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Can I Retire Before Age 100?
What is a Retirement?
Everywhere you look you see the news discussing the concept that we all strive to achieve, retirement. But what exactly is retirement?
According to Merriam-Webster
“A withdrawal from one’s position or occupation or from active working life”
For some people, a “full-time” retirement is too slow of a lifestyle for them and many retirees take up a low-stress part-time job to bring in some income and occupy their time.
If not having to go to work is as great as it sounds, what is standing in the way of everyone retiring right now? Well the bottom line is that retirement requires a large amount of money to become a reality; many refer to this lump sum as a “nest egg”.
Saving For Retirement, What’s That?
While it is true that you need to save a large amount of money, you do not have to save it all at once. The amount you need to save depends on your age and your dreams for retirement.
Many leading experts generally agree that saving 15% of your pre-tax income is about the right target.
Many of whom do not save aggressively cite the government social security program as their bridge to retirement. Unfortunately, you should not plan on living off of social security; it should be bonus money for you, not what you are depending on to live.
When Do You Start Saving?
In one of our previous blogs we discussed the concept of compound interest and how investing a little bit each month can lead to a big return.
Let’s discuss a couple examples specifically regarding retirement:
First, Sam starts to save for retirement and invest at around age 40 and he plans to put away $500 a month. Assuming a historical average return, he could have almost $800,000 if his money follows the average return of one of the popular stock indexes, the S&P 500.
Sam only contributed $162,000 to that total and the rest of his retirement funds come from compound interest!
Now let’s compare Sam to another person, Claudia, she begins saving for retirement at age 25 and puts $250 away per month. We are assuming her investments will also follow the same index, the S&P 500, and she will only contribute $126,000 to her retirement account.
However, by the time she is ready to retire, Claudia will have over $1.7 million to retire with!
How Do You Save?
There are numerous ways you can save for retirement; the most common is through your employer. Many employers offer a 401k program where they will match a percentage of your contributions. Make sure if you participate in one of these programs that you save at least up to their matching contribution to take advantage of that free money!
Beyond a traditional 401k, you can speak to a financial advisor about a Roth IRA. But what is the benefit of a Roth IRA? Simply put, you pay taxes on the money you put into the account right away and then the money grows and will come out of your account TAX FREE!
There are a lot of barriers to saving for retirement like current living expenses, spending too much on your children and their activities, medical expenses and even things like mortgages and credit card debt.
Always remember, retirement isn’t an age, it’s a financial number. Start by setting small goals and making changes in your life now to positively impact your future!
A Capuchin Monkey a Service Pet?
What is a Service Animal?
You see them on the bus, in the mall and even on planes; service animals are everywhere and play a valuable role in society. The traditional definition of a service animal is:
“Under the ADA, a service animal is defined as a dog that has been individually trained to do work or perform tasks for an individual with a disability. The task(s) by the dog must be directly related to the person’s disability.”
According to this definition, a service animal is a term reserved exclusively for dogs. The “work” they are trained to do is a specific action, or actions, when needed to assist the person with a disability.
Here are some examples:
- A person with diabetes may have a dog that is trained to alert him when his blood sugar reaches high or low levels.
- A person who has depression may have a dog that is trained to remind him to take his or her medication.
- A person who has epilepsy may have a dog that is trained to detect the onset of a seizure and help the person remain safe during the seizure.
Differences between Comfort/Therapy Animals and Service Pets
Within the last few years a new type of pet has dramatically risen in popularity. An emotional support animal is a companion animal that a medical professional has determined provides positive benefits for an individual with a disability.
This is not to say a therapy animal will cure someone, but the presences of this animal may improve at least one characteristic of the disability. These animals are typically dogs, but sometimes cats and other animals.
These animals still receive extensive training, but perform a completely different type of job. Their purpose is to provide psychological or physiological therapy to individuals. Usually these animals have stable temperaments, and are friendly and easy-going.
Types of Exotic Services Animals
While it is most common for service animals to be dogs, there are quite a few other animals that can be trained to perform similar functions. To give you an idea of the vast range of animals that can perform these tasks we have created a list of six other animals that you probably had no clue could also be an awesome service animal!
- Miniature Horses – This type of service animal has been on the rise in popularity since they’re a great choice for someone who needs support to walk. Many blind individuals use miniature horses as their guides instead of dogs; this species is naturally cautious, mild-mannered and sharp-eyed. Additionally, they have been known to live 30 or more years!
- Ferrets – One of the more unusual service animals on this list is a ferret, because of their size. They make great emotional support animals due to their easy-going and high social nature; this makes them also great at calming those who deal with seizures.
- Parrots – This is a popular animal for helping to treat psychiatric disorders, primarily because the animal has the ability to talk to their owners and deescalate them in stressful situations.
- Potbelly pigs – A potbelly pig is highly intelligent and mild-mannered, therefore they can be trained to perform all the same functions that a dog can provide. The biggest difference between the two is that the pig is actually a much cleaner animal than a dog and do not shed nearly as much. These animals are used particularly when dealing with younger individuals because they are viewed as less intimidating animals when compared to a big dog.
- Capuchin Monkeys – The capuchin monkey is probably the most exotic service animal on our list. These little helpers weigh between 6-10 pounds and come from South America. They are especially talented at grasping and retrieving items, which makes them invaluable companions for quadriplegics and other disabilities that affect fine motor skills.
- Boa Constrictors – This is certainly not on the list of animals one may think can provide value as a service pet, but Boa Constrictors can actually assist many people! These snakes are known to help patients with bipolar disorder, obsessive compulsive disorder and panic disorder. They work by giving their owners a friendly squeeze when it senses a patient about to have an episode.
There are many different types of service animals and the classic definition is rapidly expanding. We hope this was a fun and informative post and gave you some insight into all of the many types of service animals!
Travel Hacks You Need to Know to Save Big!
Travel Big on a Small Budget
Everyone wants to have fun on their vacations! There is just one big problem, traveling frequently and to exotic places can be extremely expensive! As such, many people often consider traveling to be a luxury and one worth sacrificing when funds are low.
Luckily, we have taken the time to compile a list of tips and tricks to save you money! You can use the savings to either travel to additional destinations or to simply save some more of your hard earned money!
Tips to Make Travel More Affordable
- Pick your destination wisely: One of the most expensive aspects of traveling is simply the destination you choose to visit; by choosing a less expensive destination you can see more of the world for less! Some places are considered “bargain” travel spots year-round, such as Panama or Canada.
Generally speaking these locations have less expensive options for lodging, entertainment, airline tickets and eating. The best way to find these hidden gems is by searching “everywhere” as your destination on travel websites.
- Travel during the offseason: Most tourist destinations have a cycle throughout the year, they have peak travel times and lulls. It is most economical to visit these places opposite of their peak times, as there will be greater availability at hotels and establishments and usually lower prices as well!
Off-seasons can sometimes coincide with poor, or poor weather conditions, so be sure to pack accordingly when you are ready to take off on your vacation!
- Do your research: This may seem self-explanatory, but it is imperative that you compare your methods of travel and determine the costs associated with each.
Be sure to check multiple sites and compare rates against each other, sometimes you may get the best price from Expedia, other times it could come from Kayak or even a service like Google Flights.
The more options you consider, the more likely you are to find a great rate!
- Create a budget: The best way to plan for a trip like this is to plan ahead, start by choosing your desired destination and the number of days you want to travel.
From there you estimate your cost for a flight/or a drive to the location and then add on your costs for food, entertainment and other expenses to determine your daily costs. Next you add your daily costs together and then you have an estimated cost of the trip; from there you can determine if you can afford a longer trip or if you need to cut it short.
Enjoy Whatever Vacation You Decide On!
Traveling is a relaxing and enlightening experience; it pushes you outside of your comfort zone and regular routines.
However, something to always keep in mind is that your vacation may not be the biggest or the longest trip, but enjoy it like it is!
Vacations are exactly as they sound; a vacation from everything, from your job, from your home and all of the responsibilities that come along with them. Celebrate this time you have away from the stresses of daily life, slow down, turn off your phone and enjoy the ride!
Budgeting and Reducing Expenses
The Importance of Keeping a Budget
Any financial advisor, banker or investment broker will tell you the same thing if you are pursuing financial independence, budget! And more than just creating a budget, it is imperative that you stick to it!
Budgeting is one of the few financial lessons that cannot be preached enough, especially when the economy is turbulent.
More than just pursuing financial independence, a budget keeps you on target for goals and it makes sure you do not spend more money than you have. According a study conducted by NerdWallet, the average household that’s carrying credit card debt has a balance of $15,953!
Additionally, a budget leads to a happy retirement, allows you to be prepared for emergencies and unexpected expenses and it also sheds light on your bad spending habits.
Reducing Expenses Where Possible
It is unrealistic to expect that everyone will be able to slash thousands of dollars from their expenses; however there are small changes that we can all make.
Even small changes, as we have previously discussed in our blog focusing on building a wealth snowball, make a huge difference in the long run.
Think that your budget and expenses are already lean? There are always ways that you can improve.
Examples of ways you can save money each month include:
- Refinancing your home or automobile loan
- Consolidating student loans
- Requesting a credit card reduction rate
- Cancel club memberships
- Reduce or eliminate your cable bill
- Reduce eating out
- Buy nonperishable items in bulk
- Reduce or eliminate consumable habits
These are just a few examples of ways you can reduce expenses to add to your savings. Not everyone will be able to use these examples, so here’s a list of 40 more ways you can cut expenses!
Other Benefits of Budgeting and Reducing Expenses
Beyond the financial benefits of budgeting and reducing expenses, there are many benefits that are not apparent right away.
If your income is significantly higher than your expenses you can work to pay down any debt you may have and sleep better at night at the same time!
Many people do not like the restrictions of following a budget, but it is a sacrifice you make in the present for a better future. It is not a limitation on the fun you can have in your life, but a way of opening up opportunities for yourself and your family in the future!
2018 Bellco FCU Annual Community Scholarship
Rising Costs Presents Challenges
Every year the spring season brings a world of excitement for high school seniors. These young adolescents are about to take a giant step in their life, for some of them it is time to enter the workforce, while others are continuing to invest in themselves and are headed to a technical school or to pursue a college degree.
However, over the last 20 years, the price of attending a technical school or a college has risen dramatically and that can cause many to stress about how to pay for this newfound expense.
- Private national universities’ tuition and fees have jumped 157 percent.
- Public national universities’ tuition and fees for out-of-state students have risen 194 percent.
- Public national universities’ tuition and fees for in-state students have grown by over 237 percent.
With these dramatically rising costs, students have been looking for ways to help pay for their education and Bellco Federal Credit Union is here to help!
Bellco Annual Community Scholarship
One of our favorite and most valued parts of our business is the fact that we are a community based, not-for-profit federal credit union that believes in investing into our community and rewarding our members.
Part of this mission is to give back to students in the form of a suite of easy to use products and services and an annual scholarship to help students pay for their education!
Our scholarship is for students who are attending an accredited post-secondary school. This means you could be heading off to a technical school, a college, a trade school or a university, and this is open to students of all years, not just incoming freshmen!
Bellco is awarding $1,000 to a deserving student who meets a few basic requirements:
- You must have an account with Bellco Federal Credit Union in Berks County, Pennsylvania
- You can open an account for a deposit of just $5!
- You must be accepted into or enrolled full time in an approved post-secondary school
- Your cumulative grade point average must be at least 2.5
- Open to all members regardless of age
Application Details and Important Dates
Applying for our scholarship is a breeze! All you have to do is complete these few items:
- Complete our application
- Provide an official school transcript confirming current GPA
- Provide proof of full-time enrollment and/or acceptance at a post-secondary school
- Submit a video
- Email your submission to firstname.lastname@example.org
- (video submission cannot contain any copyrighted material)
Just record a few minute video talking about your experience here at Bellco Federal Credit Union and tell us why you chose to use us! A few video ideas are:
- What benefits does a credit union offer over a big bank
- Why you love Bellco
- Explain Bellco's benefits to another college student or friend
- Tell us how you manage your Bellco checking account and Debit Card
- What is your favorite Bellco technology feature? App or Text banking, Apple Pay, Shared Branching, etc...
There are just a few important dates to note:
- Submissions must be received by May 10th, 2018
- Awards will be made by May 31st, 2018 and a member of our staff will be contacting the winner before publishing the results
We hope that this scholarship will go to a deserving student to help cover educational expenses and that we can make a positive impact on the life of a young and promising emerging adult!
Building a Wealth Snowball
The vast majority of people who achieve financial success do so over long periods of time.
If you are 19, you have over 40 years to set yourself up for financial success and even small steps now will make a big difference over the long run.
A lot of monetary growth occurs from the concept of compounding interest. Over short periods of time, any investment or savings do not create large returns, but over decades, compounding interest can help you create a truly impressive wealth snowball!
By making sound financial choices during your first 50 years, you can dramatically change your future and even tiny steps, like saving a dollar here, a dollar there, can really add up!
While it is still possible to have a positive impact on your financial future if you are starting late in life, the task is much more cumbersome.
The Potential of Compound Interest
In concept, compounding is very simple, and almost boring.
The more money you save or invest, the more interest it can generate, but as the pile grows, your interest is then reinvested. Over the first few years of saving or investing, compounding does not do much. However, the longer your money has to grow, the more of a return you will see.
The stock market on average returns roughly 6.8% per year. Let’s assume that you invest $1 into the stock market, over the first few years you do not see a large return on your money.
By year 10, that same $1 would be worth $1.97, but this is where compound interest really begins to takeover. By the end of year 20, that $1 would be worth $3.88 and the return continues to climb from that point.
If you invest $1 and achieve an average return, after 50 years that same $1 would be worth $29.68, which is over a 2700% return!
The Importance of Saving
Retirement is a phase of life that we all hope to reach one day, it is something that most Americans are working towards. But more than just retirement, people seek financial independence and to live the remainder of their life in comfort while minimizing the amount of time they have to spend working.
Almost every grandparent or elderly individual will tell you about the mistakes they have made throughout life and how to avoid them. However, the most common response when discussing retirement with them is to simply “start saving early and save often.”
By reducing expenses where you can early in life, you can retire in comfort, or in some cases if you are really disciplined, you can retire early! The longer your money has to earn interest and grow; the better off you will be in the future.
Hopefully using some of these tips you too can achieve a peaceful retirement, or maybe even accelerate your savings process and reach that goal sooner than you thought possible!
How to Decide It’s Time to Buy a Home
Maybe it’s spotting a “for sale” sign on that funky cottage you’ve always admired on your morning bike ride. Or a friend raves about the perks and privacy at the chic new condo she’s just purchased. Maybe you’re tired of roommates or just want to tend your own garden.
At some point, something will make you ask yourself: Should I buy a home and how much house can I afford?
The decision to go from renter to homeowner is emotionally and financially complex. Here are some key factors to consider when deciding whether buying is right for you.
There’s no better time to buy, right?
Owning a home used to be a virtual requirement in attaining the so-called American dream. But that was when people drove 2-ton cars, smoked on airplanes and watched live television. Buying is a smart choice for many people, but it isn’t always the best deal, depending on the market where you live and factors such as how long you plan to stay in your home and the size of the home you want to purchase compared to where you’re renting.
Before you commit to buying, factor in the following points:
- There’s a big initial investment involved. You have to pony up a lot of money when you purchase your house, from the closing costs (roughly 3% of the home’s purchase price) to the down payment itself. Not everyone has that kind of cash to spare.
- Can you handle the debt? Lenders often look at your debt-to-income ratio: how your mortgage payments and other debts would stack up against your pay. Conventional lenders often use the so-called 28/36 rule when determining whether to offer you a loan. Your house-related payments (mortgages, taxes, insurance) shouldn’t exceed 28% of your pretax income, and all other combined debts shouldn’t exceed 36% of your monthly pretax income. (Much more on this later.)
- Buying is more expensive than you think. You can’t simply compare your monthly mortgage payment to your monthly rent — these are apples and oranges, particularly when you consider that the place you purchase won’t necessarily be the same size as the place you’re renting. Though you can deduct some of your homeownership expenses, you’ll have to pay property taxes, homeowner’s insurance, HOA fees and probably mortgage insurance, as well as renovations, maintenance, utilities, and other fees typically covered by a landlord. (You can directly plug numbers into a handy rent-buy calculator from the New York Times.)
- Buying decreases ease of mobility. In today’s ever-changing job market, very few people can say with certainty that they’ll have the same employer in five years. It’s much easier, and less expensive, to leave a yearlong lease than to sell a home.
- How hot is your market? Real estate is local and cyclical, so consider whether your area is better suited to renting or buying. If you live in a larger metropolitan area, the Case-Shiller Index is a useful at-a-glance look at how current real estate values where you live compare to historic highs and lows.
Is a home an investment?
Some people would rather put their money toward equity in their property instead of giving it to a landlord. While that math makes sense for many — especially those who plan to stay long enough to pay off their mortgage entirely — nobody can predict whether home prices will rise or fall in a given time frame, so don’t count on your home to be a cash cow.
What to do before you act
If you’re thinking about buying, follow these steps before making your move.
- Calculate your current debts, including car loans, credit card payments, and student loans. Remember the 28/36 rule mentioned above.
- Consider how much available cash you have. You’ll want enough to at least cover your down payment and closing costs, and don’t forget to leave enough in your bank account to cover any emergencies that might arise.
- Make sure you can put enough money down. Traditionally, lenders have required down payments equal to 20% of the home’s purchase price, but special programs allowing down payments as low as 3% are available. (Putting 20% down on a $300,000 home would require $60,000 in the bank — plus an additional $9,000 or so for closing costs.)
- Get preapproved for a loan. Contact a lender to get preapproved for a mortgage. This doesn’t require you to accept the loan; it’s just a way of showing real estate agents and sellers that you’re serious. One of the first things a prospective agent will ask is whether you’ve been preapproved, so check off this box early in the process.
» MORE: Find a Lender to Get Preapproved
Are you better off renting?
Deciding whether to rent or buy is a big decision that requires serious “Where am I now?” and “Where am I going?” sorts of questions. It might be best to keep renting if you want to maintain maximum flexibility for personal or professional reasons, or if jumping into more debt right now takes you out of your comfort zone. Maybe you’re just not ready to face the responsibilities of homeownership: repairs, upgrades, maintenance, yardwork and all the rest. Even thinking about the difference between cleaning an 800-square-foot apartment and a 2,400-square-foot house can make you want to take a seat and a deep breath.
Your local housing market could be working against you, as well. If you live in a hot market with eager house hunters chasing too few properties, it might be best to bide your time until a better buying opportunity presents itself.
© 2018 NerdWallet, Inc. All Rights Reserved
Credit and Credit Scores
Credit and credit scores, you hear about these terms on a regular basis and many of you actively engage in the changing of your score daily! But what exactly is credit, what is a credit score, and how do you improve your score?
Credit, in its most basic form, according to Dictionary.com is:
“the ability of a customer to obtain goods or services before payment, based on trust that payment will be made in the future.”
You might ask yourself, why do you need to use credit, is it not more beneficial to pay for everything when you have the cash to pay for it?
Well credit is important for a few reasons, first you can use it to purchase goods or services you may not have the capital to currently acquire, but will within the next month or two. Additionally, building a track record of good credit is imperative for financing major purchases such as, a car, a home, a new appliance or even a vacation.
What exactly is a credit score?
On a very basic level, your credit score is a number (typically ranging from 330 to 830) which is a representation of your history with managing your credit and making payments. There are many different reporting agencies which all have their own method of determining your score, so do not panic if you see multiple different numbers because we ALL have multiple scores!
What these numbers are meant to do is predict if you are likely to pay your bills on time. One of the most common credit scores is your FICO credit score. This number is calculated based on a few factors.
- Payment history – have you missed payments, defaulted on loans or made late payments?
- Amounts owed – how much do you owe and how well have you managed your payments?
- Length of credit – how long have you been borrowing money?
- New credit – have you applied for new loans recently?
- Type of credit – do you have a good mix of different types of debt (home, auto, credit cards and others)
Tips to build strong credit
How does one go about building a credit score? You actively are building your score with each day you make purchases on credit or make payments on time.
Credit scores take time to build and usually cannot be changed very rapidly, this is why it is important to remain consistent on your efforts to improve your score! Here are some helpful tips to help improve your credit score so you can secure lower rates on loans, allow you to borrow more and can even allow you to avoid placing security deposits in some cases!
- Avoid opening too many new accounts, especially at one time! Each new account you open will lower your average account age, which in turn will lower your score.
- Make all of your payments 100% of the balance due and make them on time! This applies to not just credit card bills, but mortgages, auto loans, rent or even utility bills, it all factors in!
- Minimize the amount of credit you utilize. You may have a $2,000 limit, but that does not mean you should spend to that limit every month. Scores have seen the most improvement by keeping their monthly balance below 30% of their limit, in this case that would mean keeping your balance below $600 per month.
- Keep accounts open for as long as possible, the longer an account is open the better it looks on your credit report! Sometimes financial advisors can recommend closing an account with an annual fee and over the long-run this may be beneficial. When opening new accounts seek out cards like our Bellco Visa® credit card, which has no annual fee!
- Check your credit reports once a year for errors or discrepancies.
Hopefully by utilizing these tips and learning a little bit more about how a credit score is calculated you too can see your score rise!
First Time Home Buying
There are a lot of new, fun and exciting rites of passage to becoming a full-fledged adult. One of the biggest decisions you have to make as an adult is not where you are taking your next vacation or what car to buy; it is what home you will buy.
Questions beyond just what home you will buy follow you through this process, how much of a down payment will you place on the home, how will you finance it, how long do you want to finance it. All of these questions can really stress an individual out and require hours and hours of research to solve.
Starting with the basics
What exactly is a mortgage? Well think of it as a huge loan that someone takes out to secure the purchase of a home or condominium. A first mortgage is a little different, as it is specifically the primary loan on a property. The other factor in a mortgage is your interest rate; this is the percentage you have to pay annually to have that money loaned to you.
How does it work?
When an individual, a couple or an organization want to purchase a property but do not have the capital on hand to pay for it, they take out a mortgage. Lending institutions, like Bellco Federal Credit Union, will provide the capital for the individual to purchase the property and then will be paid back over time.
The lender expects the home loan, or mortgage, to be repaid in monthly installments, which include a portion of the principal and interest payments. Interest is the amount of money that you have to pay to the institution to compensate them lending you the money where as the principal is the initial amount borrowed.
Mortgages sound complicated, but are they?
Mortgages, loans and home buying may seem intimidating, there are a lot of fancy words used, but it is actually quite a simple concept. A mortgage is a form of debt, so your initial thought may be to avoid this.
However, a mortgage is actually the most advised form of debt due to the security of the collateral. Additionally, mortgages usually come with some of the lowest interest rates compared to almost any other form of debt.
Want to know more?
If this brief introduction to the world of lending and mortgages piqued your interest and you want to know more, come to our free home buying and refinancing seminar. It will be held on February 28th at 6:00pm in Bellco’s Wyomissing branch. Sandwiches will be provided; you can listen to a fun and informative presentation from Bellco’s partnered insurance and real estate agents.
To RSVP for this seminar, email email@example.com!