avoid avoid them.

Of those surveyed, 40% regretted not having bought long term care insurance. Yes, long term care insurance can be pricey, but for some, not having it can cost far more. Here are some articles on long term care that can help you plan for your own long term care needs:

Here’s to a comfortable retirement,
Andrea

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