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Stop Loaning the IRS Your Money Interest-Free: When and How to Adjust Your Tax Withholding

Rocky Mengle — Thu, 18 Jun 26 15:30:22 -0400

The "One Big Beautiful Bill" (OBBB) enacted last year created four new tax deductions, increased the standard deduction, raised the child tax credit, and added other tax savings for the 2025 tax year. But the IRS didn't adjust the tables employers use to calculate the amount of income tax to withhold from your paycheck. As a result, there's a good chance too much tax was withheld from your wages in 2025—especially if you work a lot of overtime, receive tips on the job, or have kids.

If that's the case, you'll likely got a refund when you filed your tax return this year. However, that also means each paycheck in 2025 was smaller than it could have been, and you essentially gave the IRS an interest-free loan. On the other hand, if not enough tax was withheld last year, you'll have to pay the IRS the difference when you file your return. You might also have to pay IRS penalties and interest.

Ideally, the amount of federal income tax withheld from your paychecks during the year will come close to the amount of tax you'll owe for the year. That way, you'll either get a small refund or only pay a small amount. But if it looks like that's not going to happen for 2026, it's easy to adjust your withholding now to get back on track.

This is the best time of year to adjust your tax withholding. I'll explain how to do it, and cover other important aspects of tax withholding that might help you plan ahead for the tax return you'll file next year.

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When Should You Adjust Your Tax Withholding?

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You shouldn't fall into the "set it and forget it" trap when it comes to federal income tax withholding. But how do you know when it's time to make a change?

Here are nine common situations where it might make sense to adjust your withholding:

1. Qualifying for new tax breaks. New tax deductions and credits aren't enacted very often. But when they are, it's usually a good idea to tweak your withholding if you qualify for a new tax break. For instance, the OBBB created four new deductions for tip income, overtime pay, car loan interest, and seniors. If you qualify for any of these deductions, your tax bill will go down. By adjusting your withholding to account for the tax savings, the amount withheld from your paycheck will go down. That will also make each paycheck a bit bigger—so it's like giving yourself a raise!

2. Getting a big tax refund. Some people think getting a big refund is a good thing. But that's not necessarily true. It just means your employer withheld more tax from your paychecks than necessary. The IRS doesn't pay you interest on any extra money it collects through withholding (i.e., on your refund), so having too much withheld from your wages is like giving Uncle Sam an interest-free loan each pay period. You can fix this problem by reducing the amount withheld from your pay.

3. Paying a big tax bill. It's no fun digging deep into your pocket to pay a large tax bill when you file your return. If this happens to you, it might be because you didn't have enough tax withheld during the year. To avoid the same problem when you file your next return, increase the amount of tax withheld by your employer. This can help you dodge IRS penalties and interest, too.

4. Getting married (or divorced). If your marital status changes, your taxes are likely to change, too. That's largely because your filing status changes if you get married or divorced. And because your withholding is partially based on your filing status, it's a good idea to adjust your withholding if your filing status changes for any reason.

5. Having a baby. Children are expensive—but they can also generate some significant tax savings. The child tax credit alone is worth up to $2,200 per child for the 2026 tax year. So, when you have a baby (or adopt a child), the amount of tax you owe might very well go down. If that's the case, you can also reduce your tax withholding to account for the lower tax bill. (When your children grow up and you're no longer eligible for any child-related tax breaks, you'll want to adjust your withholding again.)

6. Buying a home. There are a number of tax breaks available to homeowners, such as deductions for mortgage interest and property taxes. These tax benefits can have a significant impact on your federal income tax bill. So, if you go from being a renter to being a homeowner, you might want to tweak your tax withholding to account for any home-related tax savings.

7. Starting a side gig. If you start a side job and taxes aren't withheld from your income (e.g., you're a freelancer or other type of independent contractor), you should consider adjusting the withholding from your "regular" paycheck. By factoring in the income from your side gig, your primary employer can withhold additional taxes from your wages to help cover what you'll owe on your side income. (Adjust your withholding again if you quit your side job.)

8. Spouse getting a job. As your family income increases, so does your tax rate. So, if you're married and filing a joint return, and both you and your spouse are employed, you'll likely owe more tax than if only one of you had a job. As a result, you should consider adjusting your withholding if you go from a one- to a two-income family. (And adjust it again if you go back to a one-income family.)

9. Receiving non-wage income. If you receive a lot of interest, dividends, capital gains, retirement account withdrawals, or other non-wage income during the year, you might want to adjust your withholding. These types of income are generally taxable, but taxes typically aren't withheld when they're paid to you. By increasing your paycheck withholding, you can account for the additional taxes you'll owe for the extra income.

How Do You Adjust Your Tax Withholding?

Adjusting your federal income tax withholding is easy. All you have to do is fill out a new Form W-4 and give it to your employer. The information you provide on a W-4 form will be used to calculate the amount of tax to be withheld from each paycheck. If you have more than one job, you should submit a separate W-4 form for each job to get the most accurate overall withholding.

There are five "steps" to filling out a W-4 form, but you might not have to complete all of them. You can also use the IRS's Withholding Tax Estimator to help you complete the form.

Step 1: Enter Personal Information. Everyone must complete Step 1, which is to provide your name, address, Social Security number, and the filing status you expect to use on your next tax return.

Step 2: Multiple Jobs or Spouse Works. This step is only required if (1) you hold more than one job at a time, or (2) you expect to file a joint return and your spouse also works. There are three ways to complete Step 2. You can generally pick any method, although you should pick the first option (using the IRS Withholding Tax Estimator) if you or your spouse have self-employment income.

Step 3: Claim Dependent and Other Credits. If you expect to claim any tax credits—such as the child tax credit or credit for other dependents—on your next tax return, complete Step 3 so that your withholding can be reduced to account for the credits' impact on your tax bill.

Step 4: Other Adjustments. Complete this step if you want to:

--Increase your withholding to cover taxes owed on non-wage income

--Reduce your withholding to account for tax deductions you expect to claim (other than the standard deduction)

--Increase your withholding for any other reason (e.g., to generate a larger tax refund)

Step 5: Signature and Date. You must sign and date the form in this step. By signing, you declare, under penalties of perjury, that as far as you know the information on the form is true, correct, and complete.

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When Are You Required to File a W-4 Form?

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The only time you're required to complete a W-4 form is when you start a new job. If you don't provide your employer with a properly completed form at that time, your withholding will be calculated as if you're a single person with no adjustments (e.g., for multiple jobs, credits, deductions, non-wage income, etc.).

Once you start your job, you can submit a new W-4 form any time you want. However, if you want, you can stick with your original W-4 if the right amount of tax is being withheld and there are no changes to your financial or personal situation that might require an adjustment.

In any event, it's wise to check your withholding each year to make sure it's still correct. The IRS Withholding Tax Estimator can help make sure your withholding is on track. If possible, you should review your withholding earlier in the year. That way, you can spread out any necessary adjustments over a longer period of time. However, you can adjust your withholding at any point in the year if you don't think of it earlier or your financial or personal situation changes later in the year.

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Estimated Tax Payments Instead of Withholding

If you have self-employment income from a side gig, or non-wage income that's not subject to withholding, you can make estimated tax payments to cover the taxes on that income instead of adjusting the withholding from your paycheck.

If you go this route, you generally have to make four payments during the year. The estimated tax due dates are typically Jan. 15, April 15, June 15, and Sept. 15. However, if a due date falls on a weekend or holiday, the payment is due on the next business day.

Estimated tax payments generally aren't required for self-employment or non-wage income if you expect to owe less than $1,000 in tax for the year after subtracting any withholding and tax credits. They're also not necessary if you expect your withholding and tax credits for the year to be at least the smaller of:

-- 90% of your tax liability for the current year

-- 100% of your tax liability for the previous year (110% for certain higher-income people)

Penalties and Interest If Too Little Tax Is Withheld

If you don't pay enough tax during the year—either through withholding or estimated tax payments—you might have to pay a penalty. How much your penalty will be depends on the:

-- Amount of your underpayment

-- Period when the tax was due and underpaid

-- Quarterly IRS interest rates for underpayments

On the bright side, you won't have to pay a penalty if either:

-- You owe less than $1,000 of federal income tax for the year

-- You paid at least 90% of the tax due for the current year, or 100% of the tax due for the previous year (110% for certain higher-income taxpayers), whichever amount is less

The IRS also charges interest on the penalty until it's paid in full.

Exemptions From Tax Withholding

Withholding isn't required for every worker. You can claim an exemption from federal income tax withholding if both of the following are true:

-- You had no tax liability for the previous year.

-- You expect to have no tax liability for the current year.

If you qualify, you still must submit a W-4 form to claim the exemption. Complete Steps 1 (name and Social Security number only) and 5, and check the box in the "Exempt from withholding" section.

The exemption only applies for one year. If you want to claim it again, you have to file another W-4 form next year, too. For 2026 exemptions, you must submit a new form by Feb. 17, 2026 (the deadline is Feb. 16, 2027, for a 2027 exemption).

Just remember: If you claim an exemption, you won't have any income tax withheld from your paycheck. If you end up owing tax, you might also be hit with a penalty when you file your return for the year.

Can You Adjust Payroll Tax Withholding?

Income taxes aren't the only taxes your employer collects for the federal government. Take a look at your paystub and you'll notice deductions for other taxes that fund the Social Security and Medicare programs.

Young and the Invested Tip: Social Security and Medicare taxes could be listed as FICA SS, OASDI, FICA Med, or some other abbreviated term on your paystub. "FICA" stands for Federal Insurance Contributions Act, which is the legislation authorizing these taxes. "OASDI" stands for Old-Age, Survivors and Disability Insurance, which is the formal name for Social Security.

The Social Security tax you pay is generally equal to 6.2% of your wages, while your Medicare tax equals 1.45% of your pay—for a combined total of 7.65%. Your employer pays the same amount. So, between the tax you pay and the portion paid by your employer, the federal government typically gets a grand total of 15.3% of your wages to fund Social Security and Medicare.

However, there's a limit on wages subject to the Social Security tax. For 2026, there are no Social Security taxes on wages above $184,500 (the limit is adjusted for inflation each year).

There's no such limit on Medicare taxes, though. In fact, employers must withhold a 0.9% additional Medicare tax from a worker's wages exceeding $200,000 for the year.

Unfortunately, an employee can't control any of these payroll tax deductions. Unlike federal income tax withholding, there's no way to adjust withholding for these taxes.

Related: All Tax Due Dates for the Year

State Income Tax Withholding

Unless you live in a state with no income tax, your employer will likely withhold state (and possibly local) income taxes from your paycheck, too.

Most states have their own version of the federal Form W-4; however, their use isn't always required. So, when you start a new job, you might have to fill out a separate form that's used to calculate your state income tax withholding.

If and how you can adjust your state tax withholding, whether an exemption is allowed, penalties for insufficient withholding, and other withholding-related rules vary from state to state. Check with the state tax agency where you live for more information about state and local income tax withholding from your paycheck.

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Related: What's Your Standard Deduction?

For most people, their largest and most important tax deduction is the standard deduction. However, the standard deduction amounts change every year to account for inflation. Plus, the standard deduction isn’t the same for everyone.

So, before start your tax return or jumping into tax planning mode, you’ll need to know how much your standard deduction will be for the tax year.

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Paper vs. Plastic: Is Swiping a Card or Spending Cash the Smarter Play?

Hannah Kowalczyk-Harper — Thu, 18 Jun 26 14:30:54 -0400

"Will you be paying with cash or card?" It's a well-worn financial question—one that might be slowly falling out of use amid cards' growing dominance, but one you're still bound to hear every now and then.

While some people are fine using either, some people are staunch proponents of one or the other. Cash lovers tout that cash can be used virtually anywhere, that you can't spend more than you have, and that it's relatively anonymous. Credit card advocates enjoy the convenience and monetary benefits.

But is one really better than the other?

Well, yes … sometimes. It's all a matter of circumstance. Sometimes, cards are the clear-cut best option. But in some situations, you're actually better off paying in cash.

Today, I'm going to review a set of spending situations that are best handled with cash, and another set of spending situations where it's better to use a credit card. By having both payment methods handy, and knowing when to use each, you can maximize your spending power and even avoid some hassles.

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When You Should Pay With Cash

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Today, depending on the business, you're given several options when you want to pay for a product or service. You could use a credit or debit card, a payment app like Venmo, a payment service like Apple Pay or Google Pay, maybe even cryptocurrency.

But despite this growing glut of options for making purchases, many people still prefer good, old-fashioned cash.

This isn't purely out of a stubbornness to resist change. In some situations, cash is still the best payment method. So we'll start by going over some of the occasions where it makes the most sense to pay with cash.

1. When It's the Only Option

This seems pretty obvious: In some situations, you only have the option to pay with physical cash, so it's wise to always keep at least a little on hand. Examples of vendors where you might need to pay cash include garage sales, farmers' markets, old-school vending machines, and lemonade stands. And occasionally, you'll even find a few restaurants that refuse to accept cards or other alternative payments.

Indeed, even though the smallest of vendors are starting to accept cards and other payments—and even though some vendors are starting to ban cash altogether—you might occasionally find yourself in a situation where cash is your only choice. Given that you might be nowhere near an ATM, always carry at least a little cash if you can.

2. Any Time a Credit Card Surcharge Will Be Applied

One of the ways credit card companies make money is by charging fees to merchants and retailers. This has long been the case, but ever since a class-action lawsuit against the credit card companies was settled in 2013, merchants have been able to pass along charges to consumers in the form of credit card surcharges.

Credit card surcharges range between 1% to 4% of the overall purchase cost. If a business plans to have consumers pay this junk fee, they must disclose it ahead of time—it can't be a surprise. The business needs to post signs, and the surcharge must be shown on your receipt.

If you're expected to pay a credit card surcharge, it's better to pay with cash and avoid paying that extra percentage. Remember: These charges can be as high as 4% of your bill. Even if you have a rewards credit card, it's very rare to collect rewards that high.

Also, sometimes these savings are presented in a different way—some vendors will provide a "discount" for paying in cash—but it amounts to the same idea. Pay in cash when it's cheaper to do so.

3. When You're Worried About Overspending

It's easy—sometimes too easy—to spend money with a credit card. By the time a credit card gets declined for being maxed out, it can have thousands or even tens of thousands of dollars charged to it. So in any situation where you have a strict spending limit that you're worried about surpassing, it's better to stick to cash.

For example: Don't bring a credit card with you when you're out for a night of drinking. According to a 2024 LendingTree survey, nearly half of drinkers (45%) say they have regretted spending too much on alcohol and/or partying, and 17% went so far as to say that purchasing too much alcohol led to debt.

Overspending can happen in a heartbeat, particularly when your judgment is impaired. So it's better to only have as much cash on you as you're willing to spend than it is to wake up and realize you ran up a pricey bar tab on your card.

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4. When You're Traveling Internationally (In Some Situations)

There are several situations when, during international travel, it makes more sense to use cash.

One has to do with who you bank with. If your bank charges no or low fees for international ATM transactions, and your credit card charges higher foreign transaction fees, it makes sense to avoid those higher fees by withdrawing money while you're in the country. (But avoid currency exchange booths, which typically charge unfavorable rates.)

Also, in some countries, cash is still a widespread payment method to the point where you might not even have the option to use a credit card in most places. Countries including Morocco, Bulgaria, Czechia, and Egypt are heavily reliant on cash.

Lastly, if you think you'll be in a lot of tipping situations, cash remains the best payment medium.

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5. At Small, Independently Owned Shops

While you're not usually required to do so, you might want to pay in cash at your favorite "mom and pop" shops.

Small business owners often get hit with interchange fees of between 2% and 3% of the transaction cost. That means the owner of a shop where credit cards are frequently used is typically losing thousands of dollars each year to processing fees.

A few thousand dollars might be chump change for larger chains, but that can make a huge different for an independent operator.

Supporting these little shops and paying in cash isn't a purely charitable action, either. It can be challenging for these stores to stay afloat; and if they go out of business, you'll have no choice but to shop with major corporations instead.

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When You Should Pay With a Credit Card

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Credit card usage is extremely common—Capital One notes that credit cards are used to pay for nearly a third (63%) of all retail purchases, and 41% of all in-store transactions.

What's more? In a 2022 Pew Research Center survey, 41% of American adults said they used cash in none of their purchases in a typical week. That number jumped to 59% for adults with an annual household income of at least $100,000.

In many (dare I say most) cases, using a credit card makes more sense than paying with cash, including in the following situations:

1. When You'll Get a High Cash-Back/Rewards Percentage

Some rewards credit cards offer set cash-back (or other "-back" rewards, such as stock-back) for all purchases. Others give you a varying percentage back depending on the spending category; say, 5% back at restaurants, 3% back for gas, and 1% for all other types of purchases.

If your cash-back rewards would be greater than a posted credit card surcharge (if any), you're basically declining free money if you pay with cash instead of your card. For instance, if a restaurant charges a 2% credit card surcharge, but your card offers you 5% cash-back on restaurant expenditures, you're still coming out ahead. (And naturally, anywhere you're not paying a credit card surcharge, you'll come out ahead using your rewards credit card, regardless of the rewards rate.)

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2. For Very Large Purchases

Cash is fine for small purchases—a few tacos at a food truck, a souvenir at the airport—you're typically better off using a credit card for large purchases.

To start: Cash is easily stolen. And while it's never good to have any amount of cash stolen from you, you'd really hate to be out hundreds or thousands of dollars you'll never recover. Conversely, if someone steals your credit card, you'll likely be covered by theft and fraud protection.

Also, proving you bought something is much easier with a credit card. Yes, you'll receive a receipt regardless of how you pay. But receipts are easily lost. Your credit card, however, also keeps a record of your purchases, so if you lose the receipt, that record should still allow you to make a return. (Also, if you itemize your deductions come tax time, having your purchases recorded by credit card makes the process much simpler for you or your CPA.)

Furthermore, by using cash, you might be forgoing warranties or purchase protection. Credit cards sometimes provide additional coverage to the manufacturer's warranty or allow you to extend the warranty.

3. When You're Trying to Establish Credit

Are you trying to quickly build a credit history? Well, you can't really do that with cash, but it's very easy with a credit card.

Credit scores are a gateway to important purchases. Your credit score not only determines whether you'll qualify for things like renting an apartment, auto loans, mortgages, and more, but in many cases, it can also determine how much you'll be charged in interest.

Regularly using your credit card, then paying off the balance on time every month, can help you build credit. Your FICO Score is made up of several pieces of data, but No. 1 among them is payment history, at 35%.

Conversely, paying in cash does nothing to help you establish credit. So if you're trying to establish or build credit, using a credit card is a way to go.

4. When You (Or Others) Are in a Rush

Generally speaking, credit cards are more convenient than cash.

There is no counting involved; you automatically pay the exact amount. Finding your card is easier than digging for exact change in bills and coins. Your cashier might struggle to count out change. The register might not be able to break large bills.

So if you're in a rush, using your credit card is almost always going to be your fastest option.

Related: 10 Fun Jobs That Pay Well

5. When You're Splitting Costs With Others

Nothing can ruin relationships quite like arguing over money.

Pretend you're on vacation with a group of friends. You take turns paying for food, drinks, and transportation. However, while some of your friends have an "it all evens out in the end" mentality, others are following strict budgets and want to ensure they don't pay more than their fair share.

When you pay with cash, it can be challenging to remember who paid when and where. But if you forget about any expenses, it's much easier to look over credit card charges to see if anything is missing.

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Related: The 10 Best-Rated Dividend Aristocrats Right Now

Dividend growth puts more cash in our pockets and signals that the company we're invested in is confident in its ability to keep churning out profits. And there's no more heralded group of dividend growers than the Dividend Aristocrats, which are companies that have paid higher cash distributions each year for at least a quarter-century.

But even Aristocrats aren't created equally. Check out which dividend growers Wall Street loves the best right now in our list of the top-rated Dividend Aristocrats.

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Supporting Kids, Caring for Parents, Saving for Zero: 20 Realities of Gen X Retirement Readiness

Riley Adams, CPA — Wed, 17 Jun 26 13:30:53 -0400

Generation X is often referred to as "the forgotten generation," and that rings true in various facets of life—including retirement.

As far back as the turn of the century, the financial media's attention was laser-focused on the eventual (and, starting in 2011, actual) retirement of the Baby Boomer generation. We still have several years before all Baby Boomers hit retirement age, and the conversation is shifting … but largely toward Millennials and how ready they are for retirement.

Forgotten by most again is Generation X, born between the years of 1965 to 1980, and set to start hitting retirement some 15 years earlier than Millennials.

And on that front, Gen X unfortunately looks behind the 8-ball as it pertains to retirement. Whether they simply didn't have the means, weren't educated enough about the importance of saving for their post-career years, or any other reason, the average retirement account balance for Gen X workers isn't as high as they'd hoped—and as a result, most Gen Xers are worried they won't be able to retire comfortably.

What does Gen X's retirement picture look like? I'll dive into a number of statistics that explore Generation X's readiness for, and mindset about, retirement. (And for those who feel they're behind, regardless of age, I'll offer some tips on how to get on track.)

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Gen X Retirement Statistics

Read on as I dig into the specifics of how much Generation X has saved, their financial fears, and more. These statistics come from a variety of studies and surveys about Gen X's retirement preparedness.

There's No Denying That Gen Xers' Retirement Savings Need Work

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The average retirement savings balance among members of Gen X is $108,600. Seeing as how many Gen Xers find themselves well into their 50s, you can quickly see the problem this poses for retirement. (Source: Northwestern Mutual¹)

Consider this: At 55 with $108,600 saved, you're aiming for retirement at 65. Even with aggressive assumptions (additional monthly savings contributions of $400 and a 7% annual return even though requiring a stock-heavy portfolio needed for achieving that type of return is less suitable nearing retirement), you'd reach roughly $288,000.

Would that amount fall short of what's needed in retirement over a longer time horizon? $288,000 might seem decent, but consider this: Over 20 years of retirement (potentially!), the 4% retirement withdrawal rule translates to a mere $11,520 annually (initially, since this withdrawal rule requires you to adjust for inflation over time). With Social Security uncertain and averaging $22,500 per year as of the latest Social Security benefit report from November 2024, this picture might need some additional savings help.

Now, we'll explore several Gen X retirement statistics to provide a fuller context of the generation's preparation for retirement.

1. 45% of non-retired Gen Xers say they've done no retirement planning.

Comparatively, only 43% of Millennials can claim the same.

Also troubling in its own right: Some 30% of non-retired Baby Boomers claim they haven't planned at all for retirement. (Source: Schroders)

2. Only 55% of Gen X workers participate in an employer-sponsored retirement savings plan.

The small share of Gen Xers who still have student loan debt are more likely to work for an employer that sponsors a retirement plan (76%), and they're also more likely to participate in those plans (66%). Also of note: Hispanic Gen X members trail all other demographics, at just 35% participating in an employer-sponsored retirement plan. (Source: National Institute on Retirement Security)

3. Only 13% of Gen X workers still carry student loan debt, but it's not insubstantial—the average is a bit more than $40,000

On the one hand, Gen Xers that do still have student loan debt also have higher annual incomes (and thus have more means of paying off those student loans). However, while they're more likely to have access to (and use) employer-sponsored retirement accounts than Gen Xers without a college degree, the National Institute on Retirement Security (NIRS) says Gen Xers still paying off student loans "have lower net worths and are more likely to fall short of their retirement savings targets, at least in part due to student loan debt."

A couple demographics notes: Women account for 60% of Gen Xers with student loan debt. Also, Asian Americans are the least likely among Gen Xers to still have student loans outstanding. (Source: National Institute on Retirement Security)

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4. About 66% of Gen Xers worry that they won't meet their workplace plan goals.

According to Schroders, two-thirds of non-retired Gen Xers worry that they won't grow their workplace retirement plan savings to the level they'd hoped for. That fear is pretty similarly shared by other generations—64% of Millennials and 61% of non-retired Baby Boomers have the same worry. (Source: Schroders)

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5. Gen X workers expect to have less than 60% of what they need saved by the time they retire.

According to Schroders, non-retired members of Generation X expect to have just $661,000 by the time they retire. However, they believe, on average, that they'll need roughly $1.1 million to retire comfortably. That's a roughly 40% shortfall. (Source: Schroders)

6. The difference between Gen X's retirement haves and have-nots can be measured in the hundreds of thousands of dollars.

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When considering the mean (average), the top quartile of Gen X holds almost $250,000 in retirement savings while the bottom quartile holds only $35,000.

When considering the median (midpoint), the bottom half of Gen X households has troublingly little saved for retirement. The second quartile has just $4,290 saved, while the bottom quartile has just $200 in retirement savings! (Source: National Institute on Retirement Security)

7. Gen X workers are allocating an average of 32% of their assets for retirement to cash.

That's right—"despite their time horizon and sizeable retirement savings gap," Schroders says, Gen Xers are effectively parking a third of their money in cash. That means the money will not only fail to grow, but it's doomed to lose value to inflation.

When questioned about why they're investing such a large chunk of their portfolio in cash, nearly two-thirds (63%) say they're worried about losing their money. (Source: Schroders)

8. Nearly a quarter of non-retired Gen Xers are unsure about what they're investing in.

According to Schorders, 24% of Gen Xers said they "are not sure how best to invest their savings." This admitted lack of information is also factoring into Gen X stashing large swaths of their savings into cash. (Source: Schroders)

9. Only 14% of Gen X has a pension plan.

The National Institute on Retirement Security says Gen X is "the first generation to enter the labor market following the shift from defined benefit pension plans to 401(k)-style defined contribution accounts." Very few Gen Xers have pensions as a result—only 14% of the generation's future retirees have a pension plan. (Source: National Institute on Retirement Security)

Indeed, nowadays, only 15% of private-industry employers offer a pension plan, according to the Bureau of Labor Statistics. (Source: Bureau of Labor Statistics)

10. 47% of Gen Xers fear Social Security might run out of money.

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For one, that's more fearful than both Baby Boomers (38%) and Millennials (44%). But it's also worth noting that large chunks of every generation are misunderstanding a pervasive Social Security myth.

That is: While Social Security's financial situation is worsening, it's not going broke. Social Security isn't going broke, and it won't fully run out of money. Social Security's reserve, which stood at $2.8 trillion as of 2022, is at risk of running out by 2034—and if it does, Social Security will likely have to reduce payments to about 80%. But the rest will continue to be paid from annual tax revenues. (All of this assumes no fix to Social Security's situation, which is not a given.)

One other note: Just 11% of Gen X plan to wait until they are 70 to receive maximum Social Security benefit payments. (Source: Schroders)

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11. 84% of non-retired Gen X workers are "concerned or terrified" of the thought of no more regular employment paychecks in retirement.

By comparison, 74% of non-retired Baby Boomers, who are much closer to the finish line, feel the same way. Unsurprisingly, only 49% of Millennials, who are quite a ways away, expressed a similar worry. (Source: Schroders)

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12. 61% of non-retired Gen X workers say they have no confidence that they can achieve a "dream retirement."

Meanwhile, only 49% of Millennials and 53% of non-retired Baby Boomers believe the same about their own retirements. (Source: Schroders)

13. Gen X members spend an average of 1.5 hours each day worrying about money.

This is nearly double the 0.8 hours per day Baby Boomers stress about their financial situation. And it's only slightly less than the Millennial average of 1.7 hours. (Source: Schroders)

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14. Only 12% of Gen Xers predict an inheritance will be part of their retirement income.

The Baby Boomer generation is expected to pass down more than $70 trillion, but Gen Xers expect to be the "Forgotten Generation" in that regard, too. Just 12% say inheritance will be a source of retirement income. (Though it's possible some respondents expect to receive an inheritance but just don't think it will be used toward funding their retirement.)

On the flip side, most Gen Xers (84%) aren't planning on leaving an inheritance, either. (Source: Prudential Financial)

15. Almost half of Gen X workers expect to retire later than anticipated.

According to Prudential Financial Plus, 40% are planning to work part-time after full-time retirement. (Source: Prudential Financial)

16. Nearly half of surveyed Gen Xers worry they won't be able to retire at all.

The 49% of Gen Xers who worry retirement won't be an option is from a 2023 Natixis survey. It's also up from 2021, when 42% of Gen Xers expressed the same concern. (Source: Natixis Investment Managers⁷)

17. On average, Gen Xers start saving for retirement at age 36.

This is younger than Baby Boomers, who on average got their start at age 44, but older than Millennials (27) and Gen Z (20). Of course, this only accounts for people who have already started planning, so you can expect the younger generations’ averages to trend higher as more Gen Zers and Millennials start saving for retirement. (Source: Fidelity⁸)

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18. Just 40% of Gen Xers say they use financial advisors for retirement planning.

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This is lower than their younger counterparts—roughly 47% of Gen Z and 54% of both Boomers and Millennials get help on their retirement planning from a financial advisor. (Source: BlackRock via Axios⁹)

19. The average after-tax earnings invested by Gen X is more than 40% higher than the overall population.

After Gen X, Baby Boomers invest the highest amount of their paychecks, followed by Millennials, and finally Gen Z. (Source: Bank of America Institute¹⁰)

20. Gen X is expected to be the biggest beneficiary of the "Great Wealth Transfer" from Baby Boomers.

It's expected that trillions of dollars of assets will move form Baby Boomers to their heirs. However, most of this shift is likely to not occur for many more years. (Source: Bank of America Institute¹⁰)

So How Can Gen X Meet Retirement Savings Targets?

The data is, in a word, discouraging. But Gen Xers shouldn't just give up. Here are a few ways anyone can get their retirement plans back on track—and many of these tips are applicable to several generations, not just Generation X.

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1. Invest More Aggressively

Above, I said that Gen Xers are allocating nearly a third of their retirement assets to cash. That's way, way too much. While the exact percentage depends on your individual circumstances, most investment experts say you should allocate anywhere between 2% to 10% of your investment portfolio in cash or cash equivalents. Why? Because you need most of your portfolio working for you, whether that's more aggressively growing in stocks, or at least collecting interest in fixed-income investments.

2. Prioritize Retirement Over Your Child's College Fund

It's honorable to want to cover your child's future college tuition in full. But if you're behind on your retirement savings, you need to reprioritize and contribute more toward retirement.

Your child will have options: They might be able to get scholarships or financial aid, cover some of their own costs through a part-time job, or attend school through a combination of cash and student loans. But you will have far fewer options if you retire without enough money. Only after your nest egg reaches appropriate levels (ask a financial professional to determine what those are) should you bump up your education savings again.

3. Make Smart Use of Retirement Accounts

You probably already know that retirement plans such as 401(k)s and individual retirement accounts (IRAs) offer tax advantages that make them ideal vehicles to save for your post-career life. But you might not know how to maximize those advantages.

In short: Even if you have multiple retirement accounts, you shouldn't necessarily be splitting your savings equally among them. You should have a list of priorities—indeed, we can show you, in order, how to max out your 401(k) and other retirement accounts.

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Related: When Should You Take Social Security?

Social Security is a pillar of many older Americans’ retirement income. Typically, around 90% of people age 65 and older are collecting Social Security benefits at any given time.

But while most of us will end up on Social Security, when we choose to start collecting benefits will differ from person to person. Our guide to Social Security timing may help you decide.

Related: How Does the 4% Rule Work? [And Why Did It Change?]

One of the most popular retirement withdrawal strategies of the past few decades has been the unfussy “4% rule.” It’s one of the most straightforward rules you’ll come across in finance, even as its creator has made a few tweaks to it over the years.

How does the 4% rule work, how has it changed, and can it help guide your retirement? Check out our primer on the 4% rule.

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Sources

¹ Northwestern Mutual (https://news.northwesternmutual.com/2024-04-02-Americans-Believe-They-Will-Need-1-46-Million-to-Retire-Comfortably-According-to-Northwestern-Mutual-2024-Planning-Progress-Study)

² Schroders (https://www.schroders.com/en-us/us/institutional/clients/defined-contribution/us-retirement-survey/)

³ National Institute on Retirement Security (https://www.nirsonline.org/wp-content/uploads/2023/07/GenX-Student-Debt-Sept-2023.pdf)

⁴ National Institute on Retirement Security (https://www.nirsonline.org/2023/07/new-report-finds-alarming-retirement-outlook-for-generation-x-3/)

⁵ Bureau of Labor Statistics (https://www.bls.gov/opub/btn/volume-12/how-do-retirement-plans-for-private-industry-and-state-and-local-government-workers-compare.htm)

⁶ Prudential Financial (https://news.prudential.com/latest-news/prudential-news/prudential-news-details/2023/Generation-X-confronts-harsh-new-reality-of-retirement-unreadiness/default.aspx)

⁷ Natixis Investment Managers (https://www.im.natixis.com/en-us/insights/investor-sentiment/2024/gen-x-report)

⁸Fidelity (https://preview.thenewsmarket.com/Previews/FINP/DocumentAssets/663841.pdf)

⁹ BlackRock via Axios (https://www.axios.com/2024/07/10/gen-x-retirement-savings-americans-survey)

¹⁰ Bank of America Institute (https://institute.bankofamerica.com/content/dam/economic-insights/gen-x-economy.pdf)

Take It with a Grain of SALT: How the New SALT Deduction Cap May Affect Your Taxes

Rocky Mengle — Wed, 17 Jun 26 12:15:58 -0400

One of the big changes made by last year's "One Big Beautiful Bill" (OBBB) could save you a lot of money when you file your taxes this year—especially if you live in a state with high taxes.

The new law quadrupled the annual cap on the federal deduction for State and Local Taxes (nicknamed the "SALT" deduction). That means some people will be able to write off four times the amount of their state and local taxes when compared to last year, which could add up to thousands of dollars in tax savings!

The SALT cap will continue to rise for a few years, but then it will drop back down to pre-OBBB levels. Keep reading to learn more about the SALT deduction, its cap, and how they will change in the future.

What Is the SALT Deduction?

To understand the SALT deduction cap, you first need to know a few things about the SALT deduction itself.

This federal deduction is for certain state and local taxes you paid during the tax year. You can only deduct state and local taxes on your federal income tax return if you claim itemized deductions on Schedule A. However, you can't claim itemized deductions and the standard deduction on the same return. In most cases, you can pick whichever one—itemized deductions or the standard deduction—that saves you the most money. If you pick the standard deduction, you can't claim the SALT deduction.

The SALT deduction also covers more than just your state income taxes. For instance, you can generally deduct state and local real estate taxes, too. Property taxes on cars, boats, and other personal items are also deductible if the tax is based solely on the property's value and is imposed on an annual basis.

If you pay more sales tax than state and local income taxes during the year (e.g., if you live in a state that doesn't have an income tax), you can deduct your sales tax instead of your income tax (but not both). If that's the case, you can deduct either the actual amount of sales tax you paid during the year or an estimated amount. To come up with an estimate, you must use the IRS's "optional state sales tax tables," which are found in the instructions for Schedule A, or the IRS's online Sales Tax Deduction Calculator.

When Was the SALT Deduction Capped?

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Not too long ago, there was no limit on the amount of state and local taxes that itemizers could deduct on their federal return.

That all changed when the Tax Cuts and Jobs Act (TCJA) of 2017 was enacted.

One of the many changes made by the TCJA was to place a $10,000 limit on the SALT deduction ($5,000 if you were married and filing a separate return from your spouse). This cap was first imposed for the 2018 tax year and remained at $10,000 through 2024.

How Much Is the Current SALT Cap?

The OBBB raises the SALT cap deduction significantly for 2025, and then nudges it up an additional 1% for each of the next four years. However, the increases are only temporary, and they're wiped out if your income is too high.

For the 2025 to 2029 tax years, the SALT deduction cap for most taxpayers is as follows (it's half as much for married taxpayers filing separately):

-- 2025: $40,000

-- 2026: $40,400

-- 2027: $40,804

-- 2028: $41,212

-- 2029: $41,624

However, for those years, your SALT cap is gradually reduced—but not below $10,000—if your modified adjusted gross income (MAGI) is above a certain amount. The threshold amounts for most taxpayers are as follows (they're half as much for married taxpayers filing separately):

-- 2025: $500,000

-- 2026: $505,000

-- 2027: $510,050

-- 2028: $515,151

-- 2029: $520,302

For every dollar your MAGI is over the applicable threshold, the SALT cap is reduced by 30 cents. But again, the limit won't drop below $10,000.

In 2030, the SALT cap drops back down to the original $10,000 amount, and there's no phase-out.

Young and the Invested Tip: MAGI is equal to the adjusted gross income reported on your tax return, plus any (1) foreign earned income or housing costs deducted or exempt from tax, and (2) income exempt from tax for residents of Guam, American Samoa, the Northern Mariana Islands, or Puerto Rico.

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How Does the SALT Cap Work?

Let me illustrate how the SALT cap works.

Suppose you paid $48,000 in state and local taxes in 2025. If you itemize on your federal tax return for that year, you can deduct $40,000 of those taxes. However, the remaining $8,000 in state and local taxes is not deductible on your federal return (although it might be on your state tax return).

The limit also applies to the total amount of deductible state and local taxes, not to any single type of tax. So, for example, if you paid $21,000 in state income taxes, $18,000 in real estate taxes, and $8,000 in personal property taxes in 2025 (for a total state and local tax bill of $47,000), your deduction is still capped at $40,000 even though each separate type of state or local tax was less than $40,000.

Who Is Impacted by the SALT Cap?

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The SALT cap affects a relatively small number of taxpayers—and they're mostly higher-income people.

First, remember that you have to itemize to deduct state and local taxes. Before the 2018 tax year, approximately 30% of all taxpayers itemized. However, the TCJA nearly doubled the standard deduction and either eliminated or reduced certain itemized deductions. As a result, only about 10% of taxpayers itemize now.

Those who do itemize also tend to be wealthier taxpayers. That's because they're the ones whose itemized deductions—such as for state and local taxes, mortgage interest payments, and charitable deductions—are more likely to be higher than their standard deduction.

In addition, a lot of people don't pay more than the SALT cap in state and local taxes per year, and therefore can still claim their full SALT deduction if they itemize. Again, the SALT cap tends to hurt wealthier taxpayers, because they're typically the ones who pay more than the cap per year in state and local taxes.

Finally, people who live in states with higher tax rates—such as California, Illinois, New York, New Jersey, Maryland, and Connecticut—are more likely to have their SALT deduction capped. That makes sense: Higher rates make it more likely that your state and local taxes will exceed the SALT deduction limit. If you live in a low-tax state and have a modest income, there's a good chance you won't be impacted by the SALT cap even if you itemize.

Since the cap tends to have the greatest impact on wealthier people in high-tax states, they benefit the most by the OBBB's increased limits.

Related: Federal Tax Brackets and Rates

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Are There Ways Around the SALT Cap?

Most states have enacted laws that help owners of certain businesses—such as partnerships, S corporations, and many limited liability companies (LLCs)—get around the SALT deduction cap. These types of businesses, which are called pass-through entities, don't pay federal income taxes. Instead, their income, gains, losses, deductions, and credits are "passed through" to the owners, who claim them on their personal income tax returns.

The SALT cap workarounds vary from state to state. However, they generally involve the business itself paying a special elective state tax. That tax essentially covers the state income taxes the owners would owe on the income that's passed through from the business to them.

Because the SALT deduction cap doesn't apply to businesses, all of the special tax—even if it's more than the cap—can be used to reduce the taxable income that's passed through to the owners. If the owners are getting less taxable income from the business, their federal income tax bills will be lower, too.

In addition, the owners typically receive some sort of state income tax deduction, credit, or exclusion. This compensates them for the reduced income they receive from the business.

Related: 15 Best Long-Term Stocks to Buy and Hold Forever

As even novice investors probably know, funds—whether they're mutual funds or exchange-traded funds (ETFs)—are the simplest and easiest ways to invest in the stock market. But the best long-term stocks also offer many investors a way to stay "invested" intellectually—by following companies they believe in. They also provide investors with the potential for outperformance.

So if you're looking for a starting point for your own portfolio, look no further. Check out our list of the best long-term stocks for buy-and-hold investors.

Related: 7 Best Vanguard Dividend Funds for 2026 [Low-Cost Income]

What's better than a smart, sound dividend income strategy? How about a smart, sound dividend income strategy with very little money coming out of your pocket?

If that sounds good to you, you need look no farther than low-cost pioneer Vanguard, which offers up a number of payout-oriented products. Find out what you need to know in our list of seven top-notch Vanguard dividend funds.

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Fidelity Target-Date Funds: Everything You Need to Know

Charles Lewis Sizemore, CFA — Tue, 16 Jun 26 08:30:58 -0400

Financial experts commonly tell us that the key to achieving long-term investment success is simply to make an investment plan and stick to it. Heck, you'll even see that in the marketing literature for mutual funds and ETFs.

Making a plan is relatively easy; sticking to the plan is where it gets tricky. Fortunately, target-date funds (TDFs) can help. And today, I'm going to spend a little time on one particular TDF lineup: Fidelity's target-date funds.

Investing isn't necessarily difficult, but it does require your attention. You have to regularly check your allocation to make sure the risk you’re taking is appropriate for your age and stage of life. You generally don't want to be too heavy in bond funds early in your career because you’re unlikely to keep pace with inflation. You have the ability to take more risk because time is on your side; you have years or even decades to recover losses. You’re also pulling in a paycheck and have the ability to offset losses by simply saving and investing more.

However, you generally don't want to be too heavy in stock mutual funds later in life, as you won't have time to recover any potential losses. The calculus changes. You have less time to recoup losses, and once you are retired you can't replace losses by saving and investing more. So, it's important to invest more conservatively and avoid gambling with your golden years.

In an ideal investment plan, you follow a glidepath (a plan that shifts your investing mix over time) from more aggressive to more conservative over the course of your investing life.

It can be difficult to do this on your own. You might not have the skills, time, nor patience, plus market noise has a way of distracting us. When the market is ripping higher, it's natural to want to take more risk, regardless of whether you should. And when the market is looking rough, it's psychologically hard to add risk even when you need to in order to meet your long-term goals. But target-date funds can stay our hand.

Today, I want to talk to you about four Fidelity target-date fund lineups: the three Fidelity Freedom target-date fund series, as well as a fourth set of sustainable TDFs. I'll start by going over what a target-date fund is and does, discuss why shifting assets is so important, and then delve into specifically what Fidelity's target-date funds have to offer.

Editor's Note: The tabular data is up-to-date as of June 12, 2026.

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Disclaimer: This article does not constitute individualized investment advice. Individual securities, funds, and/or other investments appear for your consideration and not as personalized investment recommendations. Act at your own discretion.

What Is a Target-Date Fund?

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Target-date funds are a type of mutual fund that have become a retirement planning staple. You might also know them as lifecycle funds, age-based funds, and dynamic-risk fund.

Whatever you call them, the concept is simple: Target-date funds invest in a more aggressive portfolio of predominantly equity funds to start, then gradually shift to a more conservative portfolio of mostly bond funds as they approach a target retirement date. However, the target-date fund's allocation to stocks will generally never go to zero. Retirees need at least some growth, which means they should maintain at least a little exposure to the stock market.

The beauty of the target-date fund is that it changes your asset allocation to match your risk tolerance as you age—and it does it automatically without requiring you to actually do anything.

Also, the target retirement dates are intended to be estimates; they don't have to be super precise. Most mutual fund families will create target date funds in five-year increments (say, 2025, 2030, 2035, etc.).

For the investor, the math here is simple enough.

Target-Date Funds Example

Let's say you turned 40 years old in 2025, and that you expect to work until age 70. Your expected retirement date would be in the year 2055. So, investing in a target-date fund with a retirement date of 2055 would make sense.

If your retirement date falls in between five-year increments, that's no problem! If you planned on retiring in 2058, for instance, you could invest in a 2055 fund, a 2060 fund, or a combination of the two.

What if your expected retirement age changes? No problem! Target-date funds are normal mutual funds and can be bought or sold as your needs change.

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What Is Asset Allocation?

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A lot of investors (and particularly young investors) dream of making a killing picking stocks. And why not? Stock picking is stimulating and, if done well, can add some zeros to your net worth!

When push comes to shove, however, your asset allocation strategy is far more important than individual stock picking when it comes to meeting your financial goals. Asset allocation sits at the core of target-date funds and, really, at the core of all financial planning.

But what exactly is asset allocation?

Every planner has their own take, but the basic idea is simple. You diversify your portfolio across different asset classes (stocks and bonds, for instance) that, ideally, move at least somewhat independently of each other. A typical asset allocation will include:

Stocks (or stock mutual funds)
Fixed-income investments (bonds or bond funds)
Cash
Alternative assets such as gold, commodities, or real estate

You arrange the parts so that the overall portfolio has a risk and return profile that makes sense for you. And (importantly) you rebalance the portfolio when the weights to each asset start to divert from your plan.

Asset Allocation Example

Let's say your ideal asset allocation had you 70% allocated to stocks and 30% allocated to fixed income.

First, let's say the stock market crashes. Your stock weighting has suddenly dropped to just 50%, and your fixed-income investments have jumped to 50% of your portfolio's worth. You need to rebalance your portfolio to get back to 70/30. You would do that by selling off some of the fixed-income investments and buying some stock.

Now, let's say instead that the stock market shoots higher, and you find yourself allocated 80% to stocks and 20% to fixed-income investments. If you wanted to rebalance back to 70/30, you would sell some of your stocks and buy new fixed-income investments.

The idea here is to constantly reduce risk and smooth out your returns by buying low and selling high.

Asset allocation within a target-date fund takes it a step further. Apart from regular rebalancing due to market moves, the target-date fund’s asset allocation decisions involve gradually reducing the risk (buying fewer and less risky stocks, and buying more bonds) as the fund gets closer to its target retirement date.

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A Look at Fidelity's Target-Date Funds

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Fidelity is, of course, one of the largest mutual fund companies in the world. I've personally discussed Fidelity’s best index funds for Young and the Invested, and it's worth noting that Fidelity ETFs can be useful for tactical investors.

Fidelity also manages one of the largest target-date fund families. In fact, there's a good chance your company 401(k) plan has Fidelity target-date funds as an investment option.

There are literally dozens of Fidelity target-date funds, and we will cover each in a moment. But all share certain characteristics. For example, all Fidelity target-date funds hold underlying funds managed by Fidelity. So, essentially, you can think of a Fidelity target-date fund as a portfolio of regular Fidelity mutual funds specifically allocated for a person your age.

That said, there are some significant differences, particularly when it comes to fees and the expense ratio of each particular fund.

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Fidelity Freedom Funds

The Fidelity Freedom Funds are a family of 14 total funds: 13 target-date funds with target retirement dates currently spanning 2010 to 2070, as well as an income-focused fund, the Fidelity Freedom Income Fund (FFFAX):

Fidelity Freedom Retirement Fund (FFFAX): 0.46% expense ratio, or $4.60 annually for every $1,000 invested
Fidelity Freedom 2010 Fund (FFFCX): 0.46%
Fidelity Freedom 2015 Fund (FFVFX): 0.50%
Fidelity Freedom 2020 Fund (FFFDX): 0.55%
Fidelity Freedom 2025 Fund (FFTWX): 0.59%
Fidelity Freedom 2030 Fund (FFFEX): 0.61%
Fidelity Freedom 2035 Fund (FFTHX): 0.64%
Fidelity Freedom 2040 Fund (FFFFX): 0.66%
Fidelity Freedom 2045 Fund (FFFGX): 0.68%
Fidelity Freedom 2050 Fund (FFFHX): 0.68%
Fidelity Freedom 2055 Fund (FDEEX): 0.68%
Fidelity Freedom 2060 Fund (FDKVX): 0.68%
Fidelity Freedom 2065 Fund (FFSFX): 0.68%
Fidelity Freedom 2070 Fund (FRBDX): 0.68%

Fund managers build the allocations for each up exclusively from underlying Fidelity funds. And each of the Fidelity Freedom Funds are expected to reach their most conservative allocation 10 to 19 years after the target date. At that point, the target asset allocation is expected to be similar to Fidelity Freedom Retirement (25% stocks, 70% bonds, and 5% cash or short-term funds). Once the fund has passed its target date, its assets will eventually be merged with FFFAX.

While the process is designed to follow a glidepath, the funds are actively managed and involve a degree of human discretion.

Let’s take a look at a couple examples.

Fidelity Freedom 2065 Fund (FFSFX)

The most aggressive fund currently in the lineup is the Fidelity Freedom 2065 Fund (FFSFX), which would be appropriate for an investor in their late 20s/early 30s who intends to retire around the age of 70.

FFSFX allocates 92% of its assets to stocks (split between 53% U.S. and 39% international)*. The remaining 8% is invested in bonds. That's the highest exposure to stocks within this Fidelity Freedom series; the closer to retirement, the less exposure to equity and the more exposure to debt.

Fidelity Freedom 2065 gets its stock exposure through funds such as the Fidelity Series Emerging Markets Opportunities Fund (FEMSX), Fidelity Series Large Cap Stock Fund (FGLGX), and Fidelity Series Growth Company Fund (FCGSX). Its bond exposure is provided through funds such as the Fidelity Series Long-Term Treasury Bond Index Fund (FTLTX). Note: Fidelity's "Series" share class is only open to Freedom Funds and other asset management programs; you and I can't just buy them through our brokerage accounts.

FFSFX charges 0.68% in annual expenses, which is lower than the average across traditional actively managed mutual funds.

Fidelity Freedom 2035 Fund (FFTHX)

Now, let's consider the Fidelity Freedom 2035 Fund (FFTHX). The 2035 fund would be appropriate for someone in their late 50s or early 60s that planned to retire around the age of 70. This fund is more conservative than the 2065 fund, but it still has a 70% allocation to stocks (39% U.S. equities, 31% international equities). It charges 0.64% in annual expenses.

Remember, Fidelity's concept of what an ideal asset allocation is for a person at a given age might not exactly line up with yours. By the time you're 60, you might consider having a 69% allocation to stocks to be far too aggressive. So, while target-date funds are designed to be "set it and forget it," you still need to periodically check in to make sure you're comfortable with the risk being taken.

Fidelity Freedom Index Funds

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Index funds have made the world a better place for investors ever since Vanguard's John Bogle launched the concept in 1975. Due in large part to their lower fees and lower frictional expenses like brokerage commissions, index funds generally outperform their actively managed counterparts over time.

So, if index funds are good for your stock and bond funds, why not for your target-date funds too?

That's exactly what the Fidelity Freedom Index Funds offer. It's the exact same target-date concept as the original Fidelity Freedom funds, but this family of index target-date funds builds its portfolios exclusively from Fidelity's large selection of low-cost index funds:

Fidelity Freedom Index Retirement Investor Fund (FIKFX): 0.12% expense ratio, or $1.20 annually for every $1,000 invested
Fidelity Freedom Index 2010 Investor Fund (FKIFX): 0.12%
Fidelity Freedom Index 2015 Investor Fund (FLIFX): 0.12%
Fidelity Freedom Index 2020 Investor Fund (FPIFX): 0.12%
Fidelity Freedom Index 2025 Investor Fund (FQIFX): 0.12%
Fidelity Freedom Index 2030 Investor Fund (FXIFX): 0.12%
Fidelity Freedom Index 2035 Investor Fund (FIHFX): 0.12%
Fidelity Freedom Index 2040 Investor Fund (FBIFX): 0.12%
Fidelity Freedom Index 2045 Investor Fund (FIOFX): 0.12%
Fidelity Freedom Index 2050 Investor Fund (FIPFX): 0.12%
Fidelity Freedom Index 2055 Investor Fund (FDEWX): 0.12%
Fidelity Freedom Index 2060 Investor Fund (FDKLX): 0.12%
Fidelity Freedom Index 2065 Investor Fund (FFIJX): 0.12%
Fidelity Freedom Index 2070 Investor Fund (FRBVX): 0.12%

Let's look at an example.

Fidelity Freedom Index 2065 Fund (FFIJX)

We'll compare the Fidelity Freedom Index 2065 Fund (FFIJX) to its sister product, the Fidelity Freedom 2065 Fund.

The index-only Fidelity Freedom fund has an expense ratio of just 0.12% compared to 0.68% for the active target-date fund. Those 56 basis points (a basis point is one one-hundredth of a percentage point) might not sound like much of a difference, but over time it compounds. If you invested $10,000 into both funds over the course of 10 years, and both earned 10% before fees, you would earn $1,278 more from the index fund once fees were factored in—and the difference would get wider with time.

But understand there can be slight differences in asset allocation between the active Fidelity Freedom funds and their Index Freedom Fund peers.

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Fidelity Freedom Index 2065 Fund (FFIJX) Composition

The indexed 2065 fund invests roughly 92% of assets in equities, which is on par with the active 2065 fund. However, the U.S./international splits are a little different, at 53/39 for FFSFX but 56/36 for FFIJX.

This isn't a static allocation, either. Sometimes, the actively managed FFSFX has a more aggressive stance, favoring stocks as a whole (and U.S. stocks specifically) more than FFIJX. Sometimes it's less. You can chalk this up to the preferences of FFSFX's managers. For what it's worth, the actively managed 2065 fund has an average annual return of 9.7% over the trailing five-year period, versus 9.1% for its indexed sister. That lead might revert over time—but it might not.

Thus, when choosing between the active and indexed Fidelity Freedom funds, you have to weigh the benefits of manager discretion against the lower cost of index investing.

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Fidelity Freedom Blend Funds

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Typically, the term “blend fund” actually refers to a type of stock fund that holds both value and growth stocks. But in the case of the Fidelity Freedom Blend Funds, what Fidelity is “blending” is active and passive management.

That is, Fidelity Freedom Blend Funds are target-date funds that hold a combination of actively managed and indexed Fidelity funds to meet their goals:

Fidelity Freedom Blend Retirement Fund (FHBZX): 0.41% expense ratio, or $4.10 annually for every $1,000 invested
Fidelity Freedom Blend 2010 Fund (FHAYX): 0.41%
Fidelity Freedom Blend 2015 Fund (FHAWX): 0.42%
Fidelity Freedom Blend 2020 Fund (FHAVX): 0.43%
Fidelity Freedom Blend 2025 Fund (FHAUX): 0.44%
Fidelity Freedom Blend 2030 Fund (FHATX): 0.46%
Fidelity Freedom Blend 2035 Fund (FHASX): 0.47%
Fidelity Freedom Blend 2040 Fund (FHARX): 0.47%
Fidelity Freedom Blend 2045 Fund (FHAQX): 0.47%
Fidelity Freedom Blend 2050 Fund (FHAPX): 0.47%
Fidelity Freedom Blend 2055 Fund (FHAOX): 0.47%
Fidelity Freedom Blend 2060 Fund (FHANX): 0.47%
Fidelity Freedom Blend 2065 Fund (FFBSX): 0.47%
Fidelity Freedom Blend 2070 Fund (FRBYX): 0.47%

We cover an example of how this plays out with the Fidelity Freedom Blend 2065 Fund (FFBSX).

Fidelity Freedom Blend 2065 Fund (FFBSX)

Fidelity Freedom Blend 2065 Fund (FFBSX) holds index funds including the Fidelity Series Large Cap Value Index Fund (FIOOX) and Fidelity Series Blue Chip Growth Index Funds (FSBDX), as well as actively managed funds, such as the emerging-markets fund FEMSX. It currently has a 53/40 blend of U.S. and international stocks, for a total of around 93%—a touch more aggressive than the other two 2065 funds.

As you might expect, expenses for FFBSX's expense ratio of 0.47% falls in between the purely indexed target-date fund and the fully actively managed fund. Performance usually falls in the middle, too. However, currently, it has returned 9.2% annually on average over the past five years, which is only a hair better than the indexed FFIJX but still about 50 basis points behind the actively managed FFSFX.

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Fidelity Sustainable Target Date Funds

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In 2023, Fidelity launched its Fidelity Sustainable Target Date lineup, which like the Freedom funds, includes a product specific to every five years, as well as an income fund.

Fidelity Sustainable Target Date Retirement Fund (FSUDX): 0.41% expense ratio, or $4.10 annually for every $1,000 invested
Fidelity Sustainable Target Date 2010 Fund (FSUYX): 0.41%
Fidelity Sustainable Target Date 2015 Fund (FSVNX): 0.42%
Fidelity Sustainable Target Date 2020 Fund (FSWDX): 0.43%
Fidelity Sustainable Target Date 2025 Fund (FSWOX): 0.44%
Fidelity Sustainable Target Date 2030 Fund (FSXAX): 0.46%
Fidelity Sustainable Target Date 2035 Fund (FSXKX): 0.47%
Fidelity Sustainable Target Date 2040 Fund (FSXVX): 0.48%
Fidelity Sustainable Target Date 2045 Fund (FSYHX): 0.49%
Fidelity Sustainable Target Date 2050 Fund (FSYWX): 0.49%
Fidelity Sustainable Target Date 2055 Fund (FSZHX): 0.49%
Fidelity Sustainable Target Date 2060 Fund (FSZSX): 0.49%
Fidelity Sustainable Target Date 2065 Fund (FTGPX): 0.49%
Fidelity Sustainable Target Date 2070 Fund (FRCQX): 0.49%

In addition to leading investors down the proper glidepath to retirement, these funds also try to invest in assets with positive environmental, social, and governance (ESG) characteristics. It can do so by investing in:

Actively managed funds that buy securities of issuers that are believed to have good or improving sustainability or ESG characteristics
Index funds that track an ESG index
Funds that don’t necessarily have a principal ESG investment strategy, but that have at least 80% of assets in debt securities that the adviser believes have positive ESG characteristics

Like with Fidelity Freedom Blend Funds, Fidelity Sustainable Target Date Funds sport expense ratios falling between their fully passive and fully active brethren. Fidelity Sustainable Target Date 2065 Fund (FTGPX), for instance, charges 0.49% annually.

FTGPX is a bit more aggressive than all of the previously mentioned funds, at a 95/5 split of stocks and bonds. However, given the extremely short time since inception, performance numbers here don't tell us much.

Learn More About These and Other Funds With Morningstar Investor

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If you're buying a fund you plan on holding for years (if not forever), you want to know you're making the right selection. And Morningstar Investor can help you do that.

Morningstar Investor provides a wealth of information and comparable data points about mutual funds and ETFs—fees, risk, portfolio composition, performance, distributions, and more. Morningstar experts also provide detailed explanations and analysis of many of the funds the site covers.

With Morningstar Investor, you'll enjoy a wealth of features, including Morningstar Portfolio X-Ray®, stock and fund watchlists, news and commentary, screeners, and more. And you can try it before you buy it. Right now, Morningstar Investor is offering a free seven-day trial and a discount on your first year's subscription when you use our exclusive link.

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How Do Fidelity Freedom Funds Compare to Vanguard Target Retirement Funds?

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As a general rule, you're going to get a very similar experience in both Fidelity Freedom funds and Vanguard Target Retirement funds. Both offer low-cost access to an asset allocation model that glides from more aggressive to more conservative as you reach your targeted retirement date.

But there can be differences, and those differences matter.

Let’s compare the Fidelity Freedom Index 2040 Fund (FBIFX) to the Vanguard Target Retirement 2040 Fund (VFORX). Both have rock-bottom expense ratios of 0.12% and 0.08%, respectively. It's close enough that fees alone aren’t going to move the needle much in terms of returns.

The asset allocations are noticeably different, however. FBIFX currently has 48% of assets invested in U.S. stocks and another 31% in international equities—so, 79% invested in stocks. Meanwhile, VFORX is currently invested 43% in U.S. equities and 30% in international equities, for a total stock exposure of 73%.

As another example, let's consider funds that already assume you're in retirement. The Fidelity Freedom Index 2020 Fund Investor Class (FPIFX) has 42% of its assets invested in stocks, whereas the Vanguard Target Retirement 2020 Fund (VTWNX) weights stocks at about 34%. Also worth noting: FPIFX has a sub-1% weight in the Fidelity Series Commodity Strategy Fund (FCSSX), which means you're getting a little bit of commodities exposure. That's uncommon among the larger target-date series.

The Fidelity target-date funds consistently have more stock exposure than the Vanguard target-date funds of a comparable target date. They're a little more aggressive, and that's neither good nor bad. But it's something you should consider as you choose the right target-date fund for you.

Are Indexed Target-Date Funds Better Than Actively Managed Funds?

This is an eternal debate, and the answer is “it depends.”

Some active managers effectively beat their indexed competition even after the higher fees, trading expenses and tax considerations are taken into account. Most, however, do not. Over the past two decades, there have been only three years—2005, 2007, and 2009—in which a majority of large-cap managers beat the S&P 500. So, as a general rule, it is safe to assume that indexed target-date funds will be your better option over time.

Furthermore, active management can muddle the waters of a target date strategy, particularly if the active manager regularly makes defensive moves, such as going to cash. The percentage of the portfolio you have exposed to stocks is determined by the number of years until the retirement date, and active management can potentially skew your weights outside of the target.

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Why Does a Fund's Expense Ratio Matter So Much?

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Every dollar you pay in expenses is a dollar that comes directly out of your returns. So, it is absolutely in your best interests to keep your expense ratios to an absolute minimum.

The expense ratio is the percentage of your investment lost each year to management fees, trading expenses and other fund expenses. Because index funds are passively managed and don't have large staffs of portfolio managers and analysts to pay, they tend to have some of the lowest expense ratios of all mutual funds.

This matters because every dollar not lost to expenses is a dollar that is available to grow and compound. And over an investing lifetime, even a half a percent can have a huge impact. If you invest just $1,000 in a fund generating 5% per year after fees, over a 30-year horizon, it will grow to $4,116. However, if you invested $1,000 in the same fund, but it had an additional 50 basis points in fees (so it only generated 4.5% per year in returns), it would grow to only $3,584 over the same period.

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What Is the Minimum Investment Amount on a Fidelity Fund?

Every Fidelity fund has its own minimum investment amount specific to that fund. But Fidelity has been a trailblazer in making its funds available to beginning investors with ultra-low minimums, and many Fidelity funds have no minimum investment at all.

Part of our criteria in selecting the best Fidelity index funds was accessibility, and every fund selected here has a minimum investment of zero, meaning you can literally start your investment with any dollar amount.

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Disclosure About Allocation Math

* All allocations reported in this article have been adjusted to represent percentage of total exposure, which isn't always 100%.

For instance: FFSFX technically allocates 98% of assets to stocks, then another 8% to bonds. Yes, that adds up to 106%.

Target-date funds sometimes use derivatives such as options and futures to accomplish their investing goals in a way they couldn't by purchasing and selling assets alone. Fidelity currently lists negative 6% of assets in "net other assets," which is a catch-all for receivables, payables, assets that don't fall into the composition categories, and offsets to derivative positions. A significant (1%+) negative number may point to the use of derivatives.

Is this good or bad? It's difficult to say. Use of derivatives can increase risk, but it can also be a more cost-efficient way to replicate parts of an allocation. Also, the implied use of derivatives in Fidelity Freedom Funds is modest.

But the negative number is how we get to 100%. The very rough math for FFSFX: 98% stocks plus 8% bonds plus negative 6% net other assets = 100%. To get the adjusted allocations for stocks and bonds, I divided the figure by 106 and multiplied by 100. So, for FFSFX's stock allocation, 98 / 106 * 100 = ~92%.

Lastly, not all Fidelity Freedom Funds use derivatives. For instance, net other assets in the indexed FFIJX are less than one-tenth of 1%.

Related: 8 High-Quality, High-Yield Dividend Stocks

It’s difficult to resist the charm of high-yield dividend stocks. Their ability to generate outsized amounts of cash makes them the stuff of dreams for those living on a fixed income—as well as for any investors who simply want a little performance ballast during periods of rough stock-price returns.

But we prefer quantity and quality. For instance, our favorite high-yield dividend stocks deliver much sweeter yields than the average stock, show more signs of fundamental quality than most, and have the confidence of Wall Street's analyst community.

Related: 10 Best Monthly Dividend Stocks for Frequent, Regular Income

The vast majority of American dividend stocks pay regular, reliable payouts—and they do so at a more frequent clip (quarterly) than dividend stocks in most other countries (typically every six months or year).

Still, if you’ve ever thought to yourself, “it’d sure be nice to collect these dividends more often,” you don’t have to look far. While they’re not terribly common, American exchanges boast dozens of monthly dividend stocks.

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7 High-Yield Dividend ETFs Paying Up to 8.5%

Kyle Woodley — Tue, 16 Jun 26 07:30:35 -0400

Interested in earning a high income stream from your investments? Well, while you can occasionally get a little something for nothing, it's rare to get a lot without some sort of trade-off. Said differently: The higher the yield you seek, the higher risk you're generally required to take.

However, like with most other investments, owning an investment fund can help you tamp down some of that risk. And that brings us to high-yield dividend exchange-traded funds (ETFs).

High-yield dividend ETFs predominantly invest in assets that produce a higher-than-average amount of dividend income. They do so by targeting specific corners of the U.S. stock market or equities in different parts of the world, or in some cases, they even use a few special market mechanisms to squeeze more juice from the dividend fruit.

Importantly: By spreading out their assets across dozens, hundreds, even thousands of different investments, they reduce the risk of any single security's collapse deep-sixing your portfolio.

Let me shine a light on a group of high-yield dividend ETFs that pay between 3.5% and 11% annually, which is roughly three to nine times better than the broader market.

Editor's Note: This article's tabular data is up-to-date as of June 12, 2026.

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Why Invest in Dividend Stocks via ETFs?

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Dividend stocks certainly are common enough, but they’re also not created equally. Some companies only pay nominal dividends that are just a penny or two per share, with no prospect for dividend growth anytime soon. Others may offer generous but unsustainable dividend payouts that might be eliminated altogether in the future.

You could tether your fate to that one company's specific strengths and weaknesses. Or you could hitch your wagon to a dividend ETF, which may own that stock ... but only as a small percentage of a much larger collection of other dividend payers. Sure, you won't enjoy the same level of gains if that stock suddenly takes off, but you also won't endure the hardship of that stock going into the toilet.

Plus, finding the best stocks capable of consistently paying dividends and enjoying significant future dividend growth can be a daunting task, even for seasoned investors. So why not try to gain exposure to dividend-paying stocks via a single, diversified holding that’s tasked with finding great companies for you?

That’s what you get in a dividend ETF.

How Were These High-Yield Dividend ETFs Selected?

Let's start with a few ground rules.

First, these are dividend ETFs. In other words, this list is limited to funds that own stocks; bond funds don't apply.

Next is the yield floor. There's no universal definition of "high yield"; much like beauty, a high dividend is in the eye of the beholder. But given that it's a list of high-dividend ETFs, I have to set the floor somewhere, and that somewhere is 3.5%. That ensures you'll earn well more than double (and in most cases, many times more) what you'd collect by investing in an S&P 500 index fund.

Lastly, as a quality check, I've only included dividend ETFs that have earned a Morningstar Medalist rating—Morningstar's forward-looking analytical view of the fund—of at least Bronze. A quick explanation of why that matters, per Morningstar:

"For actively managed funds, the top three ratings of Gold, Silver, and Bronze all indicate that our analysts expect the rated investment vehicle to produce positive alpha relative to its Morningstar Category index over the long term, meaning a period of at least five years. For passive strategies, the same ratings indicate that we expect the fund to deliver alpha relative to its Morningstar Category index that is above the lesser of the category median or zero over the long term."

Importantly, a Medalist rating doesn't mean Morningstar is necessarily bullish on the underlying asset class or categorization. It's merely an expression of confidence in the fund compared to its peers.

From the remaining universe of ETFs to choose from, I picked ETFs from a variety of sectors, geographies, and strategies. I also selected funds that have reasonable expense ratios—given their specialties, many of these cost more than a bland broad-market ETF, but they're fair or low for their category.

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An Important Note About Dividend ETFs' Distributions

One last thing to know before diving into any dividend ETF: Their distributions tend to reflect the cash dividend payments of their underlying holdings.

What you're getting from an ETF in a quarter is more or less your share of all the dividends that all of the holdings made within that quarter. But sometimes, individual components don't always pay within each given quarter (even if they pay quarterly). Also, they occasionally increase regular dividends, make special payouts, or cut or even suspend regular dividends.

As a result, ETFs can have "lumpy" distributions that change from one quarter to the next.

Here's an example: In a 12-month period, the SPDR S&P 500 ETF Trust (SPY)—the largest ETF by assets on the planet, and thus one of the most commonly owned—paid out quarterly dividends of $1.80, $1.99, $1.83, and $1.76 per share. That's a 13% difference between the smallest and largest payouts, and some years, it's much more.

If you've not yet reached retirement, this inconsistency probably won't matter to you at all. But it could be problematic—or at the least, worth planning around—if you are in retirement and heavily depend on dividend income to pay your regular bills. So especially if you're in the latter boat, when you research dividend funds, I highly suggest not just looking at yield, but at distribution history, too.

Best High-Dividend ETF #1: First Trust Morningstar Dividend Leaders Index Fund

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Assets under management: $7.5 billion
Dividend yield: 3.7%
Expense ratio: 0.43%, or 4.30 per year on every $1,000 invested
Morningstar Medalist rating: Bronze

When it comes to long-term performance, U.S. stocks have historically been king. The same tends to go with dividend-growth stocks—American dividend growers are pretty prolific, so much so that the qualifications to be a Dividend Aristocrat here require more years of uninterrupted dividend growth than similar international groupings.

But it is really, really difficult to find highly-rated broad baskets of generous U.S. payers.

The First Trust Morningstar Dividend Leaders Index Fund (FDL) is one of these rare gems. It's an index fund that starts with a universe of U.S. stocks that pay qualified dividends, which are given preferential tax treatment. This includes most dividend stocks you can think of, but backs out a few categories such as real estate investment trusts (REITs).

From there, companies must have positive five-year indicated dividend-per-share growth, and their one-year estimated earnings per share (EPS) divided by indicated dividend per share must be less than or equal to 1. The stocks that remain are ranked by their indicated yield, and as many as the top 100 are included in the index. Lastly, stocks are weighted by the dollar value of their indicated dividends.

The current result of that screening process is a bundle of 85 stocks that's concentrated in many of the sectors you'd expect: energy, healthcare, and consumer staples are tops right now. Financial services also make up a meaningful double-digit weight. Top holdings are no-brainer high yielders such as Exxon Mobil (XOM), Chevron (CVX), and Verizon (VZ).

Concentration risk can be an issue here thanks to the dividend weighting. Right now, for instance, Exxon, Chevron and Verizon alone account for almost a quarter of the fund's assets.

Still, you're earning more than three times the S&P 500's yield. So if you're looking to extract high yield from American blue-chip stocks, FDL is one of the best high-yield dividend ETFs to buy.

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Best High-Dividend ETF #2: Franklin International Low Volatility High Dividend ETF

Assets under management: $4.9 billion
Dividend yield: 3.7%
Expense ratio: 0.40%, or $4.00 per year on every $1,000 invested
Morningstar Medalist rating: Bronze

Any group of favorably rated high-yield dividend ETFs is bound to include at least a couple international stock funds. Large, established dividend payers abroad—especially in developed countries—have for years tended to pay more than their U.S. counterparts, in part because the long-term outperformance of U.S. stocks has depressed yields.

And one of the best such funds—Franklin International Low Volatility High Dividend ETF (LVHI)—is of the low-volatility persuasion. For the uninitiated, low- and minimum-volatility ETFs are designed to wiggle less than the market, so the idea here is that when stocks lunge southward, low- and min-vol funds won’t decline as much—and might even produce some gains.

Franklin's fund is designed to provide a portfolio of high-yielding dividend stocks that demonstrate low price and profit volatility. Its underlying index starts with a screen to identify dividend-paying companies that can pay "relatively high sustainable dividend yields," then it grades yields based on price and earnings volatility.

LVHI also puts various limits on the portfolio to eliminate overconcentration risk—for instance, no stock can make up more than 2.5% of the index at quarterly rebalancing, no sector can make up more than 25%, and REITs, which we’ll get to in a bit, can’t exceed 15%. Also, no geographic region will exceed 50% of assets, and no single country will exceed 15%. To further tamp down on volatility, LVHI hedges against currency fluctuations.

Franklin International Low Volatility High Dividend currently owns about 185 stocks from about 20 developed nations, including Canada (16%), Japan (15%), and the U.K. (14%). Most of the portfolio (~90%) is large-cap in nature, including top holdings such as Canadian Natural Resources (CNQ), British integrated oil major Shell (SHEL), and Japanese conglomerate Mitsubishi.

These large international names throw off a yield of almost 4%, and that's actually much lower than it was a few months ago thanks to recent gains in the fund. But it also dishes out much higher returns (and much lower risk) compared to the ETF's category average. All of this makes LVHI not just a great holding for anytime, but also one of the best ETFs for bear markets. Indeed, its losses during 2025's near-bear drop were less than half the broader market's.

Income investors should note that LVHI, like many international dividend funds, has "lumpy" dividends, as foreign companies often pay just semiannually or even annually. For instance: Its four most recent quarterly dividend payments ranged from 16.0¢ to 81.4¢!

Best High-Dividend ETF #3: iShares International Select Dividend ETF

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Assets under management: $8.6 billion
Dividend yield: 4.4%
Expense ratio: 0.50%, or $5.00 per year on every $1,000 invested
Morningstar Medalist rating: Silver

The iShares International Select Dividend ETF (IDV) is a more straightforward basket of overseas stocks. It's another index fund—one that doesn't care about volatility, just relatively high payments.

IDV's 100-stock portfolio is a roughly 70/25/5 blend of large-, mid-, and small-cap stocks from across the developed world, predominantly Europe. The U.K., France, Spain, and Italy all enjoy double-digit weights at the moment. There's precious little emerging-market exposure; that's South Korea, which one could argue is a developed market but nonetheless still finds itself in some emerging indexes.

While the portfolio does have quite a few multinationals that are well-known here in the States, the top weights are reserved for the likes of French integrated giant TotalEnergies (TTE), Italian utility Enel (ENLAY), and Spanish telecommunications firm Telefónica (TEF). Collectively, this portfolio puts out a yield well north of 4% at the moment.

The 0.5% annual fee isn't exactly low in a bubble, but it's within the cheapest quintile across its Morningstar category (Foreign Large Value), so you're getting a relatively cheap fund.

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Best High-Dividend ETF #4: Vanguard Real Estate ETF

Assets under management: $82.77 million
SEC yield: 5.1%*
Expense ratio: 0.59%, or $5.90 per year on every $1,000 invested
Morningstar Medalist rating: Bronze

Ever since REITs became their own sector in 2016, they've typically been among the highest-yielding S&P 500 sectors.

Unlike most companies that more or less choose to pay out dividends, REITs are compelled to—by law. REITs were created by Congress in 1960 to spur real estate investing. They're given favorable tax treatment … but in exchange, they're required to pay out at least 90% of their taxable income to shareholders, in the form of dividends.

You could own a handful of individual REITs if you'd like, or you can load up on the sector via REIT ETFs.

The biggest name in that game is the Vanguard Real Estate ETF (VNQ). This Vanguard ETF tracks a broad index of REITs covering a variety of industries: office buildings, apartments, data centers, warehouses, senior living facilities, even driving ranges. It too is market cap-weighted. At the moment, top holdings in this 145-REIT portfolio include medical facility and senior housing company Welltower (WELL), logistics REIT Prologis (PLD), datacenter landlord Equinix (EQIX), and telecommunications infrastructure firm American Tower (AMT).

"The fund beat the category average by 28 basis points annualized over the five years through the end of December 2025," Morningstar Associate Analyst Brian Paoli said about this Gold-rated fund. "Real estate stocks are more sensitive to interest rate changes, and this volatile period had interest rate hikes in 2022 and 2023 and rate cuts in 2024 and 2025. The fund proved its ability to perform well against its peers through these different market conditions."

* Vanguard fund assets are spread across multiple share classes, including mutual funds and ETFs alike. Assets listed for VNQ is for the ETF share class only.

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Best High-Dividend ETF #5: InfraCap MLP ETF

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Assets under management: $446.35 million
Dividend yield: 11.4%
Expense ratio: 1.72%*, or $17.20 per year on every $1,000 invested
Morningstar Medalist rating: Silver

Master limited partnerships aren’t a type of energy company—they’re an overall business structure that’s applicable to numerous industries. They’re considered “pass-through entities” because income isn’t taxed at the corporate level—it’s “passed through” to owners and “unitholders” (the MLP equivalent of shareholders) via “distributions” (the MLP equivalent of dividends).

However, many publicly traded MLPs are energy-related. These companies are typically involved in energy infrastructure—that means pipelines, storage, terminals, and other assets involved in the transportation and holding of oil, gas, and other energy commodities. They also happen to be among the market's higher yielders; while they don't necessarily have a mandate for distributions the way REITs do, they often distribute most if not all of their available cash flows.

The InfraCap MLP ETF (MLP) is an actively managed ETF that owns a small grouping of MLPs. Managers Jay Hatfield and Andrew Meleney have put together a portfolio of just around 30 infrastructure names, currently concentrated in six stocks: Energy Transfer LP (ETF), Plains All American Pipeline LP (PAA), Sunoco LP (SUN), MPLX LP (MPLX), Enterprise Products Partners LP (EPD), and Western Midstream Partners LP (WES) currently account for 83% of the fund's assets.

Importantly: MLP distributions are primarily made up of tax-deferred return of capital, with the remainder typically considered ordinary income. MLPs even require an additional form—the K-1—come tax time. However, InfraCap's fund is structured as a C corporation, and instead issues a Form 1099-DIV, which allows investors to avoid the more complex K-1, simplifying tax reporting.

AMZA is also a rarity in that it's a monthly dividend payer (most equity dividend ETFs pay quarterly).

* AMZA's management fee is 0.95%. Additional fees are typically attributed to "income tax expenses,” which are an estimate of the potential tax expense (or benefit) that would occur if the fund recognized any unrealized gains or losses in the portfolio. This is common among funds that hold MLPs. This can vary widely from year to year and even day to day.

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Best High-Dividend ETF #6: Fidelity Preferred Securities & Income ETF

Assets under management: $82.77 million
SEC yield: 5.1%*
Expense ratio: 0.59%, or $5.90 per year on every $1,000 invested
Morningstar Medalist rating: Bronze

If someone is talking about "stock," 999 times out of a thousand, they're talking about "common stock." If you want to buy shares of Apple (AAPL), you'd look up "AAPL" in your brokerage account and buy AAPL shares. That's Apple's common stock.

But that's not the only kind of stock you can buy.

Preferred stocks are a "hybrid" security that has some characteristics you find in common stock, as well as some you find in bonds. For instance, preferred stocks trade on an exchange, represent ownership in a company, and typically pay qualified dividends (which enjoy long-term capital gains tax rates). However, preferred stocks typically don't have voting rights, tend to trade around a par value, and distribute a fixed level of income—all qualities of bonds.

Why the name "preferred"? Because their dividends have preference over common-stock dividends. If a company wants to cut its dividends, for instance, it must do so to the common-stock dividends before it does so to the preferreds. Also, many preferreds are also "cumulative," meaning that if a dividend payment is missed, it must be paid before the company can start paying common shareholders again.

In short: Preferreds tend to act more like bonds than stocks. They’re far less volatile than stocks—they rarely have explosive upside, but they also rarely have explosive downside. That makes them defensive in nature—doubly so when you consider they offer much higher yields than your average stock.

Everyday investors have a difficult time investing in individual preferred stocks because, compared to commons, information and analysis about specific preferred shares is hard to come by. So, much like bonds, it often makes more sense to own them via ETF. And preferred stock ETFs like the Fidelity Preferred Securities and Income ETF (FPFD) are among the best-yielding high-dividend ETFs you can find.

FPFD is a collection of 334 preferred stocks, a little more than 60% of which have investment-grade ratings from the major debt rating agencies. Most of the remainder is rated in the highest tier of non-investment-grade ("junk"). Like with most preferred-stock funds, FPFD overwhelmingly holds financial-sector preferreds (banks, insurance firms, financial services companies, etc.), though it does own issues from the utility, communication services, and other sectors. Top holdings right now include preferred shares from the likes of Energy Transfer (ET), The Bank of New York Mellon (BK), and AT&T (T).

This Fidelity ETF is relatively young, debuting in 2021, but Morningstar has seen enough to merit a Bronze Medalist rating. While it’s not among the very cheapest preferred ETFs, it still has lower-than-average fees, and it has so far produced better-than-average performance. You also enjoy a yield of more than 5% currently. So if you're looking for high yield but more conservative price action, FPFD is among the best dividend ETFs you can own.

* SEC yield reflects the interest earned across the most recent 30-day period. This is a standard measure for funds holding bonds and preferred stocks.

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Best High-Dividend ETF #7: JPMorgan Equity Premium Income ETF

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Assets under management: $44.1 billion
Dividend yield: 8.5%
Expense ratio: 0.35%, or $3.50 per year on every $1,000 invested
Morningstar Medalist rating: Gold

While most high-dividend ETFs deliver big income by simply owning high-yield dividend stocks, a few funds go about it from a different angle, using options and other market mechanics to generate yield instead.

Take the JPMorgan Equity Premium Income ETF (JEPI), for instance.

At a glance, JEPI's 124 portfolio holdings wouldn't make you blink an eye. It's a 75/25 split of large- and mid-cap stocks—roughly the same split you'll find in an S&P 500 index tracker. Positions such as Amazon (AMZN), Broadcom (AVGO), and Johnson & Johnson (JNJ) would be found in any ol' large-cap fund. And that fund would likely yield somewhere in the 1%-2% range.

But JEPI delivers a sweet yield of more than 8% right now.

That's because JEPI doesn't merely hold these stocks. It also engages in selling covered calls—a type of options trading that's designed to generate income using stocks you already own. Managers Hamilton Reiner, Raffaele Zingone, Matt Bensen, and Judy Jansen write approximately 2% out-of-the-money call options on the S&P 500 Index. "It's a quarter every week," says Jon Maier, Chief ETF Strategist, Managing Director, JPMorgan Asset Management. "A quarter of the portfolio is rewritten for a month, and then a week later, a month. So it's staggered."

The downside to this strategy: You can limit your upside in your underlying holdings. The upside? You can reduce volatility and reap healthy dividend payments. With JEPI specifically, "the underlying portfolio is managed with lower volatility than the S&P 500. So when you have the option overlay, combined with the underlying lower-volatility portfolio, it provides volatility that's about 60% of the S&P 500 and yields between 7% and 9%," Maier says.

It's rare that an options-trading strategy earns a Morningstar Medalist rating. Morningstar analyst Lan Anh Tran's reason behind JEPI's Gold award? "JPMorgan Equity Premium Income takes a nuanced approach to covered calls that delivers high income while reducing downside risk. This fund’s incremental improvements on a basic covered-call strategy make it a solid option in the derivative income Morningstar Category."

Just understand that the "income" from covered calls isn't the same as the dividend income generated by all of the other funds listed here. Options income is taxed as capital gains—usually the short-term variety, which receives less favorable treatment, as it's taxed at your marginal income rate.

A Note About Dividend Yields

A term you’re going to want to familiarize yourself with is dividend yield.

A dividend yield tells you how much of your investment you can expect to get back in the form of dividends. A stock’s dividend yield, for instance, is calculated on an annualized basis, and expressed as a percentage of share price. Example: If a stock trades for $50 and pays 25 cents per quarter, that’s $1.00 in annual payouts—or 2.0% of the share price. So its dividend yield is 2.0%.

But a fund’s dividend yield is calculated a little differently. It’s much more difficult to estimate future payouts for an ETF or mutual fund because they own groups of many different stocks paying on changing cycles.

The fairest way to measure yield in dividend ETFs and mutual funds is to calculate the distributions over the last calendar year. Dividends might change for these funds going forward, but a trailing 12-month look is the most faithful way to calculate yield.

What Is Yield on Cost?

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When you look up an ETF’s information, the dividend yield listed is based on the past year’s worth of dividend payments and the current ETF share price.

That yield is often very different than the one current ETF shareholders enjoy. That yield is called “yield on cost,” which is the payout based on what you said, at the moment you invested.”

Let’s say you buy an ETF at $100, and it pays $1 per share annually. It yields 1.0% when you buy it ($1 / $100 x 100 = 1.0%).

In a year, that ETF has doubled to $200 per share, but the dividends it pays also doubled, to $2 per share. If you look up its information, its dividend is still 1.0% ($2 / $200 x 100 = 1.0%).

That’s not your yield on cost, however. You’re still receiving that higher dividend of $2 per share. But your cost basis is still the original $100 you bought the ETF share at. So now, your yield on cost has doubled, to 2.0% ($2 / $100 * 100 = 2.0%)!

How Do Dividend ETFs Pay Investors?

When you own an ETF, you own parts of shares of various dividend stocks with different payout schedules. However, you don’t get paid when those stocks pay out—you get paid based on the ETF’s payout schedule.

Dividend ETFs pay their investors the same way as dividend stocks do, with deposits appearing on your brokerage statement on a regular cycle. Some funds—like the Global X SuperDividend ETF (SDIV)—pay you on a monthly cycle. But the majority, including the other six dividend ETFs on this list, all pay on a quarterly schedule, which is similar to most U.S. dividend stocks.

Why Does a Fund's Expense Ratio Matter So Much?

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Every dollar you pay in expenses is a dollar that comes directly out of your returns. So, it is absolutely in your best interests to keep your expense ratios to an absolute minimum.

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Riley Adams, CPA

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Investment advisory services offered through NewEdge Advisors, a registered investment advisor.

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Related: 15 Stocks You Can Buy and Hold Forever

So if you're looking for a starting point for your own portfolio, look no further. Check out our list of the best long-term stocks for buy-and-hold investors.

Related: 10 Dividend Stocks That Pay Us Each and Every Month

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Survival Now or Security Later? The Trade-Offs of Using Retirement Savings After a Layoff

Riley Adams, CPA — Tue, 16 Jun 26 16:00:39 -0400

Layoffs are often sudden and expected, and as a result, they often leave people in at least a temporary financial lurch.

You might start sending out resumes hours within losing your job, and you might file for unemployment benefits the very next day. Still, even if you do everything "right," it might be a while before you have a new stream of cash flow—and in the case of unemployment, that cash flow might not be enough to fulfill your obligations.

That lack of cash flow can have you start looking at all of your available options, and it might not be long before you consider dipping into your retirement savings.

Today, I'll discuss the ins and outs of dipping into your retirement savings before you retire—and more specifically, before you hit a critical age threshold. Early withdrawals have some significant drawbacks … but you also have a few ways of limiting the damage.

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How Dipping Into Retirement Savings Early Can Hurt You

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The appeal of tapping into your retirement savings in a pinch is pretty obvious. If your cash flow has dried up, and you have a substantial sum saved in accounts you otherwise wouldn't plan on touching for decades, it's perfectly logical that you would consider using some of that money to tide you over until you get back on your feet.

However, that shouldn't be your Plan A. Early withdrawals from tax-advantaged retirement accounts can have some severely negative consequences.

Early Withdrawal Penalties

Traditional individual retirement accounts (IRAs), traditional 401(k)s, and equivalent accounts allow you to save money free of any tax consequences until you withdraw funds once you're near or in retirement. Once you withdraw those funds, you pay normal income taxes on that money.

However, if you withdraw those funds earlier than age 59½, you'll not only have to pay income taxes, but an additional 10% penalty. A few exceptions apply—for instance, the penalty can be waived if funds withdrawn from IRAs and SEP plans are used to pay health insurance premiums while unemployed—but for the most part, you're simply out that extra 10%.

Early withdrawal penalties on Roth IRAs

Roth IRAs and similar accounts work a little differently.

Contributions to a Roth IRA can be withdrawn at any time without penalty or taxes (because you contributed on an after-tax basis). However, if you withdraw earnings before age 59½, you'll have to pay taxes and a 10% penalty on that withdrawal unless it falls under one of several exempt situations.

Potentially Higher Tax Costs

If despite your job loss, you still end up being in a higher tax bracket than what you'll be in during retirement, that means you'll also be eating higher tax costs on your withdrawals.

For instance, you might be in the 24% tax bracket now, when you take the withdrawal, but only be in the 22% or even 12% tax bracket by retirement. (Assuming the tax brackets don't materially change by then.)

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Lost Opportunity Cost

Yes, you'll pay income tax no matter when you withdraw funds. But if you withdraw funds when you're, say, 30 or 40, you're also losing the earnings those funds would have generated for the next 20 to 40 years until you retire.

Let's take a look at a hypothetical situation. You're 40. You're single. You're laid off during the second half of 2025.

You have earned $48,475 from your job in 2025, some of which would be taxed at 10%, and some of which would be taxed at 12%.

However, you withdraw $30,000 from your traditional 401(k) to cover various expenses. This pushes you up to $78,475 in income, and all of that $30,000 falls within the 22% tax bracket. Plus, you would owe a 10% penalty. Lastly, you'd lose out on any potential earnings that would've been generated by that $30,000.

Assuming you plan to retire at age 65, and your investments average an 8% annual return until then, here's what you would lose:

--Income tax: $6,600

--Tax penalty: $3,000

--Opportunity cost of $30,000: $175,454.26

In other words, one way or another, that $30,000 withdrawal cost you an additional $185,000 long-term.

For some retirees, losing that amount of money could result in something as drastic as retiring a few years later than planned.

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What Are the Best Ways to Take Early Withdrawals?

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Of course, while taking early withdrawals from a retirement account isn't ideal, it's sometimes the least-bad choice. If taking a withdrawal will keep you from losing your home or fund necessary medical expenses, for instance, you might just have to plug your nose and go through with it.

But if you do need to take an early withdrawal, be strategic about it. There are several carve-outs that allow people to avoid 10% penalties based on certain circumstances.

Let's take a look.

Know the 10% Penalty Exceptions

If you have a qualified plan (401(k), 403(b), 457, etc.) or another retirement plan, such as an IRA, SEP, SIMPLE IRA, or SARSEP, there are some withdrawal situations that are exempted from the 10% tax penalty.

Reaching age 59½ is the most obvious of those exemptions. However, others include:

Up to $5,000 per child for qualified birth or adoption expenses
Up to $10,000 toward expenses for qualified first-time homebuyers
Up to $22,000 to qualified individuals who sustain an economic loss by reason of a federally declared disaster where they live
Any health insurance premiums paid while unemployed (only applies to IRAs, SEPs, SIMPLE IRAs, and SARSEPs)

These exceptions only apply to the penalty; you'll still owe applicable taxes.

Also, when it comes to IRAs and a few other accounts, you can repay withdrawn funds to that account (or another qualified account) within 60 days to avoid tax liabilities and penalties alike. Just note that this is an extremely risky financial maneuver, especially if you've just been laid off and have no certain way of raising the funds to repay them.

You can read the full list at IRS.gov.

Take a Hardship Distribution (If Eligible)

Some workplace retirement plans allow participants to take hardship distributions, which aren't subject to the 10% penalty.

The IRS's primer on hardship distributions states that a withdrawal only counts as a hardship distribution if you have an "immediate and heavy financial need" and the withdrawal can only be the "amount necessary to satisfy that financial need."

Whether your situation meets those standards depends on your specific plan's terms. However, there are "safe harbor" distributions that automatically qualify. These include the following:

--Medical costs for the worker, their spouse, dependents or beneficiary

--Expenses directly related to the purchase of one's principal residence (excludes mortgage payments)

--Some costs to fix damage to a primary residence

--Payments to prevent eviction from a primary residence or foreclosure on the mortgage

--Tuition and some related costs for the employee, their spouse, child, dependent, or beneficiary (limited to the next 12 months)

--Funeral costs for the worker, their spouse, children, dependents, or beneficiary

In addition to only withdrawing the amount necessary to satisfy a qualifying financial need, you might be limited in other ways. Hardship distributions can usually only be made from elective deferrals, employer nonelective contributions, and regular matching contributions. Earnings on elective deferrals generally aren't allowed.

Same as with the 10% penalty exceptions, hardship distributions only eliminate the 10% penalty, but not the income tax liability. Also, you cannot repay that money.

Use the Rule of 55 (If Eligible)

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If you're at least 55 years old (or at least age 50 and a public safety employee, such as a firefighter or EMT), you might be eligible to withdraw from a 401(k) or equivalent workplace account through the "Rule of 55."

The Rule of 55 allows you to start taking distributions from your 401(k) without the early withdrawal penalty if you have lost or left your job during or after the calendar year in which you turn 55. Taxes will still apply, of course, just like they would if you were age 59½ or older—you're just dodging the penalty.

This rule only applies to workplace accounts; IRAs, for instance, wouldn't qualify. However, the Rule of 55 isn't limited to traditional qualified workplace accounts—it also applies to Roth workplace accounts. While you can withdraw contributions from your account without taxes or penalties, the earnings portion of your withdrawal would be subject to taxes and the 10% penalty … and the Rule of 55 would exempt you from that penalty.

Also, the Rule of 55 only applies to the account you were contributing to when you were laid off. You can't tap into an older 401(k) or a traditional IRA. And if you roll that employer plan into an IRA, the Rule of 55 ceases to apply.

Lastly, you don't have to retire to take advantage of this rule. You're welcome to get a new job and are even allowed to keep taking penalty-free distributions while you work elsewhere. However, even if you're able to avoid the 10% penalty, it's generally recommended to only withdraw what you need for essentials. Depleting your account balance still limits its future growth potential.

Use Rule 72(t) (If Eligible)

Rule 72(t) is another way eligible people can take penalty-free withdrawals from retirement accounts.

Unlike the Rule of 55, this rule works for IRAs as well. Also unlike the Rule of 55, Rule 72(t) doesn't have a minimum age requirement.

Rule 72(t) does require you to receive at least five substantially equal periodic payments (SEPPs) or adhere to the payment schedule until age 59½ (whichever is longer), and you don't get to choose the payment amount—they're determined by one of three methods that account for your life expectancy and a couple of other factors.

Rule 72(t) shares the same major downside as the Rule of 55. Although it offers you penalty-free income now, it hurts your retirement savings in the long run. Still, it's useful for anyone whose financial situation necessitates withdrawals as it lets you skip the penalty.

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Withdraw From a Roth IRA First

Is one of your retirement accounts a Roth IRA? Has the account been open for at least five years?

If you answered yes to both of those questions, it likely makes sense to withdraw from your Roth IRA, rather than a tax-deferred account, if you need money to tide you over after a layoff.

That's because, as a Roth IRA is funded with after-tax dollars, contributions can be withdrawn at any time without being subject to taxes and penalties.

If you're younger than 59½, the earnings portion of your withdrawal will be taxed, and if your account hasn't been open for at least five years, you'll also face a 10% penalty on that portion. (Again, some exceptions apply.) Still, that's a lot better than the hit you'd take on a 401(k) or traditional IRA withdrawal, as the entirety of that withdrawal would be subject to taxes and penalties.

What About My Emergency Fund?

Do you have an emergency fund? This is exactly the type of situation they're meant for, so you should feel free to use it if you're laid off to cover your essential expenses.

If your emergency fund is held in a standard savings account or money market account, you almost certainly will not incur a withdrawal penalty. Today, many high-yield savings accounts have no limits on the number of withdrawals, and even if your account does have a limit, it should be easy to remain within it.

If your emergency fund is held in a certificate of deposit (CD), you likely will absorb an early withdrawal penalty—that will range from a few months' to a year's worth of interest—but that likely still would better than tapping a tax-advantaged retirement account.

Sometimes, people are reluctant to use their emergency funds because they fear an even bigger emergency may be just around the corner. Avoid the temptation to hoard your emergency fund. If an expense is urgent and necessary, such as paying rent after a layoff, it makes sense to use your savings before taking on high-interest debt or dipping into a retirement account.

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Investment advisory services offered through NewEdge Advisors, a registered investment advisor.

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Related: How Long Will My Savings Last in Retirement?

When a person finally decides to retire, they don’t quit their job one day, then liquidate their entire nest egg and stash it into a bank account the next day. (Or at least, they probably shouldn’t.) They withdraw money over time, which allows them to cover their expenses while the remaining nest egg continues to grow in price and/or generate income.

That’s where these retirement withdrawal strategies come in.

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The 401(k) Diagnostic: 10 Warning Lights Flashing on Your Retirement Dashboard

Riley Adams, CPA — Tue, 16 Jun 26 14:30:46 -0400

The humble 401(k) plan has become one of the most common ways Americans save for retirement.

It's no wonder why. These accounts are widely offered by employers, they're easy to set up, they offer enormous tax advantages, and in many cases, they come with "free" money (in the form of employer matches).

By and large, contributing to a 401(k) is a pretty straightforward process and an easy way to boost your retirement savings. However, there are a number of mistakes, bad habits, and broken rules that, across the life of your account, could significantly weigh on your full earnings potential.

Let's talk about these common 401(k) mistakes—and how to avoid them.

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Avoid These 401(k) Mistakes:

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The higher your 401(k) balance, the better your position heading into retirement.

But both on the way to building that balance, and once you've called it a career, there are a variety of costly 401(k) mistakes that could stunt your portfolio's growth or bleed it down faster.

We suggest learning from others' errors rather than making those blunders yourself. So read on to learn about some of the most common 401(k) money mistakes and become aware of these dangers.

1. Not Knowing There's More Than One Type of 401(k)

The 401(k) that most people think of (and most people invest with) is the traditional 401(k).

But there are more.

For one, there's a Roth 401(k). If you're familiar with the differences between traditional and Roth IRAs, the 401(k) equivalents work similarly:

1. Contributions: Traditional 401(k) employee contributions are made with pre-tax dollars. Roth 401(k) employees contributions are made with after-tax dollars.

-- Historically, employer contributions were placed in a traditional 401(k) account, regardless of whether the employee contributed to a traditional or Roth 401(k). However, the SECURE 2.0 Act, passed in December 2022, allowed (but did not require) employers to begin making matching contributions to Roth 401(k)s.

-- Both 401(k)s allow funds to grow tax-deferred/tax-free as long as that money is in the account.

2. Withdrawals: Traditional 401(k) withdrawals made at or after age 59½ are taxed as ordinary income. Roth 401(k) withdrawals made at or after age 59½ are tax-free (as long as the account has been open for at least five years).

3. RMDs: Traditional 401(k)s have required minimum distributions (RMDs) beginning at age 73. Roth 401(k)s don't have RMDs.

The tax distinctions are important. If you believe your current tax bracket is higher than the tax bracket you'll fall within during retirement, you're best off with a traditional 401(k), where you avoid taxes now and only are taxed at the later, lower rate. Conversely, if you believe your current tax bracket is lower than the tax bracket you'll fall within during retirement, you can use a Roth 401(k) to take advantage of your current tax rate, then withdraw funds tax-free once you hit retirement.

And some people simply want to have both options available in retirement, so they contribute to both a traditional and a Roth account, whether that's by splitting 401(k)s, or pairing a traditional/Roth 401(k) with a Roth/traditional IRA.

By the way, there are also solo 401(k)s. A solo 401(k) is a small-business 401(k) alternative; you can only have one if you're self-employed, or you own a small business with no employees, or only your spouse as an employee. Solo 401(k)s have different rules than workplace 401(k)s, but are mostly similar in form. And yes, there are both traditional and Roth solo 401(k)s.

If you're unsure how to navigate your 401(k) choices, you should discuss your options with a financial advisor.

2. Not Contributing Enough Money

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Very broadly speaking, you'll benefit from contributing as much to your 401(k) as you can afford, up to the annual limit. The more you contribute, the more you can take advantage of your 401(k)'s tax benefits.

But if you can't afford to max out your 401(k), you should at least contribute up to the company match.

Let's say you make $100,000 a year, and your employer matches every dollar you contribute, up to 4% of your salary. If you contribute 2% of your salary ($2,000) across the year, they'll match you along the way, giving you another $2,000 in effectively free money. That's great, but remember—your employer will match up to 4%, or a total of $4,000. So if you only contribute 2%, you're leaving $2,000 on the table! So unless it's a true hardship, you should contribute at least up to the company match.

And if you don't contribute the max right out of the gate, you should try to increase your contributions over time, as you make more money. So let's say you start a new job and only contribute 2% annually. Try to make it a goal to contribute 3% the next year, 4% the year after, and so forth.

Interestingly, this advice is going to gradually become antiquated over time.

In 2022, Congress passed the SECURE 2.0 Act. Per that act, in 2025, any companies that established a 401(k) plan following passage of SECURE 2.0 (Dec. 29, 2022, to be specific) will have to auto-enroll new employees, as well as existing employees who haven't already opted out, into their 401(k) plans. Businesses also will have to establish an automatic default contribution rate—of anywhere between 3% and 10%—for any employee that doesn't manually set their own rate.

On top of that, these 401(k) plans will also have to auto-escalate contributions—regardless of whether you chose your initial rate or auto-opted into it. Contributions must be automatically escalated by 1 percentage point per year (example: 3% in 2024, 4% in 2025, 5% in 2026 …) up to a predetermined rate, set by the employer, that must fall between 10% and 15%.

No matter what, you'll have to mind 401(k) contribution limits. In 2025, that's $23,500 annually (up from $23,000 in 2024). However, if you're 50 or older, you can contribute an additional $7,500 in "catch-up" contributions. Workers who are aged 60, 61, 62, and 63 have a higher catch-up contribution limit of $11,250, instead of $7,500. Solo 401(k)s are a little more complicated, as you control both employee and employer contributions; to learn more, check out our solo 401(k) guide.

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3. Making the Wrong Investment Choices

OK, saying "the wrong investment choices" implies black-and-white "right" and "wrong" when it comes to selecting your investments. It's not that simple. You could, in theory, put all of your contributions into any one of the investments in a 401(k) and walk away with more money after 30 or 40 years no matter what.

So instead, let's look at it this way: You can make some choices that will improve your odds of meeting your personal investment goals.

401(k) plan investment options, with few exceptions, are limited to a handful of mutual funds. That's opposed to self-directed accounts like brokerages and individual retirement accounts, or IRAs, which allow you to select from thousands of stocks, exchange-traded funds, mutual funds, and other assets and vehicles.

These funds will almost always hold dozens, if not hundreds or even thousands, of stocks, bonds, or both. Exactly what each fund holds will depend on its strategy—one fund might hold nothing but small, growth-oriented stocks, while another fund might hold a variety of short-term U.S. Treasury bond issues, while another might hold a 50/50 blend of large-cap stocks and investment-grade corporate debt.

When you first set up your 401(k), you'll be asked how much of each contribution you want to allocate to one or more of these funds. When you make these decisions, you'll want to take into account factors such as how much time you have until retirement and how much risk you're willing to accept. If you're young, you can afford to be aggressive and take risks to grow your money, as you'll have plenty of time to make up for setbacks in the market. The closer to retirement you get, the more conservative you might want to invest to protect your money.

You can research the funds yourself and determine which ones would be right for your particular needs. Or, if you simply want to "set it and forget it," you could sink all of your money into a target-date fund. A target-date fund series will have several funds, each based on a specific year—say, 2025, 2030, 2035, and so on. You select a fund based on the rough year in which you think you'll retire. The fund might start out with an aggressive portfolio, but over time, management will change its investments to become more conservative. So, your portfolio might be stock-heavy in your 20s and 30s, but be heavier in bonds by the time you retire in your 60s.

If you're auto-enrolled in a 401(k) plan but don't make an investment selection, your plan might funnel your contributions into a qualified default investment alternative (QDIA), which is effectively a default fund chosen from among the plan's investment options. And in some cases, that QDIA will be a target-date fund.

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Related: 6 HSA Money Mistakes to Avoid

4. Not Knowing Your Vesting Schedule

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In a regular 401(k) setup, any contributions to your fund immediately belong to you. If you quit the next day, you can roll over every cent of that 401(k) without issue.

That's not the case if your 401(k) involves "vesting." With 401(k)s that require you to be vested, all of your contributions will immediately belong to you. However, while your company might provide a match or profit sharing, and those funds will immediately go into your 401(k), that money won't actually belong to you until you reach a certain milestone.

There are two primary types of vesting plans:

-- Cliff vesting: You're 100% vested after a set time.

Example: You're hired on Jan. 1, 2025. Your company has a 401(k) plan with an employer match. There is a three-year vesting period, thus your 401(k) match will vest on Jan. 1, 2028. If you quit on Dec. 31, 2027, you will forfeit your entire unvested company match. If you quit on Jan. 2, 2028, every cent of your 401(k) is yours.

-- Graded vesting: You become gradually vested across various time milestones.

Example: You're hired on Jan. 1, 2025. Your company has a 401(k) plan with an employer match. There is a five-year vesting period, where 20% of match contributions vests every year. If you quit on Jan. 2, 2026, only 20% of any employer matches are yours. If you quit on Jan. 2, 2028, 60% of any employer matches are yours. If you quit on Jan. 2, 2030, every cent of your 401(k) is yours.

Vesting plans vary by company, but the most common vesting periods are between three and five years.

As you might have guessed, vesting systems exist to help businesses retain employees. If you have a five-year cliff vesting schedule, you'll be a lot more hesitant to look elsewhere for a new job if it means losing, say, four years' worth of company matches in your 401(k).

Not knowing that your 401(k) has a vesting schedule, or not knowing what that vesting schedule is, could result in you leaving thousands of dollars behind if you quit too early.

This doesn't mean you should never switch jobs before you're fully vested—but you should at least be aware of the consequences.

5. Treating Your 401(k) Like Day Trading

Few people mistake their 401(k) for a brokerage account. When all you have is a handful of mutual funds to choose from, it's difficult to meaningfully day trade anyways.

In fact, a 401(k) doesn't inherently come with guardrails to keep you from buying and selling your funds whenever you like. (But because there can be significant financial consequences for the employer, who sponsors the plan, many employers set limits on trading.)

It's more a day-trading mindset that you want to avoid.

401(k)s are designed for long-term saving. Paying too much attention to the market's everyday swings will stress you out, and potentially cause you to make some rash decisions that could hurt your longer-term strategy. So, as a general rule, try to avoid checking your 401(k) balance every day, and try to avoid making adjustments to your 401(k) more than once a quarter.

Most people can get away with rebalancing their portfolios just once a year. And if your money is in a target-date fund, it will automatically adjust your target allocation over time.

And if you're ever unsure, you can talk to a financial advisor about whether and how you should tinker with your account.

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6. Withdrawing Funds Too Early

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A 401(k) is designed to be a retirement savings account … but you might be tempted once or twice to withdraw your funds sometime before you actually retire. Maybe you'll have a significant debt to pay off, or maybe you'll see those account funds as the only way to afford a down payment on a new home.

You're well within your rights to do so, but just understand that withdrawing money from your 401(k) too early has significant downsides.

First, let's define "early": Funds withdrawn from a 401(k) before age 59½ are considered "early" withdrawals.

For the most part, early withdrawals are subject not just to income tax, but an additional 10% early withdrawal tax. But there are exceptions. The IRS has a full list of exceptions, but examples include some unreimbursed medical expenses, $5,000 per child for qualified birth or adoption expenses, and up to $22,000 to qualified individuals who sustain economic losses because of a federally declared disaster where they live.

Just know that by withdrawing that money, you're forfeiting that money's ability to grow tax-deferred or tax-free. That will have a much larger long-term impact than pulling the same amount of money out of savings or a taxable account.

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7. Investing Too Much in Company Stock

While 401(k)s typically are limited to mutual funds, there's one common exception: your own company's stock.

It's easy to see the appeal of investing in company stock when you suspect it will grow significantly in value. After all, who wouldn't want to invest in their company if they thought they were the next Apple (AAPL) or Amazon (AMZN)?

Investing in your company's stock can be wise … but don't go overboard. The Financial Industry Regulatory Authority (FINRA) itself doesn't offer direct advice on how much company stock to own, but they note that "some experts recommend investing no more than 10 percent of total investment assets in a single stock, including stock of your company—and that could be too high, depending on your goals and circumstances."

Why should you be cautious? For one, you could end up having too much single-company risk. 401(k)s allow you to invest in funds that might hold dozens, hundreds, or even thousands of securities all at once, dramatically lowering the ability for losses in any one stock or bond to significantly weigh on your portfolio. But if you invest too much in your own company's stock, declines in that stock's worth could leave you hemorrhaging money.

It's also worth noting that your company might restrict when you can buy, sell, or transfer your stock. The biggest risk there is that, in the event your company's stock declines significantly, you might not be able to exit the stock in a timely fashion.

8. Cashing Out Your 401(k) When You Change Jobs

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You've built up a substantial 401(k) at one company, but now you're switching jobs. You have several options for what to do with the funds in your old 401(k), including:

1. Keep your money in your old 401(k) plan.

2. Transfer your old 401(k)'s funds into your new 401(k).

3. Roll over your old 401(k) into an IRA.

4. Liquidate your old 401(k) account.

That last option can be a huge mistake.

If you are under 59½ years old, liquidating your 401(k) would require you to pay not only income taxes on that money, but an additional 10% penalty. This would enormously diminish your overall retirement savings. The best way out of that situation would be to reconsider and take the funds from your liquidated 401(k) and put them into a qualified retirement plan (401(k)) or IRA. You would have 60 days from receipt of the funds to do so.

Also, a note: If you have less than $1,000 in your 401(k) account, your employer may automatically cash out your account and send you a check for the balance. In that event, the 60-day rule for handling that distribution still applies.

Plus, you would be diminishing your overall retirement savings. Note that if you have under $1,000 in your account, your employer is allowed to automatically cash out your account and send you a check for the balance. In this situation, you can avoid paying the early withdrawal penalty if you put the funds in a qualified retirement plan within 60 days. Your employer would withhold the income taxes for you.

9. Not Updating Your Beneficiary

You might have set up your 401(k) decades ago, have it on autopilot, and rarely think about it.

That's fine—unless you've had some major relationship changes during that time. In which case, you'll want to make sure to update your beneficiary.

Let's say that 20 years ago, you set your then-spouse as your beneficiary. But 10 years ago, you divorced. Today, you're single. If you pass away, the plan administrator is required to give the proceeds to your named beneficiary … which means if you pass away without changing your beneficiary, your ex-husband would receive those funds. And in fact, beneficiary designations supersede wills, so even if you wrote in your will that you wanted the 401(k) money to go to your siblings, if your ex-husband was still designated as the beneficiary, he would get the money, and not your siblings.

10. Forgetting About Catch-Up Contributions

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Many people struggle to contribute much, if anything, to retirement accounts when they first enter the professional world. But as they become more established in their careers, they're increasingly stable enough to improve and even max out their annual 401(k) contributions.

Still, if you got a late start, you might not have enough saved for a comfortable retirement. Fortunately, the law allows for workers age 50 and over to make annual catch-up contributions—to numerous accounts, not just 401(k)s—that makes their annual contribution limit higher than their younger counterparts' limit.

The 2024 and 2025. the catch-up contribution limit for a 401(k) account is $7,500. But starting in 2025, for individuals between the ages of 60 to 63, the catch-up contribution limit is $11,250.

If you fit the age requirement and have enough money to do so, taking advantage of catch-up contributions can be a great way to boost your retirement savings.

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Investment advisory services offered through NewEdge Advisors, a registered investment advisor.

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Related: When Should You Take Social Security?

Social Security is a pillar of many older Americans’ retirement income. Typically, around 90% of people age 65 and older are collecting Social Security benefits at any given time.

But while most of us will end up on Social Security, when we choose to start collecting benefits will differ from person to person. Our guide to Social Security timing may help you decide.

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The High-Net-Worth Playbook: 5 Social Security Moves the Wealthy Use to Maximize Payouts

Riley Adams, CPA — Tue, 16 Jun 26 11:15:48 -0400

High-net-worth individuals (HNWIs) tend to have more wealth-enhancing strategies at their disposal than most people, and that's even the case when it comes to Social Security.

Don't get me wrong: Everyone who collects Social Security operates within the same rules based on their circumstance—retirees, disabled workers, and survivors. But there's a lot of variance built into those rules that allow people to make tailored decisions for themselves. And that variance provides a lot of room for HNWIs to apply a variety of financial strategies to optimize their benefits.

Let me show you some Social Security strategies that are specifically geared toward high-net-worth individuals. I'll discuss how to maximize your payout and limit your tax burden, and show you some of the best ways to use your benefit.

Disclaimer: This article does not constitute individualized financial advice. The information appears for your consideration, not as a personalized recommendation. Act at your own discretion.

Social Security Tips for the Wealthy

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Social Security isn't likely to be the primary source of retirement income for HNWIs—indeed, depending on your level of wealth, it might not even be a significant source.

As a result, Social Security sometimes becomes an afterthought, with mental resources spent on more sizable income streams.

But money is money, and no one should sleep on their Social Security benefits. It's a guaranteed income stream that lasts your whole life, and it even has an annual cost-of-living adjustment (COLA) that helps your benefit keep pace with inflation. It's also at least partially (if not completely, depending on your income) shielded from federal taxes, and it's usually not taxed at all at the state level.

So, if you're an HNWI who's reconsidering their laissez-faire approach to Social Security, read on, and I'll show you several tips for optimizing your benefits.

1. Use Your Benefit to Fund Long-Term Care Insurance

Original Medicare doesn't cover a number of expenses, among them stays in assisted living or long-term care (LTC) facilities. To address this health care blind spot, you can buy long-term care insurance—and you can get a bit of a tax benefit by using your Social Security benefits to do so.

Generally speaking, benefit payments received from life insurance and LTC insurance aren't taxed at the federal level. So if you incur long-term care expenses, but your plan covers those expenses, you won't pay taxes on those benefits. That's better than the alternative, which is making withdrawals from your retirement accounts—not only will those withdrawals be taxable (if you're withdrawing from a tax-deferred account), but you'll lose the growth potential of any money taken out.

And those withdrawals could be considerable. According to a Genworth/CareScout Cost of Care Survey, in 2024, the median annual outlay was $77,792 for an in-home health aid, with that cost rising to $127,750 for a private room in a skilled nursing facility. The average American needs three years of long-term care during their lifetime, meaning the total could be around $233,376 for an in-home health aide or $383,250 for a private room in a nursing home.

2. Reconsider Your Timing

If you can afford to do so, it pays to wait until age 70 to claim Social Security.

Very briefly: You can start collecting Social Security as early as age 62, but you'll only receive a partial benefit for the remainder of your life. The closer you get to full retirement age (FRA), the fuller your benefit will be, up until you reach FRA (between age 66 and 67, depending on your year of birth), at which point you'll collect 100% of your benefit.

However, if you delay collecting your benefit past FRA, you'll earn "delayed retirement credits" that push your benefit north of 100%. These extra credits max out at age 70, however, so it doesn't benefit you to continue delaying benefits after you've turned 70.

Also note there's a cap on the maximum Social Security retirement benefit payable. For 2026, the maximums were set to the following:

-- If you retired at age 62, your maximum benefit would be $2,969.

-- If you retired at your FRA, your maximum benefit would be $4,152.

-- If you retired at age 70, your maximum benefit would be $5,181.

Wondering how close you are to reaching the cap for your age? In your Social Security Administration account, you can see an estimate of how much Social Security you'll receive.

Lastly, maxing out your benefit number isn't always the best course of action. For instance, if you expect to have a short life expectancy that wouldn't extend much farther past FRA, it might make more sense to begin collecting at least a partial benefit as soon as you're able.

3. Combine Social Security With Strategic Investment Withdrawals

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Every soon-to-be retiree needs to have a retirement withdrawal strategy that dictates how much they'll withdraw from savings each year and which accounts they'll focus withdrawals on first.

One common strategy is to coordinate Social Security benefits with income from Roth IRAs to keep your taxable income below various triggering thresholds (Social Security taxation, ordinary income, etc.). Doing so can also help you reduce or avoid Income-Related Monthly Adjustment Amount (IRMAA) surcharges for Medicare Parts B and D.

If you don't have any Roth accounts to utilize, and you're an HNWI, chances are you make too much to execute a standard Roth conversion. But you could still pull off a backdoor Roth conversion, in which you make nondeductible contributions to a traditional retirement account, then convert those funds to a Roth account. While this strategy has its own unique tax implications, it still might be worth considering.

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4. Coordinate Social Security With Your Spouse (If Applicable)

A married individual may be eligible for a Social Security spousal benefit that is greater than what they would have been eligible to receive on their own. This can occur when one spouse qualifies for a significantly larger benefit than the other. The maximum spousal benefit amount is 50% of what the other spouse is eligible to receive if the other spouse were to collect benefits at FRA.

Collecting spousal benefits doesn't reduce your partner's benefit amount. So if you'll receive more overall this way than you would collecting your own benefits, it might make sense to do this. Talk with your spouse to see whether taking your own benefit or your spouse's would result in a larger payout.

One last note: If you divorced after a marriage that lasted 10 or more years, you might be eligible for spousal benefits, too.

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5. Fund a Charitable Remainder Trust

A charitable remainder trust (CRT) is an irrevocable trust in which you can place various financial assets, which then become an income stream for you or your beneficiaries, while the remainder is eventually donated to charity. There are two basic types: charity remainder unitrust trusts (CRUTs) and charity remainder annuity trusts (CRATs).

For instance, you could choose to receive 5% of the assets per year over a 20-year period. As long as you meet certain requirements—most importantly, that the remainder donated to charity is at least 10% of the initial net fair market value of all assets placed in the trust—you'll enjoy that income stream, as well as a partial upfront tax deduction in the year of contribution based on whatever portion of the assets is expected to eventually go to the charity.

Because cash is one of the assets you can place in a CRT, you could in theory place, say, a year's worth of Social Security earnings into the trust, and the deduction would help reduce your income (and thus potentially reduce your tax liability on your benefits).

That said, CRTs are more typically used to optimize much larger windfalls. For instance, if your wealth was highly concentrated in shares of a company, you had a low cost basis in that stock, and you sold off a large portion of that stock, you would inherit a sizable tax bill. Placing that stock in a CRT, however, could significantly reduce that burden while allowing you to enjoy the financial benefits for years down the road.

If you're in a similar situation, or otherwise believe you'll enjoy a large windfall from the sale of assets, consider talking to a financial advisor about CRTs and other ways to tax-optimize those earnings.

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Riley Adams, CPA

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Investment advisory services offered through NewEdge Advisors, a registered investment advisor.

Related: How Does the 4% Rule Work? [And Why Did It Change?]

How does the 4% rule work, how has it changed, and can it help guide your retirement? Check out our primer on the 4% rule.

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The Velvet Rope is Down: The Surprisingly Low Cost of Hiring a Professional Financial Advisor

Riley Adams, CPA — Mon, 15 Jun 26 15:30:36 -0400

You're trying to map out your financial future, and you realize there are certain parts that are just too complicated to tackle on your own. You know you need help, and you know where to look. But just as you're about to reach out to a professional, a nagging doubt bubbles up:

"Do I have enough money to work with a financial advisor?"

That scenario is a lot more common than you'd realize. A 2022 survey conducted by The Harris Poll, on behalf of Intelliflo, showed that there's a high number of Americans (59% overall, 71% of Gen Z and 72% of Millennials) who want financial advice but don't know where to get it … but just less than a third of Americans actually use a registered financial advisor.

Why the disparity? Well, the top reason given in the same study is "the belief that they don't think they have enough money to hire one."

So, how much money should you have before hiring a financial advisor? The good news is, the minimum dollar amount of financial assets you need to work with a professional is likely much lower than you realize. The less-good-but-not-bad news is, there's no set threshold for all advisors—the amount you'll need will vary from one pro to the next.

Read on as we help you determine how much you'll need to save up before bringing on a financial advisor, understand which assets you should use in that calculation, how you actually pay financial advisors, and more.

What Services Do Financial Advisors Provide?

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The 2023 Herbers & Company Service Market Growth Study found the most demanded services from financial advisors among people with over $250,000 in household assets were as follows:

-- Tax planning (90%)

-- Retirement planning (74%)

-- Investment planning (55%)

-- Cash flow planning (41%)

-- Insurance planning (30%)

-- Estate planning (28%)

Some of the lesser-demanded services included education planning, tax preparation, employee benefits, business planning, and health care planning.

Financial advisors who provide a more complete suite of these and other services might require you to have a much larger amount of assets than financial advisors who only offer one or a limited set of these solutions. So, for instance, an advisor who only provides investment management might have a lower asset minimum than an advisor who helps you manage your investments, budget your retirement savings, plan out your taxes, and maps out how your estate will be divided after you pass.

Customization will be another factor. A financial advisor that works with an individual to develop a fully personalized financial plan, with your specific needs and financial goals in mind, might require a larger amount of assets to start than a financial investor who matches a client with one of several "off the shelf" plans that best fits their situation.

Certification and credentials could influence assets and cost, too. For instance, a Certified Financial Planner™, who is rigorously trained and certified in a wide variety of financial disciplines, might require more assets, and charge higher fees, than an uncredentialed financial coach.

How Does Someone Know If They're Eligible? Savings? Salary?

Think your relatively low salary disqualifies you from consideration? Think again.

Person A earns $250,000 per year. However, they're a big spender in the first place, plus a big chunk of their paycheck goes toward paying off old debt. That person owns a home, but they only have $10,000 in their bank account and own no other financial assets.

Person B earns just $75,000 per year. However, they're much more frugal. They're debt-free. They don't own a home. But in addition to also having $10,000 in their bank account, they also have managed to accumulate a tidy investment portfolio of stocks and bonds worth $50,000.

Most financial advisors will be more interested in working with Person B. That's because wealth managers care about the total value of your liquid financial assets—that is, assets that are either cash, or can be easily and quickly converted to cash (such as stocks and bonds). While your salary affects your ability to accumulate those assets, it's not as big of a factor as actually accumulating those assets.

Financial planners can help your money grow. But you need to have enough of a financial seed to get started.

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What Is the Minimum Asset Threshold?

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The minimum asset threshold is a dollar amount of liquid assets that a financial advisor requires you to have to qualify for their services.

As a general rule, the higher the value of your liquid assets, the more financial advisors who will be willing to work with you. But the bottom-line number can vary substantially. Depending on the advisor, what services you require, and the level of customization involved, the minimum asset threshold could be anywhere from $25,000 to $1 million in liquid assets—even more in select circumstances.

Realistically, if you have, say, less than $50,000 in assets, you'll have to do some legwork to find a human financial advisor willing to provide their services. But that doesn't mean every door will close to you. Some advisors might invite you to free sessions where they provide general financial advice to help people build their wealth (so they can eventually reach said advisor's threshold). You likely could also employ a robo-advisor, which is an automated advisory service that takes data from you, such as your earnings, assets, and financial goals, and puts together a basic investment portfolio.

In other words: If you don't meet most advisors' minimum asset thresholds yet, don't sweat it. Keep saving, investing, and improving your financial literacy, and you'll get there.

If you have more than $50,000, and especially if you have $100,000 or more, chances are you have enough liquid assets to attract a trustworthy advisor.

How Much Do Financial Planners Cost?

People who don't use a financial advisor often overestimate how much they cost—and they might not even realize how they get paid.

Many professionals are considered "fee-only advisors," meaning that clients pay them fees via one of several different structures. The most common?

-- Percentage of assets under management (AUM): The advisor takes a % of every dollar they manage every year. For instance, if you have $100,000 in assets, the advisor will take $1,000 annually as a fee.

-- Hourly: The advisor charges you based on the number of hours worked based on a set hourly rate.

-- Flat, recurring retainer: The advisor charges you a regular fee (usually monthly, quarterly, or annually) regardless of hours worked.

-- One-time financial planning fee: A one-time, up-front fee typically only charged by financial planners who draw up a plan but do not help you implement that plan.

Different fee structures benefit different types of clients. For instance, percentage of AUM is great for low-dollar clients because fees are taken directly out of assets, rather than paid out of pocket, while hourly rates make sense for people who only want to pay for work performed.

And many people believe financial advisors charge more than they do. Around half of all respondents to a 2021 MagnifyMoney survey believed financial advisors collected between 5% to 15% (or more) of assets. In reality, 1% is normal for a financial advisor, though you can expect exact fees to vary from one advisor to the next.'

Lastly, note that there are also commission-based advisors. Commission-based advisors likely will be free to you, but they're still getting paid. Specifically, they earn money based on the sales and product referrals they make. The problem? The investment advice you receive might be skewed toward the products that earn the financial advisor the most money. It's not a guarantee, but it's a much larger risk with a commission-based advisor than a fee-only advisor.

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When Is a Good Time to Talk to a Financial Advisor?

Assuming you have enough money to get started and are open to help with your finances, the sooner you have a consultation with a financial advisor, the better. A good wealth manager can quickly get you on the right path to making your money grow as much as possible.

Another consideration is whether you're currently going through a significant life event or are likely to soon. Major life events are an excellent time to consult with an advisor.

A few life changes that could warrant advice include:

-- Receiving a large inheritance

-- Marriage

-- Divorce

-- Expanding one's family

-- Starting your own business

-- Approaching retirement

Of course, it's preferable to talk to a financial advisor before these events, rather than during, so you're better prepared to financially handle them.

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Riley Adams, CPA

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Investment advisory services offered through NewEdge Advisors, a registered investment advisor.

Related: 15 Best Long-Term Stocks to Buy and Hold Forever

So if you're looking for a starting point for your own portfolio, look no further. Check out our list of the best long-term stocks for buy-and-hold investors.

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Should You Stop Working Cold Turkey or Ease Out of It? Designing Your Ultimate Retirement Exit Strategy

Riley Adams, CPA — Mon, 15 Jun 26 13:30:04 -0400

Most discussions about retirement treat the concept like a finish line. We're guilty, too—using terms like "when you hit retirement" and "when you reach retirement" treats the concept of exiting your work life as if it's an instantaneous moment in time.

Retirement can look like that. That's a traditional retirement—when a person completely stops working with the intention to never work for money again, with a solid end date. But not everyone wants to retire traditionally.

Some people might be better off easing into retirement. The process goes by several names—phased retirement, flexible retirement, semi-retirement—and the transition process can differ, too, with some people reducing hours, switching to consulting, or even working full-time but at a new job with less mental or physical stress.

If that sounds appealing to you, read on! I'll explain some of the different methods for slowly transitioning into retirement as well, including the pros and cons of a phased retirement.

Ways to Phase Into Retirement

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The path to retirement doesn't look the same for everyone. While I just got done saying that a moment ago, it's important to reinforce the idea—because knowing that might prevent you from trying to force your own needs into someone else's perception of what retirement has to look like.

If a traditional retirement doesn't sound like it would suit you, it helps to know your options. Here are some of the most straightforward ways to ease yourself into retired life:

1. Reduce Your Hours

One of the most popular ways to ease into retirement is simply to reduce the number of hours you work. According to the 24th Annual Transamerica Retirement Survey, among middle-class workers, nearly half (49%) envision transitioning into retirement by reducing their hours.

For instance, someone previously working a standard 40-hour, five-day work week might step down to a 24-hour, three-day work week. This transition typically is easiest for hourly (rather than salaried) workers.

Alternatively, you might reduce your hours not by cutting down on the number of hours worked per week, but by cutting down the weeks in which you work during the year—an option better suited for seasonal workers. For instance, a retired accountant might just work during tax season helping people prepare returns. Or a retail worker might just work during the busy holiday seasons. A teacher might retire but accept substitution-teaching opportunities as they are offered throughout the school year.

2. Switch Careers

Another way to phase into retirement is by switching to a completely new job, regardless of whether it's full- or part-time.

You might have a physically demanding job your body can't do forever, such as firefighting. Rather than fully retiring once you can't handle the physical requirements, you might transition into a training position, work as a fire safety consultant, or become a building inspector.

Your new career might not even be related to your previous one. Perhaps you currently work as a lawyer but love playing your guitar during your free time. Once you get older and want to get out of a high-stress environment, you might transition to giving guitar lessons a few days a week.

3. Get Involved With a Nonprofit

Some people want to maintain the feeling of purpose that their career provided, but they want to do so in a way that's more personal to them. Getting involved with a nonprofit that aligns with your values is a great way to do that. You can ease into retirement with a paid (non-volunteer) position with a nonprofit organization, and fully retire (for purposes of benefits) as an eventual volunteer.

In short: There isn't a "right" way to ease into retirement—just different ways.

Advantages of Easing Into Retirement

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There are several benefits to phasing into retirement, rather than stopping on a dime.

In several ways, semi-retirement can offer a person the best of both worlds: You get some of the benefits of being employed, but you also enjoy some of retirement's perks.

It also prevents a shock to your system. Some people dream of the day they wake up to a zeroed-out calendar. But for some, no coworkers, no responsibilities, and perhaps a little too much time and energy on your hands (to start with) is a jarring concept—and a phased retirement allows you to slowly adjust to post-work life.

The following are just a few of the upsides to easing into retirement:

A Continued Income Stream

Money is one of the biggest deciding factors in retirement style, so let's start with that.

In the Mercer 2024 Global Talent Trends report, a survey of employees showed that 36% (across all ages) expect to work past retirement age out of financial necessity.

If you want to exit the workforce but simply have too many financial constraints, a phased retirement where you work less can be an acceptable compromise.

You might have several sources of income in retirement. You'll likely withdraw money from retirement accounts and collect Social Security. You may also get annuity payments, receive real estate income, or have other money flowing in.

But unless you're highly confident you have enough money saved and/or entering your bank accounts for when you fully retire, starting with a few transitional years can help you build up extra savings and ensure you'll make it through retirement.

Plus, the longer you keep money in your tax-advantaged retirement accounts and out of your pockets, the more time those funds have to grow.

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Potentially Increased Social Security Payments

There are two ways easing into retirement might increase how much Social Security you'll receive.

First, working increases your number of working years. One's Social Security benefit is calculated using the average earnings of a person's top 35 highest-earning years of working. If you worked fewer than 35 years, the Social Security Administration doesn't just average your working years—for every year fewer than 35 that you worked, they use a zero. (For example, if your working career only lasted 33 years, your average would include two zeros.)

If you no longer can, or want, to continue your current full-time job, you might work part-time for the next two years as you ease into retirement. Even part-time work could improve your average enough to meaningfully bump your benefit higher.

The other way phasing into retirement could boost your Social Security payments is that continuing to work (and therefore receiving that income) may allow you to wait until an older age to start collecting Social Security benefits.

You see, when you take Social Security can strongly affect your monthly benefits. You can start receiving Social Security checks as early as age 62, but you'll receive a significantly reduced amount for the rest of your life. To receive your full benefit amount, you need to wait until full retirement age (FRA), which for most people is between age 66 and 67. Those who wait to collect Social Security until past FRA receive delayed retirement credits, which can increase their payments even more (until maxing out at age 70).

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Health Care Coverage

Many Americans' health insurance is tied to their employment. However, most people don't become eligible for Medicare until age 65.

So what are the health insurance options for early retirees?

One option is to ease into retirement through a part-time job that offers health benefits. Most employers don't offer health benefits to their part-time employees, but some do. As of 2025, Costco, Starbucks, and UPS are just a few of the well-known companies that offer health insurance to part-time workers.

If you work one of these jobs, or another one that provides health insurance, it could save you a substantial amount on medical costs.

Socialization

Many people socialize with their colleagues more than their friends or extended family. So it shouldn't be a surprise that when they retire, they're suddenly much lonelier than they expected.

Yes, you can build up your social networks again after you retire, but it might be easier to make new relationships and strengthen existing ones earlier.

A person phasing into retirement can still maintain their professional relationships while enjoying more time to find and foster new ones. With reduced work hours, you might have time to join hobby groups and form connections with other members. Or you might start babysitting grandchildren, deepening those relationships before you fully retire.

People who reduce their work hours by seeking out seasonal employment might enjoy traveling several months a year—and when they return, they might be just as excited to share those adventures with their coworkers.

Thus, a phased retirement can be an excellent way to combat the loneliness that sometimes follows a sudden retirement.

Time to Pursue Passions

Many people's dream jobs don't pay enough to offer them the lifestyle they desire, so they take on other professions. Someone who loves animals might want to work at an animal shelter, but they opt not to because the hourly rate wouldn't cover all of their expenses during their prime working years. Another person might have dreamed of caring for patients but couldn't afford the costs of medical school.

Two-thirds of respondents in the Fidelity Investments 2024 State of Retirement Planning study said the pandemic made them more intentional about concentrating on their passions and dreams in retirement. The same amount said they hope for a phased retirement and look forward to working for pleasure in retirement.

People who can retire outright and volunteer for free have more flexibility. But some people who still need income can thread the needle by switching to a job that at least offers more personal satisfaction. The would-have-been doctor might be able to help the American Red Cross, and the pet shelter might now be a feasible part-time gig.

Disadvantages of Easing Into Retirement

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Everything has its warts, though, and so it is with phasing into retirement.

Let's discuss some of the reasons why becoming semi-retired might not be a great fit for you … and why you might prefer a traditional transition from work life to retired life.

You Might Have Too Few Employment Options

It's one thing to want to reduce your own hours—it's another for your employer to have that option to give you.

Another Transamerica Institute report, Workplace Transformations: Employer Business Practices and Benefit Offerings, states that only 35% of employers offer a formal phased retirement program for workers, with large and medium-sized companies more likely to have one than smaller companies.

It's possible you might be able to strike a deal with your company even if they don't offer a formal flexible retirement program, but there is no guarantee they will agree.

Alternatively, you might be willing to take any part-time job but still need health insurance. And as I mentioned earlier, while it's possible to get medical coverage from a part-time job, it's not the most common practice. If you live in a small town with few job prospects, you might have to work full time to enroll in a workplace health plan.

Even if you don't need health care, your options could be scarce, depending on your work wants and needs. So if you have very specific work conditions that must be met, and your current full-time job meets those conditions, you might be better off sticking it out and working until you have enough saved for a full retirement.

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It Could (Temporarily) Reduce Your Retirement Social Security Benefits

To be clear: The only way phasing into your retirement will significantly be a pull on your Social Security benefits is if you plan to do so before reaching full retirement age and if you earn above a certain threshold. If you want to ease into retirement after FRA, or you won't make much money, this won't be an issue.

If you work at the same time you collect Social Security benefits before FRA, your benefits will be temporarily reduced if your earnings exceed yearly earnings limits.

If you work while you take Social Security before your full retirement age, it will reduce your benefits if your earnings exceed the yearly earnings limits.

You can read more about the specifics in our primer on collecting Social Security benefits while working, but in short, the Social Security Administration will deduct money from your benefits if you expect to earn more than a set annual threshold in any given year in which you are younger than or will reach your full retirement age. And it won't do so evenly across the year—it will deduct up to the entire monthly benefit each month starting in January until the full deduction is made for the year.

Fortunately, you will receive any excess withholdings at the start of the next year. And once you reach your full retirement age, the SSA will recalculate your benefit amount to give you credit for any months you didn't receive a benefit because of your earnings.

You Can't Move to Another Location

Many people choose to move at or during retirement. Sometimes it's to live closer to family, sometimes it's for more desirable weather, and sometimes it's to downsize to ease home-maintenance concerns.

Depending on your reason for wanting to move, easing into retirement can delay or complicate that process.

For instance, it might be more difficult to find work depending on the area that you move to. Or it might be more difficult to find part-time jobs that will pay you enough to make a partial retirement financially feasible.

If you're itching to switch locations, you might want to consider a more traditional retirement timeline. Let's say you need two more years of full-time work to hit your retirement savings goal. It might make sense to simply work those two years full time, then fully retire and move, rather than trying to spread that work out across four years while transferring positions within your company or trying to find new work.

Related: How Does the 4% Rule Work? [And Why Did It Change?]

How does the 4% rule work, how has it changed, and can it help guide your retirement? Check out our primer on the 4% rule.

Related: How Long Will My Savings Last in Retirement?

That’s where these retirement withdrawal strategies come in.

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The Truth About Medicare Cancellation: What’s Real and What’s Just Noise

Riley Adams, CPA — Mon, 15 Jun 26 12:15:13 -0400

When you reach retirement, you're virtually guaranteed to earn the support of two foundational social safety nets: Social Security and Medicare.

But they're not technically guaranteed. Not only is it possible to not qualify for one, the other, or both, but it's also possible to lose these backstops even after you've already started receiving them.

We've previously covered ways of losing Social Security, so today we're going to focus on America's health care safety net.

Your Medicare coverage can absolutely be discontinued, but exactly how that can happen has been muddied in myths and misinformation. To help you get a clearer picture, I'm going to walk you through the very real ways Medicare could slip through your fingers … and then I'll show you a few ways you won't lose Medicare.

Why You Might Lose Medicare

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Medicare is a national health insurance program that's divided into parts. The part of Medicare covering critical care (Medicare Part A) is free for most Americans, while the others come at a cost.

According to the Centers for Medicare & Medicaid Services, more than 67 million Americans receive health care coverage through Medicare. While some people receive Medicare coverage because they have a disability or certain medical conditions, most become eligible for Medicare by turning 65 years old.

That's how you get Medicare. But once you have it, it's possible to lose it.

Medicare is complex—indeed, in MedicareAdvantage.com's 2023 Medicare Literacy Survey, almost two-thirds (65%) of Medicare beneficiaries polled said the program is confusing and difficult to understand. Those complexities can confuse policyholders, and in some cases, lead to slip-ups big enough to cause coverage to be discontinued.

Below are several ways to lose Medicare benefits, presented in plain, easy-to-understand language. Understanding these potential pitfalls is important because, in some situations, losing your benefits might be perfectly avoidable.

1. You Don't Pay Your Monthly Premiums

The most obvious way to get dropped from Medicare? Don't pay your premiums.

You'll often see people refer to "Original Medicare," which refers to two specific parts of Medicare:

Part A: Covers the most urgent and critical aspects of health care, including services at inpatient hospitals, skilled nursing facilities, inpatient rehabilitation centers / clinics, hospice centers, and select health care needs delivered in-home.
Part B: Focuses more on preventive and medically necessary services and supplies, such as outpatient hospital services, physicians' services, select home health services, durable medical equipment, and certain other medical and health services not covered by

While around 99% of Medicare users don't have to pay Part A health insurance premiums, just about everyone has to pay for Part B. The standard monthly Medicare Part B premium for 2026 was set at $202.90 for individuals with a modified adjusted gross income (MAGI) of $109,000 or less, and for married couples with a MAGI of $218,000 or less. The premium amount increases with income.

You're billed for Part B (and, if applicable, Part A) every three months. You'll be given a due date—however, you have a 90-day grace period after the due date in which to pay your premium. If you do not, you risk termination of your coverage, and you will still be responsible for the amount owed.

Medicare Part C (Medicare Advantage) and Part D have similar conditions—failure to pay a premium by the end of the grace period may trigger a discontinuation of coverage—though the length of the grace period varies by provider.

2. You Recover From a Disability

While most Medicare recipients qualify through the age minimum, some become eligible at a younger age because they have a qualifying disability. Research from health care nonprofit KFF found that in 2022, around 7.7 million people under age 65 had Medicare coverage—that's roughly 12% of all Medicare beneficiaries.

Disability-based Medicare eligibility is determined by the Social Security Administration (SSA). And a person must first qualify for Social Security Disability Insurance (SSDI) before they can become eligible for disability-based Medicare. Once you're eligible for SSDI, you're automatically eligible for Medicare after a 24-month qualifying period. While you wait for Medicare coverage, you might be eligible to use health insurance from a previous employer. To see if this is possible, contact the employer directly.

The majority of disabilities that make a person eligible are permanent or expected to cause death—but not all of them. For people who have disabilities that aren't necessarily permanent to receive benefits, there must be evidence that the impairment has continued or is expected to last continuously for at least a year.

However, if you recover from a temporary disability, that can mean a loss of Medicare coverage.

Returning to work can sometimes be a sign of a person recovering from a disability. But if your disabling condition still meets the proper guidelines, you can keep Medicare coverage for at least 8½ years after returning to work (more on this later).

There are other instances and rules depending on the disability. For example, Medicare.gov provides an example of qualifying for Medicare because of permanent kidney failure; if you were to get a kidney transplant, your benefits would end 36 months later.

Again, the SSA is ultimately responsible for ruling on your eligibility for disability-based Medicare. If they determine you no longer qualify for disability benefits as a result of recovering from a SSA-determined disability, your Medicare disability benefits will end, too.

3. You Commit Medicare Fraud

Medicare fraud—whether purposeful or accidental—could cease your coverage. A few ways a person might commit Medicare fraud include the following:

Lying about your income on your application to lower your premiums
Allowing another person to use your Medicare card for care or supplies
Selling your Medicare number to someone who bills for services not received
Giving out your Medicare number in exchange for money or a gift

Importantly, if a scammer gains access to your personal information, they could commit fraud with it—and you could be blamed. So you have to also be aware of scams. Never give away your Medicare number or Social Security Number to anyone you don't know. If a person unexpectedly calls you and asks for this information, it's a scam—these agencies will only call you if you've called and left a message, or if you've already been informed that a representative will return your call. Be aware of phishing scams, in which people try to get you to click malicious links in email. And in general, be cautious of who you provide your Medicare and Social Security numbers to.

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4. Your Plan Was Discontinued

It's possible to lose Medicare coverage without a change in your eligibility.

Medicare plans can be changed or discontinued. The Centers for Medicare and Medicaid Services might discontinue Medicare Advantage or Part D plans that are underperforming. Alternatively, a private carrier might drop a certain plan or go bankrupt and stop offering any plans.

The good news is that, because your eligibility wasn't affected, you can re-enroll for Original Medicare. You should qualify for a Special Enrollment Period and be able to start up coverage again quickly.

Ways You DON'T Lose Medicare

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It should be no surprise, given just how intricate Medicare is, that confusion has paved the way for a few misconceptions about how to lose your eligibility and coverage.

Let's review a few actions you might think disqualify a person from Medicare but actually don't.

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1. You Keep Working or Return to Work

When you turn 65, which is when you become eligible to enroll in Medicare, you might still be in the workforce. Or you might not still be working, but you might eventually decide to rejoin the workforce later. Either way, doing so won't affect your Medicare eligibility.

Typically, if your employer has at least 20 employees, you'll have three choices:

Delay Medicare enrollment
Stop your employer coverage and just use Medicare
Have both types of coverage

If your employer has fewer than 20 employees, you'll generally need to enroll in Medicare during your Initial Enrollment Period. People who get coverage through a spouse must check specific employer's rules to determine whether they can delay or need to enroll at age 65.

And if you're disabled? "You can keep your Medicare coverage for as long as you're medically disabled," says Medicare.gov. "If you return to work, you won't have to pay your Part A premium for the first 8 1/2 years. After that, you might be able to buy Part A coverage and pay a monthly premium. If you can't afford the Part A premium, you may be able to get help from your state."

2. You Get a Pay Raise

There is no income limit for Medicare. So, much like you don't have to worry that you'll have too high an income to become Medicare-eligible, you don't have to worry that a substantial pay increase will cause your Medicare benefits to end.

However, a higher income could affect your premiums for Medicare Part B and Medicare prescription drug coverage.

Most Medicare beneficiaries pay 25% of their Part B premium, while the government foots the bill for the rest. But if you're considered a high-income beneficiary, you pay a larger percentage of your premium. Based on the income you report to the IRS, higher earners could pay between 35% to 85% of the total premium cost.

Similarly, for most beneficiaries, the government pays a significant portion of the total costs for Medicare prescription drug coverage (Part D). Costs vary by plan, but high-income earners pay monthly premiums plus an additional amount, which is again determined by the income reported to the IRS.

3. You Live in Another Country (Part A + B Only)

It can be tempting to see what it's like to live abroad, particularly once you hit retirement and aren't tied to a job. The World Population Review estimates that there are currently more than 8 million American expats living overseas. Of course, if you're using Medicare and you're considering doing your own version of Eat, Pray, Love, you'll want to know how that affects your benefits.

You must be a U.S. citizen or permanent legal resident to qualify for Medicare Parts A and B, but you don't need to live in the United States. So unless you renounce your American citizenship, you're good to go.

But just because you can keep Medicare and travel extensively or even live abroad as an American for Part A and Part B doesn't necessarily mean it's the most strategic option.

If your premiums for Part A are covered, there is only one real significant downside to remaining enrolled: You wouldn't be allowed to contribute to a health savings account (HSA). However, if you must pay Part A premiums, and/or if you have Part B, it might be best to skip coverage as you wouldn't get much use for your money.

Medicare Parts C and D, which are offered by private insurers, have stricter rules. Usually, these plans require you to live within the plan's service area for at least six months out of the year. (That might or might not conflict with your hopes of living as an expat, but it at least leaves plenty of time to travel.)

What Happens If You Become Incarcerated?

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A stint in prison or jail can affect your Medicare coverage, too.

If you are incarcerated for fewer than 30 days, and you previously were covered by Medicare, you will not be covered by Medicare while incarcerated, but you still will be responsible for paying premiums. That said, you will not lose eligibility, and your health care needs will be covered by the penal authorities. Once you are released, your Medicare coverage will resume.

If you are incarcerated for 30 days or more, and convicted of a crime, your Social Security retirement or disability benefits will also stop. However, they can be reinstated after your release. That said, if you are under age 65 and previously received Medicare for a disability, you must have your SSDI reinstated before Medicare coverage will resume.

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Related: How Long Will My Savings Last in Retirement?

That’s where these retirement withdrawal strategies come in.

Related: How Does the 4% Rule Work? [And Why Did It Change?]

How does the 4% rule work, how has it changed, and can it help guide your retirement? Check out our primer on the 4% rule.

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The Social Security Shield: 12 Income Streams That Can’t Shrink Your Monthly Check

Riley Adams, CPA — Mon, 15 Jun 26 11:15:05 -0400

Social Security is a vital income stream for millions of Americans. So, as you can imagine, those Americans have a vested interest in receiving as high a benefit as possible.

The problem? Certain types of income can actually reduce your Social Security benefit.

If you work a job while you collect a Social Security check, for instance, your wages, bonuses, and commissions could result in reduced benefits.

The good news? Many types of income do not affect your Social Security benefits. And knowing about all of these exceptions can help you map out a strategy that provides the income you need while maximizing how much you receive from Social Security each month.

Read on, and I'll outline these income sources.

Income That Doesn't Affect Your Social Security Benefits

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The monthly amount a retiree receives from Social Security varies by person. According to the Social Security Administration (SSA), the estimated average monthly Social Security retirement benefit in January 2026 was $2,071.

Of course, no matter how much you receive, you probably want to collect as much of it as you're allowed. And one way of doing that is understanding which types of income won't impact the size of your Social Security benefit.

Importantly: While these income sources won't necessarily affect the size of the Social Security benefit you receive, they may affect your modified adjusted gross income (MAGI), which could affect how your Social Security benefits are taxed.

1. Income Earned After Full Retirement Age [While Collecting Benefits]

You can work and collect a full Social Security retirement benefit at the same time—but there are limitations. If you haven't yet reached your full retirement age (FRA), earnings over a certain threshold will cause a temporary reduction in your benefits.

Your FRA depends on your birth year and the ages are as follows:

-- Born between 1943 to 1954: 66

-- Born in 1955: 66 and 2 months

-- Born in 1956: 66 and 4 months

-- Born in 1957: 66 and 6 months

-- Born in 1958: 66 and 8 months

-- Born in 1959: 66 and 10 months

-- Born 1960 or later: 67

There are also special rules the year you reach your full retirement age. (Note: You can read about these special rules, thresholds, and more in our article about collecting Social Security while working.)

However, once you reach full retirement age, any excess withheld earnings will be refunded, and your monthly benefit will be recalculated upward to account for a return of all of your withheld earnings.

All of this said, if you earn income at any age before you start collecting benefits, it will factor into your benefit.

2. Interest and Dividend Income

Interest is what a lender charges when someone borrows money. For instance, a bank might charge you interest when you take out an auto loan. But it works the other way—when you put your money into various financial products, you're in effect lending money to a financial institution, and you receive interest in return. Some of those financial products include:

-- Savings accounts

-- Money market accounts

-- Certificates of deposit (CDs)

-- Bonds

Meanwhile, dividends are cash payments that a business makes to its shareholders. If you own shares of any dividend stocks (not all stocks pay dividends), then you receive dividend payments—often quarterly, but sometimes in different frequencies, such as monthly).

Neither interest income nor dividend payments are considered earnings for the purpose of calculating your Social Security benefits.

3. Pension Payments

A pension is an employer-sponsored retirement plan in which the employer promises to pay a regular income to an employee after they retire.

Pensions have largely been replaced by 401(k)s (in which workers, not employers, are responsible for contributing), but if you're one of the fortunate few that has a jobs with a pension, you might have wondered whether those payments will negatively affect your Social Security benefits.

Wonder no more: They won't!

The SSA doesn't count pension payments as earnings toward your earnings limit. Previously, some people's benefits were reduced or eliminated if they had a pension based on work that was not covered by Social Security, but that is no longer the case following the passage of the Social Security Fairness Act, which was signed into law on Jan. 5, 2025.

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4. Unemployment Insurance Benefits

Many people simultaneously work and collect retirement Social Security benefits. But what happens if you lose your job and start collecting unemployment insurance benefits while you're also collecting Social Security?

Partial good news there.

The SSA doesn't count unemployment as earnings, and thus they won't affect your retirement benefits.

However, Social Security income could reduce your unemployment insurance benefits, depending on your state. If you're concerned about this possibility, contact your state's unemployment office for more information.

5. Workers' Compensation

Workers' compensation—state-level insurance that provides wages, medical care, and other benefits to those who have been injured or become ill as a result of their job—doesn't reduce your Social Security retirement benefits.

But it does reduce your Social Security disability benefits (SSDI).

The SSA says it will reduce SSDI benefits, including those payable to family members, "if the combined total amount of your benefits and any workers' compensation and public disability you get, exceeds 80% of your average earnings before you became injured or ill."

That said, disability payments from private sources, such as insurance, won't affect your Social Security disability benefits.

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6. Retirement Account Withdrawals

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If you pull money from a 401(k), 403(b), individual retirement account (IRA)—basically just about any type of tax-advantaged retirement plan—that won't count toward your income for Social Security purposes.

That said, withdrawals from traditional tax-advantaged retirement plans are taxed, and they count toward your MAGI, which could affect how your Social Security benefits are taxed.

Meanwhile, distributions from any Roth accounts aren't taxed, and they don't increase your MAGI.

7. Certain Third-Party Sick Pay

If you have short- or long-term disability insurance through your employer, and you are temporarily unable to work, you may receive compensation from the insurance company or trust (referred to as "third-party sick pay").

Because disability insurance pay is made in lieu of wages, if you receive it within six months after leaving a job, it will be considered earned income and count toward Social Security calculations.

However, if you receive third-party sick pay six months or more after work is discontinued, it will be categorized as unearned income and won't count under Social Security's earnings test.

8. Rental Property Income

Do you rent out a room or apartment? Or do you own commercial properties, such as stores or offices? In general, if you're collecting rental property income, it's excluded for purposes of Social Security calculations.

But there are three exceptions. Per the SSA, rental income must be included in calculating earnings if any one of the following is true:

-- You received rental income in the course of your trade or business as a real estate dealer.

-- Services were rendered primarily for the convenience of the occupant of the premises.

-- You materially participated in the production or in the management of the production of farm commodities on land rented to someone else (applies to farm rental income).

9. Lottery + Awards

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Whether you hit the jackpot in a Vegas casino or a scratch-off lottery ticket finally came up big, you're going to pay (probably hefty) taxes on those winnings, and that income could even raise your Medicare Part B premiums.

But on the bright side, the SSA doesn't count lottery winnings as earned income.

If you receive payments from contests—achievement awards, length of service awards, hobbies, or prize winnings—those earnings also don't count, unless you entered said contest as a trade or a business.

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10. Royalties

Royalties are money paid to a product or patent owner who gives permission for its use. While music is perhaps the most well-known type of royalty, you can get them for other reasons, such as writing a book, licensing out patents, or appearing on a TV show.

If you receive royalties during or after the year you turn your full retirement age (FRA), that income won't count under the earnings test—as long as they come from property created and copyrighted or patented before the taxable year in which you reach FRA.

Also, royalties are only excluded from gross income for purposes of calculating Social Security benefits. They otherwise apply to gross income.

11. Inheritances + Gifts

An inheritance, which can be in the form of cash, a right, or a noncash item(s), is a death benefit. That money isn't considered earned income, and it doesn't affect your Social Security retirement benefits.

That said, it can affect Supplemental Security Income (SSI) benefits, as those are means-based.

Gifts are also considered unearned income and excluded from Social Security calculations, but also can affect SSI.

12. Jury Duty Pay

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Jury duty income is not considered wages for Social Security purposes.

That's not a huge deal—jurors are paid a pittance for fulfilling their civic responsibility—but every little bit counts.

That said, jury duty income might be taxable, and in some cases, employers might even request you to turn over some or all of your jury duty wages.

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Riley Adams, CPA

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Related: How Does the 4% Rule Work? [And Why Did It Change?]

How does the 4% rule work, how has it changed, and can it help guide your retirement? Check out our primer on the 4% rule.

Related: 10 Best Monthly Dividend Stocks for Frequent, Regular Income

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8 Best Vanguard Funds for a 401(k)

Kyle Woodley — Mon, 15 Jun 26 08:30:58 -0400

Vanguard is one of the foremost names in investing for numerous reasons, but one of its lasting legacies will be just how inexpensive they've made it to save for retirement. Indeed, Vanguard funds are among the most fee-friendly options for your 401(k) ... or anywhere else you're building a nest egg, for that matter.

Under visionary founder Jack Bogle, Vanguard created the concept of the index fund—a product that by its nature allows for lower costs. Thirty years later, expenses have plummeted lower on funds across the industry, but Vanguard remains one of the most economical providers and a favorite in most types of retirement plans. That includes your 401(k).

You're likely to find a wealth of Vanguard options in your 401(k) and other retirement plans. And given that they're typically competitive on both price and performance, they should be among the first funds you look at.

I want to shine a light on the best Vanguard funds for a 401(k) plan. These funds have been selected for a number of reasons, including their size, strategy, and potential for showing up in 401(k)s, though your plan might hold all, some, or none of these. However, they've also been selected for their tax-inefficiency, as the tax-deferred nature of a 401(k) allows you to enjoy the fund's performance without the year-to-year tax consequences.

This last part also makes these funds ideal for holding in other tax-advantaged accounts, such as individual retirement accounts (IRAs) and health savings accounts (HSAs).

Editor's Note: Tabular data appearing in this article is up-to-date as of June 11, 2026.

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What Should You Want in a Retirement Fund?

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When you invest your retirement savings in an account like a 401(k), you'll want to keep a few things in mind.

Costs are first and foremost. Let's say you pay $5 in expenses for every $100 you have invested in a mutual fund. That's $5 that can't grow and compound for you over time. So if all else is equal, the lower the cost, the better. Yes, occasionally, a higher-priced fund will prove its worth, but we don't have to worry about that here. The annual expenses charged by the Vanguard retirement funds you'll find in a 401(k) will typically sit near or at the bottom of their category.
Income matters, too. You probably want your retirement portfolio to produce at least some regular income—in the form of both bond interest and dividend income. Stock prices can suffer during nasty corrections and bear markets, but income-generating funds can help provide for your living expenses without forcing you to sell at an inopportune time. How much income your account should produce depends on your own circumstances. For instance, older investors tend to be more concerned with income while younger investors focus more on growth.
Don't forget taxes. A taxable account (like a standard brokerage account) is better suited to take advantage of certain tax-advantaged investments, such as municipal bonds. For tax-advantaged accounts, such as 401(k)s, some of the best investments include bond funds (where the interest income won’t be taxed) and actively managed stock funds (where the capital gains distributions from heavy trading, aka "turnover," won’t be taxed).
Diversification matters (in more than one way). You've probably heard that your portfolio should be "diversified," which means holding a variety of investments, whether that's holding multiple assets (stocks, bonds, alternative investments), but that could also mean holding, say, stocks from different countries, or stocks from different sectors. And investment funds, which can own any number of stocks, bonds, or other holdings all at once, can help you achieve that diversification. Also, every fund has its own level of built-in diversification. Some funds hold dozens of stocks while others hold thousands. Some funds invest heavily in their biggest stocks while others spread their assets out more evenly. So always consider how diversified a fund really is, as well as whether that level of diversification suits your needs.

Why Vanguard Mutual Funds?

Vanguard Group is one of the largest asset managers in the world at more than $12 trillion in assets under management (AUM) currently.

Again, one of the primary drivers of that success is Vanguard's dirt-cheap expenses. The average asset-weighted expense ratio for U.S. mutual funds and ETFs is 0.44%, or $4.40 annually for every $1,000 invested. Vanguard's average, across 400-plus funds, is a scant 0.06%, or a mere 60¢ annually per $1,000 invested. That's an astoundingly low number—one that means even when a Vanguard fund isn't the absolute cheapest in its category, it's still going to be one of your most cost-effective options.

Vanguard isn't sitting still, either. That average expense ratio was 0.08% in 2024, then declined to 0.07% in 2025 after Vanguard cut expenses on 168 share classes across 87 funds. Its drop to 0.06% occurred in early 2026 when the company announced it would slash fees on another 84 share classes across 53 funds. All told, Vanguard estimates that's $600 million in savings for investors, which the firm claims is its "largest-ever two-year combined cost reduction."

Vanguard also grew into the powerhouse mutual fund company it is today by taking care of its clients and genuinely looking after their interests. Vanguard funds really started and continue to accelerate the trend of fee compression. But it's not only the best Vanguard retirement funds that benefit. We all collectively pay less in fees and expenses and enjoy better returns because of the index revolution started and led by Vanguard's founder Jack Bogle.

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The Best Vanguard Retirement Funds for Your 401(k)

With all that out of the way, let's dig into some of the best Vanguard retirement funds to hold in a 401(k) to consider diving into this year.

These Vanguard retirement funds are ordered by their Morningstar Portfolio Risk Score for the trailing 10-year period. Here are the risk levels each score range represents:

0-23: Conservative
24-47: Moderate
48-78: Aggressive
79-99: Very Aggressive
100+: Extreme

Importantly, these scores are a general gauge of risk compared to all other investments. For example, a bond fund with a score of 20 might be considered a conservative strategy overall, but it could simultaneously be riskier than a number of other bond funds.

1. Vanguard Short-Term Treasury Index Fund Admiral Shares

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Style: Short-term U.S. Treasury bond
Management: Index
Assets under management: $33.9 billion*
SEC yield: 4.0%**
Expense ratio: 0.06%, or 60¢ per year for every $1,000 invested
Morningstar Portfolio Risk Score: 6 (Conservative)

No retirement asset allocation is complete without bond funds. As an asset class, bond funds play an important role in lowering volatility and providing regular income. However, bond interest is taxable at your federal income tax rate—if you're in the 37% tax bracket, then you're losing 37% of your bond interest to taxes—and because interest is the predominant source of returns on bonds, bond funds are best held in tax-advantaged accounts such as IRAs.

Yields on short-maturity bonds rocketed between 2022 and 2024, when the yield curve inverted (inversion is when short-term rates are higher than long-term rates). The curve is no longer inverted, but short-term bonds still offer relatively high yields for relatively low risk. Thus, it may make sense to keep a decent chunk of your overall bond exposure in short-term bond funds, such as the Vanguard Short-Term Treasury Index Fund Admiral Shares (VSBSX).

VSBSX tracks the Bloomberg US Treasury 1-3 Year Bond Index—a collection of roughly 90 federal bond issues with maturities of between one and three years. U.S. Treasuries are among the best-rated bonds on the planet, meaning that the major credit-rating agencies believe bonds issued by our federal government are likelier than most to repay you fully with interest. These bonds are considered all the more secure given their short maturities—at most, these bonds will mature in just three years, which is a relatively small time for the security of those bonds to change.

One of the most critical metrics to consider when considering bond funds is duration, which is a measure of interest-rate sensitivity. As an example, a bond with a duration of two years would see its price rise by 2% if interest rates fell by 1 percentage point (or conversely, would see its price fall by 2% if interest rates rose by 1 percentage point). The actual calculation of duration is fairly complex; it's the weighted average of the bond's cash flows. But the key takeaway is that, all else equal, the longer a bond's time to maturity, the higher its duration—and thus the higher the interest-rate risk.

VSBSX has a very low duration of just 1.9 years. And in return, you currently receive a yield north of 4%. That combination of low risk and competitive income makes Vanguard Short-Term Treasury Index Fund one of the very best Vanguard retirement funds you can own in an 401(k).

This mutual fund, like many Vanguard index funds, is also available as an ETF: the Vanguard Short-Term Treasury ETF (VGSH, 0.03% expense ratio), which trades around $60 per share currently.

* Many Vanguard funds have multiple share classes, including ETFs. Listed net assets for Vanguard funds in this story refer to assets under management across all of a given fund's share classes.

** SEC yield reflects the interest earned across the most recent 30-day period. This is a standard measure for funds holding bonds and preferred stocks.

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2. Vanguard Total Bond Market Index Fund Admiral Shares

Style: Intermediate-term core bond
Management: Index
Assets under management: $394.4 billion
SEC yield: 4.5%
Expense ratio: 0.04%, or 40¢ per year for every $1,000 invested
Morningstar Portfolio Risk Score: 16 (Conservative)

While bond funds play an important role in lowering volatility and providing regular income, they don't need to be as conservative as a short-term Treasury fund.

Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX), for instance, holds longer-dated bonds but remains one of the very best Vanguard retirement funds because of its high-quality portfolio, competitive yield, and rock-bottom fees and expenses.

A share of VBTLX plugs you into a massive portfolio of nearly 11,400 bonds. About half of assets are Treasury or agency debt backed by the U.S. government. A quarter is invested in corporate bonds, and another 20% is used to own government mortgage-backed securities (MBSes). The remaining sliver is spread across foreign bonds, commercial mortgage-backed securities (CMBSes), asset-backed securities (ABSes), and other debt.

Risk is higher than Vanguard's short-term government-bond fund for a number of reasons. For one, roughly a third of VBTLX's bonds aren't government- or agency-related—they're corporates and other issues with ratings that, while high, are lower than U.S. Treasury debt. Time remaining on these bonds is longer, too, with an average effective maturity of more than eight years. As a result, duration is higher—at 5.7 years, a percentage-point increase in market interest rates would theoretically send the fund 5.7% lower in the short term.

On the flip side, you're rewarded with a higher yield and more potential upside should the Fed cut rates. And with an expense ratio of just 0.04%, Vanguard Total Bond Market Index Funds is all but free to own.

Also note that VBTLX is available in ETF form as the Vanguard Total Bond Market ETF (BND). It charges 0.03% annually and goes for around $75 per share as I write this.

* SEC yield reflects the interest earned across the most recent 30-day period. This is a standard measure for funds holding bonds and preferred stocks.

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3. Vanguard Balanced Index Fund Admiral Shares

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Style: Moderate allocation
Management: Index
Assets under management: $64.1 billion
Dividend yield: 2.0%
Expense ratio: 0.07%, or 70¢ per year for every $1,000 invested
Morningstar Portfolio Risk Score: 40 (Moderate)

Most of the funds that you and I own, and that we talk about, are single-asset funds: stock funds, bonds funds, and so on. And we mix and match these funds to put together a whole portfolio for ourselves.

However, funds like Vanguard Balanced Index Fund Admiral Shares (VBIAX)—referred to as "balanced" or "allocation" funds—are a whole portfolio unto themselves, giving us virtually everything we need in a single product. And Vanguard Balanced Index Fund specifically is a "moderate allocation" fund that invests roughly 60% of its assets in stocks, and the other 40% in bonds.

The stock "sleeve" is a massive 3,100 stocks wide. Large-cap stocks* account for the majority (70%) of assets, while mid-caps make up 20% and smalls are responsible for the remaining 10%. Top holdings are similar to what you'd get in a large-cap equity fund: Nvidia (NVDA), Apple (AAPL), Google parent Alphabet (GOOG, GOOGL). It's heavily tilted toward the technology sector, though it also has significant weights in financials, healthcare, communication, and industrials.

The bond portfolio is extremely broad, too, at more than 10,000 debt issues. The allocation is extremely similar to VBTLX; half of the fund's bond assets are invested in U.S. Treasuries or agency debt, 25% is in corporates, 20% is in government MBSes, and the rest is sprinkled across several debt types.

Balanced funds aren't without their weaknesses. For instance, many of the most popular such funds have little to no international exposure (in stocks and bonds alike); that's the case with VBIAX, so if you do want that exposure, you'd have to add it via additional individual securities or funds. Also, you have to want the specific balance the fund offers—a 60/40 fund, for instance, won't deviate much from that blend. So if Vanguard Balanced Index Fund Admiral Shares is too conservative (or aggressive) for you, you'd either have to find a different fund to act as your core, or augment your portfolio with additional exposure where you need it.

VBIAX has a moderate amount of turnover, plus it generates both dividend and interest income. So it's one of the best Vanguard funds for 401(k)s and other tax-advantaged accounts, but it will definitely have tax consequences in a traditional brokerage account.

* There are different ways to define "cap" levels. We're adhering to Morningstar's definition, which says the largest 70% of companies by market capitalization within a fund's "style" are large caps, the next 20% by market cap are mid-caps, and the smallest 10% by market cap are small caps.

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4. Vanguard Target Retirement Funds

Style: Target-date
Management: Active
Expense ratio: 0.08%, or 80¢ per year for every $1,000 invested
Morningstar Portfolio Risk Score: 20-62 (Conservative to Aggressive)

The only way in which allocation funds fall short of truly being a self-contained portfolio is that their mix of assets always remains the same. That's great if that's the particular allocation you need at a given moment in your life. But one of the greatest challenges in retirement planning is getting the asset allocation right: that is, having an asset class mix that is appropriate for an investor at your age and stage of life. An ideal portfolio for a 20-year-old is likely going to be very different from that of a 40-year-old, and both those portfolios will be different from what's ideal for a 60-year-old.

This is where Vanguard Target Retirement Funds can really add value.

Target-date funds (TDFs)—also called life-cycle funds—are basically allocation funds that change their asset allocation over time. TDFs start out invested heavily in stocks, but as they approach their target retirement date, they slowly reduce their stock exposure and replace it with bond exposure, following a glide path along the way.

The target retirement dates are intended to be estimates; they don't have to be super precise. Generally, most mutual fund families will create target-date funds in five-year increments (say, 2030, 2035, 2040, etc.).

And given the hyper-specific focus on retirement, target-date funds tend to be a mainstay of 401(k) plans.

Vanguard Target Retirement Funds hold varying blends of both U.S. and international stocks of various sizes, as well as U.S. and international bonds. Their target dates currently span from 2020 through 2070; the series also includes Vanguard Target Retirement Income Fund (VTINX), which is designed for investors who are in retirement.

This TDF lineup is unsurprisingly dirt-cheap, at just 0.08% annually, and the entire series earns a respectable Silver Medalist rating from Morningstar.

5. Vanguard Developed Markets Index Fund Admiral Shares

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Style: International large-cap stock
Management: Index
Assets under management: $317.3 billion
Dividend yield: 3.6%
Expense ratio: 0.05%, or 50¢ per year for every $1,000 invested
Morningstar Portfolio Risk Score: 70 (Aggressive)

U.S. markets have long been among the most productive in the world, and if you believe in the American economy's ability to keep growing, that should remain the case. Still, America's stock markets do catch the occasional cold, and that's why most experts will tell you it's worth having at least some exposure to international stocks.

You can do that via funds such as the Vanguard Developed Markets Index Fund Admiral Shares (VTMGX).

VTMGX owns shares in nearly 3,900 companies from "developed markets" outside the U.S. Developed markets can best be described as mature nations that have advanced economies, well-regulated capital markets, and robust infrastructure. They don't provide the same level of growth as their counterparts, "emerging markets," but they're generally considered more stable.

This index fund predominantly owns large-cap stocks, which make up roughly 80% of assets. Mid-caps account for another 15%, while the remainder is invested in smalls. Geographically speaking, European and Pacific nations make up the bulk of the portfolio, led by Japan (21%) and the U.K. (12%), though Canada is also well represented at 11%. Top holdings include multinationals such as Dutch semiconductor firm ASML Holding (ASML), Korean tech conglomerate Samsung Electronics, and British bank HSBC Holdings (HSBC).

As is common with developed-country funds, VTMGX's yield is far greater than U.S. blue-chip funds, at more than 3% currently. That's a high level of dividend income that, for tax purposes, is best suited to the confines of a tax-advantaged account like a 401(k).

VTMGX is also available in ETF form as the Vanguard FTSE Developed Markets ETF (VEA). It charges 0.03% and trades around $70 per share.

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6. Vanguard 500 Index Fund Admiral Shares

Style: U.S. large-cap stock
Management: Index
Assets under management: $1.7 trillion
Dividend yield: 1.0%
Expense ratio: 0.04%, or 40¢ per year for every $1,000 invested
Morningstar Portfolio Risk Score: 71 (Aggressive)

If we're talking about tax consequences alone, a taxable account is much better positioned to take advantage of an index fund's tax efficiency than a tax-advantaged account. However, given that a 401(k) is often an investor's primary (and sometimes only) investing account, and given that performance is the ultimate goal, an S&P 500 index fund absolutely belongs in any 401(k).

Why? Well, the S&P 500 is hard to beat. Year-end 2025 data from S&P Dow Jones Indices' SPIVA (S&P Indices versus Active) shows that only 14% of actively managed large-cap funds have managed to beat the S&P 500 over the trailing 10-year period, and that number dips to 10% when looking at the trailing 15 years.

Daniel Sotiroff, Senior Analyst for ETF and Passive Strategies at Morningstar, puts it bluntly: "You can't improve upon [the S&P 500]. You can't outdo it."

So if we can't outdo it, we might as well join it.

The Vanguard 500 Index Fund Admiral Shares (VFIAX), by virtue of tracking the S&P 500, holds shares of 500 large U.S. companies. But it doesn't hold them equally. The S&P 500 is "market-cap weighted," which means the larger the company, the more weight the stock has in the index (and thus the more impact it has on returns). Thus, right now, VFIAX dedicates the largest portions of its assets to companies like Nvidia (NVDA), Apple, and Alphabet, whose market caps are measured in trillions of dollars. It's also considered to be a "blend" fund, which means it has relatively even exposure to value stocks and growth stocks.

Even among index funds, S&P 500 "trackers" are particularly tax-efficient. Turnover is extremely low given that only a handful of stocks enter or leave the index in any given year. So VFIAX typically makes little to no capital gains distributions. This makes this Vanguard fund an extremely tax-efficient option for regular ol' taxable accounts. But again, if you primarily invest through your 401(k) plan, and your goal is simply to maximize performance, there's no good reason not to hold VFIAX in your 401(k).

VFIAX is Vanguard’s oldest index strategy, and it remains one of the very best Vanguard retirement funds—for 401(k)s or wherever else you can stash it.

If for whatever reason your investment options exclude mutual funds but include ETFs, you can buy it as the Vanguard S&P 500 ETF (VOO). VOO charges 0.03% in annual expenses and trades around $680 per share currently.

7. Vanguard Explorer Fund Investor Shares

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Style: U.S. small-cap growth stock
Management: Active
Assets under management: $22.4 billion
Dividend yield: 0.4%
Expense ratio: 0.39%, or $3.90 per year for every $1,000 invested
Morningstar Portfolio Risk Score: 81 (Very Aggressive)

Retirement savers with a high risk tolerance who want to try to turbocharge their returns might consider Vanguard Explorer Fund Investor Shares (VEXPX), which invests in predominantly American small- and midsized stocks with growth potential.

The actively managed VEXPX owns around 715 stocks with an average market cap of almost $10 billion—near the top of the traditional mid-cap range ($2 billion to $10 billion), but the majority of its holdings fall into the small- ($500 million to $2 billion) and micro-cap ($500 million or less) ranges. Top holdings include the likes of HVAC specialist Comfort Systems USA (FIX) and insurance software company Guidewire Software (GWRE).

While larger companies also have the potential for outsized growth, smaller companies, as a group, tend to be more explosive—for better or worse. They benefit from investing's rule of large numbers (effectively, doubling your revenues from $1 million to $2 million is a lot easier than doing so from $1 billion to $2 billion). And when institutional investors become interested in these stocks, large influxes of new investment money can send their stocks skyward.

But they're riskier. Smaller firms have fewer and narrow revenue streams, meaning if a core product line struggles, it can more easily lead to stock turbulence and losses. They also have less access to capital than larger companies, so if times get tight, it's harder for them to survive.

Funds like VEXPX help defray that risk by allowing you to buy many smaller companies at once, so one stock's failure doesn't torpedo your portfolio's worth. That risk is further reduced by Explorer's management style—holdings are selected by five different investment advisors that manage independent subportfolios, allowing them to use their specialities to generate outsized returns while preventing any one manager's strategy from upending the entire fund's performance.

Turnover is elevated, too, at about 50%, but you can snuff out that liability by holding VEXPX in a 401(k) or other tax-advantaged account.

8. Vanguard Growth Index Fund Admiral Shares

Style: U.S. large-cap growth stock
Management: Index
Assets under management: $393.8 billion
Dividend yield: 0.4%
Expense ratio: 0.05%, or 50¢ per year for every $1,000 invested
Morningstar Portfolio Risk Score: 84 (Very Aggressive)

You don't have to invest in small companies to seek out better returns, of course. Those with a healthy risk appetite can simply gravitate toward growth stocks in the large-cap space.

A growth stock is generally viewed as a company that is improving sales and profits with each passing year—typically at a faster clip than the industry average. This should, in theory, result in faster stock price appreciation as other shareholders get wise to this success and decide to buy in themselves.

Like with small caps, the upside can be nice, but the train can come to a halt awfully quickly once expectations start to outpace the company's actual results, leading to an abrupt, sharp drop in share prices. If that one stock is a significant portion of your portfolio, that could mean crippling losses. But you can mitigate that risk by owning bunches of growth stocks within a mutual fund like the Vanguard Growth Index Fund Admiral Shares (VIGAX).

VIGAX tracks an index of large-cap companies that exhibit various growth traits, including better-than-average historical growth in sales and earnings, as well as better-than-average expected short- and long-term growth in earnings.

The fund holds 150 predominantly U.S. growth stocks. As should be no surprise, tech stocks such as Nvidia, Apple, and Broadcom (AVGO) account for the majority (53%) of assets. Communication services companies like Facebook parent Meta Platforms (META) and Google parent Alphabet (GOOGL) account for 18%, while consumer discretionary stocks, such as Amazon.com (AMZN) and Home Depot (HD), represent another 12%. The remaining assets are spread among the other eight market sectors, with many receiving less than 2% of assets.

VIGAX's ETF share class is the Vanguard Growth ETF (VUG), which costs 0.03% annually and trades around $85 per share after a recent share split.

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What Is the Minimum Investment Amount on Vanguard Mutual Funds?

Vanguard funds are known for being shareholder-friendly. It blazed new trails with the index fund, and Vanguard has done more than any other investment firm to keep costs to a minimum for investors.

There is one hitch. Many of Vanguard's cheapest funds in terms of fees have initial investment minimums of around $3,000—and some can be even more.

But if you're investing through a 401(k), don't sweat it.

Funds don't have minimum investment requirements when you buy them through a 401(k) plan. When you invest in a 401(k), you decide what percentage of your total contribution you want to allocate to each fund, and every time contributions are taken from your paycheck, the appropriate amount is parceled out.

However, if you're considering investing in a Vanguard fund outside of a 401(k), note that many Vanguard index funds are also available as ETFs. Most brokers will allow you to buy as little as one share, and some even allow for fractional shares. And if you use a commission-free brokerage, you can buy those ETFs without incurring additional fees. ETF prices vary, of course, but many cost less than $100, and they rarely exceed $500 per share.

What Are Index Funds?

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There are two kinds of funds: actively managed funds and index funds.

With an actively managed fund, one or more managers are in charge of selecting all of the fund's holdings. They'll likely have a specific strategy to adhere to, and they'll be tasked with beating a benchmark index, but they'll be given a lot of discretion about how to achieve that. These managers will identify opportunities, conduct research, and ultimately buy and sell a fund's stocks, bonds, commodities, and so on.

An index fund, on the other hand, is effectively run by algorithm. The fund will attempt to track an index, which is just a group of assets that are selected by a series of rules. The S&P 500 and Dow Jones Industrial Average? Those are indexes with their own selection rules. Index funds that track these indexes will generally hold the same stocks, in the same proportions, giving you equal exposure and performance (minus fees) to those indexes.

If you guessed that it's more expensive to pay a conference room full of fund managers than it is a computer that tracks an index, you'd be right. That's why actively managed funds tend to cost much more in fees than index funds.

And that's why ETFs are generally cheaper. Most (but not all) mutual funds are actively managed, while most (but not all) ETFs are index funds.

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What Types of Funds Are Available in 401(k) Plans?

Virtually every 401(k) plan is limited to mutual funds. While a handful of plans might offer exchange-traded funds (ETFs), they're typically limited to mutual funds—and a handful, at that. Rather than a self-directed account, where you have your pick of virtually the entire mutual fund universe, 401(k)s only let you invest in, say, 10, 15, or 20 mutual funds, each of which cover a specific investing style.

Would it be nice to invest in ETFs, which typically offer lower costs? Sure. But mutual funds have certain qualities more befitting a 401(k).

For one, mutual funds don't trade all day on an exchange, which discourages long-term investors from panic-selling during a particularly bad day in the market. They also allow for fractional share ownership, which is important given that 401(k) plan investors are typically allocating a fixed amount of money to their account every paycheck.

What Is a Mutual Fund?

A mutual fund is an investment company that pools money from many investors to buy stocks, bonds or other securities. The investors get the benefits of professional management and certain economies of scale. A pool of potentially millions or even billions of dollars is large enough to diversify and might have access to investments that would be impractical for an individual investor to own.

Here's an example: An investor wanting to mimic the S&P 500 Index (an index made up of 500 large, U.S.-listed companies) would generally have a hard time buying and managing a portfolio of 500 individual stocks, especially in the exact proportions of the S&P 500 Index. Another example: An investor wanting a diversified bond portfolio might have a hard time building one when individual bond issues can have minimum purchase sizes of thousands (or tens of thousands!) of dollars.

Equity funds or bond funds will generally be a far more practical solution.

To invest in a mutual fund, you'll need to open an account with the fund sponsor or open a brokerage account with a broker that has a selling agreement in place with the fund sponsor. As a general rule, most large, popular mutual funds will be available at most brokers, so if you open a traditional investment account (like an IRA or brokerage), you'll have access to most of the mutual funds you'd ever want to invest in.

Why Does a Fund's Expense Ratio Matter So Much?

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Every dollar you pay in expenses is a dollar that comes directly out of your returns. So, it is absolutely in your best interests to keep your expense ratios to an absolute minimum.

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Related: The 10 Best Dividend ETFs You Can Buy Now

We love exchange-traded funds (ETFs) because they can provide one-click access to hundreds, even thousands of stocks, while charging often minuscule fees.

One way to put that low-cost diversification to work? Collecting dividends. But trying to choose from literally hundreds of income-producing funds could take up a lot more time than you have. So let us help you narrow the field—check out our list of 10 top dividend ETFs.

Related: 10 Dividend Stocks That Pay You Each and Every Month

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It's Tough to Top These 12 Vanguard ETFs

Kyle Woodley — Mon, 15 Jun 26 07:30:30 -0400

Vanguard exchange-traded funds (ETFs) are among the most popular funds out there, and for good reason. This asset manager's wide variety of investment strategies are already useful to investors of all stripes—the simple ETF "wrapper" makes them all the more simple, accessible, and cost-effective.

The best Vanguard ETFs are big and "liquid," meaning they are easy to buy and sell. They're also commonly found in low-cost portfolios; that's because most Vanguard ETFs are inexpensive index funds that are frequently the cheapest alternatives in the marketplace.

That's all to say that if you're trying to build a portfolio without getting drained by fees and other costs, check out our recently expanded list of the best Vanguard ETFs you can buy now. This list has something for everyone—whether you care about emerging markets or developed markets, small-cap stocks for growth or solid blue-chip stocks for the dividends, there's a Vanguard ETF out there for you.

Also, if you're new to exchange-traded funds, feel free to scroll even further down, where I explain some ETF basics.

Editor's Note: Tabular data shown in this article is up-to-date as of June 10, 2026.

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Why Vanguard?

Vanguard is the No. 2 asset manager in the world with more than $12 trillion in assets under management, only trailing peer BlackRock (with north of $14 trillion). With that size comes a massive breadth of investment options, as well as efficiencies of scale that are difficult for smaller investment companies to match.

Consider this: The average asset-weighted expense ratio for U.S. mutual funds and ETFs is currently 0.44%, or $4.40 annually for every $1,000 invested.

Vanguard already offered a low 0.08% average expense ratio across all its funds. Then in 2025, that number dropped to 0.07% after Vanguard cut expenses on 168 share classes across 87 funds. This year, it slimmed that figure to 0.06% when it slashed fees on another 84 share classes across 53 funds. All told, Vanguard estimates that's $600 million in savings for investors, which the firm claims is its "largest-ever two-year combined cost reduction."

It's also worth noting that the best Vanguard ETFs are often passive index funds. That means they are not aggressive vehicles that depend on overpaid managers to outperform the market, but rather "set it and forget it" funds tied to a fixed index of assets. This less flashy but more consistent approach has generally been shown to provide better long-term results.

The Best Vanguard ETFs

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There is a massive universe of exchange-traded funds out there. So what makes the best Vanguard ETFs stand out over other exchange-traded funds? A few factors include:

Relatively low fees, not just nominally low fees. After all, just because a fund only costs you a couple dollars per year doesn't mean there aren't a bunch of cheaper alternative out there.
Long-term potential. For the purpose of this article, we're not talking about tactical or short-term bets, but rather foundational investments for the long haul.
Different approaches for different investors. Also for the purpose of this article, we're not looking for a single one-size-fits-all Vanguard ETF. Instead, the list is intended to be a menu of differentiated options that you can pick and choose from, based on your personal goals.

One final word of caution: Every investment carries risk, and even the best funds can lose you money if Wall Street suffers widespread declines.

With that disclaimer out of the way, let’s jump into the first Vanguard ETF on our list:

1. Vanguard S&P 500 ETF

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Style: U.S. large-cap stock
Assets under management: $1 trillion*
Dividend yield: 1.0%
Expense ratio: $0.03%, or 30¢ per year for every $1,000 invested

I have a tendency to start every broad "best ETFs" list with the same type of product: an S&P 500 index fund.

It'd be easy to chalk it up to laziness. But consider this: The S&P 500 is the performance benchmark for many actively managed funds that invest in large-cap stocks.** Said differently, these investment professionals are tasked with exceeding the S&P 500's performance. Unfortunately, according to S&P Dow Jones Indices, the majority of active large-cap U.S. equity funds have failed to beat the S&P 500 on a total-return basis (price plus dividends) in 16 consecutive years, and in 22 of the past 25 years.

But even if you compare the Vanguard S&P 500 ETF (VOO) and other low-cost S&P 500 index funds to all large-cap funds—active and index—they routinely land in the top quartile by performance across most meaningful time periods. So even among other indexes, the S&P 500 is great.

And as long as that remains the case, I'm going to keep leading with it.

The S&P 500 Index is made up of 500 of America's largest companies. It's considered something of a gauge of the U.S. economy just because its components collectively represent the diversity of American industry.

But it's hardly "balanced." The index, like many others, is market capitalization-weighted, which means the greater the company size by market cap (stock price x outstanding shares), the greater the "weight" it's given in the index, the greater the assets an index fund will invest in that company, and the more impact those shares have on the performance of the fund. Currently, trillion-dollar-plus technology companies Nvidia (NVDA), Apple (AAPL), and Microsoft (MSFT) are among the largest constituents in the S&P 500, and thus the largest components of VOO. Indeed, technology is a huge part of the economy, so it makes up a huge part of VOO's assets—more than a third currently. On the flip side, real estate, materials, and utilities merit less than 3% apiece.

This can be problematic. A hit to the technology sector would cause more short-term harm to the VOO than weakness in any other sector. You might need to buy other complementary funds if you want more balanced sector exposure. But over the years, the S&P 500's sectors and holdings have shifted significantly several times, and that hasn't kept the index from delivering growth to people who have invested in S&P 500 funds.

In short: The Vanguard S&P 500 ETF is one of the cheapest ways to buy a wide and fairly diversified set of American blue chips that has historically delivered excellent performance. That's why this strategy has accumulated $1.5 trillion in assets across all of its share classes, and that's what makes VOO one of Vanguard's best ETFs.

* Vanguard fund assets are spread across multiple share classes, including mutual funds and ETFs alike. Assets listed for each fund in this story are for the ETF share class only.

** There are different ways to define "cap" levels. We're adhering to Morningstar's definition, which says the largest 70% of companies by market capitalization within a fund's "style" are large caps, the next 20% by market cap are mid-caps, and the smallest 10% by market cap are small caps.

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2. Vanguard Total Stock Market ETF

Style: U.S. total stock market
Assets under management: $624.0 billion
Dividend yield: 1.0%
Expense ratio: $0.03%, or 30¢ per year for every $1,000 invested

If you want a little more exposure to stocks of all sizes, a "total stock market" fund might be more up your alley.

The Vanguard Total Stock Market ETF (VTI) is a one-stop shop for investors who want exposure to the totality of the U.S. stock market in a single investment. It currently holds a whopping 3,510 stocks, representing companies from all sectors and of all sizes.

Like the aforementioned VOO, Vanguard Total Stock Market ETF does not treat every component equally. It's weighted most heavily toward the largest stocks. Nvidia accounts for more than 6% in assets, Apple is nearly 6%, and Google parent Alphabet (GOOG, GOOGL) is just under 5%. That's 17% of assets wrapped up in just three stocks. The same top-heaviness applies to its market-cap split; large caps are king at more than 70% of assets, while mid-caps account for less than 20% and the rest goes to small companies.

This is an extremely common construction for a "total stock market" fund.

Vanguard Total Stock Market, while imperfect, is still an excellent solution for investors who just want to buy … well, virtually the whole U.S. stock market! It's also a popular solution. VTI is one of the top five exchange-traded funds in the U.S. by assets, and the strategy has amassed a whopping $2.2 trillion across all share classes. So while the fund isn't particularly sophisticated, it's still a favorite of investors who think long-term, buy-and-hold strategies are preferable to more complex options.

3. Vanguard Russell 1000 Growth ETF

Style: U.S. large-cap growth stock
Assets under management: $42.4 billion
Dividend yield: 0.4%
Expense ratio: 0.06%, or 60¢ per year for every $1,000 invested

Funds like VOO And VTI are commonly called "blend" funds, which refers to the fact that their holdings are a blend of two types of stocks:

Growth stocks: Companies with above-average past and/or expected rates of growth in operational metrics such as revenue and profits. They sometimes, but not always, trade at relatively expensive valuations.
Value stocks: Companies that trade for what is perceived by some to be less than their intrinsic value. They sometimes, but not always, feature slower past and/or expected rates of growth in operational metrics.

Investors concerned with locking in higher rates of portfolio return frequently look to the former, as high rates of operational growth can result in high levels of stock performance. Naturally, the inherent risk is high expectations: If a company expected to expand by leaps and bounds only does so modestly, its stock could suffer a drastic pullback.

But you can reduce the risk of any one growth stock imploding by holding a large group of them, which you get by purchasing funds such as the Vanguard Russell 1000 Growth ETF (VONG).

VONG holds stocks within the Russell 1000 (the 1,000 largest U.S. companies by market capitalization) that boast relatively higher forecast two-year earnings growth, higher five-year historical sales growth … and higher price-to-book (P/B) ratios. It might seem odd to intentionally target relatively expensive stocks, but even though growth and value aren't inherently at odds (you certainly can find growth stocks that trade at relative bargains), they're often treated that way.

The resulting portfolio is a group of 387 growth stocks predominantly clustered in growth-oriented sectors. Technology accounts for a full half of assets right now, followed by consumer discretionary (13%) and communication services (12%). Top holdings are a who's who of blue-chip growth; the aforementioned NVDA, AAPL, and MSFT are heavily concentrated at weights of 9%-13% each; other big components include Broadcom (AVGO) and Amazon (AMZN).

VONG, which was already inexpensive, was one of the ETFs subject to Vanguard's 2026 price cuts. Its 0.07% annual fee was trimmed to 0.06%.

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4. Vanguard Russell 2000 ETF

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Style: U.S. small-cap stock
Assets under management: $13.9 billion
Dividend yield: 1.3%
Expense ratio: 0.06%, or 60¢ per year on every $1,000 invested

Another way to put growth in your portfolio is to own the shares of smaller companies. They benefit from investing's rule of large numbers (effectively, doubling your revenues from $1 million to $2 million is a lot easier than doing so from $1 billion to $2 billion). And when institutional investors become interested in these stocks, large influxes of new investment money can send their stocks skyward.

The Russell 2000 Index is to small caps what the S&P 500 is to large caps. And the Vanguard Russell 2000 ETF (VTWO) tracks the small-cap benchmark for a svelte 6 basis points in annual expenses, which was lowered from 7 earlier this year. (A basis point is one one-hundredths of a percentage point.)

The Russell 2000 holds stocks tied to—you guessed it—2,000 of the smallest securities in the U.S. equity market. It too is cap-weighted. However, unlike some large-cap benchmarks where a few individual stocks can make up uncomfortably (or even dangerously) sizable parts of the portfolio, VTWO's components have very limited impact. The largest component, fuel-cell firm Bloom Energy (BE), is weighted at just under 2% of assets. All other holdings are below 1%.

If you're looking for small-cap exposure, VTWO isn't just one of the best Vanguard ETFs you can buy … it's among the best ETFs you can buy period.

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5. Vanguard Dividend Appreciation ETF

Style: U.S. dividend-growth stock
Assets under management: $105.8 billion
Dividend yield: 1.5%
Expense ratio: 0.04%, or 40¢ per year for every $1,000 invested

One of the most popular ways for investors to reduce their risk profile in the stock market is to lean on dividend stocks. These are the stocks of companies that pay a portion of their profits back to shareholders in the form of cash distributions ("dividends").

Stocks that pay dividends regularly tend to produce significant, reliable profits, which is how they're able to afford those dividends. That implies a certain level of quality. And just as important: These dividends can provide another source of income aside from price returns.

The Vanguard Dividend Appreciation ETF (VIG) is composed of dividend payers that boast track records of improving those distributions over time. This Vanguard dividend fund holds 332 payout growers, with mega-bank JPMorgan Chase (JPM), retailers Walmart (WMT) and Costco (COST), and Big Pharma firm Eli Lilly (LLY) among its current top positions.

Dividend growth is an important indication of good financial health, as well as an important factor in compound returns over time. As your cash payments grow larger and larger over time, that's more money you can reinvest back into the stock, which in turn will keep paying you increasing dividends. Even once you call it a career, and you're using those dividends as retirement income, the steady growth in those paydays can help you fend off the dollar-eroding effects of inflation.

VIG also enjoyed an expense-ratio haircut, with its annual fee lowered from 0.05% to 0.04% in 2026. So if you want to focus on rock-solid dividend growers in 2026 and beyond, this Vanguard ETF is worth a look.

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6. Vanguard Real Estate ETF

Style: Sector (Real estate)
Assets under management: $37.0 billion
Dividend yield: 3.6%
Expense ratio: 0.13%, or $1.30 per year for every $1,000 invested

While VIG's holdings might offer lower risk and growing payouts, the current dividend yield isn't particularly impressive. That's OK to some investors, but other investors prefer more yield at the onset.

If you're in the latter group, you might consider the Vanguard Real Estate ETF (VNQ)—the best Vanguard ETF for investing in real estate and one of the sector's most popular funds period.

VNQ holds real estate investment trusts, or REITs—a special class of company specifically designed to own and sometimes even operate real estate. These companies enjoy a generous operational tax break, but in exchange, REITs must deliver 90% of taxable income back to their shareholders. This typically results in greater-than-average dividends. And the best REITs, which are able to produce the most regular and growing cash flows from their properties, are as consistent an investment as you'll find on Wall Street.

The Vanguard Real Estate ETF currently holds 145 REITs, chief among them healthcare property owner Welltower (WELL), industrial warehouse giant Prologis (PLD), and datacenter landlord Equinix (EQIX). Best of all? This portfolio collectively delivers a yield well above 4%. That's well more than three times what the broader market pays.

Most of us can't afford to buy a second home or an office building to rent out to tenants directly. Fortunately, we can still tap into the real estate market's big income potential through ETFs like VNQ.

7. Vanguard Information Technology ETF

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Style: Sector (Technology)
Assets under management: $124.9 billion
Dividend yield: 0.3%
Expense ratio: 0.09%, or 90¢ per year for every $1,000 invested

The flip side of low-risk dividend stocks and REITs are high-growth companies that pump most if not all of their profits back into the business in hopes of rapid expansion.

That's what the Vanguard Information Technology ETF (VGT) has to offer.

VGT holds technology stocks, to no one's surprise. Its 316 holdings include many of the big names you already know (like Apple and Microsoft), as well as smaller software developers, chipmakers, and other growth-oriented technology firms that are trying to make a name for themselves.

The tech sector thrived in 2023 and 2024, and VGT was among the best Vanguard ETFs as a result. But keep in mind the sector doesn't always come out on top. In 2022, even the biggest and most established names in Silicon Valley faced serious headwinds. Tech spent a good part of 2025's first half getting knocked around before getting back on their feet. It also struggled through the first few months of 2026 before staging a comeback.

Still, if you're taking a long view, it's difficult to imagine a future where technology stocks are not among the biggest winners—and this tech ETF plays into this trend.

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8. Vanguard U.S. Multifactor ETF

Style: U.S. multifactor
Assets under management: $606.0 million
Dividend yield: 1.4%
Expense ratio: 0.18%, or $1.80 per year for every $1,000 invested

Most investment funds are designed to give you exposure to a certain part of the market, however wide or narrow that part of the market might be. The whole stock market. A sector. A country. Certain types of bonds. You get the picture. To find more ideal holdings within that slice of the market, index funds might have certain inclusion criteria, and actively managed funds will rely on managers' discretion. But the purpose of these funds largely remains "access to such and such part of the market."

However, if you just wanted, say, a great collection of stocks no matter what they might look like, you might want to seek out "multifactor" funds.

Index provider MSCI defines factors well: "A factor is any characteristic that helps explain the long-term risk and return performance of an asset." If you've invested for any amount of time, you're already well-aware of the two most prominent factors: value and growth. But there are others, including volatility, dividend yield, price momentum, and more. A multifactor fund, then, invests in securities that meet criteria across several factors in hopes of building a more optimal portfolio.

The Vanguard U.S. Multifactor ETF (VFMF) is an actively managed multifactor fund, though it sticks tightly to a rules-based quantitative model to ensure its holdings meet several factor gates. After an initial universe of U.S. stocks is screened to remove the 20% most volatile stocks across each market cap grouping, the remaining stocks are chosen based on three more factors:

Value: Book value-to-price and forward earnings-to-price (also operating cash flows-to-price for non-financial-sector companies)
Quality: Financial sector: Return on equity, share issuance; Non-financials: Return on equity, gross profitability, change in net operating assets, leverage
Momentum: Total returns (price plus dividends) from 12 months ago to one month ago, total returns from 7 months ago to one month ago, and the intercept from a one-year regression of stock returns on their regional benchmark.

The resulting portfolio is … well, Morningstar categorizes it as "mid-cap value," but that's misleading. In truth, it's just extremely well-balanced across market caps right now, at a 30%/20%/25%/25% blend of large-, mid-, small-, and micro-cap stocks. (Micro-caps represent the smallest 3% of stocks by market capitalization and are often included as part of a fund's small-cap allocation.) From a sector perspective, financial stocks are the top weight at 25%, followed by healthcare (17%), technology (13%), and consumer discretionary (13%).

But Vanguard U.S. Multifactor's nature suggests that these size and sector weightings could fluctuate, and in fact, they do. What matters is whether you're getting something better than ordinary, and on that front, VFMF does the job.

VFMF is fairly young, having launched in 2018, so five-year returns are our best gauge. The multifactor ETF has slightly underperformed the S&P 500 over that time on a total-return basis. That's still respectable. However, the S&P 500 is predominantly large-cap, which has also beaten the pants off of mid- and small caps over the past five years. A better measure would be pitting VFMF against a portfolio similarly weighted across Vanguard's large-, mid-, and small-cap funds. Vanguard U.S. Multifactor looks even better through that lens, outperforming by more than 3 percentage points annually.

9. Vanguard FTSE All-World ex-US Index Fund ETF Shares

Style: International stock
Assets under management: $59.1 billion
Dividend yield: 2.9%
Expense ratio: 0.04%, or 40¢ per year for every $1,000 invested

So far we've only covered different ways to slice up the U.S. stock market. However, there's a great big universe of companies out there beyond our borders.

That's where Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) comes in.

This Vanguard ETF invests in nearly 3,900 stocks across a few dozen countries, both developed (more established but slower-growing) and emerging (riskier but higher rates of expansion). It holds stocks of all sizes, but it leans heavily into large companies. And like many other Vanguard funds on this list, VEU is cap-weighted, so the stocks with the most impact on performance currently include emerging-market tech giants such as Taiwan Semiconductor (TSM) and Samsung Electronics, as well as European mainstays like AstraZeneca (AZN) and HSBC Holdings (HSBC).

As a general rule, large, international dividend payers distribute higher rates of income than their American counterparts, resulting in a solid yield well above 2% that's more than twice what the S&P 500 offers.

You can get a much wider portfolio of international stocks with a little more exposure to smaller companies via the Vanguard Total International Stock ETF (VXUS), which like VEU earns Morningstar's highest Medalist ranking of Gold. (Medalist rankings are forward-looking views of a fund's ability to outperform its peers.) VEU is a hair cheaper, however, and has delivered slightly better performance in the past. "Its low fee and expansive portfolio make it one of the best international stock funds available," Morningstar analyst Zachary Evens adds.

In an interconnected global economy, it's a bit naive to think that multinational companies only rise and fall based on their local economies. That's true for big U.S. names as well as the international giants that lead this Vanguard ETF. So if you want international diversification to truly play broad economic trends in 2026, consider layering VEU into your portfolio.

10. Vanguard FTSE Emerging Markets ETF

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Style: U.S. intermediate-core bond
Assets under management: $153.4 billion
SEC yield: 4.5%*
Expense ratio: 0.03%, or 30¢ per year for every $1,000 invested

Developed markets make up the lion's share of VEU's assets, which is great if you want stability and yield.

But if you want more aggressive price returns, you might instead consider historically higher-growth "emerging markets" like those found in Asia and South America. And you can achieve that through funds like the Vanguard FTSE Emerging Markets ETF (VWO).

This Vanguard ETF is a simple index product that plugs investors into more than 6,350 companies from about two dozen emerging markets. But they're not spread out evenly—Taiwan and China account for almost 30% of assets each, and India makes up another 16%. Other countries, such as Egypt and Iceland, have merely token representation at fractional weights.

Funds like Vanguard FTSE Emerging Markets help you own a lot of stocks you'd have trouble owning otherwise. While a few of VWO's holdings—blue chips like Asia e-commerce giant Alibaba Group (BABA), for instance—trade on America's major exchanges and are accessible to most investors, many smaller components only trade "over the counter" in the U.S., or worse, only on foreign exchanges.

Self-directed investors would suffer quite a few headaches trying to own all these stocks individually. But this Vanguard ETF does the trick easily and even more inexpensively than before, priced at just 6 basis points (down from 7 last year).

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11. Vanguard Total Bond Market ETF

Style: U.S. intermediate-core bond
Assets under management: $151.6 billion
SEC yield: 4.3%*
Expense ratio: 0.03%, or 30¢ per year for every $1,000 invested

Investors typically look to bonds to add income and relative safety to their portfolios. But bonds come in all shapes and sizes—from U.S. government bonds, to high-quality corporate bonds from top blue-chip companies, to riskier "junk" bonds from borrowers who are facing real challenges to operations. So if you're already confused by the thousands of options in the stock market, looking into bonds on top of that would probably be downright overwhelming.

That's why many investors just opt to buy a bond fund and call it a day.

Vanguard Total Bond Market ETF (BND) is among the best Vanguard ETFs for diversified exposure to most of these categories. BND has a gigantic portfolio of almost 11,400 debt issues, including U.S. Treasury and agency bonds, corporate bonds, even mortgage-backed securities. The portfolio is entirely investment-grade, however—BND doesn't hold "junk" debt"—so you're getting diversification and relatively high credit quality, but not access to greater-yield, higher-potential bonds.

Duration (a measure of interest-rate risk) is 5.7 years, which implies that if market interest rates climbed by 1 percentage point, BND would experience a short-term decline of 5.7%; and if rates dropped by a point, BND would climb by 5.7%.

Bonds don't deliver the quick gains that stocks can. But they offer steady and reliable income—which for many investors is worth the lower potential reward to provide a lower overall risk profile to their portfolio.

* SEC yield reflects the interest earned across the most recent 30-day period. This is a standard measure for funds holding bonds and preferred stocks.

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12. Vanguard Short-Term Treasury ETF

Style: Short-term U.S. Treasury bond
Assets under management: $29.2 billion
SEC yield: 4.1%
Expense ratio: 0.03%, or 30¢ per year for every $1,000 invested

Just like stocks, bonds have varying levels of risk and potential reward. The Vanguard Short-Term Treasury ETF (VGSH) focuses on a subset of bonds that have very low risk for two reasons: They have short maturities, and they're issued by the U.S. Treasury.

Maturity helps determine risk. Generally speaking, the longer the bond, the greater the risk that the bond might not be repaid. Interest rates come into play, too. When rates go higher, new bonds pay more, which tempt people to sell their old bonds for the new, higher-paying bonds. But the temptation is much greater when you're dealing with longer-term bonds with lots of payments remaining—and not so great for short-term bonds with one or just a couple payments left.

Meanwhile, U.S. Treasury bonds, which are backed by the full faith and credit of the U.S. government, are some of the highest-rated bonds on the planet. Is there 100% certainty they'll be repaid? No. But there is a higher likelihood of repayment than the vast majority of issuers out there.

Vanguard Short-Term Treasury ETF invests in more than 90 Treasury bond issues with maturities of between one and three years. And the lower risk is reflected in the averaged duration, which currently sits at just 1.9 years. So while a 1-percentage-point hike in interest rates would theoretically knock the aforementioned BND 5.7% lower in the short term, VGSH would decline by 1.9%. Conversely, VGSH might not rise as rapidly if market interest rates declined.

That's OK, as long as you understand what you're buying. If all you want is portfolio protection that can still generate some yield (just above 4% currently), VGSH is one of the best Vanguard ETFs to own.

Learn More About These and Other Funds With Morningstar Investor

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If you're buying a fund you plan on holding for years (if not forever), you want to know you're making the right selection. And Morningstar Investor can help you do that.

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What Is an ETF?

If you're already well-versed in the subject, feel free to scroll down to the bottom. But if you're not, let's start at the top.

An investment fund is an umbrella term for a vehicle where a manager uses money to purchase investments (stocks, bonds, and so forth) on behalf of other investors. An exchange-traded fund (ETF) is one type of investment fund, and it's usually defined by its contrasts to its older brother: the mutual fund.

Mutual funds only exchange hands once per trading day, after the close of regular trading at 4 p.m. Eastern Time. ETFs, however, are listed on an exchange, much like individual stocks, and are available to buy and sell across the trading day.

The nature of mutual funds' trading makes them ideal for long-term buy-and-hold investing, but poor trading instruments. However, while ETFs are much more conducive to trading than mutual funds ... they're also perfectly suitable for the buy-and-hold crowd.

ETFs are also structured differently than mutual funds and their other cousins, closed-end funds (CEFs), which tends to make them a little more tax-efficient. Also, unlike mutual funds, ETFs don't have minimum investment thresholds—the minimum cost is just one share (or less if your broker offers fractional shares).

Lastly, ETFs tend to have cheaper fees than mutual funds, on average, but that's because most ETFs are passively managed index funds, whereas most mutual funds are run by one or more human managers. But there are more expensive actively managed ETFs and cheap index mutual funds.

What Is a Mutual Fund?

Equity funds or bond funds will generally be a far more practical solution.

ETFs vs. Mutual Funds

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Are ETFs the Same Thing as Index Funds?

Not always. Most ETFs are index funds, meaning they are tied to a fixed “index” or list of securities. However, mutual funds can also be tied to indexes and thus be categorized as index funds, too. Similarly, both ETFs and mutual funds can instead follow a more dynamic or “active” list of investments.

It can be confusing sometimes, but the bottom line is you should always read the investment materials an asset manager provides and look for a description.

In the case of Vanguard, you’ll find a heading labeled “investment style” at the top of most ETF pages that will clearly identify whether funds are index funds, or active funds.

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Does Vanguard Offer a Minimum-Volatility ETF?

Yes: The Vanguard U.S. Minimum Volatility ETF (VFMV). But investors should note two things about this ETF:

This is not an index fund. VFMV is actively managed by the Vanguard Quantitative Equity Group. Despite that, it does charge a fairly low fee of just 0.13%, or $1.30 annually for every $1,000 invested.
This is a minimum-volatility ETF, which is different than a low-volatility ETF. Min-vol funds typically try to reduce volatility while still maintaining some similarity to an underlying index–in this case, VFMV management will try to pick stocks they expect will have lower volatility than the market, but still hold stocks of varying sizes (large, mid, and small), from different industries and groups. Low-vol ETFs, however, typically invest in stocks based on backward-looking measures of volatility, and often aim for the lowest volatility possible without trying to mimic an index. For instance, a min-vol market ETF might be required to hold at least a 5% weight in all 11 sectors; a low-vol market ETF might hold the lowest-volatility stocks within the market, and as a result, some sectors simply might not be included.

Why Does a Fund's Expense Ratio Matter So Much?

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Every dollar you pay in expenses is a dollar that comes directly out of your returns. So, it is absolutely in your best interests to keep your expense ratios to an absolute minimum.

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Schedule Your Call With Riley

Riley Adams, CPA

Licensed CPA and Financial Advisor

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Investment advisory services offered through NewEdge Advisors, a registered investment advisor.

Related: The 10 Best-Rated Dividend Aristocrats Right Now

But even Aristocrats aren't created equally. Check out which dividend growers Wall Street loves the best right now in our list of the top-rated Dividend Aristocrats.

Related: 15 Stocks You Can Buy and Hold Forever

So if you're looking for a starting point for your own portfolio, look no further. Check out our list of the best long-term stocks for buy-and-hold investors.

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Kyle Woodley was long VOO and VNQ as of this writing.

The Financial DIY Threshold: 6 Moments When Managing Your Own Money Becomes Dangerous

Riley Adams, CPA — Sun, 14 Jun 26 15:30:48 -0400

Your financial world is anything but static. Virtually every year, something in your life changes, whether that's receiving a raise, entering a new tax bracket, paying more rent, or canceling a streaming subscription.

And none of that even considers the massive financial implications of major life events.

Each new chapter of your life is often paired with new financial decisions, whether that's pairing your finances with your spouse's or getting ready to enter retirement. And you might or might not feel equipped to handle those decisions on your own. Fortunately, if you need help, help is there—in the form of financial advisors, who are educated in all the many financial issues that life throws at us.

How do you know when it's time to talk to an advisor? Well, the answer isn't the same for everyone, but there are several common trigger points that often warrant professional advice. If you're approaching one of these milestones, it might be time for you to schedule an appointment.

Popular Times to Hire an Advisor

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"The best time to hire a financial advisor is yesterday; the second-best time is today," or so the cliché goes.

But in truth? I can't list a specific time or age where it makes perfect sense for every single person to start working with a financial professional. People simply have different timelines.

Even the average age a person starts working with a financial advisor is a moving target. According to Northwestern Mutual's 2024 Planning & Progress Study, the average age to start working with a financial advisor is 38 … but the average Millennial working with a financial advisor started at age 29.

In some cases, people start seeking out financial advice because they simply think they now have enough money to warrant it. However, many others finally make the call in response to a number of major life events—including the following milestones.

1. When You Reach Age 59 1/2

"That's a mighty specific age."

It is! And for good reason!

Age 59½ is an important age as it pertains to retirement plans. Most notably, that's the age at which you can begin making penalty-free withdrawals from your 401(k), IRA, and a host of other accounts.

But it's also the age at which many employer-sponsored retirement plans (401(k)s, 403(b)s, etc.) allow their employees to execute "in-service rollovers." We traditionally think of rollovers as only happening when you leave a job—you take your assets from your old 401(k) and transfer them to a new employer's 401(k) or into an IRA. However, once you reach age 59½, some employers will allow you to perform "in-service rollovers," in which you move your money from an employer-sponsored retirement plan into an IRA while you're still working with the company.

Like with a traditional rollover, you'd perform an "in-service rollover" to move your money from a workplace retirement plan with very limited investment options to an IRA with a wide variety of them, giving you more choice in how you manage your retirement funds.

And whether you're considering taking withdrawals or want to exercise your newfound retirement-investing freedom, a financial advisor can help you make educated decisions.

2. When You're Nearing Retirement

The median retirement age for Americans is 62, but people can retire in their 40s or in their 80s. They might retire with a fully fledged plan they've been tinkering with for decades, but sometimes people retire earlier than planned because of a sudden health issue or job loss.

Regardless of when you plan to retire, or how much time you think you have until you call it a career, if you think you see your retirement on the horizon and don't already have a financial advisor, then it's a good time to start talking to one, for any number of reasons:

-- You don't know what amount of savings you'll need to have at retirement.

-- You don't know if you've factored in all of the necessary costs into your retirement budget.

-- You're not sure how to create multiple estimates based on different inflation rates and market returns.

-- You know your savings goal but are behind and not sure of how to catch up before you retire.

-- You're not sure what your withdrawal strategy should be once you retire.

Basically, if you're anywhere near retirement and have any uncertainty about the path ahead, it's a great time to seek out guidance.

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3. When You're Getting Married

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Many people think about financial advisors as being integral in retirement planning, but they can be useful when you're going through any major life event that could have an impact on your finances … such as marriage.

You and your partner might couple some of your finances prior to marriage, but that typically goes to a new level at marriage—accounts are shared, tax statuses change, and financial goals shift from individual to shared. And managing this can be difficult when spouses have conflicting ideologies, like if one prefers to focus more on the present while the other prioritizes the future.

Also, no two marriages are identical. Some couples will have only one working partner, while others will be a dual-income household. Those who plan to have children may want to get a headstart on college funds and other monetary preparations.

Thus, personalized planning is key.

A financial advisor can help you with a host of issues, including taking out life insurance policies, setting beneficiaries, understanding any tax consequences, combining and managing retirement assets, estate planning, and more.

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4. When You're Getting Divorced

Well, they can't all be happy circumstances.

The financial complexity of a divorce varies by couple. Assets often have to be divided, which can be simple if there's no jointly owned property and few commingled accounts. But there are plenty of complicating factors, such as …

Lots of jointly owned assets
Shared interest in a business or real estate
One or both individuals receiving a large inheritance while married
Child support

And following a divorce, newly single ex-spouses need to reconfigure their financial goals and plans based on their individual income.

Divorce is an emotionally draining process, so it can be worth having a neutral party that can help with financial planning during a turbulent time.

5. When Your Spouse Passes Away

Another difficult life event that often comes with a great deal of financial upheaval is the death of one's spouse.

On behalf of your spouse, you'll need to start the probate process, contact insurance companies, inform credit reporting agencies, and prepare their final tax filings. For yourself, you'll need to reconfigure your budget, adjust your investment strategy, and update your will. You'll also need to adjust your health insurance (unless it was separate) and properly file your taxes as the surviving spouse. You might also become eligible for Social Security survivor benefits and need to contact the Social Security Administration.

There are seemingly endless ways one's finances change after a spouse passes. A financial advisor not only can provide proper guidance during this time—they can free up precious hours you need to take care of yourself and loved ones.

6. When You Receive an Inheritance

Your finances can change substantially if you receive an inheritance, especially if it's a large one.

To start, there may be heavy tax consequences for your newfound wealth. A financial advisor can determine the best ways to minimize any tax hit and optimize your taxes going forward. That very well might include assets being stored in tax-advantaged retirement accounts, which have special withdrawal rules you'll need to follow to avoid being penalized. An advisor can help a person manage and invest these inherited assets.

Too often, inheritances quickly disappear because the beneficiary doesn't have expertise in how to manage those funds. A financial advisor can bridge that knowledge gap.

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The Diminishing Returns Checklist: 9 Overpriced Expenses That Simply Aren't Worth it Anymore

Hannah Kowalczyk-Harper — Sun, 14 Jun 26 15:00:42 -0400

We all deserve a little indulgence now and then. Whether it's a decadent dessert, a thrilling concert, or a vacation to recharge, life's pleasures make it worth living.

But with rising prices and declining quality, it's getting harder to justify some of our favorite splurges. Maybe it's time to rethink what brings us joy and find new ways to treat ourselves without breaking the bank.

So, what expenses just aren't worth it? We look at a few products and services whose costs increasingly outweigh the enjoyment they provide.

9 Expenses People Have Had Enough Of

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Whether it's cutting down on the frequency of a recreational activity or switching to a more affordable product or service, consumers are starting to make some changes.

Consider whether or not the following items still deserve a spot in your own budget.

1. Concert Tickets

Live music used to be a fun, affordable activity that would give you a full night's worth of entertainment even if you only knew a few of the artist's songs. But concert ticket prices have soared to the point where, while super-fans will still pay hefty prices to see their idols, many people have given up on regularly attending concerts.

Some of the blame belongs to the promoters, artists, and venues. But the more rage-inducing issues are the flabbergasting fees from ticket companies, as well as resellers who never had any intention of attending a show.

Ticketmaster and other ticket sellers are some of the biggest offenders of drip pricing. According to the Break Up Ticketmaster Coalition, led by the American Economic Liberties Project, Consumer Federation of America, and other groups, ticket ordering fees added an average of 32% per purchase.

Resellers have arguably been even worse for concertgoers. According to the Wall Street Journal, between 2019 and 2023, the average resale price for concert tickets on SeatGeek rose from $125 to $252. Typically, reselling websites don't limit how much a seller can charge, so for big names like Taylor Swift or Beyonce, resellers can price tickets at thousands of dollars—or even break the five-digit mark.

2. Amazon Prime

When Amazon Prime first came out, it felt like a steal. You received fast, free shipping at a time when that was extremely unusual—and you got ad-free shows and movies to boot. And you received all of that for an original annual fee of $79.

But now, Amazon Prime costs much more—$139 annually—while simultaneously offering less.

Members frequently complain about increased Prime shipping times, receiving counterfeit items, and poor customer service. In the meantime, free shipping—particularly once you eclipse a set dollar amount—has become much more commonplace at other retailers than when Amazon first introduced it. In fact, you can sometimes even buy an item directly from the manufacturer without having to pay shipping. (And hey, that way, you know it's the real deal.)

The most recent knock on Amazon Prime is that its Amazon Prime Video service now includes ads. Want an ad-free experience? You'll have to pony up an extra $2.99 per month.

If you aren't ready to completely cut Amazon Prime, you can consider splitting your membership with another family member through Amazon Household. An Amazon Household can have up to two adults (ages 18 and up), up to four teens, and up to four children. Adults still use their own individual accounts, and they can't see one another's orders or content. (Note: Users in the same Household must live in the same country, but they don't need to share the same address.)

3. Fast Food

Remember when fast food "value menus" actually used to feel value-priced?

That feels like an eternity ago.

I've never been much of a McDonald's person, but agreed to stop there on a drive last month and I was shocked it cost me nearly $8 to get an egg and cheese biscuit and iced coffee.

Of course, McDonald's isn't the only fast food joint to raise prices. Many consumers aren't starting to find they just can't justify the high prices anymore. According to a 2023 survey by Drive Research, a national market research company, 84% of respondents believe fast food is more costly than it was five years ago, and 45% say it's "significantly more expensive."

When budgets are tight and prices rise, customers react accordingly. According to data from consulting firm Revenue Management Solutions, about a fourth of low-income consumers (making less than $50,000 a year) reported they were eating less fast food, Reuters reports. Around half said they now make fewer visits to fast-casual and sit-down, full-service restaurants.

4. Airbnb

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I've stayed in a lot of Airbnbs, but in the past couple of years, I've noticed that hotels increasingly look like a better deal.

Which?, a U.K.-based consumer rights and product testing not-for-profit, conducted a 2023 study comparing one-bedroom stays in hotels versus one-bedroom Airbnbs across 50 popular travel destinations, such as New York, Paris, and Hong Kong. The results showed that hotel rooms were cheaper than Airbnbs in 38 of the 50 locations. Plus, Airbnb doesn't have any loyalty programs, so you won't earn reward points like you might with your go-to hotels.

To be fair, there are some situations where Airbnbs can be cheaper. Hosts sometimes give hefty discounts for longer stays, so if you're a digital nomad looking to stay in one place for several months, you might be able to snag a great Airbnb deal. Plus, some people cut down on food costs by cooking in Airbnb kitchens, rather than dining out.

But Airbnb no longer offers the massive value proposition it once did.

Cost isn't the only reason people have soured on Airbnb. Some hosts expect guests to do a substantial amount of cleaning, hosts face few repercussions for last-minute cancellations, and if something goes wrong, there isn't always someone nearby to help. Plus, some people have moral qualms about Airbnb hosts snatching up valuable real estate in areas where housing is in high demand.

5. Having Several Streaming Services

The vast majority of Americans pay for streaming services, and almost half pay for three subscriptions at once. But rising prices are quickly making them reconsider their glut of "+" programming.

According to a Forbes Home survey, 44% of subscribers faced a cost increase from at least one of their services over the past year. And a similar percentage (45%) have canceled subscriptions because of higher costs. The decision of which streaming services to put on the chopping block varies by family, but Forbes found that, if prices increased, consumers would be most likely to ditch Disney+, Hulu, and ESPN+.

If TV is your favorite form of entertainment, and you use all those services, keeping up multiple subscriptions still might make sense. But many users don't use all those services. Forbes also found that nearly half of respondents (48%) said they maintained subscriptions they barely use. And streaming services are becoming too expensive to keep wasting money like that.

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6. Cable

As people start weighing the increased costs of so many streaming services, some Americans are considering making the jump back to cable.

But is it actually a deal?

CNET compared the monthly prices of streaming services and major cable companies in six sample U.S. cities, including the following:

-- Atlanta, Georgia (AT&T/DirecTV)

-- Grantville, Kansas (Cox)

-- Houston, Texas (Xfinity)

-- Kalamazoo, Michigan (Spectrum)

-- San Francisco, California (Xfinity)

-- Staten Island, New York (Fios)

The prices for basic TV and internet ranged from $125 to $159. The lowest cost for premium TV and internet was $192 and the highest was $270. Unfortunately, that doesn't include taxes and fees, which vary depending on the location, service type, and equipment. Taxes and fees tend to add between $30 to $50 to the monthly cost. The overall results found that even once you back out the internet component of those prices, cable TV tends to be more expensive than streaming services, even if you're subscribed to several, and even if you get live TV as part of your streaming package. That said, sports fans, who must subscribe to a number of services to replicate what they can get from cable, might save money by going back to cable.

Cord-cutting households (those that have ditched their cable TV for alternatives) rose from 30.8 million in 2020 to 47.6 million in 2023, according to Broadband Search. By 2027, the number of cord-cutting households is expected to climb to 60.3 million. That's tens of millions of Americans who are saying that, for one reason or another, cable TV's juice simply isn't worth the squeeze anymore.

7. Professional Hair Dyeing

The cost of getting your hair dyed at a salon can vary substantially by location. The cost of living in my city is about 4% higher than the national average, so I consider it a middle-of-the-road cost-of-living location. Were I to get my hair dyed at the salon where I get haircuts, all-over color would cost between $110 to $150. Full-head foil/highlighting with toner would cost $210 to $230. That's before the customary tip, which is commonly 20%. As it's generally recommended to dye your hair every one to two months … well, you can see how these expenses can add up.

Low-income earners simply can't justify those costs.

Rather than salons, some people are choosing to dye their own hair at home. Others are embracing their natural colors. A 2021 survey conducted by OnePoll, on behalf of Garnier, found that around 80% of women dyed their own hair for the first time during quarantine. Over two-thirds of women said they planned to continue to color their hair at home and about a third responded that they intended to exclusively dye their own hair. Anecdotally, I have more than one older family member who stopped dyeing their hair during the pandemic and never started again.

Indeed, social media has even spawned a term around this phenomenon: "recession brunette." It refers to how more people are going back to their natural brunette hair color because the cost of maintaining dyed blonde hair has become too expensive.

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8. Movie Theaters

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With the exception of box-office smashes like Barbie and Oppenheimer, it feels like fewer and fewer movies merit the rising costs of going to the theater.

The national average price of a ticket is up 17% since the start of the pandemic, to nearly $11 nationwide. Add in a couple of medium buckets of popcorn, a couple of small soft drinks, and a box of candy, and you're looking at close to $80 for a family of four before taxes. And those numbers are much worse in places like New York and California, where average ticket costs are 40% to 50% higher than the national mean.

People are returning to movie theaters—the U.S. box office gross has improved in each of the past three years since bottoming during COVID. But 2023's $8.9 billion take was still 22% lower than 2019's $11.4 billion—and remember, that's with much higher ticket prices, which means the actual number of tickets sold has rebounded by even less.

Some of those people might never come back. According to a 2022 Morning Consult poll, about half of respondents believe it's too expensive to watch movies in theaters, and more than half (55%) prefer watching movies at home. And why not? In addition to saving money, you likely have more comfortable seating, whatever food and drink you want, and you don't have to worry about missing anything if you need to take a bathroom break.

9. Skin Care and Makeup

In a recent ConsumerWise survey conducted by McKinsey & Company, a consultancy, consumers declared a decreased interest in skin care and makeup purchases during the 2024 holiday season as compared to the third quarter of 2024.

Though, to be clear, skin care and makeup sales aren't dropping, but consumers are declaring down-switches to lower cost products for their needs. The net effect? More skin care and makeup sales but at lower price points. Consumers are able to meet their needs with more volume but for less hurt on their pocketbooks.

In fact, annual sales data from Statista forecasts continued sales growth in these industries, increasing from $181 billion in 2023 to a little over $210 billion by 2028. But, when taken from that view, the compound annual growth rate of 3% is little more than the current rate of inflation. That means prices might turn downward for the higher expected volume of products to arrive at those projected revenue figures.

Related: 15 Best Long-Term Stocks to Buy and Hold Forever

So if you're looking for a starting point for your own portfolio, look no further. Check out our list of the best long-term stocks for buy-and-hold investors.

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The Mint-Condition Mirage: 10 Times 'Used' Means Getting the Exact Same Value for Less Money

Hannah Kowalczyk-Harper — Sun, 14 Jun 26 14:30:57 -0400

While most everyone appreciates the experience of buying shiny, brand-new objects, in the case of certain items, it pays to buy used.

Did you just wince a little? Do you hate the words "pre-owned" and "secondhand," too? I get it. Buying items that already have one owner has a stigma for a reason. You don't always know what you're getting, but you do know that at least a little of that item's usable life has been ... well, used.

Still, there are several advantages to buying secondhand. To start, you can save a substantial amount of money. It's also better for the environment and you can sometimes find high-quality, vintage items that are hard to come by in stores these days.

I'm not suggesting you buy everything used. Some things should be bought new. But if you're looking to save money (and the environment!), there are certain types of objects you should purchase secondhand every time. Today, I'm going to go over some top items you should always buy used.

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Don't Buy These Items New

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There are times to be frugal, but there are also times where spending up pays off. This list very much focuses on the former.

When you're shopping for the items on this list, always be thrifty. Buying new almost guarantees you'll be wasting additional money that could be put to better use.

1. Textbooks

If you think regular books are costly, go check out the price tag on a college textbook or two. Hard-copy textbooks sport an average price between $100 to $150 each. Multiply that by the number of classes you'll take throughout a college career, and the result is no small sum.

No wonder, then, that 90% of professors agree that textbooks and course materials cost too much money for students, according to data published by the Education Data Initiative.

In some cases, digital course materials might be available. But that's not always an option, and even when it is, it's sometimes every bit as expensive. Plus, some students learn better by highlighting and underlining key points in a physical book.

No, the way for college students to go thrifty, if the option exists, is to buy secondhand. While you can occasionally buy used college textbooks directly from other students, you're more likely to find what you need at a university bookstore. Better still, those same bookstores will often buy your old textbooks back when you're done, allowing you to recoup a bit more money.

"But don't I need the newest version?" Usually, the answer is no. While publishers commonly release new textbook editions every year, most of them have minimal changes or additions. However, when in doubt, ask your professor which version you must have.

2. Baby Clothes + Shoes

Those onesies calling your baby's name at the store might look adorable, but there is a high chance they'll get little to no use.

Some babies never fit into infant sizes and grow straight into larger sizes. No matter what size they come out, babies grow as fast as weeds. While there is a lot of variation, babies often go up a clothing size roughly every 10 weeks.

Also, they don't walk right away, so babies don't need shoes … but they can be gosh darn cute. If you want your baby to wear them, keep in mind that in the first year alone, their feet grow an average of five sizes.

It's not worth buying new items that will be used so briefly, so you can do well to buy baby clothes and shoes pre-owned. And remember: Children are messy, too. Your baby might be one blowout diaper or throw-up session away from destroying their outfit. But the financial impact won't be so bad if that outfit is secondhand.

3. Wedding Accessories

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Want to see a magic trick? Take an object, add the word "wedding" to it, and watch how it magically doubles or triples in price.

A wedding is (usually) a once-in-a-lifetime event. As such, people are often willing to splurge on weddings more than any other event. Retailers take advantage of this, frequently charging more for an item designed for wedding usage than it could otherwise fetch.

For this reason, you should try to buy some or all of your wedding accessories, such as jewelry, hair pieces, and fake flowers, used.

Chances are those items were only used one time and could still be in excellent condition. Yet often, you can get these items for a fraction of the original cost.

According to The Knot's 2023 Real Weddings study, the average combined wedding ceremony and reception cost in 2023 was $35,000. Engaged couples can help bring that number down a bit by purchasing secondhand.

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4. Holiday Decor

Do you love decorating your home for every season and holiday? You're probably not alone.

A Rocket Homes survey found that the average American spends about $269 on holiday decorations every year, while those who are married with children spend an average of $390.

If your number frequently comes in much higher, you don't necessarily need to cut down on how much you buy. Instead, consider purchasing some of your holiday decor used.

You can get your decor far cheaper by purchasing secondhand at thrift stores, garage sales, and online marketplaces. Plus, buying pre-owned decorations is more sustainable. Many decorations are made mainly of plastic or metal and hold up well over time.

Better still: You can take your savings and spend the excess on special presents or holiday activities with your family.

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5. Workout Equipment

People often set overly ambitious fitness goals, and many of those goals are laid out around New Year's Eve. Indeed, a 2023 Forbes Health/One Poll survey found that the most popular New Year's resolution for 2024 was fitness.

Fitness goals are good. Unfortunately, when people set the bar too high, they quickly lose motivation. That's unfortunate no matter the situation, but it's financially painful if they quit after buying a bunch of expensive workout equipment and/or exercise accessories.

But their pain can be your gain. People who no longer need that workout equipment are often willing to sell it—sometimes at very reasonable prices.

Dumbbells and other weights don't have expiration dates, and they're pretty darn hard to break, so you may as well get them secondhand. And while you should be more cautious with any powered equipment, gear like treadmills and stair climbers are typically built to last.

Just make sure that, no matter what you buy, you test it out before going through the trouble of taking it home.

6. Adult Clothing

While you might not be able to build a complete wardrobe from used clothing, there are a lot of benefits to buying at least some of your adult clothing secondhand.

The most popular reason people buy pre-owned clothing is to save money. Thrift stores offer pretty great deals, but garage sales and online marketplaces can save you even more.

But that isn't the only benefit of secondhand clothing.

Some people like the challenge of finding interesting vintage pieces. People who care about animals' rights will sometimes only buy leather or fur items secondhand so they don't increase demand for these types of items. Plus, it's more sustainable than fast fashion.

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7. Furniture

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While "fast furniture" (cheaply made items that usually last one to five years) is common in one's 20s, there's a stigma against it once you get older. A 2022 survey by Avocado Green Mattress, conducted by OnePoll, found that more than half of respondents believe it's only acceptable to own fast furniture in your 20s. And a little under half admit to having judged adults with low-quality furniture.

The problem? Quality furniture is expensive. So if you want sturdy pieces, but you don't have enough money to pay for them, you have two choices:

1. Stick with fast furniture

2. Buy high-quality secondhand furniture

People don't just sell furniture when they think it's on its last legs. People also sell well-kept used furniture because they are moving somewhere smaller or their sense of style has changed. Those without a truck are sometimes willing to give excellent deals to people who will remove these large items from their homes. Just avoid used mattresses unless you know the previous owner, as you don't want to risk getting bed bugs.

Interestingly, secondhand furniture purchases aren't just for those short on cash. A YouGov poll found that a higher percentage of high-income earners (40%) are more likely to consider purchasing secondhand furniture than middle-income earners (38%) or low-income earners (35%).

8. Pet Items

People love to spoil their pets. According to data from the U.S. Bureau of Labor Statistics Consumer Expenditure Surveys, consumers spent more than $100 billion on pet-related costs in 2021. That's more than they spent on alcoholic beverages ($73.8 billion) and women's clothing ($87.9 billion).

I'm absolutely in favor of treating pets well and buying them plenty of toys. I'm just saying, where it makes sense, buy secondhand toys. (Just think about how excited dogs get about free sticks. They don't care about how much their toys cost.)

When a pet passes away, the owner is left with a lot of items they don't need. While some owners throw these items away, others sell them at a low cost or even give them away for free. And sometimes, owners will sell treats or toys their current, very alive pets are simply uninterested in. Either way, those are sound opportunities for thrifty pet owners.

So, get your pet some pre-owned items, and spend the savings on a dog park membership or cat spa day.

9. Designer Items

Have you dreamed of owning a Coach purse or Louboutin heels but can't justify the cost? Treat yourself to a gently used designer item for a fraction of the cost.

Future Market Insights predicts, for instance, that the secondhand bag market will grow from $6.3 billion to $11.5 billion between 2023 and 2033. And Business Research Insights states that the global secondhand luxury goods market will jump from $26.2 billion in 2021 to $78.3 billion by 2031.

If a Rolex watch is still ticking or a Prada bag is still fit to hold items, you can save an insane amount of money buying these items used. Even if they are a bit worn out, people won't know it was because someone else used those items.

And if you feel any shame, remember: Even celebrities often don't buy designer items at full price. Red carpet clothes, jewelry, and shoes are typically borrowed.

So rather than spend as much money as you do for three months of rent on a handbag, go ahead and get a pre-owned one.

10. New Hobby Accessories

Hobbies are an important part of life. Spending time on a hobby can reduce stress, lower your blood pressure, and improve relationships.

However, it can be challenging to know which activities you'll actually enjoy until you've tried them out for a while. Thus, it's common to start a new hobby, only to realize within weeks or a couple months that it's not a good fit.

If you stop a hobby that is free or affordable, great! But the problem arises when you realize you hate a hobby only after you've purchased expensive hobby accessories.

LendingTree data shows that around 60% of people in the United States started a new hobby during the pandemic. Unfortunately, it caused over half of those people to take on credit card debt. Now imagine how many of those people felt once they realized those hobbies just weren't up their alley.

If you're trying out a new hobby that requires accessories—especially those that require expensive gear—buy used items. Why spend thousands of dollars on a new set of golf clubs only to realize a week later that you can't stand playing?

And once you determine a hobby has stuck, you can always upgrade your accessories.

When you're trying out a new hobby, especially an expensive one, buy used items. You don't want to spend thousands of dollars on a brand-new golf club set just to realize a week later that you hate golfing. Once you know a hobby has stuck, you can always upgrade your accessories.

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Dollar Store Duds: 10 Products Not Even Worth the Low Price Tags

Hannah Kowalczyk-Harper — Sun, 14 Jun 26 13:30:32 -0400

Between inflation and shrinkflation, shopping can feel a lot more stressful than it used to. Items you used to toss into your cart without a second thought are now a cause for pause, forcing you to pull out your phone calculator and scoff at how high prices have risen.

Walking into a dollar store, then, can be a cool smack of fresh air. The prices are so low! And for some items, a dollar store really might be a great alternative to your normal shopping stops.

But for some items, dollar stores' meager prices may be ripoffs in disguise.

Today, I want to discuss some of the items you should always skip buying at dollar stores. As we remove your rose-colored dollar-store glasses, you should have a better idea of when you're actually getting a deal, and when a dollar store is actually taking you to the cleaners.

Your Dollar Store "Don't Buy" List

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Some of the items on this list are dogged by low ratings and negative reviews complaining of poor quality. As you're likely aware, the cheapest products are often (though admittedly not always) inferior to their slightly pricier counterparts.

Perhaps more surprisingly, other products made this list because their prices aren't as competitive as one might assume—you can find better deals elsewhere.

Whatever the reason, don't let yourself be tempted to buy the following items at the dollar store.

1. Charging Cables

Dollar stores generally aren't your best option for technology, and charging cables are a prime example.

Dollar Tree's website shows two charging cable options. One option is the E-Circuit Rainbow Fabric USB-C Charging Cables, which currently garner just a little more than two out of five stars. The sample isn't large, but of six reviews, half give the cables a one-star rating. One reviewer describes it as the "worst charger ever."

The other option is the Novelty Type C Charging Cables. Again, a small sample set of just four reviews, but two of those reviews give the cables a one-star rating. One reviewer said the cords were of poor quality and wouldn't charge their Samsung phone. The other review said "within a week this charger melted in my iPhone 16."

Don't risk ruining expensive phones by buying cheap charging cables from a dollar store.

2. Earbuds

Another type of tech you may want to skip at the dollar store is earbuds. Dollar General has many earbud options, but the vast majority have poor ratings and reviews.

For example, the Billboard Titanium Earbud with Mic has a meager 2.2-star average among nine ratings. Several reviewers complained that only one side of the buds delivered audio. "I will never buy this garbage again," one reviewer claims. "Everything sucks about it."

Another option is the True Wireless Earbuds with Charging Case. While it only has four ratings, they unanimously gave these earbuds a single, lonely star. One review states that the earbuds died after one song and didn't charge past 60%. Another said the left side didn't charge and the other side died in about an hour. And yet another consumer claimed they didn't even get to use them because one of the buds broke when taking them out of the charging case.

It bears repeating: If at all possible, don't buy your technology from dollar stores.

3. Carbon Zinc Batteries

Batteries at dollar stores may seem like a steal, but there might be a catch.

For example, at a Dollar General near me, there are currently six-packs of Generate AAA Heavy Duty batteries for only $1.50! But there is a reason the six-pack of Duracell AAA batteries at the same store is triple the price: Duracell's batteries are alkaline, while the Generate Heavy Duty batteries are likely carbon-zinc batteries, which have less stored energy and are more likely to leak.

The product details hint at this, saying the batteries are "ideal for use in low-drain devices."

While the lower price tag might be tempting, you're likely better off with higher-quality batteries that will last longer and have lower leak risk.

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4. Windshield Washer Fluid

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On the Dollar Tree website, the only windshield wiper fluid shown is Driver's Choice Summer Blend Windshield Washer Fluid.

Why do they strategically put "Summer Blend" in the title? According to the product details, "These 1-gal jugs of blue fluid are ideal for warmer weather, as they are designed for temperatures over 32 degrees Fahrenheit."

If you live in a climate that never dips into freezing temperatures, this might work fine for you. But if you live somewhere that gets below freezing in winter, like me, you'll want to steer clear of this wiper fluid. When it gets cold, the fluid may freeze. Then, it wouldn't be able to clear the glass properly, making it unsafe to drive. You're better off buying a slightly more expensive windshield wiper fluid that is winter-grade and not going to freeze.

This doesn't mean every windshield washer fluid sold in a dollar store will be a clunker, but it is a warning to read the labels and know what you're buying.

5. Toilet Paper

Dollar stores sometimes sell both generic and name-brand toilet paper at their stores. Unfortunately, in many situations, neither is a great deal.

For example, the Dollar General closest to me has True Living toilet paper. It's priced competitively, but it's only single-ply bath tissue—so while you're paying less, you're likely going to end up using more during each trip to the bathroom.

"This is the worst toilet paper ever - 1 ply," one reviewer writes. "Come on guys this is a ripoff and an insult! This stuff is too thin and falls apart the second a drop of dampness hits it. I'll find something else!!! I give it a zero!"

Of course, the same Dollar General also offers Charmin Ultra Soft toilet paper, which is much better-reviewed. But once you crunch the numbers, it's actually slightly more expensive than Walmart's prices. Dollar General offers a 12-count pack of "Mega" rolls, which have 224 sheets each, for $15.50. Thus, you're getting 2,688 sheets (12 x 224 = 2,688) for $15.50, or 0.58¢ (58/100ths of a penny) per sheet. Meanwhile, Walmart currently offers 12 "Mega XXL" rolls, which have 440 sheets per roll, for $26.48. That comes out to 0.50¢ per sheet, which is less.

And if you can afford it (and have the space to store it), Walmart also has a 24-pack of "Mega XL" rolls, which have 336 sheets per roll, for $39.72. This comes out to an even cheaper (albeit slightly) 0.49¢ per sheet.

All of the above might seem like minuscule differences, but people go through a lot of sheets, so the price differences can add up over time.

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6. Soda

Quality issues aren't so much an issue with soda at dollar stores. After all, they typically sell the exact same popular brands as other retail chains.

Instead, you need to be wary about price.

Larger chains usually secure better prices from brands by purchasing their products in bulk. Dollar stores often don't sell as much soda. As a result, they must buy at a higher price … and charge customers a higher price in return.

Let's look at Coca-Cola prices at Dollar General and Walmart. Currently, Dollar General sells a 2-liter bottle of Coca-Cola Classic for $3.25. The same bottle at Walmart? $2.74. DG sells a six-pack of 16.9-ounce bottles of Coke for $6. Walmart sells it for $5.28.

Buying yourself a bottle of soda from the dollar store on a hot day likely won't make or break your finances, but if you're a regular soda drinker, you're best off stocking up somewhere else.

7. Allergy Medicine

Dollar stores frequently sell allergy medicines, but they do so in smaller quantities that result in a higher price per pill.

For example: The biggest bottle of Zyrtec that Dollar General sells contains just 40 tablets. At $21 currently, you pay about 53¢ per tablet. Compare that with Costco, which sells two bottles together (a 70-count and a 50-count, for a total of 120 tablets) for $40.99—or 34¢ per tablet.

Going generic with your allergy medicines can deliver virtually identical results at even better cost savings. Costco wins out there, too. Dollar General, under its house brand DG Health, sells a 90-tablet bottle for $17, or 19¢ per tablet. Meanwhile, Costco's Kirkland Signature-branded Aller-Tec comes in a 365-bottle (to last you the entire year!) for only $14.49. That's a wildly cheap 4¢ per tablet.

Do your wallet a favor and don't buy your allergy tablets at a dollar store. (Also, do your nose a favor and also check out Aller-Flo Allergy Spray, which is among the highest-rated Kirkland Signature products.)

8. Gift Cards

When you buy a gift card from a store, you typically pay the same price as the value of the card. So, let's say you go to Dollar General to buy a $20 Domino's Pizza gift card. You'll probably pay $20. Makes sense. And it's standard at most stores—not just dollar stores.

But a handful of places sell gift cards for less than their face value.

Costco currently offers four $25 Domino's E-gift cards ($100 value) for just $74.99. And that's not its only gift card deal. This is just a small sampling of some of Costco's current gift card promotions:

--Two $50 Dave & Buster's eGift Cards ($100 value) for $79.99

--Four $25 Nintendo eShop eGift Cards ($100 value) for $89.99

--Two $50 Spafinder eGift Cards ($100 value) for $79.99

--One $50 Cinemark Theatres eGift Card ($50 value) for $39.99

--One $50 Regal Cinemas eGift Card ($50 value) for $39.99

Yes, it requires a Costco membership, and Costco might not always be selling the gift cards you want. But if you're a member, it's always worth checking before grabbing one at a dollar store.

9. School Supplies

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If your child waits to tell you about a school project until the night before it's due, dashing to the nearest dollar store might be your only option. But before every new school year, when you make a dedicated shopping trip to stock up on school supplies, consider looking elsewhere.

Let's start by comparing prices for colored pencils. Right now, a 24-count box of Crayola colored pencils is $4 at Dollar General. The same box is only $3.27 at Walmart.

Plus, if you're being honest, that 24-pack may not be enough. Some will snap. Others will get lost in the couch cushions. Favorite shades will quickly dwindle down to a tiny nub. But you can't get a bigger size at Dollar General; Walmart, on the other hand, sells larger boxes with 50, 64, even 150 colored pencils per box.

How about construction paper? Now, let's take a look at construction paper. Currently, Dollar General sells a Crayola Construction Paper Pad, with 96 sheets of 9-inch-by-12-inch paper, for $3.50. You can get the same size and amount at Walmart for $2.86.

Again, you might want larger quantities. And again, Dollar General doesn't have that option. But Walmart sells packs with 120 sheets or 240 sheets—and if you really want to stock up, 12-packs of 96 sheets each.

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10. Canned Beans

In the fall and winter, I love making chili with three types of beans. But I don't buy my canned beans from Dollar General, which charges more than other popular chains.

Example: Dollar General sells 16-ounce cans of Bush's Pinto Beans for $1.50; it charges the same price for a 15-ounce can. But those same cans cost just $1.39 at Target, and $1.28 at Walmart.

Like several of the items on this list, a difference of a few cents might not seem like a big deal—but if you regularly include beans in your meals, it can add up.

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Skipping the Lecture Hall: 11 High-Yield Professions That Value Sweat Over Syllabi

Hannah Kowalczyk-Harper — Sun, 14 Jun 26 12:15:26 -0400

Most people are broadly aware of the concept of a "blue-collar job," but it's far from perfectly understood.

Blue-collar jobs are usually characterized as lines of employment that primarily involve manual labor. The term itself gets its name from the "blue collar" of denim shirts—a common uniform for industrial and other manual jobs.

What people tend to misunderstand, however, is just how skilled many of these professions are. Yes, some blue-collar jobs don't demand much education or specialized abilities, but many others require highly skilled and experienced workers.

Similarly, blue-collar jobs are frequently stereotyped as offering much lower pay than their white-collar counterparts. While true at times, blue-collar jobs can, in fact, pay quite well.

Today, I'm going to discuss some of today's highest-paying blue-collar jobs. I'll cover how much they pay, where the work is popular, and what requirements you might need to break into each profession.

Blue-Collar Jobs That Pay Well

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The wages for these jobs all come from the U.S. Bureau of Labor Statistics' May 2023 National Occupational Employment and Wage Estimates—the most recent information available.

The numbers shown here are the mean (aka average) wage for each occupation. Every blue-collar job listed in this article has an annual mean wage that's above the annual mean wage for all occupations—$65,470 as of the BLS's May 2023 data.

I've also included the BLS's estimates for the number of people employed within each occupation.

11. Structural Iron and Steel Workers

-- 2023 mean annual wage: $68,220

-- 2023 employment: 63,780

Not a job for the slight of buff, structural iron and steel workers have to lift, place, and unite steel beams, columns, and other structural members. Some workers also erect metal storage tanks or assemble metal buildings. (Note: This category of employment is separate from reinforcing iron and rebar workers.)

While it can be a dangerous job, these workers still tend to report only average stress levels. And in exchange for this work, the mean annual wage is $68,220, per BLS data—a few thousand dollars per year more than the mean salary for all occupations. The states with the highest concentration of these jobs are South Dakota, Nebraska, Arizona, Louisiana, and Indiana.

You don't need a college degree to enter this field; jobs here typically require just a high school diploma. But you'll typically need some previous work-related experience or skills. An apprenticeship (of between three to four years) tends to be the best way to get started. Keep in mind that you might need to join a union to qualify for an apprenticeship.

10. Makeup Artists, Theatrical and Performance

-- 2023 mean annual wage: $68,590

-- 2023 employment: 4,130

Makeup artists might not sound like blue-collar work to some, especially when compared to backbreaking jobs like iron and steel workers. But it's very much manual labor—a true behind-the-scenes occupation that helps make viewing entertainment so … well, entertaining.

The makeup artists in this category aren't prepping blushing brides or doing other salon work, however. These are specifically theatrical and performance makeup artists, which apply makeup to performers, such as those in television and motion pictures. This involves a wide variety of work, from making the local news anchor a little more attractive to turning actors into zombies, aliens, and other sci-fi creatures.

Unsurprisingly, these workers are paid well; according to BLS data, the mean annual wage for these professionals is $68,590. However, an interesting note about that data—the year prior, the average wage was nearly $94,000! Why the difference? The 2023 Hollywood strikes resulted in massive temporary shifts in that year's data; the year before, California not only employed the biggest number of makeup artists, but it also had one of the highest mean wages for the profession.

The strikes affected other data points too. For instance, by concentration, Texas, New York, Florida, Utah, and Illinois are the top states by concentration of makeup artists as of 2023, but under normal circumstances, California would rank pretty high on (or at the top of) that list.

Typically, this type of work requires no associate's degree, vocational school training, or related on-the-job experience. However, you are expected to already have some of the necessary skills and receive additional on-the-job training.

9. Lighting Technicians

-- 2023 mean annual wage: $73,250

-- 2023 employment: 9,520

Looking for a high-paying job typically categorized as blue collar? This may be a, ahem, lightbulb moment for you.

As you might guess, lighting technicians set up, dismantle, and maintain light fixtures and lighting control devices. Perhaps less obvious, they also deal with the associated lighting electrical and rigging equipment used for creative endeavors, such as photo shoots, television, film, video, and live performances. Some workers focus on operating light fixtures or attaching lighting accessories.

The annual mean wage for this profession, based on BLS data, is $73,250.

It's far easier to find lighting technician roles in some parts of the country than others. The states with the highest employment levels for this job are California, Nevada, New Jersey, Tennessee, and Kansas.

There are a few ways to break into this industry. Workers have a leg up on the competition if they hold a bachelor's degree in theatrical production arts or a degree in electrical engineering. However, a college degree isn't necessary (there are no formal educational requirements), and people can get entry-level roles that offer on-the-job training.

8. Commercial Divers

-- 2023 mean annual wage: $75,570

-- 2023 employment: 2,790

If you're envisioning the Olympics, this isn't that.

Commercial divers go underwater and use air or scuba equipment to install, inspect, fix, or take out equipment and structures. To do these tasks, they sometimes need to use a wide range of equipment, such as torches or welding equipment.

Some workers conduct experiments, others take underwater photographs, and some rig explosives. Not included within this employment category are fishing and hunting workers, police and sheriff's patrol officers, or athletes and sports competitors (trust me, Michael Phelps' wages are much higher).

Data published by the BLS shows the mean annual wage for this job to be $75,570. You're most likely to find work as a commercial diver in Louisiana, Alaska, Hawaii, and Washington (few surprises there), but also Kentucky—a little more surprising given that it doesn't border an ocean, gulf, or Great Lake.

Usually, this job requires training in a vocational school, relevant experience, or an associate's degree. Prior skills, experience, or knowledge is required. And once you enter this occupation, you can expect a year or two of on-the-job training.

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7. Water Transportation Workers

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-- 2023 mean annual wage: $79,030

-- 2023 employment: 76,040

Water transportation workers maintain and operate water vessels that transport people and cargo, and they must ensure the safety of both. Captains, mates, pilots, sailors, ship engineers, marine oilers, and motorboat operators all fall under this category of employment.

If you love being out on the water, this job could be a great fit for you. But be warned—these workers typically work for long periods … and the chances of seeing a mermaid are very low.

The annual mean wage for water transportation workers was $79,030 in 2023, per BLS data. The bureau did not list state-level data for this occupation in May 2023.

Entry-level sailors and marine oilers typically don't have to meet educational requirements. However, some other types of workers usually must do U.S. Coast Guard-approved training programs.

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6. Signal and Track Switch Repairers

-- 2023 mean annual wage: $81,810

-- 2023 employment: 9,200

Specifically, signal and track switch repairers install, inspect, test, maintain, or make any necessary repairs to electric gate crossings, track switches, signals, signal equipment, section lines, or intercommunications systems.

It's not a huge field, but it's an important one. While the U.S. doesn't use passenger trains as much as several other first-world countries, freight trains are popular. Per the Association of American Railroads, America's freight rail network operates more than 140,000 miles of privately owned track and handles a third of all U.S. exports.

According to BLS data, the mean annual wage for this type of work is $81,810. New York is an overwhelming source of these jobs, at more than a third of the total number employed as of 2023, and it also has the highest concentration of this occupation. Other high concentrations can be found in Kansas, Illinois, Indiana, and Wisconsin.

Most of these jobs necessitate training in vocational schools, on-the-job experience, or an associate's degree. A recognized apprenticeship program can be useful, too.

5. Electrical Power-Line Installers and Repairers

-- 2023 mean annual wage: $85,900

-- 2023 employment: 120,170

As could be surmised from the title, electrical power-line installers and repairers install or fix cables or wires that electrical power or distribution systems use. Other duties can include erecting poles or transmission towers. After these lines are installed, it's the job of birds to hang out on those powerlines. (Note: This employment category doesn't include electrical and electronics repairers, powerhouse, substation, and relay.)

It's one of the highest-paying blue-collar jobs you can find; based on BLS data, the mean annual wage for this profession is $85,900. While the greatest number of jobs can be found in Texas (13,710), the highest concentrations of these jobs will be found in South Dakota, Mississippi, Wyoming, Alabama, and Kentucky.

The typical entry-level education requirement for these roles is a high school diploma or equivalent. While there is usually no prior related work experience necessary, workers can expect long-term on-the-job training.

4. Petroleum Pump System Operators, Refinery Operations, and Gaugers

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-- 2023 mean annual wage: $88,120

-- 2023 employment: 33,360

Petroleum pump system operators, refinery operators, and gaugers control petroleum refining or processing units. Some workers have specialties, such as controlling manifold and pumping systems. A manifold is a system of headers and branched pipes used to distribute or gather fluids. Others specialize in gauging or testing oil or regulating oil flow into pipelines.

Per BLS data, the mean annual wage for this type of employment is $88,120. People interested in this type of employment should look for jobs in Wyoming, Louisiana, Oklahoma, Alaska, and Texas, which have the highest concentration of people employed in this field.

Typically, these jobs require a high school diploma as well as some previous work-related knowledge, skills, or experience. Workers can expect job training to last anywhere from a few months to a year.

Unfortunately, while this job does provide an excellent salary compared to many other blue-collar workers, it's also one of several lucrative jobs that are going away.

3. Farmers, Ranchers, and Other Agricultural Managers

-- 2023 mean annual wage: $90,160

-- 2023 employment: 6,150

There is no lack of tasks that need to be done on a farm or ranch. Farmers, ranchers, and other agricultural managers may work at farms, ranches, greenhouses, nurseries (the plant kind—not the child kind!), aquaculture operations, timber tracts, or other agricultural places. Some of these workers hire and supervise farm workers, while others contract out the work. These workers are categorized separately from first-line supervisors of farming, fishing, and forestry.

This fluctuates between blue- and white-collar work depending on the exact role. For instance, a worker might either engage in or supervise planting, cultivating, or harvesting plants, though some might focus on marketing and financial activity instead.

This field pays a well-above-average mean annual wage of $90,160, according to BLS data. The states with the highest concentrations of farmers, ranchers, and other agricultural managers include Idaho, Nebraska, Iowa, Hawaii, and California.

Entry-level education requirements are typically limited to a high school degree or equivalent. However, many employers expect at least five years of work experience in a related occupation. Many people gain experience from growing up on a family farm.

2. Electrical and Electronics Repairers, Powerhouse, Substation, and Relay

-- 2023 mean annual wage: $92,840

-- 2023 employment: 24,790

As the title suggests, electrical and electronics repairers, powerhouse, substation, relay workers largely handle electrical equipment in generating stations, substations, and in-service relays. This is a common example people use when they encourage others to go into well-paying trades.

The mean annual wage for this category of employment, based on BLS data, is $92,840—second highest on this list, and one of the few blue-collar jobs that earns more than $90,000 annually on average. The biggest concentrations of this job are found all across the country, from New York and Alaska to West Virginia and Michigan.

The minimum educational requirement for this work is usually a high school diploma; however, specialized training is needed for some roles. Employers are more likely to choose candidates who have some formal education in electronics from a community college or technical school. Workers typically get training on specific types of equipment and work with professionals before doing independent work.

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1. Elevator and Escalator Installers and Repairers

-- 2023 mean annual wage: $100,060

-- 2023 employment: 23,990

You've probably ridden an elevator at some point—and it's possible that once or twice, you've tried to call an elevator only to find it's out of order and that you must take the stairs.

That's when elevator and escalator installers and repairers come to the rescue. These workers set up and maintain not just passenger elevators and escalators, but also hydraulic freight elevators or dumbwaiters.

This profession has the highest mean annual wage on our list, cracking six digits at $100,060, per BLS data. Where there are a lot of elevators, you need a lot of workers to install and repair them, so it should be of no surprise that New York is home to both the largest number of jobs in this field (4,530) and the highest concentration. Maryland, Hawaii, Washington, and Florida also have high concentrations of this work.

The minimum educational level is usually a high school diploma or equivalent. The vast majority of these workers learn the necessary skills through an apprenticeship of about four years, though those who can prove relevant experience may be able to get a shorter apprenticeship. You need to be licensed in most states.

Related: Federal Tax Brackets and Rates

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Hacking the Golden Years: 12 High-Satisfaction Activities That Don't Touch Your Nest Egg

Hannah Kowalczyk-Harper — Sun, 14 Jun 26 09:45:42 -0400

"What are you going to do with all that free time?" Actual and soon-to-be retirees know the question well. When you're ready to call it a career, it's one of the things people love to ask you most.

But it makes sense! Most people sink 40 or more hours per week into their jobs—a massive dance card that suddenly opens up in retirement. And while some of that time might be spent sitting around, much of it probably won't.

Seniors do have to operate on a fixed income, however. Sure, there will be the occasional travel and events with friends, but they won't exactly be touring the Riviera every month, either. Thus, most seniors would benefit from an activity or two that doesn't tug on their wallets.

Whether you're on a fixed income or just naturally frugal, free hobbies are preferable to expensive ones. So with that in mind, I've come up with a list of free things for seniors to do.

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Free Activities for Seniors

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Some of the activities in this list are free specifically for older adults, while some of them are free for all people—seniors included. I've also explored in-person and online options so there's something for everyone, regardless of social outgoingness and mobility. The same considerations go for the type of activity; some are physical, others will work out your mind, and a few provide benefits for both.

Just one note: Many hobbies and activities, while free to participate in, might require some amount of gear at the onset. I've intentionally excluded many of those activities, and instead am focusing on things to do that require little to no gear—maybe a pair of shoes or a cheap set of binoculars, but nothing more.

Now, let's discover your next favorite free hobby!

1. Hiking + Walking

Hiking provides ample benefits—it's great exercise, you can see parts of the country you never could before, and being out and about in nature can be calming.

Some of the best sights you can see can be found in America's national parks. And better yet? You can visit national parks for free during certain days of the year. In 2024, these days include:

-- Martin Luther King Jr. Day (Jan. 15)

-- The First Day of National Park Week (April 20)

-- Juneteenth National Independence Day (June 19)

-- Anniversary of the Great American Outdoors Act (Aug. 4)

-- National Public Lands Day (Sept. 28)

-- Veterans Day (Nov. 11)

Some national parks are free every day! And for those that aren't, you can also benefit from a great senior discount on the America the Beautiful Pass.

If you don't live near a national park and aren't sure where to hike local trails, the AllTrails app holds a database of map trails and has crowdsourced reviews, many of which include images.

As someone from the Midwest, I understand that outdoor hiking might not be an option for you every season. That's OK—indoor walking can be great too! Malls are a popular location for indoor walks because they are public places, there are long stretches to walk, and they often have plenty of benches for when you need a rest.

2. Continuing Education

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You might have stopped working, but that doesn't mean you have to stop learning.

In 2023, associate professors Rachel Wu and Jessica A. Church wrote in Scientific American to describe their study of adults between ages 58 and 86. The adults took three weekly classes, each lasting two hours, to learn new skills. Their finding?

"Over the course of the intervention, people significantly improved their cognitive scores for memory and attention. In a follow-up study, we discovered that the participants had not only maintained their gains but had improved further: their cognitive abilities after one year were similar to those of adults 50 years younger. In other words, giving these seniors a supportive and structured three-course routine—much like an undergraduate student's schedule—seemed to eventually improve their memory and attention to levels similar to that of a college student."

Most states have at least one tuition-free state university program for seniors. (The exceptions—Arizona, Idaho, Indiana, and South Dakota—still have deeply discounted tuition programs for senior citizens.)

Depending on the state, the minimum age for free tuition ranges from 55 to 65.

3. Auditing Classes

Alternatively, you could learn without doing homework and taking tests.

If you'd just prefer to listen to captivating lectures and learn at your own pace, you don't need to work toward a degree—you can audit college classes. When you audit a class, you can attend lectures and even participate in discussions. But you don't need to complete coursework or take exams. You're not receiving official credit, but you're not being graded, either.

Many states have universities that allow seniors to audit college classes for free. For instance, a Wisconsin state legislature mandate allows Wisconsin residents who are at least 60 years old to attend lectures for free within University of Wisconsin System schools.

This is a great option if you want to obtain more knowledge and expand your horizons without added pressure. (And hey! Younger college students might benefit from occasionally hearing from different generations about world events prior to when they were born.)

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4. Podcasts

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Podcasts are somewhat reminiscent of how radio stations used to be—but instead of having to tune into a specific station at a specific time, you just download what you want to hear when you want to listen to it.

These audio-only productions might be monologues, involve interviews, or just feel like you're overhearing friends talking. They can be fiction or nonfiction. Some are run by celebrities or a full production team, but it's also possible your next-door neighbor has one.

There's a podcast on just about any topic that might interest you. Marketing, animals, politics, television, beauty—you name it. Too broad for you? Podcasts can get very niche. There is an eight-part series called Containers that just talks about shipping containers. Crime Pays But Botany Doesn't is about "plants as viewed through the lens of evolution and ecology with a side of deranged ranting, crass humor, occasional profanity, & the perpetual search for the filthiest taqueria bathroom."

Anyone can listen to free podcasts on Spotify, SoundCloud, YouTube, the Podcasts app, and more.

And if you feel ambitious (and own a microphone), rather than just listening to a podcast, you could even start your own!

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5. Reading

Reading is an enjoyable hobby at any age, but it can be particularly beneficial for older adults. A collaborative effort between researchers at the Beckman Institute and staff from Illinois' Champaign Public Library found that reading can improve memory skills in older adults.

Now, if you want to buy books, that won't be cheap. But getting a public library card is free.

Public library membership allows you to go there and read, or check out a few books there and bring them home. Struggle with small print? Library visitors can ask for assistance finding large-print books, which have bigger font sizes to accommodate those with less-than-perfect vision. Want some socialization? You can join a book club to discuss literature.

Also, libraries have far more than just books—you can also borrow audiobooks, movies, CDs, video games. You can utilize free internet access. And a handful of libraries have an even wider array of options, loaning out everything from tools to cooking supplies.

6. Games

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Another thing you can get from some libraries? Games—including board games, card games, and even video games. So whether you prefer a game of solitaire or playing around on Minecraft, you might be able to borrow what you need for free.

Online games on your phone or computer are an excellent option as well. Every morning my (senior) mother and I text each other our Wordle scores, which we each do while drinking our morning coffee in our respective homes. The NYT Games app is a fabulous free app—while you can't do the crossword for free, you can play Wordle, Sudoku, Connections, and other games for free.

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7. Library Events

Public libraries frequently host a wide range of events. While some are geared toward children, others are for all ages, and some are specifically designed for older adults.

A quick look at my city's public library event calendar shows upcoming events including Adult Beginning Sewing, First Friday Films, Saturday Art, Munch Mobile Lunch Van (which offers a free lunch), and a Sculpey workshop (clay sculpting) … and all are completely free.

Check out your local library's website to see whether any interesting events are coming up soon!

8. Free Fitness Classes

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Long ago, if you wanted to take a fitness class, you either had to sign up for paid in-person classes or buy videos advertised on TV.

But nowadays, on the internet, you can find more free fitness classes—via online videos—than any one person could ever complete.

YouTube is a wonderful place to start your search. I've personally enjoyed videos from PopSugar Fitness and Blogilates. A few other highly popular YouTube fitness channels are Yoga With Adriene, Chloe Ting, and The Fitness Marshall.

Also worth noting is the SilverSneakers fitness program, which includes live online fitness classes and, in select locations nationwide, in-person classes. SilverSneakers is designed specifically for adults aged 65+ and is included for free in many Medicare Advantage plans. (Note: Medicare Advantage plans are private health insurance plans the federal government pays for—not state-sponsored health insurance.) You can find locations through SilverSneakers' local tool; I tried it out with my midsized-city ZIP code, and were I old enough to be eligible, I could go to seven fitness locations within about 4 miles.

It also never hurts to reach out to a community pool or gym and ask if they have a free access pass for seniors.

9. Bird Watching

Bird watching is a fun and affordable way to spend your time at any age, but it seems particularly popular among old adults.

People enjoy seeing birds' colorful features, hearing their melodic chirps, and figuring out their species. It's surprisingly good for you, too. A recent study published in Scientific Reports found "significant positive associations between seeing or hearing birds and mental wellbeing" both in people with and without a diagnosis of depression.

Bird watching can be done at home, parks—really most outdoor locations. If your city has indoor botanical gardens, that can be a good place to spot them as well. To identify birds, consider renting a book from the library or searching identifying bird characteristics online. Binoculars can be helpful but aren't necessary.

Related: 11 Best Fidelity Funds to Buy

10. Public Concerts + Events

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Big cities don't have a monopoly on free public performances and other events. Even villages with a few thousand people often host free concerts, outdoor movies, and more—you just need to be informed that these events exist.

One way to find out about performances and other events is to take a peek at a local newspaper. Facebook Events is an excellent option if you already have an account. City websites might also provide calendars of events.

Schools often host concerts and other performances, too, you can also check the websites of your local school district to view any upcoming public events.

In many cases, you're doing the event a favor—organizers want as many visitors as possible, but might struggle to spread the word.

Related: 11 Best Vanguard Funds to Buy

11. Volunteering

Senior citizens can benefit substantially from volunteer work. When you join advocacy groups, it can give you a sense of purpose. Volunteering can also help you meet new people and, depending on the type of volunteer work, get some exercise.

Plus, it can often give you free admission to attractions and events you otherwise would have had to spend money to attend. If locally owned amusement parks have a special event, you might run a station for kids before enjoying a few rides yourself. Or you might volunteer at an annual film festival, which often lets you watch some of the films for free.

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12. Senior Center Activities

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Senior centers fall under the umbrella of community centers. A local community center is a place where community members of all ages can gather for free and cheap activities. Senior centers cater more specifically to older members of the community.

But unlike, say, a country club membership, senior centers typically don't require dues or registration (aside from signing up for certain events). Activities will vary by location. A glance at the website of a senior center in my city shows upcoming events such as bridge games, a veteran's social, bingo, and more. A center near you might host free poker nights, have painting events, or offer another activity that interests you.

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The 12 Most Regretted Walmart Buys: Why These Deals Are Actually Duds

Hannah Kowalczyk-Harper — Sun, 14 Jun 26 08:00:23 -0400

Walmart is the world's largest name in retailing. The big-box chain boasts more than 10,600 stores and clubs, which includes more than 4,600 Walmarts and nearly 600 Sam's Clubs in the U.S.

But that doesn't mean it's universally revered.

Yes, for many people, Walmart is the holy grail for affordable food and household items. It can be a one-stop-shop for almost everything a family needs—and much of what they find will be cheaper at Walmart than anywhere else.

But other people avoid Walmart at all costs. And part of that is related to the price—the reason some of those items don't cost very much is because they aren't worth very much. Occasionally, Walmart items can be inferior to those sold elsewhere, whether in terms of taste for food items or the sturdiness of other products.

Reality, in this situation, sits somewhere in the middle. Personally speaking, many Walmart items I have purchased over time have been just as good as the competition, so the lower price has provided more bang for my buck. But some items weren't good values—they were just cheap.

Today, I'm going to dive into some of the things you should never buy at Walmart. Some of them are being singled out for their low quality, others are deeply unpopular among Walmart shoppers, and a few can even be found at better prices elsewhere.

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Never Buy These Products From Walmart

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Have a Walmart trip planned soon? Well, I don't mean to throw you off your routine, but you should consider leaving the below items off your shopping list.

The reasons why vary: Many are very low-quality. Some are actually more expensive than the competition. And a few of these are deceptively priced.

1. Peanut Butter

Peanut butter is a beloved food for all ages. You'll never catch me without a jar on hand. But while it might seem like all peanut butter would be virtually the same—and that Walmart's brand would be the cheapest, nothing more—that's not necessarily true.

The critiques of taste aren't all that scathing. Great Value peanut butter currently garners a respectable 3.3 out of 5.0 score, though that's far below the 4.6 score of gold standard Jif peanut butter. And while the reviews are generally respectable, many recent opinions for the store's brand complain of a burnt taste.

So, it's not the best tasting, but it's OK. At least it's the cheapest, right?

Actually, Target's store-brand peanut butter is slightly cheaper. Currently, Great Value's product costs $1.94 for a 16-ounce jar, while the same amount of Good & Gather peanut butter only costs $1.79. Target's peanut butter has higher ratings, too, earning a 4.6 score on Target's app.

Personally, peanut butter is one product I'll always splurge on for the name brand. But if you're just as happy with a generic, Target's peanut butter is more affordable and better-liked.

2. Produce

Salad enthusiasts: Look elsewhere. In general, Walmart doesn't have a reputation for high-quality produce.

Out of 2,253 reviews on Walmart.com, the Marketside shredded iceberg lettuce has an average rating of only 1.9 stars. Customers complain about the lettuce being brown and rotting.

Were you hoping to add some fresh mini cucumbers to your salad? Out of 2,180 reviews, the current average rating is only 1.6 stars. The cucumbers are said to be wilted, gross, slimy, and rotten. The 19 most recent reviews all give it just one star.

Bell peppers have an average rating of 1.8 stars across 1,500 ratings, and tomatoes have a 2.1-star average out of roughly 4,000 ratings.

I think you get the idea.

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3. Seafood

Walmart likely isn't very popular among pescatarians. The reviews for Walmart seafood products are typically very low. Just consider this sampling of ratings and opinions for three Great Value seafood offerings on Walmart.com:

Great Value Tilapia Skinless & Boneless Fillets had a 2.5 average rating—the best of the three. The most recent review states, "Says 4 per serving size but gives you 3 in the packages." While there are a few positive thoughts, the majority of taste-related comments are negative, including phrases such as "rancid smell and funny taste," "horrible and rotten," and "if there were a 'no star' rating, this nasty fish would deserve it."

The Pacific Cod Skinless Fillets and Pink Salmon Skin-on Fillets both garnered 2-star average ratings. A few of the negative comments in the cod reviews included, "did not resemble fish," "doesn't even resemble cod in texture or flavor," and "mushy and I suspect is like raw cat food." The salmon reviews were also largely negative, though one recent review sums up the broader sentiment best: "Very mushy almost white. Zero texture. I wonder if it's even real fish much less salmon. Disgusting. I will feed it to the stray cats. (even they may not eat it)."

Another unrelated factor might give at least a few seafood shoppers pause: Kukorinis v. Walmart Inc.

This lawsuit, filed in October 2022, claimed that Walmart "deceptively, systemically and artificially increases the weight of the product at checkout, resulting in the customer paying an inflated price" on meat, poultry, and seafood, as well as certain citrus fruit for years. Walmart settled the suit, and agreed to pay $45 million to customers who had bought these products between Oct. 19, 2018, and Jan. 19, 2024, though it denied the allegations and admitted no fault.

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4. Beef

As I mentioned above, beef is another one of the sold-by-weight products that were included in the Kukorinis suit. And like with Walmart's seafood products, the ground beef tends to have poor ratings and reviews. Clicking through a few different variations of fat-to-lean ratios, the chain's beef ratings range from 2 to 2.5 stars. Walmart also tends to lack options for customers who prefer organic meat.

Price and taste aside, Walmart's ground beef has also been the subject of multiple recalls.

The most recent incident was in 2022, when over 28,000 pounds of ground beef was recalled from select Walmart, Kroger, Albertson, and WinCo Foods for possible E. coli contamination. The meat was sold under store-brand labels. Only two years prior, Walmart had a ground beef recall for the same reason. And in 2019, Walmart recalled more than 6,400 pounds of Great Value frozen meat, which likely included the brand's frozen beef patties.

To be clear: Recalls themselves are not necessarily the retailer's fault, and no major retailer has ever gone without having an item recalled. But that information is a bit more concerning when coupled with a report on how Walmart handles product recalls.

A 2020 report released by the U.S. PIRG (Public Interest Research Group) Education Fund graded 26 of the largest U.S. supermarkets "on efforts to warn customers about food recalls through clear policies, direct notification, and in-store posters." Walmart received an F. To be fair, 22 of the stores received failing grades, so Walmart has plenty of company at the bottom. Still, anyone highly concerned with food safety might want to opt for one of the supermarket chains with a passing grade, which include Target, Kroger, Harris Teeter, and Smith's.

5. Phone Plans

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Right now you might be thinking, "Huh? I didn't even know Walmart offered phone plans." Well, they do—and a lot of people use them. Its Straight Talk Wireless currently boasts more than 25 million subscribers. Their family plans are priced competitively, they work with a wide range of phones, and they're advertised as simple to activate.

So what's the catch?

If user reviews are any indication, Straight Talk Wireless is simply not good. Consumer Affairs has collected roughly 2,300 ratings for the wireless service, and an incredible 95% of those give it one lonely star—good for an aggregate rating of 1.1 stars out of a possible five.

Complaints run the gamut, from microphones not working to slow shipping times to no data/service to randomly deactivated accounts. But the most popular complaint is that once something goes wrong, the customer service is beyond atrocious. People have spent hours on the phone to solve simple issues, been connected to support reps who spoke poor English, and have repeatedly been hung up on by representatives.

6. Gift Cards

Gift cards are simple gifts that feel a bit more personal than cash. And given that most places sell gift cards at face value, Walmart might seem as good a place as any to grab one for a loved one's birthday or celebratory event.

Not so. Some retailers actually give you a deal on gift cards.

Costco frequently sells gift cards at less than face value, which could save you a chunk of money. Just a small sample of the currently discounted on Costco's website include:

-- Four $25 Domino's E-gift cards for $79.99

-- Two $50 Spafinder E-gift cards for $79.99

-- One $50 Cinemark Theatres E-gift card for $39.99

-- Five $20 Peet's Coffee E-gift cards for $79.99

-- Four $25 Papa John's E-gift cards for $79.99

If you want to buy discounted gift cards and don't have a membership or know anyone who will let you use theirs, you can still buy them online without a membership, but you'll absorb a 5% surcharge. Even with the surcharge, though, the cards are still much lower than face value.

Also, Target doesn't offer year-round gift card discounts like Costco, but it occasionally offers special gift card deals during its annual Circle Week. For instance, on April 9, 2024, the brand offered a deal where customers could buy a $50 gift card to Panera Bread, Regal Cinemas, or AMC Theaters and also receive a free $10 Target gift card.

For any non-urgent gift card needs, you can often stock up during the holiday season. Call or check the websites of your favorite local stores around Black Friday; you might find that some of them offer special gift card deals.

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7. Expensive Purchases From Third-Party Sellers

Items you purchase on Walmart.com aren't always Walmart's products. Just like Amazon, Walmart.com hosts third-party sellers, via its Walmart Marketplace.

Often, these sellers handle just about everything (from inventory to delivery) on their own; they're simply using the well-known brand's website to reach its large audience. In exchange for access to its customers, Walmart gets a commission.

Why does that matter? Well, sometimes those items are low quality or even fake. If you want to return an item, Walmart Marketplace rules can differ from Walmart's normal return policy. Walmart does set minimum standards for what a seller can have as a return policy, but these minimums don't give you much time. For example, the minimum return window for major appliances is only two days.

Some Marketplace purchases can't be returned to a Walmart store either, such as odd-sized or luxury items. Certain types of objects can't be returned at all. For instance, Walmart states that they and Marketplace sellers won't replace, provide refunds, or accept returns for trading cards, firearms and ammunition, pepper spray, gas-powered recreation vehicles, SIM cards, and much more.

Another noteworthy drawback: Marketplace sellers are allowed to charge restocking fees of up to 20%.

While it might not be a big deal to buy small items from third-party sellers on Walmart.com, I don't recommend buying any costly items from them.

8. Diapers

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As anyone with a newborn quickly discovers, babies go through a lot of diapers. According to the American Academy of Pediatrics, an infant can use around 3,000 disposable diapers in the first year alone. For such high quantities, you want an item to be as affordable as possible. Plus, exhausted new parents need to save all the time and energy they can.

For these reasons, parents might be better off choosing Amazon for their diaper needs. Let's compare the cost and convenience.

-- Walmart currently sells a 140-count box of newborn Pampers Swaddlers Diapers for $53.05. This is a one-time purchase. Based on my location, I could have it delivered to me in four days.

-- Comparatively, that same box only costs $44.99 on Amazon, and I could have it delivered to me today. Moreover, parents who sign up for Subscribe & Save could save an additional 5% for repeat deliveries, and if you sign up to receive five or more products in one auto-delivery to one address, you could save 10%. Consumers can choose their own delivery frequency from as often as every two weeks to as infrequent as once every six months.

Those savings really add up when you consider just how many diapers you'll need before a child is potty trained. Even before Subscribe & Save savings, you're looking at about $170 less per year through Amazon.

It's also much easier to keep getting diapers automatically delivered rather than make emergency trips to the store when you realize you're almost out.

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9. Wood Furniture

Furniture is a pricy purchase, so it makes sense people want the most affordable options. However, while Walmart's furniture is sometimes one of the cheaper choices, that's often because it won't last long and the customer service isn't always the greatest.

Consumer Reports surveyed its members about walk-in furniture stores and received 28,665 ratings. Walmart, along with Ashley Furniture Store, were amongst the lowest-rated stores.

Walmart's wood furniture, in particular, appears to have a reputation for being more likely to break or deteriorate and need to be replaced quickly. The chain sells a lot of furniture made of particle board, which isn't very resistant to chipping, scratching, or other surface defects. It also wears down easily and has little water resistance.

Young and the Invested considers furniture to be among bigger-ticket items it makes sense to splurge on. While cheaply made furniture might be more affordable now, you could very well end up paying more over time by frequently replacing these pieces.

10. Organic Milk

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Although Walmart tends to offer cheaper prices for products, organic milk isn't one of them.

For example, Walmart and Target both sell half gallons of Horizon Organic Milk DHA Omega-3. At Walmart, it costs $5.32, while Target charges just $4.99.

Perhaps even more surprising is the negligible difference between generic options. Walmart's Great Value Organic Whole Vitamin D milk currently costs $6.98 for a gallon. Whole Foods' 365 brand, which is generally known to be more expensive than other generic brands, only charges a cent more per gallon. While the Great Value milk's 3.0 average isn't too bad, the 365 by Whole Foods milk boasts a 4.7 score.

Whether price or taste is the bigger priority for you, you're better off getting your organic milk from somewhere besides Walmart.

11. Bread

While the ratings for Great Value breads aren't as shockingly low as some of the other items on this list, they still aren't good. Out of five stars, the Great Value bread ratings are currently as follows:

-- White bread: 2.7

-- Honey wheat bread: 2.9

-- Whole wheat: 3.1

-- Wheat bread: 2.8

You can skip Great Value hamburger buns at your next cookout; they rate a tepid 2.6.

Now, some of the bread complaints are that the loaves are smushed or they never received it, which might be the fault of a delivery person, rather than Walmart. However, other complaints say the bread is hard and stale. So unless you're making homemade croutons, you might want to opt for another bread brand with a better reputation for freshness.

What better options are available? The Rhodes Bake-N-Serv white bread dough currently has a 4.2-star rating. Even better, the Brownberry Country Style White bread sold at Walmart boasts a 4.7-star rating. Perhaps surprisingly, Walmart also has great options for people in need of gluten-free bread. The Canyon Bakehouse Gluten Free Hawaiian Sweet bread has an impressive 4.8-star rating and reviewers compliment it for its sweet taste and soft texture.

12. Frozen Pizza

Whether frozen pizza is one of your household staples or you just like to keep a few on hand as a backup plan, it can be tempting to grab Walmart's Great Value frozen pizzas.

Based on the ratings, though, there's a reason they're not called Great Taste pizzas. The first five Great Value pizzas that come up on Walmart.com have the following ratings (out of five stars)

-- Deep Dish 2 Pepperoni Pizzas: 3.1 stars

-- Cheese Stuffed Crust Three Meat Pizza: 2.8 stars

-- Rising Crust Pepperoni Pizza: 1.9 stars

-- Rising Crust Three Meat Pizza: 2.2 stars

-- Microwavable Cheese Pizza: 2.7 stars

Again, like with Walmart's bread, these pizza scores aren't horrible—they're just not very good. But you'd be better off with higher-rated pizza brands, which Walmart sells at typically cheaper prices than other retailers.

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Related: The 12 Best Vanguard ETFs for a Low-Cost Portfolio

Vanguard's exchange-traded funds (ETFs) are among the most popular funds out there thanks to their low fees. But there's more appeal to their ETF lineup than low costs alone.

Vanguard ETFs are big, liquid, and tend to track well-constructed indexes, meaning you're not just paying low expenses ... you're actually getting some value out of your fees. And these Vanguard ETFs represent the best of the best.

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The Paper-Trail Era: 10 Elaborate Chores of Banking Only Baby Boomers Remember

Hannah Kowalczyk-Harper — Sat, 13 Jun 26 15:30:51 -0400

For some of us, a bank is more than a pile of bricks and a vault—it's a memory or two. Maybe you remember proudly depositing your first paycheck. Maybe you remember how nervous you were while applying for your home loan before you bought your first house. Or maybe you remember earning 8% on your standard savings account.

That's not a misprint. Way back when, savings accounts yielded way more money—they don't today, but that's just one of the many ways banking has changed over the past few decades.

What's commonplace today might become obsolete before we know it. So think twice before you laugh at a parent or grandparent who isn't great at using their banking app … because one day, banking apps could be supplanted by a different technology, too.

So, how different is banking today from what it was in the past? Let's dive in!

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The Current State of Banking

The vast majority of Americans use banks. According to the Federal Reserve, as of 2022, only 6% of adults were "unbanked"—meaning they nor their partner had a savings, checking, or money market account.

But what "being banked" is today is far different than what it meant yesterday. Banking technology has greatly advanced, and many banking customs have changed. More financial transactions are digital and automated than ever before. Many tasks that used to require a 15-minute drive and a half-hour in line at the bank can largely be accomplished from your phone.

And especially for older adults, stepping into a bank is a far different experience than it used to be. A whole new world? No. But certainly a wealth of different offerings and procedures.

How Banking + Banks Have Changed

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Banking was vastly different even a few decades ago. Some of the changes over that time have been great, others are a bit more unfortunate, but almost all of them will invoke some amount of nostalgia.

1. High Standard Savings Account Interest Rates

While you've probably seen plenty of ads for high-yield savings accounts with rates in the 4%-5% range, the national average interest rate for a standard savings account sits at less than half a percent.

That's a world away from where they were back in the 1980s, when high standard savings account interest rates were the norm—at one point, standard savings rates actually touched 8%. You can thank both all-time highs in the federal funds rate, as well as lack of regulation that allowed banks to offer those high savings rates, even when they were financially unsustainable.

Rates have plunged since then—even today's seemingly high Fed funds rate is a fraction of what it was in the '80s. And standard savings rates have dropped along with it. Rates fell to about 4%-5% in the '90s to 1%-2% in the aughts, and then to historic lows during the Great Financial Crisis.

Again, you can find high rates in a high-yield savings account. But you still won't find 8% in those, and traditional savings might never see those rates again.

2. Passbooks

Passbooks, also called bankbooks, were about the size of a passport. These paper books were used to record banking transactions on a deposit account. The bank worker would hand-write the date, transaction amount, and new balance, before initialing it.

Eventually, small dot matrix or inkjet printers could update passbooks at an ATM or passbook printer either in a branch, by post, or self-serve style.

While some banks still offer passbooks, they're exceedingly uncommon and typically only upon request. Now, paperless alternatives prevail.

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3. Physical Branches

The past few years have seen the advent of online-only banks. They're not incredibly popular—as of late 2023, only 6% of American adults with bank accounts said their main bank is online—but Gen Zers are almost twice as likely to use an online-only bank as the general population, so that number could rise over time.

Let's be clear: Most banks still have physical branches, and likely will for the foreseeable future. But banks are narrowing their physical presences somewhat—within the past couple of weeks (as of this writing), Wells Fargo, Bank of America, PNC, Citizens, and Santander had all announced they would be closing various numbers of branches.

So if you have a child or grandchild with banking issues, you might not always be able to tell them to go see a bank teller in person!

While the lack of in-person customer service is a clear disadvantage, online-only banks do have upsides. Because they don't have nearly as much overhead as brick-and-mortar locations, online banks can pass those savings on to customers. For example, a SoFi Checking & Savings Account, which charges no monthly account fees and has no minimum balance requirements³, earns far more than the national average percentage yield (APY)² and more than the average high-yield account.

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4. Loans Without a Credit Score

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If you're in a younger generation, you've at least known about the existence of credit scores and loans your whole life. But one is much older than the other.

The FICO score, America's first credit score, wasn't introduced until 1989. Oh, people certainly received loans before then—but instead of a credit score, a person's creditworthiness was determined by factors such as income, referrals, and sometimes even home visits.

The loan system pre-credit scores was slow and at times even discriminatory. Credit scores, while hardly perfect themselves, have made evaluating a person's credit quicker and reduced bias.

5. Banks Advertising on Matchbooks

Have you ever walked out of the bank, then cringed as you discovered you had accidentally taken one of their branded pens with you? It's OK—it's not exactly encouraged, but security's not going to tackle you over it.

But once upon a time, banks were happy to give you one piece of branded swag: matchbooks.

And it wasn't just banks. Restaurants, bars, hotels, and other establishments advertised on free matchbooks as well. But as people became more aware of the health risks and government's cracked down, smoking became less prevalent—as did this form of advertising.

Even today, though, some collectors have vintage bank matchbooks as mementos.

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6. Smoking in Banks

Imagine walking into a bank and instantly getting a whiff of cigarette smoke from a smoking worker or customer. Today? No. But long ago, that was the norm.

That's because banks not only gave out matchbooks—they allowed people to smoke inside as well.

To be clear: It's not like banks in particular were lax about smoking. It's just that it was acceptable to smoke just about anywhere. Given that there's no federal smoking ban for workplaces in the U.S., it's possible that somewhere, somehow, there's a bank branch or two that still allows it. But they're a dying breed, if not already dead.

7. The Popularity of Traveler's Checks

Don't worry: The traveler's check is still alive and well. But it is far less common than it once was.

If you're new to the term: A traveler's check is obtained from a financial institution (your bank) and used for international travel. Once abroad, travelers can use these checks to directly pay for goods and services, where accepted, or exchange them for local currency.

A benefit to these checks is the unique serial numbers that insure the checks against theft or loss. Similar to how a person would cancel a stolen credit card, a lost or stolen traveler's check can be canceled. Then, people can get a replacement at participating banks or travel agencies.

Traveler's checks have gone out of style because the alternatives have become more attractive. Now, many credit and debit cards don't charge any foreign transaction fees and are far more convenient—and they can protect against fraudulent charges.

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8. Peer-to-Peer Wire Transfers

Wire transfers electronically move funds from one bank account to another. This system started in the 1980s, providing people with a way to easily send funds anywhere in the world without having to mail a check. These are still widely in use, though nowadays, they're predominantly business-to-consumer or consumer-to-business transfers.

But let's say you, a consumer, needed to lend money to an out-of-state friend (also a consumer). Years ago, you might have considered a peer-to-peer wire transfer. It could take a couple days to complete, you'd be charged a sizable fee, but you could do it.

Nowadays, there are numerous peer-to-peer money transfer apps that are either free or minimal-cost and instant. Heck, even the phrase "I'll wire you some money" is now often replaced with "I'll Venmo you," "I'll PayPal you," or "I'll CashApp you."

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9. Only Withdrawing Cash During Bank Hours

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Pretend you're out late at night and see a taco stand, which sounds like the perfect snack. Your mouth is watering as you read the menu while you wait in line. Then, you see a sign that states "Cash Only." You check your wallet hoping there is some cash in there you forgot about. There isn't.

Today, you would solve your dilemma by going to a nearby ATM. Prior to the late 1960s, though, that wasn't an option anywhere in the United States—you had to go into the bank, during bank hours. But along came the ATM, which began to flourish throughout the '70s and through today, when you can find an ATM virtually anywhere.

And that's good news for late-night taco stand lovers.

10. Customer Service

The customer service you receive in a bank can depend on the bank, individual worker, or even just a teller's mood at that moment. This makes it challenging to quantifiably say whether bank customer service has improved or gotten worse over the years.

But if we're including anecdotal evidence, bank customer service was probably superior in the past.

For example, when my mother was studying abroad in India in the early 1980s, she shipped a hand-knotted rug to her small U.S. hometown bank. Her bank accepted delivery of the rug and arranged for the overseas payment in Indian rupees to be made from her savings account with her prior authorization.

The bank charged no fees, insisted on unrolling the rug to ensure nothing got damaged in shipping, and shared in her enthusiasm as the entire staff gathered around.

Obviously, none of this would happen with an online-only bank. In fact, it's even hard to imagine that scenario at a large bank today.

Those who want more of a family banking feel might choose to bank with a credit union instead of a traditional bank. Credit unions are not–for-profit, member-owned, and often have a high level of community involvement. When I bought out my car lease and went into a credit union to finalize the paperwork, I was expecting business as usual. Instead, I was pleasantly surprised at the hearty congratulations for owning my car and the small talk that followed as everything was wrapped up.

Whether you love the current level of customer service or hate it, there's no denying it's different. According to the Consumer Financial Protection Bureau, it's estimated around 37% of Americans interacted with a bank's chatbot in 2022. That certainly wasn't an option even a few years ago.

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What Does The Future of Banking Look Like?

Inevitably, banking technology will continue to advance. As people play with artificial intelligence, it may take on some human jobs. We might continue to see the number of brick-and-mortar banks dwindle.

As advanced as credit cards currently seem, it's possible people will later keep them as relics of the past. Some people believe cryptocurrency is the future and money as we know it will change. It's impossible to predict the directions banking will take. But the real question is, will these changes that occur make banking better or worse?

Related: How Does the 4% Rule Work? [And Why Did It Change?]

How does the 4% rule work, how has it changed, and can it help guide your retirement? Check out our primer on the 4% rule.

Related: The 10 Best Dividend ETFs [Get Income + Diversify]

We love exchange-traded funds (ETFs) because they can provide one-click access to hundreds, even thousands of stocks, while charging often minuscule fees.

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The $100 Skip That Costs Thousands: The Brutal Math of Avoiding Auto Maintenance

Kyle Woodley — Sat, 13 Jun 26 15:00:07 -0400

Much like how you need to take care of your body and your home, your vehicles need care, too.

And in the same vein, routine maintenance now can end up both extending your vehicle's life and saving you many thousands of dollars over the long run. In just about every walk of life, it's much better (and cost-efficient) to catch and fix a smaller problem than wait for it to ruin a major vehicle component.

Today, I'm going to discuss a few car maintenance tasks that, if done regularly, can save you serious money in the long run. I'll also discuss a couple of ways to make car preservation feel like less of a drain on your finances.

Prevent Major Car Repairs With These Maintenance Tasks

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Public transportation is limited in the vast majority of the country, meaning most people simply need a car to get to their job and tackle other daily tasks.

A vehicle is a costly investment, however—one that frequently demands you sink more money into it. The good news? You can reduce your chances of needing major vehicle repairs (or at least delay the breakdown of certain components) by keeping up with maintenance.

Let's go over some common car maintenance tasks that will help you prevent or delay pricey future repairs.

1. Oil Changes

The No. 1 recommendation of auto experts and concerned fathers alike: Don't forget to get your oil changed!

Of course, how often you have this performed will vary from vehicle to vehicle. From the American Automobile Association (AAA):

"Depending on vehicle age, type of oil and driving conditions, oil change intervals will vary. It used to be normal to change the oil every 3,000 miles, but with modern lubricants most engines today have recommended oil change intervals of 5,000 to 7,500 miles. Moreover, if your car's engine requires full-synthetic motor oil, it might go as far as 15,000 miles between services! You cannot judge engine oil condition by color, so follow the factory maintenance schedule for oil changes."

However, if you drive extremely infrequently, your oil still needs to be fresh. So it can be wise to get an oil change at least once or twice a year, even if you haven't reached the mileage recommendation.

The U.S. average cost of an oil change at an auto repair shop, dealership, or auto change facility is about $100 and typically includes a filter change, according to 2024 data aggregated by Yelp. The price will vary by location and provider, as well as the type of oil you use. For example, conventional motor oil is more affordable than full-synthetic oil.

So what happens if you don't get regular oil changes?

Engine oil reduces friction between your internal car parts and stops overheating. If you skip your routine oil changes, you could reduce your fuel efficiency—in other words, you'll have to purchase gas a little more often. That'll add up over time.

A much bigger one-time hit could come in the form of engine damage. as not getting oil changes can decrease your engine's lifespan. The longer you wait to change the oil, the more dirt and debris that oil will pick up as it continues to cycle through your engine. That will wear on the engine, and eventually warp it or even cause a gasket to blow. The new price tag on an engine might land anywhere from $2,000 to more than $10,000, depending on your vehicle's model, year, and the engine you want, according to Autozone.

Also, if you don't get regular oil changes, you could void your vehicle's warranty. Not only would you be out the money you spent on the warranty—but you would also become liable for any repairs that would have been covered by the warranty.

Put differently: A couple hundred dollars on oil changes each year is a relative bargain.

2. Tire Maintenance

Good tire health involves a few different components.

For one, you'll want to maintain proper tire pressure, particularly during the winter (low temperatures can make air denser and thus lower your tire pressure).

You'll also want to keep the wear even on your tires, which keeps them operating efficiently (read: gas mileage), reduces the risks of tire failure, and improves their safety. You do this by getting your tires rotated—a service you'll need about every 6,000 to 8,000 miles. The average cost of a tire rotation is between $60 and $72, according to Kelley Blue Book.

There's also tread depth. Have you ever worn down a pair of running shoes to the extent that the bottom has become too smooth and less grippy? The same can happen to your tires—and that can result in either a tire failing (which, depending on where and how it happens, can cause damage to the wheel or other parts of the car) or you losing control of your vehicle, which could result in an accident.

The "penny test" is an easy way to see how your tires are doing. Take a penny, Lincoln's head facing down, and put it between the tread ribs on a tire. If you can see his entire head, your tread might be too shallow and need to be replaced.

The price range for new tires is so wide—per J.D. Power, we're talking between $89 each for inexpensive winter tires to $1,209 a pop for Pirelli sport tires—that it's almost useless to provide an average. Your costs will vary based on your vehicle, tire type, and quality of tire. Plus you'll have installation costs, which come to about $100 for a set of four tires.

Related: 12 Best Vanguard ETFs to Buy

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3. Brake Inspections

You're obviously aware of how malfunctioning car brakes could be disastrous, but you might not realize that maintaining your braking system is a smart financial decision, too.

Brake pads, for one, need to be changed out—though not super-frequently. Pads can last anywhere between 30,000 and 70,000 miles. But when you do replace them, you'll likely pay somewhere between $115 and $270 per axle, says AutoZone. If you also replace the rotors (which work alongside brake pads to slow your wheels), you're looking at a range of $250 to $500 per axle. And a full brake repair (pads, rotors, and calipers, which house and apply pressure to the brake pads) sits around $300 to $800 per axle.

That's not exactly cheap … but if deteriorated brakes result in you getting into an accident, you'll likely pay much more either immediately via damage, or over time via a significantly stepped-up auto insurance rate.

4. Air Filter Replacements

How many times have you gone to get service performed on your vehicle, and a mechanic came in to show you a dirty cabin air filter that needed to be replaced?

Believe it or not, this is a frequently reported scam in which the filter isn't even yours, your air filter is actually fine, but they managed to charge you an extra $20 or $40 for effectively nothing.

That said, cabin air filters actually do need to be replaced on the regular.

Clean air filters help engines run efficiently. Failing to replace air filters when needed, then, can lead to lower fuel efficiency (thus more money spent on gas), reduced horsepower, and even engine damage.

You should check (and when necessary, replace) your air filter every 12,000 to 15,000 miles. RepairPal says the average cost of an air filter replacement is between $59 and $78, excluding taxes and fees. However, between $27 to $34 of that cost is the labor, and this is a task people with car familiarity can often handle themselves.

If you don't plan on replacing air filters yourself, but you want to avoid getting scammed, whenever a mechanic asks you if you want to replace your air filter and shows you a dirty one, ask them to show you where on your vehicle they pulled the filter from your vehicle (to ensure it was indeed yours).

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5. Battery Terminal Cleanings

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A lesser-known car-care task is cleaning your battery terminals. If you let a battery terminal go long enough without a proper cleaning, they can begin to corrode, which in turn can cause the battery to crack or otherwise stop working.

A mechanic can perform cable battery terminal end service to make sure everything is clean for a charge of $26 to $33 on average, per RepairPal. (Alternatively, you could clean everything yourself with water, baking soda, and a $5 steel wire brush.)

If you need to replace the battery itself, you're looking at $378 to $388 on average, most of which is the battery cost itself. If you end up needing to replace the battery cables, that averages between $342 and $369, again with most of that cost coming from parts.

6. Coolant Changes

Over time, coolant becomes more acidic. Neglecting to change your coolant means it could start to corrode your radiator, thermostat, water pump, other cooling system components, and the heater system.

Needless to say, a coolant change is preferable to the alternative of having to replace these components.

While there is a lot of variation on how often one's coolant needs to be changed, AutoZone gives a (wide!) range of 30,000 to 100,000 or two to five years. The average cost of a coolant change runs between $375 and $402 on average, RepairPal says.

An alternative for-instance? If corrosion resulted in your car needing a radiator replacement, you could be ponying up $1,068 to $1,253, on average.

7. Transmission Fluid Changes

Transmission fluid works as a lubricant to keep your transmission functioning properly. It does need to be changed, but not all that frequently. The general guidance is pretty wide—every 30,000 to 60,000 miles for manual-transmission vehicles, and every 30,000 to 100,000 miles for automatic-transition vehicles.

Some vehicles claim to have "lifetime fluid," but even then, it's still generally recommended to replace your fluid every 100,000 miles.

There are two ways a mechanic will deal with your transmission fluid (average prices, in parentheses, provided by Kelley Blue Book):

1. A transmission fluid change ($150 to $175): Some fluid is drained out, then fluid is added to fill it back up.

2. A transmission fluid flush ($165 to $290): All transmission fluid is pulled out, a solution is pushed through the system to clean it, and then the transmission is filled back up with fluid.

What happens if you decide to skip this maintenance task? Well, most critically, your transmission may overheat and result in a system failure. Were you to need to replace your transmission entirely, the cost would likely land between $5,584 to $5,789, says RepairPal. And given that the bulk of that price is parts, that'd be an expensive fix even if you were to replace the transmission yourself.

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How Else Can I Save Money on Car Maintenance?

Regular auto maintenance shouldn't cost you an arm and a leg. And there are ways to reduce the cost, including:

-- Performing some simple maintenance yourself (you might still need to buy the occasional component or tool, like a wire brush, but it will be less expensive than having the service performed by a mechanic).

-- Comparison-shop auto mechanics in your area.

-- Go to independent mechanics and chain repair shops, rather than the dealership, as they might be more open to price negotiations and more likely to provide discounts.

-- Ask about AAA or AARP discounts.

Be honest about how handy you truly are before trying to save money by performing DIY auto maintenance. Unless you're very comfortable under the hood of a vehicle, some work should be left to the professionals.

And lastly, no matter how much you care for your car, at some point, you'll probably need to repair or replace a major component. As is true for other large expenses, you can reduce the sting by planning ahead and saving for expected car maintenance. For example, if your tire tread depth indicates you'll need new tires soon, start setting money aside for that purchase. Or even better: Start saving for new tires as soon as you change out your old ones.

Related: 15 Best Long-Term Stocks to Buy and Hold Forever

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The Target Traps: 10 Products That Are a Total Rip-Off at the Red Bullseye

Hannah Kowalczyk-Harper — Sat, 13 Jun 26 14:30:55 -0400

When discussing popular retail chains, you can't forget about Target.

Target spans nearly 2,000 stores across all 50 states and the District of Columbia. Nearly three-fourths of Americans live within 10 miles of a Target.

These stores sell virtually everything—clothes, home decor, toys, electronics, groceries, pharmaceuticals, and more. Indeed, Target is No. 6 in the National Retail Federation's Top 100 Retailers List, which ranks the largest companies based on the previous year's worldwide retail sales. It sits behind only a handful of juggernauts, such as Walmart and Amazon.

But while you can buy virtually anything at Target, it doesn't mean you should.

Today, I'm going to walk you through several products you shouldn't buy at Target. For some items, this is a great store—but if you take a closer look, you'll see there are several product categories where you can either save more or get better-quality items elsewhere.

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Don't Buy These Target Products

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The primary reason to avoid buying some products at Target is price. While Target is a great place to score deals, it's not always the cheapest option. That's no surprise—partly by design—Target aims to provide a higher-quality shopping experience than other big-box stores (like Walmart).

Still, some Target products are overpriced. Others aren't as high quality as consumers expect. If you always want the best deals, you simply can't do 100% of your shopping at Target. You should buy the following products elsewhere.

1. Greeting Cards

Target's greeting cards are, in a word, overpriced.

Many people buy presents at Target, and while they do, they'll grab the accompanying celebratory cards. But they're paying for that convenience and would be better off purchasing more affordable greeting cards elsewhere.

Most birthday, anniversary, and other greeting cards at Target cost $4.99 and up. While cards sold at Target are often high-quality, that's a mighty high price for a paper product that will likely be discarded quickly.

Comparatively, Walmart still offers some cards for as little as 98¢, while select Dollar Tree stores have cute cards priced at two for a dollar. Even grocery store greeting cards often beat out Target's card prices.

So rather than wait until a birthday or significant event arises, stock up on celebratory cards elsewhere so you aren't tempted to buy them last-second from Target.

2. Disposable Party Supplies

Are you throwing a party? Consider buying your disposable party supplies (paper plates, plastic utensils, balloons, etc.) somewhere other than Target. Because you won't be reusing these items, it typically makes sense to buy them at the cheapest price possible—and Target rarely has the best deals.

For example: Currently, a nearby Target sells a 20-count pack of 8.5-inch paper plates for $3.00. You can buy a higher number of larger plates for a lower cost at Dollar Tree—they currently sell a 24-count pack of 9-inch pink paper plates for only $1.25. Note: Prices will vary by location.

Could there be a quality difference in the plates? Possibly. But they'll be quickly discarded after a single use, so durability is unlikely to be an issue. (An exception? If you're having a barbecue or any other event where you expect people to pile on the food, plate durability might come into play.)

3. Trail Mix

While you can buy Chex Mix and similar snack mixes at Target, if you want a true trail mix, you typically need to buy a mix from Favorite Day—a Target brand that debuted in 2021. That might not sound so bad, given that store-brand items are typically affordable choices, but Target's Favorite Day trail mix is still a bit costly.

Confusingly, the number of ounces in bags and plastic containers varies by flavor. For instance, the Monster Trail Mix that comes in a 36-ounce plastic container costs $8.79 (~24¢ per ounce). Meanwhile, the Peanut Butter Monster Trail Mix costs the same amount, but you only get 34 ounces (~26¢ per ounce). The Tropical Trail Mix is the same price, too, but comes in at just 29 ounces (~30¢ per ounce).

Walmart's Great Value Trail Mix also comes in different sizes depending on the ingredients, but similarly sized bags are usually cheaper. The 40-ounce bag of Great Value Mountain Trail Mix currently costs $8.96 (~22¢ per ounce) and the 26-ounce Indulgent Trail Mix costs $5.98 (~23¢ per ounce). Part of the reason Walmart may be able to offer lower prices in this department is that the larger portions still come in bags, whereas Target uses plastic containers.

By the way: The higher prices don't necessarily reflect higher quality. While some flavors boast strong ratings, others are very low. For example, the average across Favorite Day Caramel Cashew Trail Mix's 50 ratings is 1.5 out of 5 stars. (Interestingly, in the past few days, this mix has been hammered with reviews begging Target to revert to an older version.)

4. Diapers

As anyone with a newborn quickly discovers, babies go through a lot of diapers. According to the American Academy of Pediatrics, an infant can use around 3,000 disposable diapers in the first year alone. For such high quantities, you want an item to be as affordable as possible. Plus, exhausted new parents need to save all the time and energy they can.

When faced with that volume of purchasing, Target simply isn't the most affordable option. And in fact, it's not even the most convenient.

Let's say you're a fan of Pampers diapers. A 140-count box of newborn Pampers Swaddlers costs $44.99 at the Target closest to me. That comes out to around 32¢ per diaper. You could grab a box each Target run, which is pretty easy for frequent shoppers, but you may unexpectedly run out and need to make a special trip.

You can do much better with Amazon's diaper subscription service.

Target and Amazon don't sell diapers in the same quantities, so I'm choosing a similar box count for this comparison. A 198-count box of the same newborn Pampers Swaddlers costs $55.94 on Amazon, which is about 28¢ per diaper.

But it gets better. If you sign up for Subscribe & Save, you automatically get an additional 5% off. And anyone who receives five or more products in a single auto-delivery to one address can unlock 15% savings. Parents can choose a frequency that makes sense for them, from every other week to every six months. In short: The subscription service saves you money and is more convenient than buying diapers every store visit.

I'm usually not a big fan of Amazon, but temporarily having an account while you have a newborn at home might be too good of a deal to pass up.

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5. Some Up & Up Infant Formulas

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While many of the infant formula options at Target have high ratings, there are two with low ratings that you should avoid.

One is the Up & Up Advantage Premium Infant Formula With Iron Powder, which garners just 2.5 stars out of 5. Recent reviews state that the price is too high and the container is too small. Some claim that Target discontinued the formula then brought it back, but with a significant price increase for less product.

The other Target formula to avoid is the Up & Up Sensitivity Premium Infant Formula With Iron Powder. This one has a dismal 2.2-star rating. Many of the recent comments have the same complaint as the other formula—the price grew but the amount was reduced. Additionally, people dislike the texture.

Either choose other infant formulas at Target, or buy your formula from another store altogether.

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6. Gift Cards

Gift cards have become a go-to gift for many—they're useful, and they feel a bit more personal than cash.

Given that most retailers sell gift cards at face value, Target might seem as good a place as any to grab one for a loved one's birthday or celebratory event.

Costco frequently sells gift cards at less than face value, which could save you a chunk of money. Just a small sample of the currently discounted on Costco's website include:

-- One $500 Southwest Airlines E-gift card for $449.99

-- Four $25 Domino's E-gift cards for $79.99

-- One $100 Nutrisystem E-gift card for $79.99

-- One $50 Cinemark E-gift card for $39.99

-- Four $25 Chuck E. Cheese E-gift cards for $74.99

To be fair, Target occasionally offers specific gift cards during its annual Circle Week. For instance, in April 2024, the brand allowed customers to buy a $50 gift card to Panera Bread, Regal Cinemas, or AMC Theaters and also receive a free $10 Target gift card. But past that, there are not advantages to buying your gift cards at Target.

Another tip? For any non-urgent gift card needs, stock up during the holiday season. Call or check the websites of your favorite local stores around Black Friday; occasionally, they'll offer special gift card deals.

7. Bulk Items

Another area where Costco outshines Target is bulk purchases.

To start, there are simply fewer items you can buy in bulk at Target. So if you have a large family and want to buy in large quantities, Target won't be the most convenient option for you (unless you don't have a Costco, Sam's Club, or other warehouse club nearby). And the products available in bulk frequently change. For instance, my nearest Target recently reduced the quantities it offers for Charmin toilet paper; the one I used to buy is now only available in six-count packages. (If I switched to Charmin Ultra Gentle MEGA XL, I could get a 24-roll package, but that's as large as it gets.) You can get larger quantities of generic brands, but they don't hold up.

Meanwhile, 30-roll packs of Charmin are a Costco mainstay.

My nearest Target recently reduced what quantities it offers for Charmin toilet paper. The one I used to buy is now only available in 6-count packages! If I switch to Charmin Ultra Gentle MEGA XL, I could get a 24-roll package, but that's as large as it gets. There are larger quantities for generic brands, but those don't hold up. Meanwhile, Costco lets you buy 30-roll packs of Charmin.

Canned foods, which are an excellent item to buy in bulk, are only available as single cans at Target. Want several cans of black beans? You have to put them in your cart one at a time. Meanwhile, you can put a full eight-pack in your cart at Costco, and for cheaper.

When you really want to stock up on items, head to a warehouse club.

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8. Dollar Spot Impulse Buys

Whether your store calls it Dollar Spot, Bullseye, or Bullseye's Playground, Targets have an area—usually near the entrance—with a mini-aisle or two carrying ever-changing items that only cost a few dollars. Given how affordable these items are, they're extremely tempting to buy, whether you have any real use for them or not.

As a general rule, anyone trying to save more money should avoid impulse buys.

Consider this: According to a survey commissioned by Slickdeals, while unplanned purchases declined from 2022 to 2023, the average respondent still made six impulse buys per month for an average of $151. That means people spent more than $1,800 per year on spur-of-the-moment purchases.

Unless you have a specific need in mind—like goodie-bag items for a party—avoid Target's Dollar Spot. It's a budget-killer.

9. Name-Brand Garbage Bags

You can save money by not regularly buying your name-brand garbage bags from Target, too.

For instance, a box of 45-count 13-gallon Glad ForceFlex MaxStrength tall kitchen drawstring cherry blossom trash bags costs $12.89 at my nearest Target. That comes out to about 29¢ per bag. A 40-count box of the exact same bags costs $10.98 at Walmart, which is around 27.5¢ per bag.

Prefer Hefty garbage bags? At Target, a 50-count box of 13-gallon Hefty Ultra Strong tall kitchen drawstring trash bags costs $11.59. That's about 23¢ per bag. At Walmart, a 40-count box of the same product costs $8.54, which is approximately 21.4¢ per bag.

For those who are fine using generics, Target's Up & Up bags and Walmart's Great Value bags both cost around 20¢ per bag.

10. Anything Without the Target Circle App

While you want to avoid some Target items, there are still several purchases you may enjoy. The more you shop there, the more sense it makes to join Target Circle.

Target Circle is Target's free loyalty program, which is accessed through the Target Circle App. Users gain access to:

-- A 5% discount on most purchases (exceptions include things like prescriptions and gift cards)

-- Special coupons, which are automatically applied upon purchase

-- Target Circle Bonuses, which either provide additional savings or earn Target Circle Rewards

-- Target Circle Rewards, which can be applied on purchases to reduce the price

-- Additional discounts on partner brands' items, as well as free trials and reward points at other vendors.

The app itself will show you all the items that are currently on sale, as well as bonuses you'll get that regular shoppers won't. For example, as I'm writing this, Target Circle is offering me $5 off if I spend $30 on homecare products. Another available deal is $5 off if I spend $40 on one in-store or online purchase.

Speaking of online purchases, I frequently use the app to create orders to pick up inside the store or have put directly in my car's trunk in the parking lot.

I love this free service for several other reasons. I get free two-day shipping, as well as an extra 30 days to return items. Plus, the app ensures I don't forget anything on my shopping list, and it makes it easier to price-compare items.

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Related: The 10 Best Dividend ETFs [Get Income + Diversify]

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The Expensive Way to Save: 20+ High-Ticket Items That Pay for Themselves

Hannah Kowalczyk-Harper — Sat, 13 Jun 26 13:30:39 -0400

The bigger you need to spend, the smarter you need to be.

When you're thinking about buying, say, a $5 box of cookies or a $10 T-shirt, you're not making a difficult decision. If you buy it and you like it, great. If you buy it and you don't, oh well—you're out a few bucks. If you don't buy it, who cares?

That's not the case with many big-ticket items.

For most people, a purchase measured in hundreds or thousands of dollars is no small transaction. What you're buying will usually have some sort of significance—a critical service, or an essential good that's meant to last. And typically, the more expensive it is, the more difficult it is to get out from underneath that purchase.

This makes it all the more important to make sure that you make the right decision at the onset. It also means, in many cases, you'll want to spend more than the bare minimum on a big-ticket buy to ensure you're getting a certain baseline of quality.

Today, I'm going to talk about a variety of big-ticket purchases that are worth splurging on. Most of these goods and services start at a high price tag, but spending a little more on them now will ensure much higher quality, more utility, and/or a longer product life, ultimately saving you time, frustration, and even money on frequently replacing a cheaper version. A few of these are things you might consider going without—but you shouldn't, because you'll ultimately end up paying even more in other ways.

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Big-Ticket Items Worth Buying

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Perhaps the most important concept to keep in mind as you read through this list is that sometimes spending more money up front is a way to prevent spending even more money down the road. So while it feels like a splurge now, going big on a big-ticket item might just be a savvy financial decision in disguise.

This wisdom has limits—ultimately, your decision to spend boils down to your personal financial situation. If you need one of the below items and have a fixed amount of budget to dedicate to it, you have to do what you can with what you've got. Or if you simply can't afford the item altogether, nothing we say here will change how much money you have in the bank.

But if you're in a financial position to spend (or spend more), you'll thank yourself later for making the most of these purchases.

1. Dental Care

Delaying needed dental treatments isn't only uncomfortable—it can be more expensive as well. A 2023 study by the National Library of Medicine found that the top reason people delay dental care is the cost. But putting off dental care can be more expensive than fixing an issue right away.

Let's say you have a cavity. Depending on the severity of the cavity, where you live, and the material used, filling costs vary. You should be able to get the work done for a couple hundred dollars … unless you want a ceramic or porcelain filling, which would cost around $1,100.

Now, pretend you ignore cavity pain until it's nearly unbearable and discover you need a root canal. That procedure may cost anywhere between $600 and $1,600 without dental insurance.

In general, you're unlikely to regret spending money on dental care. Poor oral hygiene might mean you need dentures at a young age which is expensive (a complete set of mid-priced ones usually cost between $1,000 to $3,000), not to mention extremely inconvenient.

Also, if your workplace offers dental insurance, get it—and use it. While much cheaper than health insurance, it's still a significant purchase at several hundred dollars per year. But it can save you well more than that should you need anything more than checkups in a given year.

2. Health Insurance

Americans should never risk being without health insurance.

I get it. It sucks to pay premiums every month just so you can still pay for services until you reach your deductible … and sometimes still pay a portion after that. I've had years when the only time I went to a doctor was an annual wellness visit, and that certainly didn't feel worth a year's worth of premiums.

But you might be perfectly healthy and get in an accident that requires extensive medical care. Unfortunately, even "minor" procedures can carry big-ticket prices. And obviously, cancer and other diseases that require extensive treatment can be financially back-breaking—according to AARP, the average costs for cancer treatment are around $150,000.

So while paying health insurance premiums feels like you're just throwing money into a pit, insurance could very quickly flip the script and be a financial lifesaver, saving you several thousand dollars should you ever have a medical emergency. (Also, when you have insurance, you typically take advantage of it by getting more preventative exams, which can catch costly health issues earlier.)

Consider splurging on better-quality health care plans, too. While high-deductible health plans can be a good deal for younger, extremely healthy people, traditional PPO plans might make more sense for people who need more health care and want to avoid extremely variable costs up to the high deductible. At the very least, consider all aspects of a plan—not just premiums, but deductibles, coinsurance, and maximum out-of-pocket costs—before selecting a plan. Good health insurance could save not just your life, but your bank account.

Young and the Invested (YATI) Tip: Anyone with a qualifying high-deductible health insurance plan should consider opening a health savings account (HSA). An HSA is said to have a "triple tax advantage" because you can make tax-free contributions, aren't taxed on growth, and you get tax-free withdrawals for qualifying health expenses.

3. Desk Chairs

Kyle Woodley, Young and the Invested's editor-in-chief here, to interject my own personal experience with this particular subject.

If you have a desk job, you're spending at least eight hours of each and every day sitting in the same seat. If you do additional freelance work, that's even more time with your butt in one place.

I cannot stress this enough: Put the time and money into a decent office chair.

I spent roughly three years in and out of various physical therapists to work on my persistent chronic neck and back pain. While most of them were only vaguely concerned with my office setup, one particularly astute therapist finally dug in hard on my chair, what type of mouse I used, where I positioned my monitor, and more.

The therapist said one of the most impactful upgrades anyone could make was in their office chair. Even spending, say, just a few hundred dollars on a feature-packed chair with proper lumbar support often turned patients back into strangers. I did just that (and made a few other specific adjustments to my chair given my spinal curvature), and I've winnowed my PT sessions down to a once-a-month "tune-up."

Really put the work into finding an appropriate office chair. Some chairs actually indicate how much time per day they're meant to be used for—so if you're constantly parked at your desk but your chair is only rated for two to three hours a day, you might be saving $200 now, but you'll pay thousands of dollars later in PT or chiropractic bills. Not to mention, inexpensive chairs tend to wear out faster anyways, meaning you'll have to literally buy more of them over time.

4. Mattresses

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Even if you don't spend much time in an office chair, virtually all adults need seven to nine hours of sleep per night—which means they're spending seven to nine hours on a mattress every day.

That's a lot of time in bed. Buying a high-quality mattress is essential. And a lot of time in bed using a low-quality mattress can weigh on the quality of your sleep, which will in turn weigh on your mood and productivity. A poor mattress can also contribute to poor cardiovascular and metabolic health and even cause you pain.

Also, mattresses don't all last the same amount of time. The widely cited average lifespan of a mattress is seven to 10 years. But cheaper mattresses must be replaced more frequently (upping your actual cost over time) and provide an even worse sleep experience until you do.

And if you can avoid it, don't buy a used mattress to save money. While you might be saving on a higher-quality mattress, you're buying a mattress with reduced usable life—plus you're possibly inheriting other problems, such as body impressions or even bed bugs.

5. Other Furniture

Some used furniture is an absolute steal—antique chests, drawers, cabinets, and other primarily wood-and-metal furniture tend to be built well and, if properly cared for, still look good to boot.

However, when it comes to other "soft" furniture (think sofas and lounge chairs), you're better off buying new, as well as emphasizing quality over price.

Bargain furniture, for one, isn't necessarily a bargain—it quickly wears out, so if you have to buy two $500 sofas over the amount of time a $1,000 sofa would last, you really aren't saving anything. Also, cheaper soft furniture tends to fade quickly, rip easily, and be uncomfortable even during its usable life, so you're getting a worse experience overall.

Just like with mattresses, I'd be hesitant to take on a secondhand couch or lounge chair because I know it'd have fewer years of good life left, and I'd be risking bed bugs and other unwanted problems.

And if you're worried about keeping nice furniture nice because you have kids and/or pets, consider covering soft-furniture surfaces with blankets or other covers, or invest in a decent steam cleaner.

6. Computers

If you're a contractor or anyone else who's responsible for procuring their own work computer, or if you're a college-bound student, it makes sense to spring for a newer model with a bit more horsepower than the bargain-basement models.

Most colleges require students to use a computer. So the question isn't so much whether you should get one, but how much computer you need. (As a for-instance, take a look at this Rutgers page that outlines the technical specifications for recommended computers—both PCs and Macs.) A good rule of thumb: Try to buy a new laptop or desktop with at least equal if not better specs than what the school recommends.

You want to buy something a little more powerful than the minimum because 1.) better performance simply makes it easier to do your studies and 2.) your studies might eventually require you to use programs that run better on faster computers. And you want to avoid secondhand computers, even those with the technical specs you require, because while cheaper, they could suffer from other mechanical problems or wear and tear you're simply not aware of yet.

Similar guidance goes for workers whose computers are core to what they do. Why saddle yourself with a machine that coughs and wheezes when you have more than three browser tabs open at once? Or why buy a laptop that already has insufficient storage and struggles to hold a charge? Slow and/or faltering computers drag your efficiency lower and also cause frustration on the job.

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7. Cars

When it comes to big-ticket items, cars are about as big as they get. Depending on where you live, you might not need a car. But, if you do need one, it's certainly worth spending more than the bare minimum.

Most people don't have a lot of flexibility when it comes to their car budget because the cost is so high in the first place. But if you have the benefit of time to save up more before you purchase a car, you can stave off and even prevent some problems over time.

When you buy a car, you ideally should try to buy new (so, no mileage) or lightly pre-owned (with low mileage).

New and even lightly pre-owned cars have very few maintenance and repair costs up front, and they typically enjoy some level of warranty coverage—so even if something does break, you might not be financially liable for the fix. Conversely, heavily used cars tend to need much more maintenance and are more prone to requiring repairs as old parts age out. And those costs aren't cheap—depending on your luck, what you save in monthly payments, you could easily lose out to having to make major repairs in a given year.

Plus, whenever your car breaks, you're losing time. You're losing a means of getting to your job. And if it breaks down in an opportune place—the middle of an intersection or on a busy highway—it's even presenting a safety hazard to you and everyone around you.

So if you have the option to wait to save up for a lightly used or new car, rather than buy an old clunker, do it. (But note: You don't have to buy luxury cars to get reliability—check out J.D. Power, Consumer Reports, and other respected car-information outlets to determine what regular brands last the longest.)

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8. Car Tires

If you need a fresh set of car tires, don't cheap out, and don't delay.

To start, having run-down tires is a safety issue; they don't grip the road as well, and they're more susceptible to punctures. They can also slowly eat at your wallet—older tires are more likely to suffer from low pressure, which negatively impacts fuel efficiency.

So if you buy used car tires, you're just inviting those problems sooner.

If you're budgeting, you'll need anywhere between $120-$200 per tire for a mid-range new tire (depending on the size tire your vehicle requires). If you're simply replacing a relatively new blown-out tire, you might be able to get away with buying one tire at a time. Otherwise, if you're just replacing worn tires, you'll typically want to buy all four at once—particularly if you drive an all-wheel-drive vehicle.

9. Dishwasher

A dishwasher is a big-ticket purchase where people often consider the upfront cost but forget about the cost over time.

Especially if you hate washing dishes manually, it pays to pay up for a nicer dishwasher. For one, some pricier dishwashers offer much better energy- and water-efficiency, helping you save twofold on your utility bills. Also, pricier dishwashers also tend to hold more dishes, clean more deeply, and run more quietly.

Even some seemingly frivolous bells and whistles are quite useful. Some high-end models, for instance, even have sensors that detect how dirty your dishes are and adjust temperatures and cycle times accordingly.

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10. Houses

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Most of us have seen at least one episode of a show where people buy and "flip" homes, either for a profit or to transform an old home into something incredible for its new owners.

The transformation in these shows, while impressive, take a substantial amount of time … and money.

If you're buying a new home, you don't need to pony up for a brand-new mansion, but unless you're both extremely handy and flush with time, don't save money buying a "fixer-upper." In fact, the less handy you are, the newer the house you should buy—yes, you might have to figure out how to do a few DIY tasks eventually, but a new/newer home, with new/newer amenities, will buy you more time to learn. Also worth noting is some issues are so large, you might need alternate housing until they're fixed—meaning you'll not only have to make mortgage payments, but you'll have to pay rent elsewhere.

Also, if you're not considering buying a new home, even long-term, you might want to reconsider. While expensive overall, owning a home is sometimes actually cheaper than renting. When you own, you have more power, too—there's no landlord raising rent every year, telling you how you can or can't decorate the interior, or charging you extra just to own a pet.

Home ownership can also be good for your credit, it offers tax advantages to offset costs, and it can make you feel more personally secure. And remember: A house is a tangible asset—one that can appreciate over time. A 2021 Realtor.com survey shows a whopping 94% of respondents expected to sell their home for more than they paid for it.

11. Home Renovations

Even simple renovations can be costly—Rocket Mortgage, for instance, says the average American family spends $22,000 on a single home renovation project. (Though obviously, costs will vary widely from one project to the next.)

In general, it's a good rule of thumb to not contract out home renovations solely on cost—while cheaper materials and labor might bring the cost to a more attractive level, you risk a lower-quality result that doesn't stand the test of time. DIY home renovations might be more affordable, but if you're not skilled, your changes could look sloppy or even be unsafe. So be realistic about what you can do and what you should farm out to a professional.

You might also consider splashing cash on "strategic" renovations—that is, investing money in your home now can add value to it when it comes time to sell. According to Better Homes & Gardens, some of the home renovations that add the most value include:

-- Additions that increase your square footage

-- Kitchen remodels

-- Bathroom renovations

-- Updating your heating, ventilation, and air conditioning (HVAC)

-- Outdoor updates, such as patios

-- Accessibility features

-- Updating light fixtures

12. Post-Secondary Education

A post-secondary education is one of the costliest big-ticket items you'll ever buy—at this point, it'll likely be second only to your home. But it can be well worth it.

Whether your child goes to college or a trade school, any sort of post-secondary education can make it easier to get a high-paying job.

Whether your child goes to college or a trade school, it can make it easier to get a high-paying job. According to the Bureau of Labor Statistics, the median annual salary for someone with a high school degree is $44,356—that jumps to $74,464 for those with a bachelor's degree, $86,372 for those with a master's, and $108,316 for those with a doctoral degree.

Apprenticeship USA, meanwhile, says people who have completed an apprenticeship earn a starting salary of $80,000, on average. (While not apples to apples—BLS data is median, while Apprenticeship USA is using mean—that's still several tens of thousands of dollars higher, according to numerous other data sources we checked that provide mean earnings estimates for high school diploma holders.)

YATI Tip: You can save for your child's future education in a tax-advantaged account, such as a 529 savings plan, Coverdell education savings account (ESA), or Roth IRA.

Related: Federal Tax Brackets and Rates

13. Fitness Equipment

Your health is important, and doing sufficient physical activity is a crucial part of maintaining health. However, while some people can easily maintain a rigorous physical training regimen without spending a dime, others need fitness equipment to make exercising more convenient and even accessible.

For instance, sure, anyone can just go outside and run. However, if your winters are frigid or your summers are dangerously hot, that's going to keep you indoors—alternatively, you can use a treadmill or stationary bike all year long. Sure, many gyms are cheap. But if you have to drive 30 minutes each way to get to one, maybe you just don't have the time to lift weights in one—alternatively, you can easily squeeze in some reps in between tasks at home.

In some cases, simply spending the money on fitness equipment is its own motivation. After all, you don't want to waste the hard-earned money you spent. And as countless studies show, exercise provides a vast array of physical and mental health benefits that far outweigh the outlay for a Stairmaster or rowing machine.

14. Vacuums

A vacuum is a staple of home cleanliness. But the prices and quality of vacuums can vary substantially.

I remember the tiny, pink vacuum I got for my college dorm. It was cheap, but it ultimately felt (and cleaned) more like a child's toy than an adult's home maintenance machine. Yes, you can get vacuums for as cheap as $50 … but cheap vacuums notoriously lack durability, dying without any identifiable cost. They also have little suction, which means you're not really cleaning anything—you're just pushing a stick across your carpet.

A good vacuum is going to be a bigger-ticket item in the hundreds of dollars. But they'll last years longer than a bargain-basement vacuum will, they'll clean effectively, and they'll usually come with (or at least support) tools that let you clean in hard-to-reach places.

Nowadays, I try to use vacuums that have much more power and durability. Cheap vacuums have a way of dying without any identifiable cause. Then, you have to purchase another one.

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15. Travel

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When you splurge on travel, you won't save more money in the long run, or get a more durable product, or enjoy any of the other benefits that typically come with spending more on big-ticket items.

The benefits of spending more on travel are far less tangible but no less important.

A survey by the American Society of Travel Advisors showed that 78% of survey takers believed "Now, more than ever, a vacation would do wonders for my mental health." Another 64% agreed that "Traveling is the best quality time I can spend with my family." No wonder, then, that nearly half of respondents rank vacationing as their No. 1 discretionary spend.

Speaking for myself, I've been to 14 countries—and that's allowed me to unwind, stay warm when it was icy back home, and, most importantly, learn about numerous other cultures.

How you get more enjoyment out of your trip depends on what you value. Spending more on a flight could get you fewer stops and a shorter flight time (and thus more time at your destination) or just more legroom and a more relaxed time spent getting from A to B. Or you might spend more on a hotel to ensure you're staying in a more relaxing room in a quieter property. (Whenever I used to stay in hostels, I wouldn't get a good night's sleep.) And spending more on experiences—museums, shows, what have you—can turn into even more memories.

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16. Luggage

You're at the airport's baggage claim, and you see your luggage turn the corner … only to see it has split open and released some of your clothes. Or you're at home zipping your luggage shut before a big trip, but it refuses to budge—and you have a wide-open piece of luggage that's no good to anyone.

When you buy cheap luggage, you're increasing the risk that your luggage will become unusable at a critical moment in your travel timeline.

So don't buy cheap luggage.

Good, solid luggage from established brands such as Samsonite or Hartmann will run you a few hundred dollars per bag. But these bags can last for literal decades—and from time to time, you can get them at stores like Marshalls or TJ Maxx at a discount.

17. Time-Saving Services

Kyle Woodley, Young and the Invested editor-in-chief, sounding off again. While it might seem silly to pay someone else for a task you could do yourself, professionals can usually do that task better and faster.

Consider one of the most popular time-saving services: cleaning.

My wife and I have both deep-cleaned our house ourselves, and also hired out the job. Typically, it takes the two of us a combined 10 to 12 hours. It took a two-person professional team (that also had the benefit of professional-grade equipment) a combined six hours to do the job—and, admittedly, do it better.

The job cost about $400 (without tip). If you have a traditional 9-to-5, salaried job, and that's it, then you're basically paying for the convenience of not having to do it yourself—and that alone can certainly be worth it! However, there's additional financial incentive if you work an hourly job (especially where overtime hours are common), or if you have at least one side hustle (guilty). That's because time literally is money; those hours spent working instead of cleaning can help partially or completely offset the money you're paying to have work such as cleaning or mowing done.

18. Kitchen Ranges

If it's time to replace your old kitchen range, don't scrimp.

The kitchen range (which includes an oven and a stove top) is effectively the nerve center of your kitchen. With the exception of occasionally using an outdoor grill, microwave, or crock pot, it's where most of your cooking is done—and if you have the right kitchen implements, a range can do most of what those other appliances can do, too.

Will paying up for at least a mid-level kitchen range turn you into a Michelin chef? No. But it will cook your food faster and more evenly. Having additional burners makes it easier to cook complex dishes and meals. Double-oven ranges allow you to bake multiple dishes at different temperatures. A kitchen range with a griddle gives you additional cooktop versatility (and a big cooking surface).

Even if you don't cook often, an impressive kitchen range can literally increase your home's value for when you're ready to sell.

19. Water Heaters

When you buy a home, you always need to be mindful of the ticking time bomb that is your water heater. According to Architectural Digest, "the national average for tank water heater installation is between $906 and $1,583 for the unit and labor, and tankless water heaters cost around $1,833 to $3,910 to purchase and install."

Larger units cost more—but if you install a tank that's too small for your family, you risk running out of hot water before everyone bathes. Electric water heaters typically have lower purchase prices but higher operating costs. Gas water heaters have lower operating costs … but they also tend to have shorter lifespans. Tankless water heaters are more expensive but can last between 20 and 30 years.

So there are a lot of considerations when it comes to water heaters. But no matter what kind you get, you don't want to cheap out. "Value-priced" water heaters often use less durable materials such as plastic valves and glass (or even no) interior tank lining. So while it might be less costly up front, a cheap water heater could still cost more by deteriorating more quickly and forcing you to buy a new one sooner.

20. Cookware

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Cookware like pots and pans aren't necessarily luxury items, but they can be priced that way.

While a single pot or pan wouldn't necessarily be considered a big-ticket item, a full set will easily set you back hundreds of dollars—even if you "go cheap." A relatively inexpensive set of nonstick pots and pans can run $300—and those will still need to be replaced every five years, or even more frequently depending on the brand.

Stainless steel cookware, while more expensive, can last decades (if not your whole life). Cast iron cookware can—and often is—passed down through generations.

There's a reason expensive cookware is a popular item on wedding registries and holiday season wish lists.

21. Washing Machine

Washing machines are big-ticket items, but doing laundry at home versus at a laundromat can be worth it. While each load of laundry is generally cheaper when done at home, it's a small difference, so it can take a long time before the investment pays for itself.

However, that isn't the only factor at play. Unless you live within walking distance from a laundromat and don't mind lugging around a big basket, or a nearby service offers pickup and drop off, you need to pay for transportation. Plus, if you use a laundromat washing machine, you're stuck paying for the dryer. Doing laundry at home gives you the option to dry clothes for free on a clothing line, should you wish.

While a washing machine presents a big upfront cost, saving literally hours every week, and coming out ahead financially over time, makes this a big-ticket item worth prioritizing.

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How to Plan for a Big Purchase

I'm not suggesting you grab a credit card and head to the nearest store to immediately buy some of these big-ticket items. If you're going to splurge on services and high-quality goods, you'll do so over time as your financial situation allows.

But until then, keep these strategies in mind:

Incorporate big-ticket items into your budget: A popular piece of advice (at least back in the day) was "when you buy a car, start saving for your next car." Maybe you're not that proactive, but if you know you're going to need a new car, dishwasher, hot-water heater, etc., it's wise to start regularly saving toward that so you have the money by the time (or before) you need it. That way, you're not in a mad scramble to find a few hundred or thousand bucks when the need arises.

Put money in a different account: It's challenging to "earmark" money from your checking account and not spend it elsewhere. And if you do that, that money is probably earning little to no interest. Set aside money you're saving toward a big-ticket purchase into an interest-bearing account, such as a high-yield savings account or money market account.

Comparison shop: When I say comparison shop, I don't just mean on Amazon. Big-ticket purchases shouldn't be bought on a whim. Take real time to research the product or service that makes the most sense for your family and gives you the most value for what you're spending. That could mean checking numerous sites, reading numerous reviews, even going out in person to various stores or dealers to see the product in person. (And keep track of prices over time—it's a great way to determine whether you're getting a good deal.)

What NOT to Splurge On

If you have a high income, can easily afford luxury goods, and don't really care how much you spend on anything … for one, congratulations, and two, you don't need to read on.

But if you're being smart about your spending, it's not just about knowing where to pay more—it's about knowing where to pay less. With that in mind, consider skipping paying too much for the following purchases:

Refrigerators: While getting the absolute cheapest fridge may not be the best option, premium refrigerators are often advised against. Big-ticket fridges typically come with a wide range of technological features, such as Wi-Fi connectivity or voice controls. But the more features added, the more potential for something to go wrong. Often, simpler is better.

Anything "trendy": Go ahead and buy a nice suit or a classic little black dress. But be more wary of a designer outfit or accessory that might soon go out of style. One of the current fashion trends is "mob wife," but by the time you read this, it might not be! Also, clothes aren't the only items that go through trend cycles. Anyone remember Snapchat Spectacles? 3D televisions? Before you buy the latest technology, you might want to wait for it to go mainstream—if it doesn't, you could be saddled with a high-cost piece of hardware with little developer support and no app ecosystem.

New hobbies: Some hobbies are very expensive. If you can afford one of these hobbies and it enriches your life, by all means, spend a lot of money on it! But if you're just trying a hobby out, start out cheap. For instance: You don't want to purchase high-quality camping gear and discover that, after one night on the cold, hard ground, it isn't for you. Expensive camping gear rapidly goes down in value. Instead, when you're first getting into a new hobby, try to borrow items or buy affordable tools. Only once it's clear that you've discovered a true passion should you upgrade.

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Gourmet on a Golden Budget: 10 Premium Food Perks for Seniors

Hannah Kowalczyk-Harper — Sat, 13 Jun 26 12:15:03 -0400

Once you become 21, you've pretty much run through all of the major milestone ages that come with fresh privileges … for a few decades, at least.

But once you get into your 50s and 60s, you have a few more milestone birthdays (55, 60, and 65) that deliver fresh perks: senior discounts.

Senior discounts exist across a variety of businesses, but it's hard to think of a more regularly useful source of price relief than discounts on food. And that's what I'll focus on today.

Read on as I outline a number of food-related senior discounts across two types of business: restaurants and grocery stores. For the most part, these are either national or "super-regional" chains, meaning you likely patronize at least a few of these businesses.

Restaurants With Senior Discounts

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You've probably heard "have you signed up for our rewards program?" five times this week alone. Nowadays, the most ubiquitous method of saving is to join a rewards program and download yet another app.

At the same time, simply showing an ID card to receive a senior discount is a lot less common than it used to be.

Less common … but not extinct.

Some restaurants still offer senior discounts. Today, I'll show you a few of those—most of which use a blanket discount across the menu, though one has a special prix fixe menu for seniors.

1. Chili's

If you're a fan of Chili's Grill & Bar's American and Tex-Mex cuisine, you're not alone—the popular casual dining chain has more than 1,600 locations, including roughly 450 outside of the U.S.!

You'll also be happy to hear that there are ways to lower your Chili's bill.

In addition to kids eating free (with the purchase of an adult entrée) and free meals for veterans and active-duty members on Veteran's Day, Chili's offers a 10% senior discount to people age 55 and older.

You'll want to double-check that the discount is available at your preferred location, as terms may vary. If your location does offer the discount, all you need to do to receive it is mention your age to the server. That Mango Chile Chicken won't just be delicious—it'll be a little cheaper, too.

2. El Pollo Loco

Are you crazy about El Pollo Loco? You may be in "cluck."

El Pollo Loco actually spans three separate entities: a Mexican group, a Philippines group, and a publicly traded U.S. operation that spans 495 restaurants (mostly in the Southwest).

If you're at least 60 years old, you qualify for a 10% senior discount (with a maximum savings of $1) at participating U.S. locations. It's by no means a substantial discount, but savings are savings.

It's also worth noting that El Pollo Loco also offers a 15% (max savings: $1.50) for military personnel, federal law enforcement agents, police officers, firefighters, and EMTs.

3. Dairy Queen

Dairy Queen, or just "DQ" if you're pressed for time, offers a 10% senior discount to anyone who is 55 years of age or older.

But you'll want to do your homework before ordering your Blizzard.

Dairy Queen boasts more than 7,000 locations across the U.S., Canada, and 19 other countries. So chances are, there's a location near you. However, the majority of U.S. locations are independently owned and operated franchises, which means those locations don't necessarily have to offer the discount. In other words, you'll want to call ahead or ask at the store to see if they'll honor the discount.

Related: 12 Free Things for Seniors

4. Golden Corral

If you have a large appetite, or you just love having a wide selection, you probably gravitate toward buffets. And because Ponderosa's reach has dwindled to just about 20 locations, your best bet is likely Golden Corral.

Golden Corral has roughly 400 locations across 43 states and Puerto Rico, and virtually all of them offer a senior "early bird" special on the buffet to seniors age 60 and older.

That said, you'll still want to call ahead, as early bird times vary by location.

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5. Denny's

Grand Slam-slinging Denny's has more than 1,560 restaurants, most of which are in the U.S., though it has roughly 140 international locations. For the uninitiated, this diner-style chain serves traditional American food and is best known for its strong breakfast offerings and 24/7 operations.

That means no matter what time it is, seniors can save.

Adults can use an AARP membership to get 15% off of their checks. To get the AARP discount, you simply show your membership card with your check. If you're getting a to-go order, you can give your membership number over the phone. Your 15% off is unlimited though—the maximum discount is $10.

6. Perry's Steakhouse

Perry's Steakhouse & Grill is an upscale steakhouse and grill with humble roots. The Perry family opened a buncher shop in 1979, and a few years later, they added a few dining tables to the store. In 1993, Chris Perry founded Perry's Steakhouse & Grille, which today has 22 locations in eight states.

Perry's isn't expansive as the other restaurants on this list, but it does offer a stellar value-priced menu for seniors age 65 and older. It's a $39 prix fixe three-course menu with six choices per course, beginning with soup or salad, a main course, and dessert.

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7. Papa Johns

Pizza is a crowd pleaser, no matter your age! And if you're an AARP member, you can get "Better Ingredients, Better Pizza" for a little less at Papa John's.

Papa John's pumps out some 350 million pizzas every year at its 6,000-plus locations, so there's almost certainly a location somewhere near you. And if you're an AARP member, you can get 25% off any regular-menu-price order.

Just don't plan on just flashing your membership card at a register. You'll need to redeem your discount online, then either pick it up or have it delivered.

Grocery Stores With Senior Discounts

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Preparing a home-cooked meal is typically more cost-efficient than going out to eat, but rising grocery prices make cooking at home feel just as expensive.

Thankfully, a few grocers help seniors save money on groceries. Let's check out some major grocery chains that currently offer senior discounts.

8. Fred Meyer

At a time when it was common to visit different stores for produce, meat, and other items, Fred Meyer opened with the idea of being a one-stop shop. This Kroger subsidiary spans more than 130 grocery stores spread across Alaska, Idaho, Oregon, and Washington.

True to its one-stop-shop mission, in addition to groceries, customers can also get household goods or visit the pharmacy for vaccinations or prescriptions.

Fred Meyer's senior discount, which is available to adults age 55 and older, is available on the first Tuesday of every month. The 10% discount applies to select items, including:

--Private-brand groceries and nutrition

--Apparel, shoes, and accessories

--"Home" items, such as

---Toys

---Sporting goods

---Auto

---Garden

--Most electronics (excludes game consoles by Nintendo, PlayStation, and Xbox)

9. Hy-Vee

Hy-Vee, which has more than 280 locations spread across the Midwest, promises it customers "a helpful smile in every aisle."

Smiles are great, but seniors are probably more interested in getting a discount.

Most Hy-Vee locations do offer a discount to older adults, but it's extremely variable—the minimum age of eligibility, timing of discount availability, and discount amounts all vary by location.

In researching for this story, I've seen age minimums as low as 55 and as high as 65. The discount usually is available one or two days per week, but the days aren't the same. And while a 5% discount is the most common, some stores reduce prices by a little more or a little less.

In other words: Check with your nearest Hy-Vee for details.

10. Piggly Wiggly

Do you love to "shop the pig"? Piggly Wiggly, which was founded in 1916 in Memphis, Tennessee, touts itself as being America's first self-serve grocery store. Today, it boasts more than 500 stores across 18 states, predominantly in smaller cities and towns in the South and Midwest.

If you live in a small town with few grocery options, it can be really difficult to get good prices. Fortunately, some Piggly Wiggly locations help by offering a senior discount.

Stores are independently owned, so availability varies wildly. Some stores don't have the discount—and those that do offer different amounts (5% is typical), timing (usually once a week, but the day varies), and minimum age (60 is the most common I've found).

Related: 10 Best Monthly Dividend Stocks for Frequent, Regular Income

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Trading Coworkers for Canines: Is a Pet the Perfect Golden Years Companion?

Hannah Kowalczyk-Harper — Sat, 13 Jun 26 11:15:32 -0400

As the phases of our lives change, so too do our many needs and preferences—and that includes the companionship of little furry friends.

Pet ownership is ubiquitous in America, with some two-thirds of households boasting at least one dog, cat, rabbit, hamster, bird … well, you get the picture. While Millennials make up the largest share of pet owners, Gen X and Baby Boomers still account for significant slices of the pie. In other words, adults of virtually all ages see the benefits of pet ownership.

Still, people entering retirement usually face a serious decision about owning a pet. Longtime pet owners might need to consider whether they can still care for their pets, or whether they should give them a new home. Those who have never had a pet sometimes see retirement—and all of that newfound time—as the perfect opportunity to get a new cat or dog because they can give them the attention they deserve.

Today, I'd like to help you make your decision by providing some of the most poignant pros and cons of pet ownership for retirement-age adults. Older adults often enjoy incredible health and mental benefits when they own a pet. But the decision to become a pet owner shouldn't be made lightly—there are several reasons why retirement is a less-than-ideal time to take on an additional responsibility.

Pet Ownership in Retirement: The Pros

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Pet ownership can benefit you mentally, emotionally, even physically. These advantages have made themselves evident time and time again through scientific studies, survey results, and personal anecdotes. And some of these advantages are even more important for older adults.

Let's start by going over some of the most noteworthy reasons why retirees should consider getting (or keeping) a pet.

1. Pets Reduce Loneliness

Loneliness is a scourge—one that particularly weighs on people as they get older.

The 2023 University of Michigan National Poll on Healthy Aging surveyed American adults ages 50 to 80 about loneliness. Around one-third of respondents (34%) admitted to feeling isolated from others, and 37% reported feeling a lack of companionship.

Retirement can contribute to loneliness. Some retirees go from being surrounded by people five days a week to seeing people much less frequently.

Fortunately, studies show that pet ownership is associated with lower levels of social isolation. Not only can pets themselves provide companionship, but especially social pets can help you meet other people. For example, dog owners frequently strike up conversations on walks and hikes while their pets interact.

2. Pets Reduce Stress

Pets can be an excellent stress reliever, too.

In a 2022 American Heart Association Pets Survey, 95% of respondents said they rely on their pets for stress relief. The most common reasons given for how pets help eliminate stress are through cuddles, making owners laugh, and reducing overall loneliness.

Simply petting a dog can lower cortisol (a stress hormone) while increasing oxytocin (literally known as the "love hormone" and helps humans bond to one another). Studies suggest service dogs can even decrease symptom severity for people with post-traumatic stress disorder (PTSD).

3. Pets Can Slow Mental Decline

Your pet might be clever … but it also might be keeping you every bit as clever.

The American Academy of Neurology conducted a study of older adults with normal cognitive skills and an average age of 65. Just more than half of participants (53%) were pet owners; around one-third (32%) owned a pet for five years or more. The adults took multiple cognitive tests over the years, and they were given a composite cognitive score.

Over the course of six years, the cognitive scores decreased at a lower rate for people with pets, and it decreased the slowest for long-term pet owners.

The takeaway: Pets can keep you mentally sharp.

4. Pets Help You Stay in a Routine

If you own a cat or dog, you might not even bother owning an alarm clock. Pets will make sure you're awake (too early), let you know if it's past time for one of their meals, and let you know when it's time to get to bed so they can sleep on your chest.

In short: Pets can help you keep a general routine, and that's actually good news for your health.

Northwestern Medicine writes that routines can help you eat healthier, stay active, and sleep better. And researchers at the University of Pittsburgh discovered that older adults (age 65+) who have more volatile schedules have "depressed mood levels," "greater guilt levels," and "greater suicidality levels" than people who develop routines and are active each day.

5. Some Pets Keep You Physically Active

Fewer than 15% of Americans ages 65 and older get the recommended amounts of aerobic and muscle-strengthening exercise suggested by the second edition of the Physical Activity Guidelines for Americans, according to the U.S. Department of Health and Human Services.

Sure, a pet turtle won't necessarily jump-start your exercise routine. But a hyperactive dog? Yeah, that kind of pet will keep you on your feet.

In a survey conducted by OnePoll, on behalf of dog food company Orijen Amazon Grains, some 70% of respondents said they've become physically healthier since getting a dog. A similar number (68%) said they "hated" exercising before they got a dog.

Research seems to back up these surveys. The study "Examining the Contribution of Dog Walking to Total Daily Physical Activity Among Dogs and Their Owners" used accelerometers to monitor dog owner-dog pairs. The results showed that dog walking accounted for more than half of the owners' daily moderate-to-vigorous physical activity.

And a 2023 meta-analysis of 49 qualifying studies, published in Frontiers in Public Health, found that pets have a "moderately significant positive effect on the physical activity" of pet owners, compared to people without pets. (Said otherwise, pet owners tend to be physically active more frequently than non-owners.)

If you're looking to get more physical activity into your daily routine, an active animal could be the motivation you need.

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Pet Ownership in Retirement: The Cons

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Pet ownership can be wonderful, but it isn't without its share of challenges. Pets require energy, space, and financial resources. And while they can provide health benefits for some people, others might find furry friends to be detrimental to their health.

Here are some reasons why caring for pets could actually be a poor decision for some retirees.

1. Pets Can be Expensive

Pet expenses can vary substantially depending on the animal you have, whether they have minor or major health issues, and how much you want to spoil them. Still, it can be useful to get a general sense of costs before diving in.

Let's consider two of the most popular pets.

A MetLife survey found that in 2023, owners of cats and dogs spent an average of $4,800 on their pet. Some of the highest costs were veterinary visits (averaging $1,242), treats (averaging $645), food (averaging $633), clothes (averaging $598), and toys (averaging $585).

While not all of these items are necessities (no, your dog doesn't need another tutu), the costs can still add up—particularly if your pet has, or is likely to develop, any health issues.

If you're already on a very tight budget, a pet could add more financial strain.

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2. Pets Can Make It More Difficult to Go on Vacations

Many people look forward to retirement because it unshackles them from the constraints of a full-time job, which gives them more time to travel.

The Transamerica Institute is a nonprofit that researches "retirement security and the intersections of health and financial well-being." According to the institute's 2023 retirement survey, traveling is the most commonly cited retirement dream by both workers aged 50-plus (65%) and retirees (60%).

Unfortunately, pets can complicate your retirement travel plans.

In a Forbes Advisor survey of 10,000 American dog owners, 37% of respondents said that finding a pet sitter when traveling was the most annoying part of having a dog. Of course, many people just bring their dogs with them—82% reported that they sometimes travel by car with their dogs, and 33% said they sometimes bring them by plane.

Bringing a pet on your travels can be challenging and stressful. Paying for boarding or a pet sitter can be pricey. So while it can be done, having pets makes it more difficult to travel often.

3. Space Limitations

While many older adults have enough room for a pet, some people downsize during retirement—and doing so might leave them with insufficient space.

According to the Transamerica Center for Retirement Studies' 2023 report Life in Retirement: Pre-Retiree Expectations and Retiree Realities, over one-third (37%) of retirees move to a new home during retirement. Among movers, nearly one-third (27%) cite their reason as downsizing to a smaller home.

How much space a pet needs varies, but even small animals need a minimum amount of room to roam. For example, Purina recommends having at least 20 square feet (which can be across various rooms) for a cat to wander.

Some elderly adults might move to senior or assisted living facilities, which can be on the small side, too. Some may permit pets, but the resident is typically required to provide full care, and there might be restrictions on weight and breed.

No matter your situation, you don't anticipate having much room during retirement, a pet may feel cramped.

4. Physical Limitations

Although pets can help older adults stay active, elderly people still often have physical limitations, which can make it challenging to care for pets. Stray toys, slippery floors from bathroom accidents, and small pets themselves can be tripping hazards.

The Centers for Disease Control and Prevention (CDC) reported that in 2021, "emergency departments recorded nearly 3 million visits for older adult falls." And emergency falls among seniors ages 65 and older resulted in more than 38,000 deaths that year.

Even if pet owners don't trip, it can be difficult for people with mobility issues to carry heavy bags of food, frequently vacuum up pet hair, and execute all the other physical activities associated with pets.

Many of these concerns can be mitigated by strategically choosing which type of pet to get. Still, elderly adults with severe mobility challenges might want to reconsider whether pet ownership is worth the risk.

5. Allergies

Allergies can change over throughout a person's life. Unfortunately, for some, allergies worsen with age, and some people even develop new allergies in adulthood.

So, an adult might currently have very mild pet allergies that are easily kept at bay through hair and dander removal. However, if their immune system weakens as they age, their allergies might intensify and their symptoms might worsen.

While there are always ways to reduce allergy symptoms, those methods might not provide enough relief. The American Lung Association says the best way to manage a pet allergy is to reduce exposure, and for some retirees, that might mean making the difficult decision not to have pets anymore.

Related: Best Schwab Funds to Hold in an HSA

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The High Cost of Being Broke: 10 Ways Modern Capitalism Penalizes the Poor

Hannah Kowalczyk-Harper — Sat, 13 Jun 26 09:45:02 -0400

Most people love a good "rags-to-riches" tale. Someone starting from the economic basement works hard and not only turns their life around—they become an enormous success. It's a feel-good story anyone could appreciate, and it gives us all hope that, if we were suddenly down on our luck, we too could overcome and earn our way to the gilded life.

Of course, these tales are also so appealing because they're so rare in real life.

Among the many reasons why it's so difficult to improve your socio-economic status from the bottom is that being poor is actually very expensive. It's not just the difficulty of trying to live with far less money—it's that in many cases, people in low-income communities pay more for the same items and services as their wealthier counterparts.

What is the "Poor Tax?"

This struggle is aptly nicknamed the "poor tax." Like the "pink tax," it's not technically a tax—but it's a financial reality that very much acts like a tax.

If you want to learn more, read on, and I'll show you several examples of how the "poor tax" makes being poor more expensive than you might realize. We'll also list a few of the most essential things people can do to try to break the cycle of poverty.

The Hidden Costs of Being Poor

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Common responses to "why is so-and-so always broke?" is that the person is a poor budgeter or that they overspend on non-essentials.

Does this happen? Absolutely. But some people simply don't make enough money to make ends meet—and often, they're shouldering the burden of additional costs many people don't realize exist.

Here, we'll try to open some eyes to ways poor people end up paying more.

1. Groceries

You can cut a lot of things out of your budget to make ends meet, but food isn't one of them.

"Food insecurity"—not having enough access to food, or food of sufficient quality, to meet one's basic needs—is a massive problem in America. According to the U.S. Department of Agriculture, 44.2 million people lived in food-insecure homes in 2022. And low-income families struggle with food insecurity for a number of reasons.

For one, they can't afford to buy items in bulk, which is more cost-efficient because you're not paying as much for packaging. For instance, a warehouse store might sell a 100-ounce can of beans for $6 (6¢ per ounce), while a grocery store might sell a 14.5-ounce can of beans for $1.50 (~10¢ per ounce). But poor families typically can't afford a warehouse membership in the first place, and $6 might be more than they can afford to spend on that particular item in a given week anyways.

Having a smaller food budget also means you can't always take advantage of sales. If you're price-constrained to the point where you don't buy something until you absolutely need it, that means you can't buy something just because it's suddenly more affordable. (Conversely, people with more flexible budgets tend to stock up on items during sales.)

There is also the issue of "food deserts," where there is insufficient access to grocery stores or at least stores with healthy, affordable food. Food deserts are more common in low-income neighborhoods. Moreover, if you don't live near many stores—particularly if you don't have your own transportation—you often have to settle for whatever prices your nearest store charges. The alternative? Pay much more in transportation costs (fare or gas) to go to a farther store, which could possibly negate any food savings.

2. Health Care

The U.S. has one of the world's highest costs of health care, and one of the largest chunks of those costs is health insurance. As a result, many people are tempted to skip buying it altogether, especially if they simply can't afford it without cutting into more immediate needs (rent, food, utilities).

Now, even insured Americans can get hit with medical debt, but it impacts the uninsured far worse. According to the Commonwealth Fund 2023 Health Care Affordability Survey:

-- 32% of all respondents said they had medical or dental debt they were paying over time.

-- However, uninsured people were the most likely to report having medical or dental debt, at 41%.

-- Even among those with employer-sponsored insurance, the greatest cohort reporting medical or dental debt were those in the lowest economic bracket (income of less than 200% of the federal poverty level), at 44%.

Zooming out, more than half of that low-income bracket (56%) reported generally struggling with health care costs.

People without health insurance are less likely to have preventative and primary care visits, and those who postpone care are more likely to need hospitalization for chronic conditions. So not only can being uninsured be costlier over the long term—it can be deadlier, too.

3. Preventative Dental Care

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In the same vein, people who can't afford preventative dental care can also risk much bigger bills (or bigger problems that go unaddressed) down the road.

An example of the cost of not having dental insurance: Last year, a friend of mine who doesn't have dental insurance had her wisdom teeth pulled out. It cost her about $3,100 (the cheapest price she could find after calling several offices). If she had dental insurance, it likely would have covered around 50% to 80% of the cost.

Wisdom teeth are beyond your control, but preventative dental care isn't. Whether or not you have dental insurance, getting regular cleanings, X-rays, and fillings (if necessary) is important to your health and can prevent the need for costlier procedures.

Pretend you have a cavity that's bothering you and you don't have dental insurance. Depending on the location where you get it done and the material used, prices vary, but the price is often between $200 to $600.

Let's say you ignore the pain because you can't afford a filling. Eventually, the pain worsens and when you finally see a dentist, you find out you need a root canal. The average cost of a root canal, without insurance help, is $600 to $1,600—potentially much more than it would have cost to get the filling right away.

4. Laundry

Another aspect of life in which low-income people pay more is doing laundry.

Anyone who has gone from using the laundromat to their own in-home appliances knows how much easier their lives became as a result. But they might not have realized they probably came out financially ahead, too.

This involves a little math, but …

-- The average cost of doing a load of laundry at home (so, electricity, water, laundry supplies, etc.) is roughly $1.40.

-- The average cost of doing a load of laundry at the laundromat is roughly $3.10.

-- If you do the U.S. average 300 loads of laundry per year, you pay $420 per year at home, and $930 per year at the laundromat. So you save $510 per year by doing your laundry at home.

You'll note that these numbers don't factor in the cost of buying a washer and dryer. Well, you can purchase a low-end washer and dryer set for roughly $1,000, so it would take just two years ($510 annual savings x 2 years) to offset the difference—everything after that is pure financial upside.

But that's no help to a person who can't save $1,000 to buy a washer and/or dryer, or doesn't have accommodations big enough to store those appliances.

Low-income people not only miss out on this cheaper cost of doing laundry—they also lose time. That includes the time of doing laundry at the laundromat rather than multitasking at home, and the time it takes to drive (or ride the bus) to and from the laundromat. And that time really is money; it could be spent picking up more hours at work or even doing a side hustle.

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5. Transportation

The cost of getting yourself from A to B is one of the biggest line items in a family budget.

Research published by the Bureau of Transportation Statistics shows that in 2022, transportation was the second highest household expenditure, eating up 15% of budgets on average. But transportation costs hit much harder for low-income households, which spent an average of 30% of their after-tax income on getting there and back.

Part of that is because of the low income itself. But it also has to do with various aspects of vehicle ownership.

For one, many households can buy new cars outright, or at least finance them at decent rates. However, lower-income households often can only afford used cars, which traditionally are financed at higher rates. And used cars usually don't have the benefit of warranty coverage, so owners typically have to start paying for repairs much sooner than new-car owners.

Public transportation is a great, affordable option in some cities. But it's not widely available everywhere. And in some places, it's cost-prohibitive. So some people are stuck between paying high public transportation rates or buying a car at usurious rates.

Even situational costs are different. Wealthier households typically have more than one car, so if one car does break down, they can simply use a different car until the first one is repaired. But many low-income households have just one car—so if that car breaks down, they're looking at either public transportation costs or expensive ride-share fees until they get their vehicle back.

6. Banking + Credit Card Fees

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Banking is exceedingly more expensive for people with low incomes thanks to numerous factors.

Overdraft fees disproportionately impact low-income households for obvious reasons—people with higher incomes are better able to maintain sufficient fund balances—and they're extremely punitive.

Per the Consumer Financial Protection Bureau: "CFPB research has found that people who pay more than 10 overdraft fees per year end up paying nearly three-quarters of all overdraft fees, and on average, these frequent overdrafters paid $380 in overdraft fees during the year." After all, if you have so little money that you can't avoid an overdraft fee, a $35 overdraft fee is going to substantially deepen the hole you need to climb out of.

Poor people face other banking issues as well. Low-income people are more likely to run out of cash on hand and need to pay out-of-network ATM surcharges. People who need to take a cash advance from a credit card typically pay 3% to 5% of the total amount of each advance. Late fees and high interest rates can also disproportionately weigh on low-income households.

And many households simply go unbanked. When they do, they sometimes have to rely on payday lenders, which charge much higher interest rates than traditional banks and are frequently referred to as "financial quicksand."

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7. Housing

Most people are aware that people with lower incomes are less able to afford the cost of buying a home. That means renting in perpetuity, which means never really owning the place in which they live.

But even when they can afford a home, lower-income households might still end up paying more.

For one: People who don't make much money often have more difficulty saving for a significant down payment (if any). Not only does a smaller, or no, down payment make it harder to successfully bid on a home, but that's also more money that's being financed—which means more money paid in interest over time.

Also, a person's debt-to-income ratio can factor in the interest rate offered; someone with high income and/or a better credit score likely will pay less for a similar-priced home than someone with low income and/or bad credit.

People with less money also sometimes have to settle for fixer-upper homes in low-income areas. And if substantial renovations become necessary, they might end up having to pay far more overall than they can afford.

8. Higher Education

Higher education costs in the United States can be astronomical. While some fortunate undergrads get their college tuition paid for by their parents, others have to take out student loans—and doing so creates a significant additional financial burden.

To obtain a college degree, the average public university student borrows roughly $33,000, according to the Education Data Initiative. On a 10-year payback period at a 6% interest, that comes out to nearly $11,000 in additional interest payments.

In other words, people who can't afford college upfront have to pay an extra $11,000 for the privilege.

If there's any good news here, it's that many students from low-income families can qualify for college financial aid. They can find out how much by filling out the Free Application for Federal Student Aid (FAFSA).

9. Job Opportunities

If you don't earn much, a quick way to improve your situation would be to get a better-paying job, right?

OK. Let's say you work a minimum-wage job and barely make ends meet. And let's say you get an interview for a company offering a very livable salary.

What happens if they can only interview on a day you're supposed to work? You might not have any paid personal, vacation, or even sick days. At best, you'd miss out on a day's wages. But if your current job is understaffed—or if you just have a crappy boss—you might have your job threatened for missing a shift. An interview is not a guarantee you'll be hired, so many people in that situation won't risk their current hours or job.

There are other hurdles that narrow potential opportunities, too. What if you need to wear a nice suit to interview for that job? A person with higher income might already own a suit or have the income to spare—a person barely making ends meet probably won't.

People with low incomes also might not be able to afford relocation, so that can eliminate a lot of opportunities outside their current city. And people without a financial safety net might not want to risk a job offer by negotiating a higher salary, so even while they might improve their income situation, they might earn far less than what another candidate might have been able to negotiate up to.

10. Car Insurance

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All states except New Hampshire, South Carolina, and Virginia require drivers to have a minimum amount of auto liability insurance—and South Carolina and Virginia require those without car insurance to pay an uninsured motorist fee.

That means in most states, if you're caught driving without insurance, you have to pay a fee. Depending on the state, a first offense might cost anywhere between $50 to $1,500.

If your state's fee is low, it might seem worth the risk to simply not carry auto insurance. But fees aren't the only punishment you need to worry about—you might have your license, registration, or both suspended, which can make getting to work much more difficult. You might even face jail time.

In other words: Being too poor to afford auto insurance means either cutting back on other necessities or taking massive risks by simply doing your daily driving.

Related: Federal Tax Brackets and Rates

Breaking the Cycle of Poverty

Once you've started paying the "poverty premium," it can be challenging to stop. As you improve your financial situation, there are a few key actions you should do and some you should strictly avoid.

1. Don't Use Payday Loans

Payday loans, which are known for short terms and high interest rates, can end up doing more harm than good for your financial situation. Pretend you got a two-week payday loan to tide you over until your next paycheck. It wouldn't be uncommon for it to have a $15 per $100 fee, which equates to an APR of nearly 400%!

If you desperately need money, you're better off doing any number of things, including borrowing money from family friends, personal loans, or (while still not ideal, but better) cash advances.

2. Weigh the Value of Employee Benefits

While a job's pay rate is important when choosing a job, don't underestimate the value of benefits. If Job A pays minimum wage, but also offers health and dental insurance, that might actually be a better financial choice than Job B, which offers 50¢ more per hour but with no benefits. Other benefits matter, too.

Paid time off can make it more cost-efficient to manage your health, miss a day of work for your sick kid, or get your car repaired. Access to unemployment insurance, which you usually can't get through gig work, could be a much-needed safety net, too.

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3. Take Advantage of Services

Don't be too proud to use the services available to you. If you were laid off from your job, there is nothing wrong with applying for unemployment benefits. You might be eligible for food assistance, housing aid, and more. To learn more about governmental programs that might help you, visit USA.gov's benefits center.

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Stop Thieves in Their Tracks: 10 Ways to Make Porch Pirates Leave Your House Alone

Hannah Kowalczyk-Harper — Sat, 13 Jun 26 08:30:37 -0400

E-commerce package delivery is insanely convenient. No driving. No waiting in lines. No risk of items becoming out of stock before you get there.

But having those packages stolen? Not so convenient.

As retail deliveries have become ubiquitous, so too has package theft, so much so that a cottage industry of "porch pirates"—thieves who steal packages left outside by carriers—has sprung forth.

Having a package stolen is frustrating, time-consuming, and cost you money. Sure, sometimes all you're losing is a box of garbage bags or a package of back scratchers. But sometimes you might have a high-ticket purchase or a sentimental item sent by family snatched away.

It's extremely difficult (and often impossible) to track down stolen packages after the fact. So for most people, the best step forward is deterrence to keep porch pirates at bay.

Today, I'm going to provide some of the best ways to prevent your packages from being stolen. These simple tricks can give you some peace of mind that your deliveries will be safe from the clutches of local porch pirates.

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How Common Is Porch Piracy?

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Porch piracy is a lot more widespread than people realize.

The concrete numbers vary by survey, but broadly speaking, data shows that between 35% and 45% of Americans have fallen victim to a porch pirate at some point in their lives. According to a January 2024 report from Security.org, some 44 million Americans (17%) lost a package to a porch pirate over just the prior three months.

People are happy to point the finger. A survey by Lombardo Homes found that more than half of Americans believe retailers don't do enough to prevent delivery theft, and roughly the same number think delivery companies aren't doing their part.

But ultimately, the buck largely stops at your doorstep. If a package is delivered to the correct address, it's up to consumers to protect their purchases.

How to Stop Porch Pirates

You might imagine porch pirates as careful planners who stake out homes and wait patiently for the right moment to strike.

While this type of porch pirate exists, most package thefts tend to be crimes of opportunity.

A person walking or driving by your home sees an attractive-looking box, perhaps one donning the logo of an electronics or luxury brand, and quickly grabs it. If the porch pirate doesn't see a package, or has reason to believe they would be caught, there's a high chance they'll skip your home and move on to an easier target.

Try these strategies to make your home unappealing to thieves.

1. Choose Package Pickup Over Delivery

Do you order online primarily for the simpler shopping experience, and not necessarily the convenience of home delivery? Well, if you don't mind a little driving to pick up your order, this strategy keeps packages from ever hitting your porch—robbing porch pirates of the opportunity to steal them.

For Amazon orders, consumers can sometimes choose to have eligible packages delivered to Amazon Lockers, Amazon Counter, or UPS AccessPoint Locations. Not every order has these options, but when they do, you can select that option during checkout.

Families who get frequent deliveries and are unable to bring them inside quickly might also decide to get a Post Office Box (PO Box). These are locked mailboxes at a post office that people rent. As a bonus, a PO Box is a great way to avoid giving out your home address too often, giving you more privacy.

2. Use "Ship to Store" Options

In a similar vein, you can select "ship to store" options.

Did you find the perfect dress, but it's sold out in your size at the store nearby? You could order the proper size online and have it shipped directly to your home. But if your area has a porch pirate problem, most brick-and-mortar retailers will let you buy online but have your order shipped to a physical store location.

Sure, driving to the store to pick it up might be a bit less convenient, but it's far less work than trying to get reimbursed for a stolen package.

Plus, if you see the item and have instant buyer's remorse, you're already where you need to be to make a return.

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3. Package Tracking

While some people hate delivery workers knocking or ringing their doorbells because it wakes up babies or riles up pets, others wish they would take these measures more often. Sometimes, the deliverer is as quiet as a mouse … and you don't realize your boxes have been delivered until you leave the house or open the door for another reason.

If you want to be bothered, sign up for package tracking functions like delivery notifications. A notification on your phone can inform you when your packages arrive so you can grab them right away. The less time boxes sit on a porch, the less likely they are to be swiped. Among the most prominent options:

-- For U.S. Postal Service packages, sign up for Informed Delivery. The service lets you preview packages that will arrive soon and sends alerts about the status of your delivery.

-- FedEx Delivery Manager works similarly. Users can easily track their boxes, receive notifications, give instructions, or schedule a delivery time. Choosing your delivery time isn't free, though.

-- UPS has two membership options for consumers who want more control over their deliveries. UPS My Choice is free and lets people request package delivery to a neighbor, receive delivery notifications and photos, and view estimated delivery times. However, options like changing the delivery date, have boxes delivered to a UPS location or different address, and two-hour delivery windows incur additional fees. Rather than pay for additional services every time, people who frequently get packages might sign up for UPS My Choice Premium. It costs $19.99 per year, but everything is included.

-- Amazon will send emails and, if enabled, push notifications whenever a package is delivered.

My significant other receives a lot of deliveries as part of his job and is signed up for all the free tracking services. Because I work from home and he doesn't, he'll sometimes send me a text during the day to grab some delivered packages off the porch. It gives him peace of mind to know porch pirates won't have a chance to grab any of his work tools.

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4. Provide Specific Delivery Instructions

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In addition to letting you track your deliveries, Amazon, the UPS My Choice tool, FedEx Delivery Manager, and USPS Informed Delivery will all let you leave delivery instructions.

For instance, if you know you'll be home, you might ask the carrier to knock on the door or ring the doorbell. Whether you'll be there or not, you could request a specific delivery spot, asking the package to be obscured by, say, a plant or a wall.

Importantly, not every single package is automatically eligible for these requests. Also, carriers sometimes miss these instructions. So for extremely valuable packages, you might want to employ this method alongside several others listed here.

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5. Security Cameras + Motion-Sensing Lights

Thieves want to remain anonymous. If one home clearly has security cameras, and the one next door doesn't, you can guess which one a porch pirate is more likely to choose. If you're particularly cash-strapped, even a fake security camera can deter theft—after all, your average stranger probably can't tell whether a camera is real or not.

Security cameras are a great way to ward off porch pirates at any time of day. But another way to bolster your nighttime defenses is to install motion-sensing lights, which turn on whenever they detect motion after dark. Many people will turn tail the second a light comes on. These can be effectively used near any area of your house where delivery services drop your packages, especially if that area isn't normally well-lit.

That said, you can optimize your security by using a combination of cameras and lights.

6. Get Packages Delivered Inside Your Home or Garage

Having a package delivered in your home or garage isn't always an option, but when it is, it's an extremely convenient one.

If you're an Amazon Prime member, you could get your packages put inside your garage and away from the eyes of thieves. Amazon Key In-Garage Delivery has users link their garage door to Amazon Key in the app. At every checkout, the user is given the option to choose an in-garage delivery.

Per usual, consumers receive real-time delivery notifications. Once the Amazon worker reaches your home, the person gets a one-time secure access. Amazon won't open the door until the package and driver's location are confirmed. Customers are never expected to share garage codes.

Is Walmart your go-to store? Walmart+ members can get "InHome" delivery. Whether you need food or household essentials, you can opt to have your order brought into your garage, home, or even have food put right into your fridge! If you're home, you can let the person inside. Otherwise, entry is done through a keypad or smart entry device, meaning it can't be done with a physical key.

The service is a free part of the membership and already includes tips. You must make a $35 minimum order amount, though, so don't expect a Walmart employee to bring over a single carton of milk.

Personally, if I were to use these kinds of services, I would lock the garage door to the house and install a security camera in the garage for some additional comfort. These are extremely convenient options, but there is a higher degree of risk.

7. Get Packages Delivered to a Work Address

Rather than getting an important package delivered to your home, consider getting it sent to your work address … if your boss has no issues with it.

Packages delivered to workplaces are usually brought inside and often handed directly to a person. Thieves are much less likely to try to steal a box inside a busy building that's likely equipped with cameras than they are on an unmonitored porch in a quiet neighborhood.

Another benefit of workplace deliveries is that you're ensured your package is delivered during normal business hours, rather than late at night. A delivery driver can bring a package to your house when you're already asleep, but they can't bring something to a closed business building.

8. Make Agreements With Neighbors

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Are you friendly with your neighbors? They might be willing to help you out.

If you've already entrusted a neighbor with a key to your house in case of an emergency, you could ask them to stick a package in your house when they know you aren't home. Alternatively, they could grab sitting boxes and have you pick them up later. You might even get some expensive orders delivered straight to your neighbor with the agreement that you'll retrieve them once you're home.

The drawback of only utilizing this method is that neighbors might not always be around and might not always notice delivered packages before porch pirates do.

Also, if you're asking these favors, just make sure you show your appreciation with some kind deeds of your own.

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9. Use Anti-Porch Pirate Products

A few companies heard consumers' porch pirates complaints and responded by designing several types of anti-porch pirate products.

For example, you can find a "porch pirate bag" on sites like Amazon and Etsy. The bag locks onto a mailbox, porch post, handle, or elsewhere. Delivery people can place the package into the bag, then lock it. However, based on comments, results seem to vary—some claim it's a great deterrent, but others say delivery people simply won't use the bags.

Similarly, some people use a porch lockbox or package vault. These boxes are a bit sturdier than bags and seem to have higher ratings, though they're also more expensive. It's worth noting that some buyers have complained that gaps in these boxes let water in, so they might not be a great fit for people in rainy or snowy locations.

If you're looking for something more technologically advanced, there are products like the Package Guard. When a package is delivered and set on one of these devices, Package Guard sends you an alert—and it can even notify a trusted neighbor you designate. If the package is removed without you using your app, an alarm will go off.

I have not personally used any of these products, so I highly recommend due diligence if you choose to purchase one.

10. Obstruct View of Package Delivery Areas

Thieves tend to steal packages that are clearly visible—it's quicker, it's easier, and there's less time spent than searching for hidden packages, thus there's less of a chance of getting caught.

So, another way you can deter would-be porch pirates is to obstruct the view of areas where packages are typically delivered.

Large plants, furniture, and even decorative pieces can help eliminate sightlines to your packages. And many carriers are well aware of porch piracy (and often want to help prevent it), so if you supply the hiding spot, the delivery person may very well use it to keep your package hidden from view. Help them help you.

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What Should I Do If My Package Is Stolen?

Even if you do everything right, porch pirates might end up stealing one of your packages. It happens.

But if this happens to you, don't automatically chalk it up as a loss and move on.

First, check your tracking number to see whether the package was delivered. If you confirm it was, ask other members of your household if they brought a package inside.

Once you're sure a delivery was stolen, contact both the retailer and the carrier. Sometimes, they will either reimburse you or re-deliver the product.

If neither is helpful, and you paid with a credit card, see if you have credit card purchase protection that will cover your loss. Sometimes, homeowners' or renters' insurance will cover mail theft. However, doing so will likely only be worth it if you're making a claim for a high-ticket item that exceeds your deductible.

For stolen large purchases, consider contacting the authorities. Some people also try out their detective skills by looking at new For Sale ads on Craigslist and Facebook Marketplace. If you bought a rare item and it shows up online for sale near you the next day, that might have been your purchase. But if you do play sleuth, avoid directly contacting the assumed thief—instead, raise the issue with your local police.

Related: 10 Best Monthly Dividend Stocks for Frequent, Regular Income

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Home Depot Freebie Hacks: 10 Things You Can Get for Free If You Know to Ask

Hannah Kowalczyk-Harper — Sat, 13 Jun 26 08:00:16 -0400

The Home Depot, the world's largest home improvement retailer, is best-known for selling just about everything DIY … but it's surprisingly good about giving away a number of complimentary services and items.

Home Depot's freebies are designed to help customers of all skill levels, whether you're a seasoned professional, a first-time DIYer, or even a kid. (No, really! Home Depot even offers workshops for kids.) And while its freebies are generally provided in-person, when applicable, they're also offered online.

If you're looking to get a head start on your projects without spending a dime, look no further. I've compiled a list of some of the best freebie services and items available at Home Depot.

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Don't Miss Out on These Home Depot Freebies

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The Home Depot has nearly 2,350 stores across the U.S. (including several territories), Canada, and Mexico. While much of its success can be chalked up to competitive pricing and an extremely wide offering of home improvement products, its free services and samples have likely convinced at least a few customers to return.

However, many of Home Depot's freebies fly under the radar—they're not widely advertised, and they don't get prime real estate on their website. But they're still worth checking out.

Here are some of Home Depot's top free services and items you should know about.

1. Wood Cutting

Let's say part of your wooden fence breaks, so you need to buy a few new replacement boards. Well, Home Depot sells a lot of wood. From pressure-treated lumber to plywood to boards and planks, and much more, you're bound to find what you need.

And you won't need to follow your trip to Home Depot with a visit to a generous neighbor to ask about using their saw. That's because a Home Depot employee will cut them to your desired length(s) at the store's Cutting Center.

Home Depot will do a certain number of cuts for free, but how many varies by store. Some will only do a few at a time, while others' limits are closer to 10 or 12. Also, note that some stores might not make cuts under 6 inches for safety reasons.

Related: 7 Contractor Scams to Avoid

2. Kids Workshops

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Looking for more free, fun activities for your children? Home Depot has you covered.

On the first Saturday of every month, Home Depot hosts free in-store kids workshops. Some workshops have a theme that matches the season, such as creating haunted candy boxes around Halloween, while others are more timeless, such as making toy excavators.

The workshops, which are designed for children ages 5 through 12, give kids practice with hand tools, such as screwdrivers, and experience painting. Each Kids Workshops kit also comes with a related STEAM activity your child can do at home.

Adults and kids can arrive any time between 9 a.m. and noon (though supplies are limited, so earlier is better), and kits take 30 minutes on average to build and paint. You can see the upcoming workshops on the website and register for any that you think your kid would enjoy. This could be an easy way for one adult to do some shopping for home essentials while another keeps the child occupied.

3. Kids DIY Projects

Don't feel like making the drive to Home Depot for a workshop? No problem! Home Depot also has free kids DIY projects available online. Every guide or video comes with a supply list (usually everyday household items) and step-by-step instructions.

The crafts and projects are appropriate for various age groups. For example, younger kids might enjoy the guide on How to Create a DIY Interactive Sensory Board. Older kids might prefer making a fire-glass suncatcher, creating a road-trip game box, or building a milk-carton birdhouse.

These projects are an excellent way to bond with your child and teach them useful skills.

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4. Livestreamed How-To Workshops for Adults

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Kids aren't the only ones who need a little handiwork help! Adults do, too—which is why Home Depot also offers two types of free virtual how-to workshops for adults who need help with DIY projects.

The first type is livestreamed how-to workshops, during which associates help you with projects and explain how to care for different areas of your home. Because they're live, you can ask clarification questions in real-time and participate in polls. A few examples of livestream sessions done in the past include:

--How to Install Tile Backsplash

--How to Update Cabinets

--Power Tool Basics

--How to Plan for Your Bathroom Project

--Electrical Basics

You can filter for workshop categories, viewing days, and viewing times to find livestreams that work well with your goals and schedule.

5. On-Demand Adult How-To Workshops

If you're not able to fit a livestream into your busy schedule, that's all right. Home Depot also has on-demand how-to workshops.

You can watch these videos any time you need a little help with home-related tasks. A small sample of available videos includes:

--How to Un-Ding Siding

--How to Install Window Treatments and Blinds

--How to Un-Stop a Disposal

--How to Remove and Install Carpet

--How to Stain a Deck

You can filter by workshop category, such as choosing a room in your home, to more easily find the how-to videos you need.

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6. Written Resources

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Personally, I prefer to learn from written documents, rather than videos—and fortunately for people like me, Home Depot also offers a variety of written resources and educational documents, such as:

--How to Hang Wall Décor

--How to Repot a Plant

--How to Replace a Window Screen

--Sanding Basics

--Tape Measure Basics

--How to Tile a Shower

Some guides are also available in Spanish.

7. Paint Swatches, Shakes, and Sticks

Home Depot has you covered with freebies throughout your painting process.

Like many stores that sell paint, Home Depot will let you take home free sample swatches. This allows you to hold colors up against various surfaces you want to paint to see how it would look in your home. (And afterwards, you could even use the swatches for crafting.)

Once you've picked the perfect color, an associate can shake the paint for you to ensure it's mixed and ready to go. Paint should be stirred before use to recombine components that have separated, which will help evenly distribute the color.

Finally, you can take home a paint stir stick to mix it up again later as necessary.

8. Virtual or In-Home Consultations

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Whether you want to do a full-room renovation or just make a small change, Home Depot can give you advice through a free virtual or in-home consultation.

Let's say you want a virtual consultation about storage solutions. You would take measurements, then initiate a video chat with a design consultant. The consultant would discuss custom storage solutions, show you product samples, use a 3D digital design tool to help you see options, and offer you a quote for doing the work. Virtual consultations usually last around an hour to 90 minutes.

If you opt for an in-home consultation instead, the design associate would visit your home to talk about your project. Just like with the virtual consultation, they would show you samples, use the 3D design tool, and give you a quote. Better still: The consultant will take measurements for you. In-person consultations generally last between 45 and 90 minutes.

9. Carpet Samples

Home Depot has (an admittedly limited) number of free carpet samples available in its stores.

You won't be able to take enough to fill your room, but you can snag a square to see how it looks in a space and feels between your toes. If you schedule a flooring measure, you can also get curated carpet samples sent to you for free.

Currently, if you want an in-home flooring measure, you must pay a non-refundable deposit of up to $50, depending on the location. However, the deposit is then credited toward the total cost of your carpet installation.

If you already know you're planning to buy and have your carpet installed by Home Depot, it makes sense to get curated free samples sent to you. If you're still unsure who you're getting your carpet from, it's best to stick with the in-store samples.

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10. In-Store + Curbside Pickup

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Free in-store and curbside pickup are a pair of conveniences that are becoming more commonplace, but they're still worth mentioning.

Home Depot offers free in-store pickup in two hours for thousands of eligible items. When you order online, you simply select the Pick Up In-Store option. Once you receive the pickup notification, you can head over to the store's service desk. Then, you show your identification and notification email.

Don't even want to enter the building? The store also offers curbside pickup. When completing your online order, you choose Curbside Pickup at checkout, assuming your items are eligible. After you receive an email or text message that your order is ready, you can head over. As you're leaving, use the link from your notification to check in on The Home Depot App and let them know you're on your way. (Note: Curbside pickup is only available in select stores between 9 a.m. and 6 p.m.)

Finally, you park in the designated Curbside Pickup spot and mark in the app that you've arrived. An associate will bring out your order, look at your identification, and load your items into your vehicle.

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Related: 7 Best Vanguard Dividend Funds for 2026 [Low-Cost Income]

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The Wallflower's Wealth Guide: 10 Lucrative Careers Where Introverts Thrive

Hannah Kowalczyk-Harper — Sat, 13 Jun 26 07:30:40 -0400

The professional landscape often feels tailor-made for the extroverted. Interviews are a social gauntlet, and most roles demand significant interaction. High-powered positions–think medicine, law, business–thrive on client and colleague engagement. But don't despair, fellow introvert. While the world may sing the praises of the gregarious, there's a thriving undercurrent of high-paying careers perfectly suited to those who recharge in solitude.

This guide will explore some of the most lucrative career paths for introverts, outlining their demands, rewards, and the steps to break into them. We'll demonstrate that with the right skills and credentials, introverts can achieve professional success on their own terms–fulfilling, high-earning careers with minimal forced social drain.

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High-Pay, Low-Contact Jobs

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OK. Let's get real for a second. It's extremely unlikely you'll ever find a job where you'll work 100% alone all of the time.

That said, there are many roles that require far fewer face-to-face interactions than your average position. And those are the jobs that we'll home in on today.

Every one of these jobs pays a mean annual wage of $100,000 annually, according to the U.S. Bureau of Labor Statistics Occupational Outlook Handbook. These jobs are listed in reverse order of mean annual wage (from lowest to highest).

13. Industrial Engineers

-- 2023 mean annual wage: $103,150

-- 2023 employment: 332,870

Industrial engineers make processes more efficient. To do so, they need a broad understanding of workers' tasks, logistics, and other production elements. They gain this information through observations, data collection, staff surveys, and other means.

Many of an industrial engineer's tasks are done alone. For example, they may work independently in offices reviewing data and analyzing reports.

Typically, you'll need a bachelor's degree in industrial engineering or another engineering field to become an industrial engineer. Some colleges and universities have internship opportunities to give prospective industrial engineers relevant work experience. Licensure requirements vary by state.

12. Mining and Geological Engineers, Including Mining Safety Engineers

-- 2023 mean annual wage: $105,460

-- 2023 employment: 7,040

Mining and geological engineers design mines for removing minerals in environmentally sound and efficient ways. Mining safety engineers, as the name implies, are mainly focused on workers' safety. They inspect the mine's walls and roofs and check the equipment.

Often, these engineers work in remote areas, such as sand-and-gravel quarries or mineral mines. Those new to the field typically work under the supervision of more senior engineers, but as they gain more experience, they're allowed greater independence.

Usually, to enter this field you need a bachelor's degree in engineering. While programs in geological or mining engineering are ideal, they aren't common college offerings. Therefore, a degree in geoscience or civil or environmental engineering is often sufficient. Workers don't need a license to enter the field, but those who want more independence might want to obtain a Professional Engineering (PE) license.

11. Computer Programmers

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-- 2023 mean annual wage: $107,750

-- 2023 employment: 120,370

After software developers and engineers are done with the designing phase, computer programmers write and test code and scripts for computer software and applications. If a product isn't functioning properly, they make the necessary modifications. Computer programmers use a variety of computer languages, though they sometimes specialize in just a few.

Typically, these professions work in offices or at home. They frequently work independently. While computer programmers sometimes work in teams, collaboration can often be done over text apps and workflow programs, rather than face-to-face interactions.

Computer programmers commonly have a bachelor's degree in computer and information technology or a related field. This isn't a hard-and-fast rule, though. Some employers will hire based more on experience in the programming languages they need. A candidate who gained experience through an internship may have an advantage.

10. Software Quality Assurance Analysts and Testers

-- 2023 mean annual wage: $108,460

-- 2023 employment: 203,040

Software quality assurance analysts and testers check out software before it reaches consumers in an effort to find any defects and their causes. These workers document any issues they discover and report them to software or web developers. Sometimes, they also participate in software design reviews.

Much of software quality assurance analysts' and testers' work is done independently. They do have interactions with developers, programmers, and possibly customers, but this is often through written reports.

Usually, to get one of these positions, you need a bachelor's degree in computer science, information technology, computer programming, or a related field. However, some people instead qualify through boot camps or online courses. To gain relevant experience, some first work in IT positions or as programmers.

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9. Statisticians

-- 2023 mean annual wage: $109,190

-- 2023 employment: 29,950

Statisticians collect, analyze, interpret, and summarize numerical data to solve problems. Some specialize in fields such as biostatistics, business statistics, or economic statistics. This employment category includes mathematical and survey statisticians, but excludes survey researchers.

Typically, this job is done in offices, and the majority of this work is done solitarily. (Though if you're a bit more extroverted, you might occasionally attend conferences and seminars.)

People interested in a career as a statistician start by earning a bachelor's degree in statistics. Those interested in a specialization might also want to take courses related to that field (e.g., someone interested in biostatistics might want to take biology courses). Within the private industry, some employers prefer candidates to have a master's degree.

8. Special Effects Artists and Animators

-- 2023 mean annual wage: $109,630

-- 2023 employment: 29,940

Special effects artists and animators make special effects or animations for media such as movies, commercials, and computer games. Says the BLS: "Special effects artists and animators often work in a specific medium. Some focus on creating animated movies or video games. Others create visual effects for movies and television shows." Some of these workers mainly use computer software, while others prefer to draw or paint by hand before translating their work into computer programs, and still others work in physical mediums where their work is never digitized.

Many people in this line of work do so in offices or from home, usually on a computer or at a drawing table. Usually, there is a regular schedule, but nights or weekends may need to be worked if deadlines are quickly approaching. And this work can be largely independent, though every job is different—some positions require a high level of collaboration, others don't.

These creatives usually need a bachelor's degree in animation, computer graphics, fine arts, or a related field. Some schools offer specialized degrees in topics such as game design or interactive media. Additionally, candidates should have a strong portfolio, which can be developed while earning a degree.

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7. Mathematicians

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-- 2023 mean annual wage: $119,770

-- 2023 employment: 2,220

Mathematicians research mathematics and use mathematical techniques to solve problems in business, the sciences, engineering, and other fields. They may create surveys or experiments, develop mathematical models to analyze data, and communicate their analyses to others.

It's standard for mathematicians to work in offices and use computers frequently. The majority of work is done alone, which allows for deep focus.

Anyone interested in a career as a mathematician will need to take a lot of math classes. Federal government jobs usually ask for a bachelor's degree in math or at least a substantial amount of math coursework. Private industry mathematicians typically need a master's or doctoral degree.

Related: Federal Tax Brackets and Rates

6. Economists

-- 2023 mean annual wage: $132,650

-- 2023 employment: 16,420

The government, consulting firms, and other organizations hire economists to research a variety of economic issues, often related to the labor force, education, or international trade. These professionals collect and analyze data, interpret forecast trends, present research, and advise their employers on issues related to fiscal policy or other economic topics.

Economists typically work under the glow of office fluorescents. However, depending on the position, some may be asked to attend conferences or travel for other reasons. And while most work is performed independently, occasionally, these economists might need to collaborate with statisticians, data scientists, or other specialists.

Higher education is necessary for anyone who wants to be an economist. At minimum, you need a bachelor's degree. Research, business, or international organizations often require a master's degree or Ph.D. and relevant work experience.

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5. Computer Network Architects

-- 2023 mean annual wage: $133,930

-- 2023 employment: 174,100

Computer network architects, also referred to as network engineers, design and implement an organization's data communication networks. Some of the common duties include deploying planned networks, documenting processes, upgrading hardware, and researching new technologies.

This job is typically done in an office setting, though computer network architects sometimes work in server rooms so they can access the hardware. And while this role occasionally requires a little teamwork, much of these professionals' work can be done solo.

Often, employers want a computer network architect to have a bachelor's degree in computer and information technology, engineering, or a similar field. However, this isn't a requirement for every company. Regardless of formal education, several years of working with information technology systems is expected. Some people start their careers as network and computer system administrators or in a related role.

4. Database Architects

-- 2023 mean annual wage: $137,030

-- 2023 employment: 59,920

Database architects develop and build databases for systems and applications. To do this, they need to know an organization's technical requirements, create models, and code new data architecture that integrates with existing infrastructure. Some of their tasks overlap with those of database administrators.

These workers frequently work independently, though some companies might have them collaborate with technicians, hardware engineers, and others. Database architects often work in offices, though some are able to work remotely.

The path to becoming a database administrator usually starts with a bachelor's degree in computer and information technology or a related field. Some companies prefer applicants who have a master's degree.

3. Software Developers

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-- 2023 mean annual wage: $138,110

-- 2023 employment: 1,656,880

As you could likely guess, software developers develop computer and network software. But that isn't all they do. They also analyze user needs, update software, and enhance current software capabilities. Some developers maintain databases within an application area.

Depending on the organization, software developers either work alone or in very small groups. For smaller companies, independent work is more common, whereas larger businesses tend to have teams tackling complex tasks.

Typically, software developers have a bachelor's degree in computer and information technology or a related field, but some employers prioritize hiring people with a master's degree. It's an advantage to complete a software development internship.

2. Physicists

-- 2023 mean annual wage: $158,270

-- 2023 employment: 18,350

Physicists research the fundamental properties that govern time, space, energy, and matter. Some conduct experiments and study theory to increase the world's knowledge about physics. Others use what they know about the topic to develop new technologies or solve problems.

It's very common for physicists to work at universities. Those that do typically split up their time between teaching, researching, and writing scientific articles. Some physicists work as part of a team in laboratories. Others work independently solving problems, which is the best fit for introverts.

Physicists start by earning a bachelor's degree in physics. Some choose to also get a master's degree in the subject. Those who want to be a professor or work in the most prestigious research positions obtain a Ph.D. As a general rule, the more research a person has conducted, the better.

1. Computer and Information Systems Managers

-- 2023 mean annual wage: $180,720

-- 2023 employment: 592,600

Technologically savvy computer and information systems managers, aka information technology (IT) managers, plan and coordinate a company's computer-related activities. A few of their duties often include directing the installation of computer software and hardware, staying up to date on new technology, managing the work of other IT professionals, and negotiating with vendors.

Usually, these employees work in offices near computer rooms. A lot of their work is done independently, making this a good role for introverts.

These are most commonly full-time positions that have an expectation to work additional hours if an issue arises or an important deadline is quickly approaching.

To become a computer and information systems manager, you typically need a bachelor's degree in computer and information technology or a similar field. Some organizations also require a graduate degree. Additionally, most jobs ask for several years of relevant experience. It's common to begin as a lower-level manager before advancing to a more advanced position.

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Related: 15 Best Long-Term Stocks to Buy and Hold Forever

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Quickly Approaching Retirement? Here's How to Use Catch-Up Contributions to Save More

Riley Adams, CPA — Fri, 12 Jun 26 15:00:46 -0400

When people are in their 20s and even 30s, they often focus their finances on paying off debts, starting a family, and buying a home. By the time they start focusing more on growing a nest egg for retirement, they've often missed out on numerous years they could have been contributing (or contributing more) to a workplace retirement account.

In many cases, those people might feel (or actually be) behind the 8-ball—to the point where, even if they max out their workplace and personal retirement plans, they might not be able to save up enough to retire comfortably at a reasonable age.

And that's where "catch-up contributions" come in.

Catch-up contributions allow older adults to make larger contributions to 401(k)s and other retirement plans in excess of the normal annual limits. These higher ceilings are typically thousands of dollars above the normal caps, which can make a serious dent in a savings shortfall.

Recent legislation has altered the rules concerning catch-up contributions, however. So today, I'm going to explain what major change started in 2026. I'll also provide a brief review of how catch-up contributions work, minimum ages to qualify, and contribution limits for the major retirement accounts.

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How Do Catch-Up Contributions Work?

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All tax-advantaged retirement accounts have an annual limit on how much you can contribute. If you exceed that amount, you could not only be taxed twice on the overcontribution, but if you're under age 59½, you could also face a 10% penalty.

However, many (though not all) types of retirement accounts allow for catch-up contributions—which raise that limit—for older adults. To be eligible to make catch-up contributions, you must be at least the minimum age for that account type (often 50 years old).

For instance, in 2026, the contribution limit for a 401(k) is $24,500. However, people ages 50 to 59 or 64 and older are allowed an additional $8,000 in catch-up contributions, bringing their total contribution limit to $35,500.

And recently, the rules were changed to introduce "super" catch-up contributions, which allow an even smaller older age group to contribute up to an even higher limit for a few years. In 2026, people who are ages 60 to 63 can contribute an additional $11,250 over the normal cap, raising their combined contribution limit to $35,750.

To take advantage of catch-up contributions, you simply contribute more to a retirement account at those ages, whether through paycheck deductions for an employer-sponsored account or transferring more money yourself for an account you manage.

How Did Catch-Up Contributions Change for 2026?

Starting in 2026, any workers whose earnings exceeded $145,000 in the prior year will need to make any catch-up contributions on an after-tax basis to a designated Roth account. In other words, those contributions aren't tax-deductible (but the worker will be able to withdraw those contributions tax-free in retirement).

If you made $145,000 or less in the prior year, you can continue to make catch-up contributions to your traditional 401(k) or other workplace plan.

The $145,000 income limit doesn't apply to all the aforementioned accounts. Here's a breakdown:

Does apply: 401(k), 403(b), 457, Thrift Savings Plan (TSP)
Does not apply: Individual retirement account (IRA), SIMPLE IRA, SEP IRA, health savings account (HSA)

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What If My Plan Doesn't Offer Roth Contributions?

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If you're over the income limit but your workplace plan doesn't offer Roth contributions, you will not be allowed to make catch-up contributions to your plan.

Your best options? You could contribute that money to an IRA. Some people may choose to do a Roth conversion or, more likely if they earn too much for a standard Roth conversion, a backdoor Roth conversion. And if you manage to max out basically any other avenue, you can fund a brokerage account—you won't enjoy any tax advantages, but taxable brokerages have no contribution limits.

Fortunately, while including Roth elective deferrals is ultimately up to employers, the vast majority of employers choose to. Per a Plan Sponsor Council of America poll, approximately 93% of 401(k) plans offered a Roth option in 2023.

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Should You Take Advantage of Catch-Up Contributions?

Generally speaking? Absolutely.

Catch-up contributions can help some workers fill their retirement savings gap. Even in the case where a worker is on target to hit their savings goals, it usually won't hurt to err on the side of caution and have more in retirement savings than they anticipate they'll need.

Not to mention, catch-up contributions can help you reduce your tax-liability for a certain year (if you're making them to a tax-deferred account like a traditional 401(k) or IRA). Meanwhile, catch-up contributions to a Roth account can provide more tax diversification on your retirement withdrawals.

However, you should only take advantage of catch-up contributions if you can afford to do so. If you're drowning in high-interest debt, for instance, your money would be better spent paying down that debt and reducing your interest liabilities than socking it away via catch-up contributions.

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Higher Education Is Expensive. Consider These 3 Tax-Smart Ways to Save for College

Riley Adams, CPA — Fri, 12 Jun 26 13:30:50 -0400

Most parents want to do everything they can to set their children up for future financial success. One way to help is to save money for a college education, since college graduates typically make more money over their lifetime than those without a university degree.

But college is expensive. And saving enough money for a child’s higher education can place a huge strain on a family’s overall finances. This is particularly true for parents with more than one child under their roof.

As a result, parents usually have a lot of questions when it comes to saving for a child’s college education. How much money do I need to save? Where should I store college savings? Can student loans cover all college expenses?

Saving for college is complicated, but we have answers to these questions, and more, in the discussion below.

The Current Cost of College

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Although the inflation-adjusted average for tuition and fees has dipped a bit over the past couple of years, the cost of college still remains high. According to the College Board, the advertised annual tuition and fees for a full-time undergraduate student at a four-year college during the 2022-23 school year averaged out to:

-- $10,940 at a public, in-state college

-- $28,240 at a public, out-of-state college

-- $39,400 at a private nonprofit college

And that doesn’t include room and board. For students living on campus, tack on an average of $12,310 for a dorm room, meal card, and other related expenses at a public college. Private college costs for room and board averaged 14,030 per year.

When you add it all up, the average combined total for annual tuition, fees, and living expenses for a full-time undergraduate student at a four-year college during the 2022-23 school year was:

-- $23,250 at a public, in-state college

-- $40,550 at a public, out-of-state college

-- $53,430 at a private nonprofit college

No doubt these figures caused sticker shock for parents and students alike. A 2021 survey by Fidelity Investments found that about 25% of high schoolers’ parents and 38% of high school students believed a year of college only costs $5,000 or less. So, you can imagine their reaction when they discovered the actual price.

Parents might also be used to college costs from decades ago. However, those costs are way out of date. According to a recent study by Georgetown University’s Center on Education and the Workforce, the average price for undergraduate education—including tuition, fees, room, and board—rose 169% from 1980 to 2019.

Is College Worth It?

Yes, college costs are high. But don't let that prevent you from saving for your child’s higher education. While there are always exceptions, people with a bachelor's degree still tend to make more money than those without one. Next, we cover data from the Bureau of Labor Statistics that shows the importance of going to college and its impact on weekly earnings and unemployment rates.

Earnings and Unemployment Rates by Educational Attainment

Bureau of Labor Statistics

According to the most recent data from the Bureau of Labor Statistics, the median weekly earnings of full-time workers with a high school diploma is $809. By comparison, the median weekly earnings of someone with a bachelor's degree is $1,334. That’s a 65% increase over the wages earned by a high school graduate.

Taking it further, people with a master’s degree have a median weekly paycheck of $1,574, while the mean weekly earnings for someone with a doctoral degree is $1,909. So, in general, the more education you have, the more you're likely to earn.

There are other financial and work-related benefits of a college education, too. For example, as your level of education rises, your chances of being unemployed decrease.

College also opens up a lot of employment opportunities. Even in fields where a degree isn't a hard requirement, connections made at college can help secure a better job down the road.

Many college students also discover unknown passions through classes and end up in careers they didn't even know existed.

As a result of these and other reasons, college is still worth the time and money for most students.

How Much to Save for Your Kid's College Costs

If you start saving for your child's college education early, you can help set them up for a better financial future. But that’s usually easier said than done.

Not only is saving for college difficult, but knowing how much to save can be complicated, too. As a result, parents have many questions when it comes to savings goals. For instance, parents often ask if they should try to save enough all by themselves to cover the total cost to obtain a four-year degree. Knowing exactly how much to save is another head-scratcher for most parents. And whether a child should pay some of the costs is another puzzler.

Let’s take a look at these common questions.

Should You Save to Cover the Entire Cost?

Every family's financial situation is different, so how much of your child's college costs you should cover is a personal decision. It should also depend on how much you’ve saved for your own retirement, since most financial experts recommend that your first priority should be your own financial security in your golden years. (It’s akin to securing your own airplane oxygen mask first before those of your dependent passengers.)

How Likely Is It For Your Child to Attend College?

When deciding how much to save, we recommend first determining the likelihood of your child attending college. If you aren't certain about their desire to attend college, squirreling away too much for higher education might not be the smartest choice—especially if you’re contributing to a 529 plan, since in the past you could be hit with a penalty if leftover money in a 529 plan is used for anything other than qualified education expenses.

Now, that decision has gotten easier as a new rule allows you to roll over up to $35,000 in unused 529 plans into Roth IRA for the child.

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Public or Private College, In-State or Out-of-State?

Next, consider your child’s interest in going to a public vs. private college, and to an in-state vs. out-of-state school. As noted above, college costs vary widely, and an in-state, public college is usually considerably less expensive than a private university.

Based on which type of school and school location your child is most likely to attend, you should be able to come up with a rough estimate of how much everything will cost.

As a general rule of thumb, we suggest aiming to cover about half the total cost of college as an initial savings goal. That leaves some room for potential scholarships or other financial aid to cover part of your child’s college expenses while lowering the risk of having leftover funds in a 529 plan. (Again, a new rule allows you to roll over up to $35,000 in unused 529 funds into a Roth IRA.)

Another option is to have your child take on some student loans to cover the remaining costs. It will also give them some skin in the game, which might make them take college more seriously and study harder.

You can also encourage them to take core classes at a junior college near home to complete their basic requirements before attending a public or private four-year college. That will likely help bridge the gap between the amount you’ve saved and the total costs of your child’s college education.

How Much Should Your Child Contribute?

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Having your child contribute to his or her own college fund is another way to reach your overall college savings goal. However, how much your child saves for college (if anything) is completely up to you and based on your family’s financial situation and values.

For example, suppose you're in an excellent spot financially and want your child to focus entirely on impressing the college board and participating in extracurricular activities. In that case, you might not ask your kid to contribute anything.

However, if you’re not sure you can reach your savings goal, it's certainly acceptable to ask your child to contribute to their college savings, especially if their heart is set on a particularly expensive school.

Teenagers can have summer jobs, but there are plenty of other ways for teens to make money (including online jobs). Some of the money your kids earn before they’re off to college can be used to pay for college. Student income earned while working during college can also be put toward higher education expenses.

Either way, don't keep college expenses a secret from your child. Explain the cost differences between a private college and a public college as well as the price differences between an in-state college and an out-of-state college.

If you want them to help save for college, make sure you set clear expectations and don't give the impression that you’ll cover everything if you actually won't.

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How Much Should I Be Saving for My Child?

Not every student pays the same amount for college. Some students attend an expensive private school, while others stick to a more affordable public school in their home state. In addition, some kids get scholarships or grants, while others don’t qualify for any financial help.

Plus, not everything always goes according to plan. For instance, a student who expects to get an athletic scholarship might get a severe injury and lose out on the free ride. Therefore, you need to have a backup plan.

To estimate how much you should save for college, try using the "2 for 10" method. With this technique, multiply your child's age by $2,000 for every $10,000 of college costs you plan to cover per year. The exact formula is:

($2,000 x Child’s Age) x (Annual Costs to Cover ÷ $10,000) = Optimal Savings To Date

So, for example, let's say Charlie wants to see if his college savings are on track for his son Greyson, who is 14 years old. Greyson wants to attend a private college that currently costs $50,000 per year.

Charlie plans to cover 60% of the total costs for four years of college with his savings, which comes to $120,000 ($200,000 x .6 = $120,000) ... or $30,000 per year. Charlie expects scholarships and financial aid to cover the rest. To estimate how much he should have saved by now, Charlie first multiplies $2,000 x 14 (i.e., Greyson’s current age), which equals $28,000. He then multiplies that amount by three (i.e., the amount he plans to pay each year divided by $10,000), which equals $84,000. That’s how much Charlie should have saved for Greyson’s college expenses.

Fidelity Investments has a college savings calculator on its website that uses this model. The online tool will also help you come up with a monthly savings goal if you’re behind where you ought to be and need to catch up.

Tax-Smart Ways to Save for College

If you’re saving for a child’s college costs, the most important thing is to have a savings goal and plan. But if you’re going to the trouble of planning out a savings strategy, you might as well factor taxes into the equation.

You’ll have to put your college savings in some sort of an account. (Please don’t hide it under your mattress!) Fortunately, certain types of investment accounts come with tax benefits that can save you hundreds or even thousands of dollars while you’re saving for college.

Here are three such tax-advantaged investment accounts that you should consider for your education savings.

1. 529 Plans

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A 529 plan is designed specifically for college savings (and sometimes K-12 tuition or trade schools). It's a tax-advantaged investment account you fund with after-tax money. Basically, that means you don’t get any federal tax deductions when you put money in a 529 plan, so you ultimately end up paying income tax on the money before you put it in the account.

However, there are two other tax benefits that you do get with a 529 plan. First, you get tax-free growth on the earnings. Second, when it comes time to make withdrawals, you don't pay taxes on any of the money as long as you use it for qualified higher education expenses.

Besides tuition, qualified expenses can include fees, books, room and board (must be at least a half-time student), certain technology (such as a computer), special needs equipment, student loan payments (up to $10,000), and more.

Young and the Invested Tip: There are actually two types of 529 plans: investment plans and prepaid tuition plans. With a prepaid tuition plan, you pay tuition and fees at the current rate for college expenses to be incurred years in the future. Our discussion focuses on investment plans, which are by far the most popular type of 529 plan.

You Can Only Use 529 Funds for Qualified Education Expenses

Unfortunately, you can only use 529 plan funds for qualified education expenses. If you use the money for anything else, the earnings (not contributions) withdrawn are subject to income tax at ordinary tax rates and a hefty 10% penalty.

There is no way out of the taxes if you use 529 funds for non-education purposes (unless you meet the new requirements to roll unused 529 funds into a Roth IRA), but the IRS will waive the penalty in some instances. For example, you won't pay a penalty if the child does any of the following:

-- Earns a tax-free scholarship or fellowship grant

-- Becomes disabled or dies

-- Attends a U.S. military academy

-- Receives veterans’ educational assistance, employer-provided educational assistance, or any other tax-free payments as educational assistance

The 10% penalty is also avoided if 529 plan funds are included in income only because qualified education expenses were taken into account in determining the American Opportunity tax credit or Lifetime Learning credit.

Although a 529 account can only be established for one child, you don't have to use all of the money in an account for the education of the child for which the account was created. So, for example, if there’s still some money remaining after the child's education is complete, you can transfer the funds to a 529 plan established for a family member (e.g., a sibling).

When is a 529 plan a bad idea?

Previously, using a 529 college savings plan was a bad idea if you weren't confident your child will attend college because ff your kid didn't go on to a public or private university, you would have had to pay taxes on the gains and a 10% penalty. However, since 2024, a beneficiary can also transfer some of the leftover money in a 529 plan into a Roth IRA (more on this later).

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2. Roth IRA Accounts

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Roth individual retirement accounts (IRAs) are designed primarily for retirement savings, but there are other ways to take advantage of the tax-free growth they offer—including saving for college.

Like 529 plans, a Roth IRA investment account is funded with after-tax money and the earnings grow tax-free in your account. You can take the contributions out at any time, but withdrawing earnings before age 59½ or before you've had a Roth IRA for at least five years typically results in a 10% penalty.

However, there are a few exceptions to the penalty rules. One of them allows you to withdraw any amount from a Roth IRA to pay higher education expenses for yourself, your spouse, your child or grandchild, or your spouse’s child or grandchild. For this reason, Roth IRAs are sometimes used to save for college.

As with 529 plans, money from a Roth IRA can be used penalty-free for such things as college tuition, fees, books, room and board (must be at least a half-time student), certain technology (such as a computer), and special needs equipment. It can’t be used for student loan payments or K-12 tuition.

Roth IRA Contribution Limits

There are limits on how much money you can put in a Roth IRA each year.

First, contributions for the year can’t exceed the account holder’s “earned income” for the year. According to the IRS, earned income includes “wages, salaries, tips, professional fees, bonuses, and other amounts received for providing personal services.”

There’s also an annual contribution limit based on your age (the limit is adjusted annually for inflation). For 2o26, the most you can put in a Roth IRA is $7,500 if you’re under 50 years old at the end of the year. If you’re 50 or older by Dec. 31, 2026, you can put in up to $8,600 for the year.

When is a Roth IRA better than a 529 plan?

If you’re not sure your child will attend college, then saving for college with a Roth IRA might make more sense than with a 529 plan. That’s because you can just keep the money in the account and let it continue to grow tax-free for retirement if you don’t end up using the money you saved for your child’s college education.

3. Custodial Accounts

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Custodial accounts are run by an adult custodian (often a parent) for a beneficiary (usually a child). While the custodian can invest the money in the account, the funds legally belong to the child. The child gains control of the account once he or she reaches the age of majority for their state, which is typically when they turn 18 or 21 years old.

Withdrawn money must be used in ways that benefit the child, but there are many, many possible uses. One popular use of funds is for the child’s college costs.

However, if the funds don't go toward paying for college, that's fine too. There are no penalties for using the money in a custodial account for something else that benefits the child. Then, once the child takes over the account, the funds can be used for any purpose at all.

There are no limits on how much you can contribute to a custodial account, but you might not want to exceed the annual federal gift tax limit. For 2026, the limit is $19,000 ($38,000 for married couples filing a joint tax return). If you exceed the limit, you need to tell the IRS and you might have to pay gift tax on the amount (although in most cases you won’t owe any tax at that time). The IRS will also deduct the excess amount from your lifetime estate and gift tax exemption, which is $15 million in 2026 and $30 million for married couples.

Young and the Invested Tip: Both the annual limit and lifetime exemption are adjusted annually for inflation.

You’ll also have to pay capital gains taxes on any assets held in a custodial account if those assets are sold.

Tax Benefits for Using a Custodial Account

While money in a traditional custodial account doesn’t grow entirely tax-free, some of the earnings aren’t subject to income tax and another portion is taxed at the child’s tax rate, which is usually lower than the parent’s rate. Unfortunately, thanks to the “kiddie tax,” the rest is taxed at the parent’s rate.

For the 2026 tax year, earnings in a custodial account are taxed as follows:

-- $0 through $1,350 is tax-free

-- $1,351 through $2,700 is taxed at the child’s marginal tax rate

-- $2,701 or more is taxed at the parents’ marginal tax rate

You can also open a custodial Roth IRA or custodial 529 plan. The tax benefits generally associated with Roth IRAs and 529 plans will generally be available with the custodial versions of those accounts.

Custodial Account’s Impact on Financial Aid

Be warned, however, that using custodial accounts to save for college can have a negative impact on your child’s financial aid eligibility. When applying for financial aid, custodial accounts are considered assets of the child, while 529 plans are typically considered assets of the parent and Roth IRA funds aren’t included in financial aid calculations.

Since students are expected to use a higher percentage of their assets to pay for college (20%) than what their parents are expected to pay (up to 5.64%), the student’s overall expected family contribution will be higher with a custodial account than with a 529 plan or Roth IRA. And as the amount your family is expected to pay rises, the financial aid your child is likely to receive drops. (We discuss expected family contributions in more detail below.)

When Does a Custodial Account Make Sense for College Savings?

There’s a great deal of flexibility when it comes to spending money in a custodial account, which makes it a good choice for educational savings if you’re not sure college is in your child’s future and you can handle the potential negative impact on financial aid.

For example, suppose your child doesn’t need money for college, but does need it for something else—like braces or a car. Unlike 529 plans, there’s no penalty if money in the account is used for something unrelated to education. And unlike Roth IRAs, there are no early withdrawal fees if you take money out of a custodial account for non-educational expenses before a certain age.

What Is the Best Way to Save for Your Child's Future?

The best way to save for your child's future is to save early, save regularly, and have the proper amount of risk for your investments.

The earlier you start to save for your child, the more money you can accumulate. The same amount of money saved a few years earlier can be worth far more than saved later because of the power of compounding.

Setting aside money for your child's future as part of your regular monthly budget helps make saving for college more manageable and steadily raises the funds needed for a college education.

It's also important to invest some of the savings in ways that will help it grow. Funds sitting in a standard savings account can actually lose value when you factor in inflation. On the other hand, money in high-yield savings accounts or brokerage accounts that are invested in ETFs, mutual funds, or blue-chip stocks have the potential to grow significantly.

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Make College Savings Part of Your Overall Financial Planning

Households function better financially when there’s a budget in place and a plan for covering upcoming major costs, such as the cost of college after your child graduates high school.

The easiest way to save for your child's college is to make it part of your overall financial planning. To do this, you'll need to find out approximately how much your child's education will cost.

As noted earlier, the cost of college can vary greatly depending on whether your child is looking at private schools or public schools, and if he or she is interested in attending an in-state or out-of-state school.

Once you have an estimated total cost in mind, consider how much you can realistically contribute on a regular basis to put toward college expenses.

While completely covering the cost is ideal, it might be financially wiser for you to cover 50%, for example, and have the other half be paid through a combination of scholarships, financial aid, and money your child has saved.

Then, you can calculate a monthly contribution and put that cost in your budget with all of your other usual monthly expenses. Preferably, set up a direct deposit to a 529 account, Roth IRA, or custodial account.

How did the Formula Used to Determine Your Financial Aid Eligibility Change?

Starting with the 2024-2025 school year, the formula used to determine your financial aid eligibility changed. The Student Aid Index (SAI) is a calculation used to calculate how much of your college education you are deemed to afford by yourself. It is determined based on information you provide on your Free Application for Federal Student Aid (FAFSA). The SAI replaced the EFC.

Once the school you're applying to receives your SAI figure, they'll use it to calculate just how much federal student aid you can receive to attend that school.

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What Happens to Money Left in a 529 Plan?

You have several options if money is left in a 529 savings account after your child has completed college. If there’s a chance your child will attend grad school, you can keep the money in the account until that decision is made.

One of the most popular ways to use leftover money is to transfer money in the account to another family member. It doesn't have to be an immediate family member, like a sibling, though that is a popular choice.

Changing the beneficiary to a family member doesn't count as a distribution. Therefore, you don’t have to pay income tax on the money and the 10% penalty is avoided.

Up to $10,000 can also be used to pay off student loans for the beneficiary or a sibling.

In addition, you can also transfer leftover 529 funds to a family member's ABLE account, which is a savings account for people with disabilities. Money from a 529 plan can also be transferred to an ABLE account set up for the same beneficiary as the 529 plan. If moving money to an ABLE account, just make sure the transfer doesn’t exceed the ABLE account’s annual contribution limit.

As of 2024, a beneficiary can also transfer up to $35,000 of leftover money in a 529 plan into a Roth IRA in his or her name. Any rollover is subject to annual Roth IRA contribution limits, and the 529 account must have been open for at least 15 years.

Of course, you can always withdraw the extra funds and use them for non-qualifying expenses if you're willing to pay taxes and the 10% penalty on the earnings.

Related: The 7 Best Dividend ETFs [Get Income + Diversify]

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Be the Boss of Your Money: 7 Smart Ways to Make Your Money Work for You

Riley Adams, CPA — Fri, 12 Jun 26 12:15:33 -0400

You obviously work to make money. But if you want to reach your financial goals (or reach them faster), you also want to make your money work for you, too.

Earning additional money from what you've already made doesn't just earn you more money overall—it gives you more control over your finances. And at a certain point, when your money is appreciating on its own, you won't have to put in as many (or any!) hours at a job just to make ends meet.

That's why you should make your money work for you. But what's more challenging is how to make your money work for you. Fortunately, there are many paths for how to get your money to grow on its own. Even better, many of these strategies are simple to start.

Let's go over several ways to make your money work for you. The more of these methods you can put into practice, the more potential your wealth has to increase.

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What Does It Mean to "Make Your Money Work for You"?

When you have a traditional job, you are working for your money—it's your time and your effort that are generating a return.

When your money is working for you, you're not giving any time or effort—it's your money that's generating a return.

Put differently: You're using your money as a tool to make more money.

How to Make Your Money Work for You

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Below, I've outlined a number of ways in which you can put your money to work for you over time.

By the way: You're not limited to choosing one strategy. You can mix and match whichever methods work best for your risk tolerance, your goals, and your current financial situation.

1. Build a Budget

Consider this a setup step.

Building a budget technically doesn’t put your money to work for you … but it frees up money that you can then put to work for you, making it a bedrock strategy for growing your wealth.

Budgets provide you with two, sometimes three, core benefits:

--They create a clear picture of your financial situation.

--If you’re losing money, they help you identify where money might be misspent.

--They help you plan out your future expenditures and give you a roadmap to success.

Don’t know how to build a budget? It’s simple. If you’re just starting out, we suggest using a basic spreadsheet program like Google Sheets or Microsoft Excel. (We even have a budget template if you’d like to start with a helping hand.)

Begin by selecting a timeframe. Because most bills are on a monthly basis, most people work with a monthly budget.

Next, list all of your sources of regular income—as in, income you can expect to be there month in and month out. This is typically going to be limited to employment income, but it’s possible you might have income from other sources, such as a legal settlement.

Then, list all of the expenses you expect to incur within a month. This should include a.) fixed necessary expenses like rent or a cell phone bill, b.) variable necessary expenses like utilities and groceries, and c.) discretionary expenses, which include everything you spend on that you don’t actually need—think streaming services or going out to restaurants. It typically helps to look back across several months’ worth of expenses to better understand your variable costs. For instance, if you live in a colder climate, you’ll probably find you spend more on natural gas bills during the winter months than the summer months, and that should affect how you budget from month to month.

If your income is less than your expenses, you need to determine how to get the two numbers level. This can include actions such as cutting back on some discretionary expenditures (or cutting them out completely), or trying to reduce some bills by changing plans or providers. Importantly, if there’s additional room to cut after reaching breakeven, you might consider doing so to free up money to go toward savings.

If your income is more than your expenses, you’re in a good spot! From there, you can see if there are still any additional ways to optimize your budget, and from there, you can get a good idea of how much you can afford to save or invest.

2. Earn Interest on Your Cash

OK. You’ve written out a budget and determined you can indeed afford to put some money away every month. And if you’re going to do that, you might as well earn some interest on that saved-up cash.

The answer to this question partly depends on how much access to those savings you need.

High-yield savings accounts (HYSAs)

A basic savings account will keep your money safe, allow you to withdraw it pretty much whenever you want, and even grow your money … a little bit. Usually, you’ll earn a fraction of a percent in annual percentage yield (APY).

A high-yield savings account (HYSA), however, can do much better. Your typical HYSA will earn around 10 times what an average basic savings account will.

It’s extremely easy to open up a high-yield savings account and either put fresh money in there or have it transferred over from another account. And it’s one of the safest ways you can generate interest, as the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA) will typically insure up to $250,000 per depositor per bank.

The one drawback: Some—not all, but some—HYSAs provide a little less access to your money. Virtually all basic savings accounts allow for limitless transactions, but some high-yield savings accounts will set a limit on monthly transactions. But if you’re only using the account for savings and letting that money grow thanks to compounding interest, that shouldn’t be a meaningful hardship.

One last note: All of the above makes the HYSA an optimal place to save up an emergency fund. You have plenty of access to your cash in the event of a sudden expense, but until you tap that fund, the money can grow.

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Money market accounts

Money market accounts (MMAs) are similar to savings accounts in that you can earn a higher rate than your average savings account while enjoying better access and FDIC or NCUA insurance. But they are different from HYSAs in a few key ways.

For one, money market accounts typically offer higher interest rates than HYSAs. That’s because the bank invests your money into short-term, low-risk assets, which allows the bank to up the ante on the APY.

Also, MMAs actually offer a little more access to your money. While you still might be subject to transaction limits, money market accounts may come with checks, a debit card, or both, making it much easier to tap into that money as soon as you need it.

That said, whereas HYSAs have low or even no account minimums, money market accounts often have a considerable minimum, frequently around $2,500. This can eliminate it as a serious consideration for many people who can’t afford to save much—either they won’t be able to save enough to meet the minimum to begin with, or when it comes time to pay for an emergency, they’ll be forced to withdraw well below the account minimum.

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Certificates of deposit (CDs)

You can earn even more interest on a certificate of deposit (CD), which is another financial product sold by banks and credit unions. And like HYSAs and MMAs, they come with FDIC or NCUA insurance.

However, CDs are far less “liquid”—in other words, you have far less access to your money.

With a Certificate of Deposit, you deposit your money for an agreed-upon amount of time. The terms vary but typically range between six months and five years. Once the term is up, you receive your money back with interest.

However, if you try to access your money before the term has expired, you’ll have to pay a penalty for early withdrawal. So you can technically still get to your money while it’s invested in a CD, but there’ll be less of it as a result.

If you’re being strategic, then, a CD is a poor place to save up an emergency fund. But it’s a great place to put your money to work toward savings goals with a defined timeline—like, say, working toward a down payment on a house in three years.

3. Invest in the Stock Market

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A more powerful way to put your money to work is to invest in the stock market. Whereas a HYSA or CD might net you, say, anywhere between 4% and 6% right now, the average annual stock market return, depending on the time period studied, is around 9%-11%.

However, these higher returns come with greater risks. While investment accounts typically are insured, they’re insured against a broker or institution’s failure—but if you invest poorly, the responsibility ultimately falls on you.

Different investment accounts have different characteristics that will ultimately determine how liquid your funds are, what the account should be used for, what you can invest in, and more.

Taxable brokerage accounts

Taxable brokerage accounts are among the most powerful drivers of financial growth, and they’re about as common and easy to open as you could want.

Most brokerage accounts let you invest in basic instruments like stocks, exchange-traded funds (ETFs), and mutual funds, though others let you access more options such as individual bonds, options contracts, futures, and more.

That variety allows you to build a portfolio suited to your savings needs. If you’re willing to take on more risk, you can tap growthier strategies to build your wealth much more rapidly. If you’re more conservative, you can still build passive income streams by holding assets such as dividend stocks and bonds.

There are downsides, of course.

For one, there’s the risk. Your investments could lose value thanks to problems in the underlying companies or even just because of broader economic issues.

There’s also the matter of liquidity. It’s called a “taxable” brokerage account because it has no tax advantages—you contribute with money that has already been taxed, you’re taxed on any income your investments generate, and whenever you sell a position and incur a capital gain, you owe capital gains tax. The flip side is, you can withdraw money from your account whenever you want without penalty—something you usually can’t do with other types of investment accounts.

That said, if you want to withdraw money from a brokerage account, you’ll typically need to sell some of your holdings, then transfer the money to a bank account from which you can actually withdraw the cash. It’s not a massive hurdle, but it takes a little time. Thus, brokerage accounts are best used not for short-term savings goals like emergency funds, but medium- and longer-term goals where you have time to ride out ups and downs in the market and won’t need to withdraw the money at a moment’s notice.

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Retirement accounts

Retirement accounts, such as individual retirement accounts (IRAs), Roth IRAs, and 401(k)s, are great investment vehicles because they allow you to invest in stocks, funds, and other securities while also enjoying various tax advantages—and in some cases, bonus money. For instance:

Traditional IRAs let you invest in virtually everything you can invest in using a traditional brokerage account. However, IRAs are tax-deferred—you contribute pre-tax money, your funds grow tax-free while in the account, and you only pay taxes upon withdrawing the funds.
Roth IRAs are similar to traditional IRAs, but the tax consequences are flipped. You contribute money that has already been taxed—but your funds grow tax-free while in the account, and they’re not taxed when you withdraw them.
401(k)s are tax-deferred just like IRAs. They typically have a much narrower investment selection—often, just a few mutual funds. However, in addition to the contributions you make, employers can pony up funds, too, typically through contribution matches, though some employers provide a contribution even if the worker contributes nothing.

However, in exchange for their different tax advantages, retirement accounts have stricter rules about withdrawing funds. With a few exceptions, you can’t withdraw money from an IRA or 401(k) until age 59½ without incurring penalties. You can withdraw contributions to a Roth IRA before age 59½ without penalty as long as the account has been open for five years, but you have to wait until age 59½ to withdraw earnings penalty-free.

That makes these accounts poor options for most savings goals outside retirement.

Other accounts

You also have access to a variety of other specialized investment accounts, though these too have their own limitations and restrictions.

For instance, you can also invest in health savings accounts (HSAs). HSAs have a “triple tax benefit”: 1.) They allow you to reduce your taxable income (because you contribute pretax dollars), 2.) money in the account can grow tax-free, and 3.) you won’t be taxed on withdrawals made for qualified medical expenses. Investment selections vary by HSA provider.

There are also 529 plans, which are investment accounts specifically designed to pay for educational expenses. 529s also allow money to grow tax-free, and withdrawals aren’t taxed if they’re used on qualified costs. Investment options are limited, however, and plans are state-specific.

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4. Invest in Real Estate

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There are several ways to invest in real estate.

The most straightforward way is to buy a house (other than your primary residence) or another residential property, then rent it out to tenants.

This can be a great way to earn a passive income stream, but becoming a landlord also entails a substantial amount of work and requires a lot of capital upfront. If that commitment doesn’t appeal to you, there are other ways to invest, such as buying shares of real estate investment trusts (REITs) in your brokerage or retirement account.

That said, you can also buy into real estate through a crowdfunding platform, such as Fundrise. Fundrise is a popular real estate and alternative asset investing platform that allows you to diversify through its numerous funds. Each fund holds a number of properties and is designed to provide varying levels of risk and income.

Just note that some of Fundrise’s offerings, as well as other private real estate investments, are quite illiquid, locking up your money for several years.

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5. Invest in Art

Real estate is just one example of an “alternative asset”—basically, an investment that falls out of traditional assets such as stocks and bonds.

Another is art.

Once upon a time, fine art used to be available exclusively to the ultra-wealthy. But thanks to technology and specialized platforms, this asset is becoming more accessible to the general public.

Masterworks provides investors with a way to enjoy fractional ownership in shares of famous works of art, created by renowned masters such as Picasso and Banksy. The investment platform’s art experts scour millions of auction records to choose the pieces most likely to grow in value over time.

Again, art is typically a long-term, illiquid investment. While it can make your money work diligently for you, you only want to use money that you won’t need for several years.

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6. Pay Off High-Interest Debt

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“Sure,” you say, “I should pay off my credit card debt. But how is that making my money work for me?”

If a savings account generates compound interest, think of a credit card or loan as generating compound debt. When you take on debt, you have to pay back not only the principal, but any interest that’s charged too. And the longer you take to pay back the principal, the more interest you’ll owe along the way.

With that in mind, sometimes your money will work harder if it’s used to pay off debt rather than grow in a savings or even investment account.

Above, I mentioned that you can expect, on average, 9%-11% in annual returns from the stock market. Let’s call it 10%. If you put $10,000 into the stock market, and you get the average annual return, you’ll earn $1,000 in the first year. However, if you pay off $10,000 in credit card debt that charges a 20% interest rate, you’ll save between $1,800 and $1,900 in interest that you would have paid across the first year. (This assumes you were only going to make the minimum required payment each month, which is primarily interest payments and very little going toward the principal.)

In short: Compare the cost of your debt with the potential earnings from where you planned on saving the money. In almost all situations, paying off high-interest debt like you see with credit cards will generate a better “return” than virtually any savings or investment account.

Low-interest debt, such as a mortgage, is different. For one thing, paying down your mortgage gradually each month is a form of savings, since you’re building equity in your home as you pay down your loan principal. However, depending on your mortgage’s interest rate, you may be able to earn a higher return on reasonably safe investments than what you’re paying on your mortgage. So consider low-interest debt more carefully.

7. Automate Your Finances

Putting your finances on autopilot can help your money work for you by ensuring you never miss a bill—and subject your savings to the late fees that come along with that.

Similarly, you're likely to save more if you put your savings on autopilot. Many jobs will let you split your paycheck between two accounts, which means you can send most of your income to your main bank account to pay your monthly expenses, while directing some of your paycheck straight into a savings account where it can earn you interest (more on that below). This way, you aren't as tempted to spend that extra money.

Alternatively, you can set up automatic transfers from a checking account into a savings account to ensure you're setting money aside on a regular basis. Again, the idea is to automate the hard work of saving instead of spending so your wealth can grow over time.

The SoFi® Checking & Savings Account sounds like your run-of-the-mill bank account, but it’s more: It’s also a high-yield savings account that earns far more than the national average percentage yield (APY)² and more than the average high-yield account. Better still, it boosts your ability to save right off the bat by rewarding you with $50 or $300 upon sign-up.¹

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See full terms and conditions at https://wealthup.com/sofi-checking-savings-terms-conditions/.

How Do I Stop Working for Money and Make My Money Work For Me?

There's no get-rich-quick solution to this question. The answer largely boils down to making intelligent decisions, practicing a little bit of self-control, and letting time do the rest.

For instance, the earlier you start putting your money to work (whether that's via a brokerage account or even just a high-yield savings account), the longer you can benefit from compounding—and thus, the more wealth you'll build over time.

Also, try to be consistent. Set aside a target amount each week or each month. The more you make saving a habit, the less likely you'll be to stop.

And remember: There are other little things you can do. If you're good about paying off your credit card every month, credit card rewards like cash back can help you save a percentage point or two on every purchase.

Lastly, be patient. Instant-wealth schemes are often scams. By contrast, the strategies above sure aren't flashy, but they're tried-and-true ways of eventually becoming financially independent.

How Building Passive Income and Making More Money Gives You Freedom

Creating a passive income gives you more freedom in how you spend your time, and it can relieve you from some of the burdens of financial stress.

Some passive income strategies take time to get rolling, while others generate some amount of passive income right from the get-go.

For instance, once you buy stocks that pay dividends, your work is done—you simply receive payouts on a regular schedule. By contrast, if you buy real estate to rent out, it could take some initial work, such as renovating the property and hiring a property manager to handle the day-to-day responsibilities before you ever see a rent check.

Either way, once you've created a reliable source of passive income, you become less financially dependent on your day job. That extra income might not pay all your bills right away, but over time, it can increasingly supplement—and one day replace—your paycheck.

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Related: 7 Best Vanguard Dividend Funds for 2026 [Low-Cost Income]

What's better than a smart, sound dividend income strategy? How about a smart, sound dividend income strategy with very little money coming out of your pocket?

Related: 15 Best Long-Term Stocks to Buy and Hold Forever

So if you're looking for a starting point for your own portfolio, look no further. Check out our list of the best long-term stocks for buy-and-hold investors.

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14 Proven Ways to Increase Your Net Worth and Feel More Financially Stable

Riley Adams, CPA — Fri, 12 Jun 26 11:15:48 -0400

Are you trying to learn how to increase your net worth? If so, then there are a number of things that you can do to grow your assets and reduce your debt.

One of the most common mistakes people make is not thinking about how their current assets affect their future net worth. By controlling your spending, reducing debt, saving more and investing wisely, you can grow your net worth in no time.

In fact, there are many ways to grow your assets and improve your net worth. In this article, we will discuss proven ways to grow your assets and how they will help build up your net worth!

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What is Net Worth?

Net worth is the total value of what you own, minus the total amount of debt. Your net worth is your assets minus liabilities. The resulting figure is your net worth.

A more nuanced view of the net worth involves looking at your liquid net worth vs. illiquid net worth. Liquid net worth is the amount of cash, investments and other liquid assets that you have. Liquid in the financial world means readily able to convert into cash or cash-like instruments.

This compares to illiquid net worth, which looks at your non-liquid assets like real estate, rental property, a new car, retirement assets or other assets not readily accessible and convertible into cash and then subtracts the outstanding debt you hold.

Ignoring these liquidity concerns, you can look at your total basket of assets and how they compare to your overall debt burden. This will tell you your net worth.

Can You Increase Your Net Worth?

Absolutely. This article teaches you strategies to increase your net worth. Getting started sooner makes it easier to build your net worth later.

By using the formula above (Assets - Liabilities = Net Worth), you can begin to control your expenses, eliminate debt and grow your assets.

How to Increase Net Worth

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The first step in building your net worth is to get rid of debt. Net worth is another term for equity or residual value, meaning assets minus liabilities.

Therefore, lowering debt becomes a strategy to increase your net worth by realizing guaranteed returns on the interest you don't pay. This compares to the expected returns you earn on investments like stocks, real estate, or other assets you buy which earn a return.

One of the best ways to increase net worth is through smart investments. Buying a suitable car for your situation, a house you can afford or renting in a location that fits comfortably into your budget, and keeping extravagant expenses low all act as important steps.

Net worth doesn't necessarily equate to rich. For some, having a positive net worth is a goal well worth pursuing. When we live with debt, the size of our net worth is often negative.

When people with high debt balances on a mortgage, student loans or credit card debt see their net worth go from negative to positive, they often have a reason to celebrate for turning debt into wealth.

The following pathways help you to build personal savings in a bank account, the market, housing and more while learning to manage your financial health and grow your wealth over the short term and long term.

Building your net worth is a process that could lead you to your magical number where you feel you have enough savings and funds built up to care for your family and not need to worry so much about the next time funds will come through the door.

Related: 10 Best Fidelity Funds to Own

1. Pay Off Credit Card Debt

Interest-bearing loans are a liability and can hurt your ability to boost your net worth. As you're able, pay off all of your debt and ensure that no penalties are applied for early or frequent payment (as is the case with some mortgages).

The best ways to grow your assets and increase net worth include targeting debt with the highest interest rates first, then paying other debts off as you go.

Consolidating your debt through a lower rate personal loan to pay down high-yield debt is a time-tested strategy. It is possible to pay off debt, increase your assets, and grow your net worth. Have a plan for getting from A to B and manage your payments within your budget.

One of the easiest ways to grow your assets is by tapping into any extra savings or income you have and making an extra payment to reduce your debt burden.

Shed this debt fast and watch your net worth rise fast.

Do you want to get serious about saving and planning for retirement? Sign up for Retire With Riley, Young and the Invested's free retirement planning newsletter.

2. Build an Emergency Fund

An emergency fund is an account containing cash set aside to cover urgent necessities such as sudden health problems or automobile emergencies. But they can also cover expenses like:

-- Home-appliance repair or replacement.

-- Unemployment.

-- Unexpected travel.

-- Family emergency.

One way to grow your assets and increase net worth is to create an emergency fund that can help you stay financially afloat without having to rely on any other money, especially high interest debt from credit cards or expensive personal loans. It is crucially important that you have an emergency fund of savings if you have debt, because it can help avoid taking out more loans.

One of the first things to do when getting out of debt is to not go further into debt. It seems simple and straightforward, but if you've got debt to your name, you know you don't want it to be to your name. You want it gone. So, how much should you have set aside in your emergency fund? It depends on your situation.

For simplicity, the best place to start is by setting a dollar target that proves challenging but not so much that you can't ever motivate yourself to achieve it. If starting small, consider starting at a lower milestone like saving $500. As you can afford to save more, work your way up and try to reach half a year’s expenses before contributing money toward your retirement.

Though, the right amount for you depends on your financial circumstances. It is a good idea to maintain enough assets to cover individuals living expenses for up to six months. If your job or income earned by your family has less predictability (like you work as a freelance financial writer or in seasonal work) or proves harder to replace, consider having a bigger buffer saved in an emergency fund.

To manage any unexpected unemployment, you can utilize your savings to help with any necessary expenses and supplement any benefits provided by the government. Start small, but start. One of the most basic ideas to grow your assets is having even $500 saved. This could help you out in plenty of tough financial situations.

If you don't already have an emergency fund set up for you and your family, consider opening a high-yield savings account which you can easily access. This might be through your existing bank but it could also be through an online-only bank like Bread Savings. That way, you can access it from anywhere and it remains separate from your daily banking activity.

Make sure the bank account you choose offers competitive interest rates and can connect with many other financial institutions, allowing for easy transfers. Having quick access to emergency funds is imperative in order to prevent circumstances from getting out of hand. Therefore, you shouldn't tie up these funds in a long-term investment or something illiquid.

Though, the account shouldn't be so easily accessed that it sits in the same bank account you use daily. Having it reside at a separate banking institution might avoid temptations to dip into your rainy day fund and depleting your financial reserves.

Having a savings account with a high-interest rate will make you money while you sleep and allow it to work for you. These accounts carry federal insurance up to $250,000, making the funds safe. The money can earn interest, and you have access to your cash when needed whether through withdrawal or a fund transfer. Consider an online-only, high-interest savings account through Bread Savings to establish your emergency fund.

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3. Pay Off Student Loans

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Millennials and Gen Zers have a mountain of student loans to their names. The Federal Reserve estimated as much as $1.6 trillion in student loans exist today. This number looks set to climb despite the temporary reprieve many borrowers received due in part to efforts from Presidents Trump and Biden for deferring student loan payments for all federal borrowers during the pandemic.

Many will begin repaying these loans this fall when the deferment ends, leading to the reemerge of the classic question of, "Should you invest or pay off student loans?" In most cases, it makes sense to do both simultaneously. Borrowers should consider the rate of interest they currently pay and whether they think they can get a better return in an investment like the stock market.

You want to maximize your expected return on your money within your acceptable risk tolerance. This will reduce what you owe on your student loans while also growing your assets through investments.

One way to reduce your interest rate is through refinancing your student loans. To bring down the costs of these loans, many have sought using refinancing options. Once young adults can put their student loans in good standing, they should turn to investing for the future and growing their net worth through their retirement accounts.

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4. Max Out Retirement Contributions

Many private employers offer 401(k) retirement accounts that provide great tax advantages for saving and investing your money. For example, many employers have matching programs that will help you to grow your contribution and build wealth faster than you could by yourself.

You also have other tax-advantaged accounts available to you as well, such as Traditional and Roth IRAs, or individual retirement accounts. Taking advantage of these accounts keeps money invested for the long-term through mutual funds, stocks and other investment options. It grows in value and builds your savings balance as you approach retirement. Using these accounts saves you tax expenses and invests your income for the long term.

Use these employer-matched funds to upsize your retirement contributions and grow your income further by getting more money to save. By choosing to ignore such programs, you leave money on the table.

Retirement contributions serve two benefits. First, in the case of traditional retirement accounts, they allow you to defer your taxable income to your lowest earning years in retirement and second, act as a way to increase your available investment assets. Achieving your retirement goals can be slowed by taxes. Taking action now will prevent this and help you achieve your goals quicker.

Start contributing to your employer-sponsored plan and consider investing in low-cost index fund mutual funds or even target date funds aligned to your desired retirement date. These funds invest in stocks and bonds and transition the amounts you hold in each over time as you near retirement. They automatically switch your savings goals from wealth accumulation to wealth preservation, de-risking your retirement assets and working toward providing you a retirement income.

You can invest in investment vehicles like these through your own IRA as well. Though, IRAs offer many more investment choices for you to consider. Apps like E*Trade offer you an all-in-one investment management experience, complete with access to an IRA.

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5. Live Below Your Means by Cutting Expenses

It's not easy to maintain a lifestyle that doesn't require much money. But you might end up with more cash if you're willing to live on less.

Taking the first step toward living below your means (and possibly no longer hemorrhaging money) begins with making a list of your expenses. Try to include everything from the things you spend money on every day, like food and transportation, to items that are only purchased once in a while.

Then, take time to consider the items on your list and determine if they're necessities or luxuries. Start small and work your way down the list of things that don't make financial sense for you, from eating out at restaurants every day to buying clothes you don't need. As you go, you'll also need to reevaluate major money decisions in your life.

That's because it's not enough just to cut back on the little things, you have to be intentional about it and work your way up the expense categories.

Doing so will require a financial plan that accounts for your needs and wants while still giving you some leeway in terms of what luxuries or indulgences you can afford.

No matter how good your intentions are when trying to live below your means, you'll need conviction to make the hard changes necessary to spend less. Remember, living on less than you earn can be a great way to build your net worth and prepare for the future.

You might think living below your means is impossible, but by making a concerted effort little by little, you can manage your expenses and leave more money for debt repayment or saving.

You can track all of your expenses and visualize your money through using a budgeting app like Quicken Simplifi. The app allows you to see your entire financial life in one place, providing you with a comprehensive tool for budgeting, tracking your investments and planning for retirement.

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6. Pay Yourself First

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Leveling up your decision to live below your means involves paying yourself first.

Pay yourself first means that you set aside money for your future before you make any other financial moves. It's not an easy feat, but if you can start with small changes like canceling unused memberships or making a standing order to put funds away in savings on payday it'll get easier the more committed you are.

There will be opportunities to increase your savings as you grow and progress in your career. Though, that doesn't mean you should delay saving more now.

Rather, the earlier you start to pay yourself first through higher savings and contributions to your investment accounts, the more time you'll allow compounding returns to work for you.

Compound interest occurs when you earn not only on the initial investment but also its accumulated earnings from previous years (or months).

You can also work toward building passive income streams by, for example, investing in real estate, buying income generating assets and the best investments or starting a side hustle.

Look here for a full list of passive income ideas.

7. Invest in Yourself

One way to pay yourself more first is through investing in yourself. You may have heard of it before, but the best investment you can make is in your own education.

This could mean pursuing more rigorous job training programs or paying for a certification course to improve your skill set and grow into higher-paying positions with better benefits.

Flipping this equation around, if we invest in ourselves first then money will flow into our checking accounts quicker.

It is also important to invest in our health. This can happen by taking care of your body and mind with regular exercise, nutritious food, sufficient sleep for the individual and their family members, relaxation techniques like meditation or yoga as well as mental wellness practices that include therapy sessions when necessary.

8. Keep Money You Have Saved In Places It'll Grow

You may already have a savings account because you've got an emergency fund with enough set aside to cover at least three to six months of expenses. But are you using it?

Your checking account should have a balance that covers your regular spending and everything else should be in an interest-bearing bank account earning you returns. Even better, invest what you can.

Even if you're saving for yourself in a mattress in your bedroom (figuratively), that should not be your long-term goal. You want that money to turn into more money.

Further, resist the urge to spend a windfall. Invest it so you will continue to benefit in the future.

Most people tend to be risk averse, so consider investing in index funds instead of trying to pick stocks yourself. Although, by choosing to add individual stocks to your portfolio, this can open your returns up to higher potential.

If you don't know where to look, consider subscribing to one of the best stock picking services or signing up for an investment newsletter to learn about stocks.

You can learn how to research stocks and perform stock analysis to uncover growth companies worth investing in for the long-term.

One service worth considering is Motley Fool's Stock Advisor. The subscription recommends investing in "Steady Eddies," or companies that perform well over long-periods of time and deliver consistent returns. These serve as a strong foundation to a diversified portfolio and can deliver you solid returns over long periods of time.

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9. Buy Your Forever Car

It is a sure bet that any car you buy today will be worth much less in one year's time. That's the case in almost every situation, save perhaps the period immediately following the pandemic.

Cars depreciate rapidly as you drive them and rarely act as physical things that appreciate in value. Add in maintenance costs, insurance premiums and operating expenses (gas) and you have an understanding of the true cost of owning a car.

Every time you buy a car, it inevitably leads to a decrease in your net worth. Buying a car means you will be paying interest and depreciation over the course of that vehicle's life. Purchasing vehicles only when they are necessary can significantly reduce these financial penalties.

10. Buy Your Forever Home

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Buying a home often represents the single largest purchase you'll ever make. While there are many different strategies for spending your money, buying a home is generally considered one of the most sound investments you can make in terms of increasing net worth.

The reason it's so powerful has to do with leverage and return on capital: A person who buys a house usually puts down 20% or less of the purchase price as cash, while borrowing 80% from a lender.

Over time, the home price should appreciate in value and generate equity.

The home's value is leveraged by the homeowner who typically pays less in interest rates and has more time to pay off the debt than a renter, which means they get an improved ROI on their investment.

Additionally, homeownership may also help you build wealth and income by treating part of it as a rental property. You can rent out rooms or even purchase a separate property to treat as rental property and earn extra money.

Regardless of your intended use, by purchasing a forever home and living in it for many years, you can build equity for when you later in life decide to downsize and take out the equity for retirement.

Do you want to get serious about saving and planning for retirement? Sign up for Retire With Riley, Young and the Invested's free retirement planning newsletter.

11. Avoid Liabilities, Acquire Assets

One of the smartest choices in personal finance is to acquire assets and avoid liabilities. The first thing you should think about when evaluating your personal financial situation is how to grow assets and minimize liabilities.

The best way for Americans to build wealth, short term or long term, is by acquiring assets.

Taking on no debt, though, might not be the smartest choice. For example, taking out student loans to finance a medical career or buying a home in a nice area with a mortgage serve as good financial decisions for the long-term.

You want to use debt strategically for investments in your life, not for frivolous expenses on wants. Being smart and using liabilities to increase your long-term net worth can serve as a strong decision to compound your returns with someone else's money.

Sometimes, high-yield investments justify the cost of debt to get them in your hands.

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12. Get Extra Money from Freelancing

Another way to earn more money and build your net worth comes from augmenting your income. You can do this by getting promoted at work but also by taking on freelance work on the side as well.

Freelancing in your line of work or doing something you enjoy can be a side hustle, but also your main source of income.

Working as a freelancer means you likely won't get any added employment benefits like health insurance or paid time off, but instead, you should receive a higher rate or compensation to account for this.

13. Improve Your Financial Health

Improving your financial health requires planning and looking into your finances to identify areas of financial stress in your life. Consider the following steps to improve your financial position:

1. Determine where you're starting from and establish goals for where you want to go.

2. Tell your money where to go and what you want it to invest toward down the line. Less money on a credit card and more money in a retirement account or investment account invested in the market.

3. Start to spend less, live within your means and pay yourself first.

4. Begin planning for your future and what it might entail.

5. Take actions to accomplish this future and put yourself in a better financial position.

By following these steps, you'll learn how to increase net worth for yourself sooner than later.

14. Protect Your Net Worth with Insurance

Once you've started to build your net worth with good personal finance choices, you'll want to protect it. When you've got nothing to lose, it's easy not to think about what could go wrong.

When you've got something on the line, you need to watch your bottom line and look for ways to protect it.

One way of watching the eggs in your basket comes from buying insurance through a life insurance policy, personal insurance policy, liability insurance, umbrella coverage and more.

Depending on your unique situation and needs, you might consider getting free quotes from relevant insurers to understand how much protecting what you've built could cost.

Having financial peace of mind after accumulating a positive net worth adds icing to your cake.

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Investment advisory services offered through NewEdge Advisors, a registered investment advisor.

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Is a Custodial Roth IRA the Key to Your Child's Future Financial Security?

Riley Adams, CPA — Fri, 12 Jun 26 09:45:02 -0400

Investing isn’t just for adults these days. More and more children are getting into the act with their parents’ assistance. However, if you’re helping your child save for the future, a custodial Roth IRA rarely makes the list of the best investment vehicles. That’s too bad, because Roth IRAs are actually an ideal investment account for kids. Invest enough in long-term oriented investments for enough time, and your contributions could eventually become worth more than $1 million in retirement for the child.

A Roth IRA can be opened for anyone, regardless of their age. Contributions to an account made when your child is at a young age have decades to grow tax-free, too. Plus, contributions can be withdrawn tax- and penalty-free at any time, while earnings can be taken out before retirement age to cover college expenses or buy a home.

And with custodial Roth IRAs, an adult can manage the account until the child reaches the age of majority. That way, there’s proper oversight while your children learn about the benefits of investing. Adults can even help with matching contributions, too.

So, if you want a tax-smart, flexible, and supervised way to help your children invest for the future, consider opening a custodial Roth IRA for your kids. I’ll explain the important rules, tell you want to look for, and even provide recommendations for the best custodial Roth IRAs for children. Read on for all the details about these under-appreciated retirement savings vehicles.

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What Is a Roth IRA?

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Let’s start with some of the basics about IRAs and, more specifically, Roth IRAs. There are also some special rules you need to know in order to understand how a Roth IRA for kids works.

First, an IRA—which is short for “individual retirement account”—is a tax-advantaged retirement savings account. In other words, you get tax breaks for using them instead of putting your retirement savings in certain other types of accounts (e.g., a regular savings account from your bank or a standard brokerage account). However, as you’ll see, there are also certain restrictions and limitations that go along with IRAs.

There are two basic types of IRAs: Traditional IRAs and Roth IRAs. The main difference between the two is when you pay taxes on the money in the account (more on that in a second). There are annual contribution limits for both types of IRAs, but there’s an additional income limit for Roth IRAs that prevents wealthier people from contributing to them or contributing as much.

There’s no age limit for IRAs, so there’s no restriction on opening a Roth IRA for kids. But there is an earned income requirement, so a child must have a job or similar source of compensation to contribute to a Roth IRA.

The main purpose of a Roth IRA is retirement saving. However, under certain circumstances, funds in this type of retirement account can be used for other purposes before reaching retirement age. This makes Roth IRAs an especially good investment vehicle for children who have their whole lives ahead of them.

Tax Treatment of Traditional IRAs vs. Roth IRAs

Traditional IRAs are often called “pre-tax” accounts because contributions are made before taxes are imposed on the amount contributed (there’s generally no tax at the time thanks to a tax deduction for the contributions). Money in the account also grows tax-free … until you withdraw funds in retirement. At that point, the money you take out of the account is considered taxable income and you must pay income tax on it.

On the other hand, a Roth IRA is an “after-tax” account, because contributions are made after taxes have been paid on that money. Thus, unlike traditional IRAs, no tax deduction is allowed when you contribute to a Roth IRA. However, once that money is in the Roth IRA, it’s allowed to grow tax-free, and you don’t pay taxes when you withdraw the funds, either.

Young and the Invested (YATI) Tip: Don’t worry too much about your child contributing his or her own money to a Roth IRA. If your child has to file a tax return, the tax rates that kids face are typically so low that taxes on a Roth IRA contribution would mostly be avoided anyway. Plus, since money in a Roth IRA grows tax-free, the “kiddie tax” won’t apply to the investment earnings.

Annual Roth IRA Contribution Limits

An annual contribution limit applies to both types of IRAs. For 2026, the most that can be contributed to a child’s Roth IRA is $7,500 (people 50 or older can contribute $1,000 more). That's up from the $7,000 limit in 2025.

The annual IRA contribution limits are combined limits that apply to all your traditional and Roth IRAs. So, for example, if a child puts $5,000 in a traditional IRA in 2026, then no more than $2,500 can be put in the child’s Roth IRA (or any other IRA) for 2026.

Annual Roth IRA Income Limits

As I mentioned earlier, there’s also an income limit and phase-out rules for Roth IRA contributions. So, if your income is too high, you can’t contribute to a Roth IRA at all.

For the 2026 tax year, the maximum amount you can contribute to a Roth IRA is gradually reduced to zero if your 2026 modified AGI is:

-- At least $153,000 but less than $168,000 for single and head-of-household filers ($150,000 to $165,000 for 2025)

-- At least $242,000 but less than $252,000 for joint filers ($236,000 to $246,000 for 2025)

That also means you can’t contribute to a Roth IRA at all for 2025 if your modified AGI for the year is:

-- $168,000 or more if you use the single or head of household filing status on your tax return ($165,000 for 2025)

-- $252,000 or more if you’re married and file a joint return ($246,000 for 2025)

If you’re married but file a separate tax return, your annual maximum contribution is gradually reduced to zero if your modified AGI is between $0 and $10,000.

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Roth IRA Earned Income Requirements

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The account holder must also have earned income in order to contribute to an IRA. If an IRA is in a child's name, then it’s the child’s earned income that counts.

Also, in addition to the annual contribution limits noted earlier, IRA contributions for the year can’t exceed the child’s earned income for the year. However, there are still ways for parents, grandparents, or other loved ones to put money in a child’s Roth IRA account (as I'll discuss in a minute).

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What Is Earned Income for Purposes of Roth IRA Requirements?

According to the IRS, compensation that satisfies the earned income requirement generally includes “wages, salaries, tips, professional fees, bonuses, and other amounts received for providing personal services.” A commission that’s a percentage of profits or sales satisfies the requirement, too.

Self-employment income also counts as earned income. However, if you’re self-employed, don’t include any contributions made to retirement plans on your behalf or the deductible part of your self-employment taxes. Earned income includes self-employment income even if you don’t have to pay self-employment tax because of your religious beliefs. Don’t subtract a net loss from self-employment from salaries or wages when calculating your total earned income.

What’s not treated as earned income? Among other things:

- Interest, dividends, rental income, and other earnings and profits from property

- Pension or annuity income

- Deferred compensation from a previous year

- Amounts excluded from gross income for tax purposes

So, for a kid’s Roth IRA, the necessary income can come from an after-school or summer job (including online jobs for teenagers). It can also come from walking dogs, mowing lawns, babysitting, or performing other jobs kids can do to make money. However, allowance money or financial gifts for babies or other kids don’t count toward a child’s earned income.

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Earned Income Limit for a Child’s Roth IRA

Even though Roth IRA contributions to a kid’s account can’t exceed the child’s earnings, that doesn't mean it has to be the child’s money that’s contributed to the account. Parents and other adults can contribute to a child's Roth IRA—up to the amount of the child’s earned income. For instance, if Johnny earns $2,500 during the year by walking dogs in the neighborhood after school, his parents can contribute up to $2,500 of their money into his Roth IRA, while Johnny keeps the money he earned from dog walking.

A child can also choose to work, but only contribute gift money received for holidays, birthdays, or other celebrations to his or her Roth IRA. Again, the child can’t contribute more than his or her earned income for the year (or more than the annual contribution limit for the year).

Deadline for Contributing to a Roth IRA

You have until the tax filing deadline for the year to make contributions to a Roth IRA. So, for example, you have until April 15, 2026 (April 17 to put money in an account for the 2025 tax year. You'd have until each year's filing deadline around market close to make that contribution for the prior tax year.

If you request an automatic filing extension for your 2025 tax return, you'll have until Oct. 15, 2026, to contribute to a Roth IRA for the 2025 tax year. Similar deadlines will apply for 2026 IRA contributions.

YATI Tip: If you make a 2025 contribution in 2026, make sure you let the account administrator know that the contribution is for the 2025 tax year.

Use of Roth IRA Funds

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Because IRAs are retirement accounts, a 10% penalty might be imposed if you withdraw money from an IRA before you’re 59½ years old. The distribution might also be considered taxable income if you’re not yet 59½ years old.

The early withdrawal penalty and tax generally apply if you pull either contributions or investment earnings out of a traditional IRA, or if you withdraw earnings from a Roth IRA. (You can withdraw contributions from a Roth IRA at any time, since taxes have already been paid on your contributions.)

However, there are exceptions to the 10% penalty for certain circumstances or if the withdrawn funds are used for particular purposes. Some of the more common situations or uses of money that trigger a penalty-free withdrawal before age 59½ include:

- You’re totally and permanently disabled.

- The funds are used to buy, build, or rebuild a first home (including to pay typical closing costs).

- You have unreimbursed medical expenses exceeding 7.5% of your adjusted gross income for the year.

- You’re paying health insurance premiums while unemployed.

- The withdrawn funds aren’t more than your qualified education expenses.

What Is a Custodial Account?

If you open a Roth IRA for kids, it can be set up as a custodial account. In that case, the Roth IRA is held in the name of the child by a custodian, who manages the account for the benefit of the child. Custodians can technically be any adult, but they’re usually the child’s parent, guardian, grandparent, or other relative.

With custodial Roth IRAs, the custodian maintains full control over the account until the child reaches the termination age, which is usually when the child reaches the age of majority. This can be when the child turns 18 years old; however, depending on the child's state of residence, it can also be as late as age 21 or 25. At this point, the child can make decisions as he or she sees fit with how funds get invested, contributed, or spent.

YATI Tip: A custodian can generally withdraw contributions (but not investment earnings) from a custodial Roth IRA tax-free and penalty-free at any time. However, if possible, it's usually best to keep funds in the account and continue to invest for the child's retirement. That way, the child's money stays invested and can continue to benefit from tax-free growth.

When contributions are made into a custodial Roth IRA, it’s considered an irrevocable gift that now belongs to the child. As a result, unlike 529 plans or other tax-advantaged savings accounts for kids, assets placed into custodial Roth IRAs can’t be transferred to another person.

Custodial accounts generally offer flexibility, too. Money held in a custodial account typically can go toward any number of expenses—as long as they benefit the child. For example, funds in a custodial brokerage account don’t need to be earmarked for one specific purpose, such as how money in a 529 plan generally must go toward qualified education expenses. (However, custodial Roth IRAs will have the same spending limitations as Roth IRAs for adults.) There’s general flexibility in how you invest custodial account funds for the benefit of a child as well. The account can hold investments in stocks, bonds, ETFs, mutual funds, and other traditional financial assets.

And custodial accounts are an excellent tool for teaching kids about money. By saving and investing with real money they'll actually control one day, children can see firsthand how funds in a custodial account can grow over time. They can also learn how to research stocks. Parents also feel more comfortable knowing that this learning process is supervised while the account is still under the custodian’s control.

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What’s the Best Custodial Roth IRA for Kids?

Now that you know more about Roth IRAs and custodial accounts, perhaps you’re ready to take the next step and open a Roth IRA for your child.

You have many different options for custodial Roth IRAs, including investing with a brokerage or bank. In most cases, your Roth IRA for kids should be an investment account. Brokerage accounts offer much higher potential returns than bank Roth IRAs, most of which only allow you to invest in CDs, money market accounts, and other interest-bearing products.

While there’s no black-and-white “best account,” there are some considerations that can help you make a decision for what will work best for your individual financial situation.

- Fees. This is one of the most common considerations when choosing an account. Typically, custodial accounts have low or no fees if you’re a customer with a brokerage firm. Some firms charge trading commissions, while others opt for a monthly or annual fee. A free stock trading app might also come with the account. Some brokers even offer free stocks for signing up and opening an account.

- Account minimums. Before opening an account, look into how much you'll need to cough up as an initial deposit and the minimum account balance you'll need to maintain.

- Investment options. You'll also want to think about the types of investment options available. Some custodial accounts offer a wide range of investment choices, while others provide guardrails with fewer choices but simplified offerings.

- Investment support. You shouldn't need to be an investment professional with ten years of Wall Street experience to manage your account. However, sometimes you want a little help beyond your own knowledge or a simplified menu of investment options. Some brokers offer research and resources to help you make your own stock picks, while others provide free personal advice and support. Choose the online broker that meets your needs.

If you need some additional help picking the right custodial Roth IRA for you, read on to see my top pick available today.

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E*Trade: IRAs for Minors

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Most people know E*Trade as one of the leading providers of individual brokerage accounts, but you can also put the powerful platform to work saving for your child’s future.

E*Trade’s IRA for Minors offering allows you to open up a traditional custodial IRA or a custodial Roth IRA for children under age 18 who have earned income. Within the account, you can build a personalized portfolio through thousands of stocks, bonds, ETFs, and mutual funds, or you can have E*Trade select your holdings for you through its Core Portfolio robo-advisory service.

Just like with its individual brokerage accounts, E*Trade custodial IRAs offer zero-commission stock, ETF, and options trading. It also has a leg up on some platforms by offering $0-commission mutual fund trading.

And if you want to learn more about investing—or want your young one to learn alongside you—E*Trade also boasts educational resources, including articles, videos, classes, monthly webinars, and even live events.

Visit our E*Trade review to learn more or sign up today.

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Should You Take the Standard Deduction for 2026? Here's the Numbers You Need to Know

Riley Adams, CPA — Fri, 12 Jun 26 08:30:39 -0400

Every year, as you file your federal income tax return, you have an important decision to make: itemize, or take the standard deduction. You can only pick one, but at least you can select the option that cuts your tax bill the most.

Standard deduction amounts are adjusted each year to account for inflation, which helps taxpayers by increasing their deduction nearly every year. Those increases have become milder over the past couple of years as inflation has been pared down. Still, for smart taxpayers who want to start thinking about their 2026 tax situation now, the IRS has already released the standard deduction amounts for the 2026 tax year.

Want to get a jump on your 2026 tax planning? Read on, as we lay out all of the various standard deduction amounts for next year. This is typically the most important tax deduction for about 90% of all Americans—so it’s something you definitely want to be on top of well before it’s time to file your return.

Standard Deduction Amounts for the 2026 Tax Year

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Your standard deduction for the year primarily depends on your filing status, but it can also be impacted by your age, whether or not you’re a dependent, and even your vision.

For the 2026 tax year, the basic standard deduction based on your filing status will be as follows:

Filing Status	2026 Standard Deduction
Single	$16,100
Married Filing Jointly	$32,200
Married Filing Separately	$16,100
Head of Household	$24,150
Qualifying Surviving Spouse	$32,200

Standard Deduction Limit for Dependents

The basic standard deduction is capped for people who can be claimed as a dependent on someone else’s tax return. For 2026, a dependent’s basic standard deduction will be limited to the greater of:

$1,350
Your earned income plus $450 (but not more than the applicable basic standard deduction amount)

Earned income includes salaries, wages, tips, professional fees, and other compensation for work. It also includes any part of a taxable scholarship or fellowship grant.

Additional Standard Deduction for Age and/or Blindness

Anyone who’s at least 65 years old or legally blind at the end of next year will be able to claim the following additional standard deduction amount for the 2026 tax year:

$1,650 for married couples filing jointly, married taxpayers filing separately, and surviving spouses
$2,050 for single and head-of-household filers

For married couples who file a joint tax return, both spouses will get an additional standard deduction for being at least 65 years old or blind. If you or your spouse is both 65 or older and blind, then the additional deduction for that person will be doubled.

If you’re married but file a separate return, your spouse will be eligible for the additional standard deduction on your return only if he or she has no income, isn't filing a return, and can't be claimed as a dependent on someone else’s tax return for the tax year. The additional deduction will also be doubled for separate filers for either qualifying spouse who is both 65 or older and blind.

For more on the standard deduction, including the 2025 standard deduction amounts, see What Is the Standard Deduction?

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Senior Deduction

The passage of the 2025 budget reconciliation bill also ushered in a new (albeit temporary) Senior Deduction.

To qualify for the Senior Deduction, you must turn 65 within the tax year you want to claim it, you must have a Social Security number (an individual taxpayer identification number, or ITIN, is not enough), and if you're married, you must file a joint return. You can take the Senior Deduction regardless of whether you itemize or take the standard deduction, and you can take it in addition to the additional standard deduction.

All qualified seniors start with a $6,000 deduction. If you’re married and filing a joint return, both you and your spouse start with a $6,000 deduction, for a total of $12,000. However, if your “modified adjusted gross income” (MAGI) is more than $75,000 ($150,000 if you’re filing a joint return), then your $6,000 deduction is reduced by 6¢ for every dollar of MAGI over the applicable threshold. The $6,000 deduction is reduced all the way to $0 when your MAGI reaches $175,000 ($250,000 for joint filers).

For purposes of this deduction, MAGI is equal to the adjusted gross income reported on your tax return, plus any:

foreign earned income or housing excluded from taxation
income excluded from taxation for residents of Guam, American Samoa, the Northern Mariana Islands, or Puerto Rico

Example: Suzanne is 80 years old and single. Her MAGI for the year is $90,000, which is $15,000 over the phase-out threshold for single taxpayers ($90,000 – $75,000 = $15,000). As a result, her deduction is reduced by $900 ($15,000 x .06 = $900). So, her Senior Deduction for the year is $5,100 ($6,000 – $900 = $5,100).

Just note that the Senior Deduction is temporary: Per the reconciliation bill, it is only available through the 2028 tax year. It also will not change in value from one year to the next.

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Inflation Adjustments for the 2026 Standard Deduction Amounts

The 2026 basic standard deduction amounts represent an increase of 2.22%. That continues a string of smaller increases, including 2.7% for 2025, 5.4% for 2024 (5.3% for head-of-household filers), and 6.95% for 2023 (7.22% for head-of-household filers).

Young and the Invested Tip: The 2.2% increase translates to a $350 jump in the basic standard deduction from 2025 to 2026 for single taxpayers, an $700 rise for joint filers, and a $525 boost for head-of-household filers.

When the standard deduction was nearly doubled by the Tax Cuts and Jobs Act of 2017 (starting with the 2018 tax year), annual increases were more modest. High inflation in the post-COVID era resulted in much larger-than-usual hikes in the standard deduction, with the size of those increases shrinking as inflation has slowed.

Also worth noting is that the 2025 budget reconciliation bill provided an additional increase in the standard deduction.

You can see the standard deduction's changes over time in the table below:

Tax Year	Head of Household Filer’s Standard Deduction Increase	All Other Taxpayers' Standard Deduction Increase
2026	2.22%	2.22%
OBBB change	5.00%	5.00%
2025	2.74%	2.73%
2024	5.41%	5.29%
2023	6.95%	7.22%
2022	3.19%	3.18%
2021	0.80%	1.21%
2020	1.63%	1.64%
2019	1.94%	1.67%

Note that, if any increase triggered by the inflation adjustment rules is not a multiple of $50, the increase is rounded to the next lowest multiple of $50.

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Bored of Big Banks? Here's 10 Strategic Alternatives

Riley Adams, CPA — Fri, 12 Jun 26 08:00:41 -0400

Big banks made a new record profit in 2024, clocking in north of $250 billion in profits. And they did so in large part by earning interest on loans and paying out scant amounts of interest to their depositors. This difference, called Net Interest Income, has never been higher on account of raised rates from the Federal Reserve. While this might change now that rates are coming down, those big bank profits are still substantial and their forecasts after the latest round of quarterly earnings reports shows no signs of slowing.

If you're skeptical of big banks, seeking a more profitable place for your savings, or looking for features not offered by traditional banks, you're in the right place. There are numerous alternatives to conventional banking that provide secure options for your funds.

In this article, we'll explore the best places to keep your money outside of big banks. I'll detail the advantages and disadvantages of each option, highlighting that many of these alternatives not only ensure safety but also offer attractive benefits.

Whether you're considering moving all your funds away from a big bank or simply diversifying where you store your money for strategic reasons, this guide is for you.

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Why Wouldn't You Want to Store Your Money in a Bank?

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Some people choose not to keep their money in a traditional bank for a plethora of reasons.

To start, a different financial institution, such as an online-only bank, may offer more financial flexibility and better tools. Often, credit unions and other bank alternatives provide better rates on loans to finance big purchases, such as auto loans and mortgages. And many people also choose not to put all of their money in checking and savings accounts because other types of financial products and accounts can be more fruitful ways to grow their savings.

1. Treasury Bills

Just as many consumers and businesses do, the U.S. government borrows money to make ends meet. It does so through the U.S. Treasury, which issues three primary kinds of debt:

-- Treasury bonds (T-bonds): Mature in 20 to 30 years

-- Treasury notes (T-notes): Mature in two to 10 years

-- Treasury bills (T-bills): Mature in 4 to 52 weeks

Treasury bills—which can have maturities of four, eight, 13, 17, 26, and 52 weeks—are sold in increments of $100 (which is also the minimum purchase amount), up to a maximum of $10 million. You can typically purchase these through the U.S. government’s Treasury Direct website or through a bank or broker.

When you buy a T-bill, you lend money to the U.S. government for a specified period of time. The price for a T-bill will vary, but typically will be below the bond’s face value, or “par value.” (For instance, a $1,000 T-bill might cost $975 to purchase.) When the T-bill matures, you receive the full par value of the bond—so the return on your investment is the difference between the discounted price you paid at auction and the par value of the T-bill.

Treasuries are one of the most secure investments in the world due to their virtually guaranteed repayment—the federal government hasn’t defaulted on a debt payment since moving away from the gold standard in 1971.

When you receive the repayment of your T-bills’ face value, the income generated is exempt from state and local taxes, which can make them a good choice for investors looking for reliable, tax-advantaged income.

2. Credit Unions

Credit unions are member-owned, not-for-profit financial institutions. They are often highly involved in a local community and are known to provide excellent customer service.

These financial institutions are just as safe as banks. Credit unions have their own equivalent to the Federal Deposit Insurance Corporation (FDIC), which is the National Credit Union Administration (NCUA). The NCUA insures the money in each credit union member's account up to $250,000.

Credit unions offer all the functions you’d expect from a bank, such as direct deposit, mobile pay, loans, and much more. But because credit unions don't have shareholders to pay, they can offer their members better terms on loans and more competitive rates on savings accounts.

3. Online Banks

Online banks allow users to conduct all of their banking functions through an internet connection.

Just like traditional brick-and-mortar banks, most internet-based banks offer Federal Deposit Insurance Corporation-insured accounts, so your money is safe, as is your personal information.

An online savings account is simple to open, as these banks typically either don't require a minimum balance to get started, or a very low one. And because they don’t have to spend money on physical buildings and associated costs, they can pass some of those savings on to their depositors—in the form of higher rates on savings and other interest-bearing vehicles. Fees are often lower, too.

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4. Cash Management Accounts

A cash management account is similar to an online bank account. However, instead of a bank, the providers are typically broker-dealers or advisory firms that partner with banks to hold your cash. These products usually combine features from investment, checking, and savings accounts, all within one account. If you want fewer accounts to manage, a cash management account may be an excellent fit for you.

Often, cash management accounts have minimal or no fees and offer above-average interest rates. The banks they partner with to hold your cash and earn interest are generally FDIC-insured, meaning your savings are secure, but you should read the fine print associated with the account to make sure you understand any limits or exceptions that apply.

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5. Investment Accounts

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Investment accounts can grow your money much faster than traditional savings accounts, high-yield savings accounts, or basically any other type of non-investment account. But they also come with far higher risk than those options. Money you put into stocks, bonds or other securities should generally be money you’re prepared to invest for the long term to give you the best chance of growing your funds.

While some investment accounts allow you to invest in alternative assets like cryptocurrencies and options, the safer markets to put your money to work in are the traditional stock and bond markets. Consider the investments below:

Stock market

- Individual stocks

- Stock mutual funds

- Stock exchange-traded funds (ETFs)

Bond market

- Individual bonds

- Bond mutual funds

- Bond ETFs

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6. Money Market Accounts

A money market account is an interest-bearing product, similar to a savings account, that may also allow limited debit card transactions or check-writing privileges, with a monthly cap on such transfers.

The interest rates on money market accounts are often higher than those of a standard savings account. Deposits are insured for money market accounts up to $250,000 per depositor, making this a secure place to keep your cash.

As money market accounts typically offer high interest rates and permit a predetermined number of transactions each month, some people keep their emergency fund in these accounts. The money earns a competitive interest rate but is still readily accessible if needed. Just note that money market accounts sometimes have minimum balance requirements, and they sometimes have lower yields than high-yield savings accounts.

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7. Money Market Mutual Funds

A money market mutual fund is a fixed-income fund that invests in debt securities. These funds are known for being low-risk and holding securities with very short maturities.

There are three categories of money funds: government, prime, and municipal. The funds are an excellent place to store money as they are secure, stable, and liquid.

While it may not match the returns of other fixed-income funds, a money market mutual fund is generally much safer. They are excellent places to keep your emergency fund or hold cash while you're waiting for other investment opportunities to become available.

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8. Certificates of Deposit

A certificate of deposit (CD) is a savings vehicle that earns interest on a lump sum for a predetermined period of time.

CDs’ main selling point is their high interest rates. They offer a higher annual percentage yield (APY) than traditional savings accounts and usually beat out high-yield savings accounts, too. Also, a CD’s interest rate is locked in until it matures—the yield on a high-yield savings account can move over time.

The downside to the CD is that the money is illiquid for the duration of its term. Terms usually last from a few months to a few years, though some are longer. If you withdraw money before the term is over, an early withdrawal penalty is charged.

9. Treasury Notes

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As mentioned before, Treasury notes are considered between short- and medium-term in nature, taking more time to mature (two to 10 years) than T-bills. Like with T-bills, T-notes are backed by the full faith and credit of the U.S. government, making them very low-risk investments. They’re sold at terms of two, three, five, seven, and 10 years.

Treasury notes pay a fixed interest rate every six months until the note matures. Federal taxes on interest earned are due each year, though the income is exempt from state and local taxes.

With T-notes and other bonds, you can either hold on until it matures, at which point your full principal will be repaid. But you can also sell the bond—which you’ll hopefully do for a gain, but you might have to sell at a loss. Either way, if you want to know how bonds move higher and lower, take a breath and brace yourself—it’s a mouthful:

Bonds’ performance is directly tied to market interest rates. Specifically, bonds have an “inverse relationship” with interest rates—when market interest rates rise, bond prices fall, and when rates fall, bond prices rise. Thus, all bonds have some level of “interest-rate risk,” and T-notes have more of it than T-bills. Why? If market interest rates rise, new bonds with higher rates will make comparable older bonds with lower rates look less enticing to investors. As a result, the market will price those older bonds lower. This effect is amplified on longer-dated bonds because they have more interest payments remaining.

Put differently: If a bond you hold matures in four weeks, you probably won’t sell it early just because a new short-term bond with higher rates is available. But if your bond matures in, say, five years, you might sell your current bond to buy a bond with higher income potential.

The flip side of this risk? T-notes usually offer higher rates than T-bills. They’re also similarly liquid—yes, they take longer to mature, but you can usually buy and sell them with ease.

10. Short-Term Corporate Bonds

Just like the U.S. government issues bonds to help fund its operations, corporations frequently issue bonds to fund research, development, expansion, you name it.

Generally speaking, corporate bonds have lower credit quality than U.S. Treasury bonds. Credit quality is generally determined by how likely an entity is to pay back its debts—and the credit-ratings agencies believe that just about any U.S. corporation has at least a little (if not a lot) more risk of going under than the U.S. government. Probably a fair bet.

That lower quality does mean more risk—but it also usually means better compensation in the form of higher yields.

Also, “lower quality than Treasuries” doesn’t always mean “low quality.” Many corporate bonds are considered investment-grade, which means the bond rating companies generally deem them likely to be repaid. If you’re willing to accept more risk, you can invest in junk bonds, which are less likely to be repaid but also offer even sweeter yields as a result.

Like with U.S. Treasury bonds, short-term corporate bonds are fairly liquid—they don’t take long to expire, and if you need cash before that, you can typically sell without trouble. And like with T-notes and T-bills, many investors buy these through ETFs and mutual funds rather than individually.

And if You Really Want the Money in Your Possession: Cash

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Cash is king, or so the saying goes. Many small businesses only accept cash payments, and some large businesses have a minimum amount you must spend to pay with a card. And during times of crisis, such as a natural disaster, credit card readers can go dark—cash always works.

But cash won’t grow in value. And if you lose it, it’s gone—bank and other accounts offer much more protected. So while it’s wise to have a little cash around, it’s a good idea to have most of your money saved or invested.

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Where Is the Safest Place to Keep Your Money?

The safest place to keep your money is in debt issued by the federal government, such as savings bonds or T-bills. However, you can't keep all of your money in savings bonds and similar assets, as they aren't completely liquid.

Bank accounts are a wonderful place to keep money, since up to $250,000 per depositor, per institution, is FDIC-insured. Certificates of deposit are another safe, FDIC-insured option, though they are not liquid unless you pay an early-termination fee.

Also on the list of safe places to store your funds are money market accounts at banks with FDIC coverage and credit unions with NCUA coverage.

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Is It Safe to Keep Your Money at a Bank?

Yes, it's safe to save money at a bank. However, many people seek alternatives for various reasons. Many bank alternatives offer a higher annual percentage yield, letting you grow your money faster. Depending on the savings vehicle, there can be many other perks, as well.

So while it's safe to keep some of your money in a bank, it can be strategic to have some of your funds in other places, as well.

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Are There Risks to Keeping My Money Somewhere Other Than a Bank?

Banks are not the only financial institutions that keep your money secure. Government debt, such as T-bills or savings bonds, are backed by the federal government and are therefore extremely safe.

To determine whether your money is safe in another non-bank financial institution, check whether your money is insured through the FDIC or NCUA. If your money is insured, it's safe.

Cash, prepaid cards, and similar physical funds could be stolen, but that's preventable with proper precautions. For an online bank or similar account, make sure security measures are in place to protect your personal information, such as your name and Social Security number.

What are the risks to keeping money with a non-bank financial institution?

Some non-bank financial institutions have no physical locations. If something goes wrong, it can be more challenging to get a hold of an employee to fix the problem. You’ll need to call or go online for help.

Make sure any financial institution you work with has security measures in place to protect both your money and your personal information. It's also important to only work with financial institutions where your money is covered by one of the government-sponsored insurers, like the FDIC.

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Investment advisory services offered through NewEdge Advisors, a registered investment advisor.

Related: The 12 Best Vanguard ETFs for a Low-Cost Portfolio

Vanguard's exchange-traded funds (ETFs) are among the most popular funds out there thanks to their low fees. But there's more appeal to their ETF lineup than low costs alone.

Related: 10 Best Monthly Dividend Stocks for Frequent, Regular Income

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The Pink Slip Pivot: How to Re-Engineer Your Budget After a Layoff

Riley Adams, CPA — Fri, 12 Jun 26 07:30:40 -0400

Layoffs are typically a sudden and dramatic shock to a household's financial situation. In most cases, the loss of a primary job means the loss of at least a significant chunk of a household's income, if not all of it.

Which means that very shortly after you lose your job, you need to get to work rearranging your financial life.

Today, I'm going to review what should be your top budgeting priorities after a layoff.

Which of the following steps you'll need to adopt will depend on your personal financial situation. It's unlikely you'll need to execute on every one of these actions, but it's possible you'll need to put several of them to work.

Budget Adjustments to Make After a Layoff

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Before we get into the budgeting changes you'll need to make after a layoff, it bears saying that if you don't already have a budget, you need to create one. If you already have a budget, it's time to get out the red pen, because you'll almost certainly need to make changes.

The following suggestions are in no particular order. Some of them are simply executed and relatively painless, though a couple are more complex and risky in nature. Don't execute on any of these blindly—first, evaluate your financial situation to ensure they even make sense for you.

1. Stop Overpaying Debt / Switch to Monthly Minimums

Some people overpay on student loans, auto loans, and even mortgages to get them paid down early. Between reducing how much interest you'll pay overall, and the sheer mental satisfaction of eliminating your debt more quickly, this can be a great decision for both your finances and your state of mind.

Regardless, it's a luxury—and if you've just lost a major source of income, it's a luxury you can no longer afford.

Set these types of bills to the monthly minimum payments to free up extra cash. You can always increase your payment amounts later once you've found a job and have reclaimed your financial security.

2. Talk to Your Credit Card Company

It's one thing to only pay the minimum on loans with interest rates likely in the single digits. But credit cards, and their often 20%-plus annual percentage rates (APRs), are a different story. Even a little bit of credit card debt can result in you paying an extravagant amount of interest if you only pay the minimum. And after a layoff, you might need to rely more heavily on your credit card.

Reach out to your credit card company. Card issuers will sometimes offer temporary flexibility after a layoff, in the form of waiving late fees, reducing your APR and/or minimum payments, and/or extending your due dates.

Your luck likely will be better if you have a long history of on-time payments with the card provider.

Alternatively, you could execute a credit card balance transfer from a card with a high APR to one that offers a 0% balance transfer. Balance transfer credit cards will often provide interest-free introductory periods of six to 18 months, and occasionally even longer than that.

You would still have to make the minimum payment each month to retain the 0% interest rate, and the action could result in a hard credit pull. But it could save you a great deal of money until you have a new income source.

3. Ask About Debt Repayment Plans

If you have some form of debt that you don't believe you can repay at current levels while laid off, you should reach out to your lender about a debt repayment plan.

Debt repayment plans generally ease your debt burden, albeit temporarily, though they differ from one lender to the next, and they sometimes differ by type of debt.

For instance, federal student loans often offer the ability to participate in income-driven repayment (IDR)—a recalculation of your monthly payment that factors in income and family size. Firms that service private student loans are generally far less flexible, typically providing only very short-term relief.

Have a mortgage? You might be able to get a forbearance, which temporarily reduces or pauses your payments. But you'll want to contact your service provider right away—some servicers require you to request forbearance within a set amount of time after your layoff.

No matter what type of debt repayment plan you arrange, any money you owe won't disappear. But temporary relief might give you enough breathing room until you find a new job—and that's a lot better than nothing.

4. Consider a HELOC

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A home equity line of credit (HELOC) is an open-ended line of credit that lets you borrow money against the available equity in your home.

Your equity is the value of your home minus how much you still owe on your mortgage. For instance, if your home is valued at $750,000 and you have $500,000 left on your mortgage, your available equity to borrow against would be $250,000.

Once you enter the repayment period, you have a predetermined schedule for repaying the balance—usually 10 to 20 years. The average interest rate for a HELOC is about 8% right now, and it's usually variable, so that number will change over time. Still, that's substantially lower than the average credit card interest rate, which currently sits at 24%, making HELOCs an appealing option for covering your basic expenses.

Importantly: You don't actually have to use a HELOC—and interest typically only accrues on whatever balance you spend. So you could secure the line of credit as a backup plan in anticipation of a layoff but never end up using it.

HELOCs do have a massive pitfall, however: If you don't make your payments, you risk losing your home. So you should only consider a HELOC if you're highly confident you can make all of your loan payments on time.

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5. Call 211

Many people know what you get if you dial 911 or 411, but another three-digit number happens to be very useful in this particular situation: 211.

You can call 211 in 50 states, the District of Columbia, and Puerto Rico, or visit the website 211.org, to be connected to useful resources. 211 has staff and volunteers available every day, 24/7, to direct you to assistance for needs such as paying bills, securing food for your family, or addressing your mental health after a layoff. Eligibility for these resources will vary; you must call to find out. And every call is confidential.

Another useful resource is USA.gov's benefit finder tool, which can help you find programs to keep you on your feet.

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6. Reduce Discretionary Expenditures

It goes without saying that right after a layoff, it's essential to either review your budget or, if you don't have one, create one. (Check out our budget directions and template.)

From there, you'll want to determine which expenditures can't go (necessary expenses) and which can (discretionary expenses).

Among the most common discretionary expenses:

--Digital subscriptions

--Memberships

--Eating at restaurants

--Food delivery

--Vacations

--Entertainment expenses (movie/theater/sports tickets)

--Nonreplacement clothing

When it comes to necessary expenditures, there's not much you can do to reduce those, but you do have a few options. For instance, you could try to use less electricity to bring down your power bill, switch to a lower-tier phone/internet plan, and be more cost-conscious when shopping for groceries. But ultimately, each of these categories will have a bottom line you can't drop below.

7. Look for Short-Term Income Streams

You can only push off debt and cut expenses so much. But a budget is more than expenses—it's also income, which is why you're looking for another full-time job in the first place.

But until you land a new role, you should look for other ways to prop up the income side of your ledger. The two most impactful things you can do are:

--Apply for unemployment insurance benefits. Every state administers their own unemployment insurance program within Federal guidelines. As such, benefit amounts and length of benefits vary by state. To apply, contact the State Unemployment Insurance agency for the state where you worked.

--Start a side hustle. You might drive for Uber or Lyft a couple of nights per week or sell unwanted items on eBay or Mercari. If you're fortunate, you might even find a short-term gig related to your work, such as consulting.

No matter what, the more income you bring in, the less you'll have to worry about making cuts and/or depleting your emergency fund.

Related: 8 High-Quality, High-Yield Dividend Stocks

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