What are Section 702 Retirement Programs?

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Most people hate to pay taxes. That’s not hard to understand. What is baffling is the length people will go to avoid taxes – sometimes, the cost of avoiding taxes exceeds the taxes themselves.

The reason this happens is that for some people, all they have to hear is that a scheme will help them avoid taxes, and they are on board. Remember though, avoiding taxes should not be your ultimate goal. The idea is to earn the best after-tax return. That means avoiding taxes is only worthwhile if the cost and risk involved don’t diminish your investment return too much.

In Focus: Section 702 Retirement Programs

These are important issues to examine if you are considering a Section 702 retirement account.

What is a 702 retirement account? It is commonly pitched as a way to accumulate retirement income, tax-free. The real story, though, is more complicated than that.

What is a 702 retirement account?

Technically, Section 702 retirement accounts don’t exist. The popular name is a shortening of Section 7702, a portion of the US tax code which pertains to life insurance policies. At heart, that’s what these 702 retirement schemes are – life insurance policies which accumulate cash value.

Since life insurance benefits are free from income taxes, they can be a way to accumulate savings without paying taxes. Some policies allow you to access a portion of your accumulated benefit prior to death, which is how they can act as a source of retirement income.

Sounds straight-forward enough, but there’s a catch. Actually several catches.

Here’s the catch….

A life insurance policy can be a valid method of wealth accumulation, but how effective this is depends on the details. And there are a lot of details. Here are some of the things to understand before committing to a 702 retirement program:

  1. Premiums are not deductible. The tax-advantaged angle is simply that benefits accumulate and are paid out tax-free, but unlike contributions to a 401k plan or a traditional IRA, the premiums you pay into a life insurance policy are not deductible. This makes the tax characteristics of a 702 retirement program more similar to those of a Roth IRA, for which contributions are not deductible but investment earnings are not taxed.
  2. It’s a long-term commitment. If you run into financial difficulties at some point, you may have to stop paying premiums. Depending on the terms of the policy this could substantially reduce or negate the benefits you accrue. In order for a 702 plan to deliver the advertised retirement benefits, you have to be able to commit to making the premium payments on schedule.
  3. The extra retirement income isn’t really income. Any retirement income produced by a 702 program will reduce the ultimate benefit paid by the insurance policy, since it typically represents a loan or advance against the ultimate death benefit.
  4. Accessing that money may be costly. Borrowing against the death benefit is likely to entail an interest cost, which would reduce the ultimate benefit by more than you take out for retirement income.
  5. Interest rate risk is especially acute right now. The relationship between the premiums and benefit of the insurance policy would be based on current interest rates, which are very low. This means benefits would accrue at a slow pace. However, if you borrow against that benefit several years in the future, the interest rate by then may well be much higher. This means that the money you borrow could cost you interest at a higher rate than the pace at which benefits are accruing.
  6. The long-term return is murky. If that last point left you scratching your head, get used to the confusion. Assessing the benefit of a 702 retirement account depends on being able to figure out the rate of return implied by the relationship between the benefits and the premiums, and the length of time over which both are paid. Until you can figure that out, you don’t really know if a given policy is better than conservative vehicles such as CDs or savings accounts, let alone long-term investments like stocks and bonds. In other words, you can’t make a blanket judgement about whether 702 programs are good or bad – the answer depends on the specific terms of the insurance policy.
  7. There is a stroke-of-the pen risk. The tax-free status of payments out of a 702 retirement account depends on a bit of a tap dance. Benefits from life insurance policies are not taxable. By borrowing against those future benefits, the policy holder can get that tax advantage without having to actually die. This is precisely the type of loophole that tax reforms often target, so there is the risk that with the signing of a new tax law in the future the retirement savings aspect of these policies may become invalidated.
  8. There is also counter-party risk. When you have a bank account, your money is guaranteed by the FDIC. When you have a retirement investment account like a 401(k) or an IRA, there are specific assets held for your benefit. In contrast, an insurance policy represents a general obligation of the insurance company, so your benefits are only as secure as that insurance company. To be sure, there are strict rules governing how insurance companies fund their obligations, but as the last financial crisis demonstrated, these safety measures don’t always hold up under pressure. Counter-party risk means that the arrangement is only as good as the party on the other side of the deal, in this case the insurance company. When you are contracting for benefits to be paid decades in the future, there is a lot of time for counter-party risk to become an issue.

702 retirement accounts don’t appear to offer superior tax characteristics to more traditional retirement programs, such as a 401k plan or an IRA. A 702 program might be a viable option if you are already maxing out your allowable contributions to those retirement programs, and want to amass some savings over and above that.

Related >> How Much to Save for Retirement

Even then, don’t sign up for an insurance policy until you have crunched the numbers and figured out that its benefits are likely to offer you a better after-tax return on the premiums you pay than you would earn for CD rates or long-term investments. And, if you find the terms too complicated to understand, then walk away. Financial sales people often like you to feel that there is a mystery to complicated programs that makes them work. Usually though, in the end the only mystery in such cases is where your money went.

Richard Barrington has earned the CFA designation and is a 20-year veteran of the financial industry, including having previously served for over a dozen years as a member of the Executive Committee of Manning & Napier Advisors, Inc. Richard has written extensively on investment and personal finance topics.

GRS is committed to helping our readers save and achieve their financial goals. Savings interest rates may be low, but that is all the more reason to shop for the best rate. Find the highest savings interest rates and CD rates from Synchrony Bank, Ally Bank, and more.

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Retirement Savings Strategies for Every Age

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There is no shortage of retirement saving advice out there, but do you find it’s hard to find advice relevant to your situation when you need it? If so, this guide should help.

Here are a couple of basic ground rules to this guide:

  1. This is not financial advice for the rich and famous. As much as financial professionals like to write about the more exotic vehicles and tactics out there, those things have no relevance for most people. This guide is focused on the important fundamentals ordinary wage earners can apply. So, if you are looking for the latest thinking on private equity or offshore tax havens, this isn’t the guide for you – but if you are in those markets you probably have advisors who do that kind of research for you anyway.
  2. Financial advice changes as you go through life. The moves you need to make as you approach retirement differ from those that make sense when you are first starting your career. For ease of reference, this guide is set up by decade of age, providing suggestions for people in their 20s, 30s, 40s, 50s, 60s, and 70s.

Retirement saving for people in their 20s

Between modest starting salaries and student loan burdens, it may not seem that people in their 20s can make much headway towards retirement savings. However, the key at this phase of your career is to set up some good financial habits that are oriented towards saving. In doing so, you should at least be able to take the first baby steps towards retirement savings. Here are some things you should be doing as you transition from school to the workplace:

  1. Know your student loan terms. You know that student loan debt is lurking out there, so better make a plan for dealing with it. Don’t be depressed by the sheer amount of it – the whole point behind a loan is to take an overwhelming sum of money and spread it out into manageable payments. Know what your payments are and when they start. Also understand any programs that can ease this burden. For example, federally-backed student loans – and most student loans are backed by the federal government – allow you to sign up for a plan that will limit your payments to 10 percent of your income. This should make your debt burden very manageable even if you are not making much money yet.
  2. Implement a budget. Financial success does not happen by accident – it takes planning, Eventually, that will include some long-range retirement planning, but for now just make sure you are in control of your spending from month to month. Budgeting doesn’t just help you manage your money, it helps you hang onto more of it by allowing you to minimize charges that result from overspending, such as overdraft fees and credit card interest.
  3. Leave room for saving money. When you create your budget, don’t just include the obvious bills you have to pay, such as rent, food, and utilities. Those things are necessary, but they involve paying other people. Also leave room for paying yourself by allocating some of your income to savings. If you devote a percentage of your income to savings from the very start, then it will seem less jarring to gradually increase your savings as your income grows.
  4. Set up direct payroll deposit into a savings account. One way to make sure a portion of your pay actually makes it into savings is to have your pay directly deposited into savings rather than a checking account. You can still move some money from savings into checking for easier access, but doing this rather than having all your pay go directly into checking will encourage you to transfer only a budgeted amount. Meanwhile, this will allow your savings to start earning interest sooner than if you had to wait until you transferred accumulated money from your checking account.
  5. Establish – and safeguard – credit. Some people go a little overboard when they first get access to credit in their early 20s, and can spend years paying off the results of overspending. More cautious people shy away from using credit, almost to a fault. The best course for long-term financial health is somewhere in between the extremes. Use credit, but be sure to pay it off on time and in full. Responsible use of credit will allow you to establish a favorable history that will make it cheaper to borrow money when you need to later, such as when you buy a house or a car.
  6. Find banks that do the most for you. As you set up your banking relationships, be mindful of the fact that banks offer very different account terms. For example, most checking accounts these days charge a monthly maintenance fee just for having an account, but there are still some checking accounts that don’t charge those fees so it’s worth looking around (here’s a tip – your chances of finding free checking are much better if you look at online banking). Also, savings and CD rates can vary from one bank to another, with some banks offering several times as much interest as others. Consider what you need from a bank, and then look for accounts that offer you those services on the most favorable terms.
  7. Sign up for your employer’s retirement plan. Retirement may seem to be a long way off, and early in your career you might not have much spare money to devote to long-term saving. Even so, if your employer has a 401k or similar plan, sign up to direct at least a token amount into that account automatically. Having money go directly from your paycheck into a retirement plan is a great way to start the savings habit, and it may make you eligible for matching contributions from your employer, which is basically like getting free money.

Retirement saving for people in their 30s

As you get a little older and your career starts to gain some traction, it is time to get serious about retirement saving. Here are some moves to consider:

  1. Use retired debt to jump-start retirement savings. If you’ve been paying off a student loan, you are used to doing without the portion of your paycheck that’s been going towards those payments. Once the loan is paid off, use the amount that had making those payments to add to your retirement savings. You won’t miss money you haven’t been able to use anyway, and now at least those payments will be going towards your future rather than to the loan company.
  2. Maximize your employer’s retirement contribution match. Ideally, you should be working towards contributing the legal maximum to your 401k or other retirement plan, but at the very least you should be contributing enough to get the full amount of employer matching contributions. Otherwise, you are leaving money on the table that you have a right to.
  3. Consider augmenting your employer’s plan with an IRA. Once you start maxing out your 401k contributions, you may be able to supplement those retirement savings with an Individual Retirement Arrangement (IRA). Be sure to check eligibility limits, which are subject to income ceilings. Also, keep in mind that money going into any retirement plan, whether it is a 401k or IRA, is a long-term commitment. If you take money out before you reach age 59 1/2, you will pay a 10 percent penalty on top of any normal income tax liability.
  4. Decide between a traditional and a Roth IRA. The basic difference is that with a traditional IRA you can deduct your contribution and not pay taxes on the account until you start to draw money out of it. With a Roth IRA, you pay taxes upfront but then the money can grow tax-free and you will not pay taxes when you start drawing money out upon reaching retirement age. To a large extent, the choice comes down to judging whether you are likely to be in a higher or lower tax bracket when you retire than you are now. Since many young adults are still earning relatively low wages, it may make sense to choose a Roth IRA while you are still in a low tax bracket.
  5. Do some preliminary retirement planning. The most important thing is just to start money flowing into retirement savings, but at some point in your 30s you should use a retirement calculator to do some projections to figure out how much you will need to save so you can afford a comfortable retirement. After all, you can’t hit a retirement target if you don’t know what that target is.
  6. Bring retirement contributions up to speed. Once you have figured out some preliminary retirement saving targets, work out a plan to bring your contributions up to those targets. If money is tight now, a good method is to devote a healthy chunk of future wage raises to retirement savings. That way you won’t feel as though your take-home pay is taking a step back when you boost your retirement deferrals.
  7. Get investments in line with your time horizon. As savings start to build up, you need to give more thought to how to invest those savings. Given the long time until retirement, the majority of your investments should probably be in long-term, growth-oriented assets like stocks.
  8. Re-evaluate your banking relationships. Periodically, take a fresh look at your line-up of bank accounts. This is to make sure they are still competitive, and because as your financial situation changes, what you need from a bank might also change.

Retirement saving for people in their 40s

OK – no more excuses. As you enter your 40s, you should be hitting some of your prime earning years, plus you are getting ever-closer to retirement age. It’s time for your retirement saving to shift into high gear.

  1. Re-calibrate your retirement targets and your life style. Just because you did some retirement planning when you were younger doesn’t mean those targets will still fit your plans in your 40s. You now know more about your earning ability and your life style than you did when you were in your 30s, so it is time to update your retirement plan.
  2. Consider switching to a traditional IRA. As mentioned in the section for people in their 30s, the choice between a traditional and a Roth IRA largely depends on whether or not you are currently in a high tax bracket. As you move into your 40s and your earnings improve, you may find yourself moving into higher tax brackets. This may justify holding off on any further Roth IRA contributions in favor of starting a traditional IRA.
  3. Adjust contribution levels annually according to progress. It is important to recognize that retirement planning is not an exact science. One of the most undependable variables is the investment returns you earn on your savings. Be sure to check progress towards your goals at least annually, so you can boost contributions to catch up if your investment returns have been disappointing. It is important to make these adjustments before your retirement savings get too far behind schedule.
  4. Don’t back off if you get ahead of schedule. A big mistake people made in the late 1990s was to go slow on their retirement plan deferrals because the stock market was performing so well that they were able to build wealth without having to sacrifice much of their paychecks. Unfortunately, those missing contributions from the prosperous years would have come in handy during what has proven to be an extended period of disappointing market returns during the 21st century. If a good investment year puts your retirement savings a little ahead of schedule, don’t take it as a sign to coast. Keep up the contributions, and view the extra returns as a cushion against potential disappointments in the future.
  5. Consider using a Health Savings Account to accumulate long-term savings. If you have hit the limits for 401k and IRA contributions, you can accumulate additional tax-advantaged savings via a Health Savings Account (HSA). To be eligible you have to be participating in a High Deductible Health Care Plan, but unlike what many people think, money in an HSA does not have to be used exclusively to pay plan deductibles and other immediate health care expenses. Money in an HSA can continue to grow tax free, and you don’t even have to pay taxes on it when you start to withdraw from the account, as long as the money is used for qualifying medical expenses. Given that health care is a major expense in retirement, you should be able to put your accumulated HSA money to good use eventually.

Retirement saving for people in their 50s

You’re getting into the home stretch of your career now – which depending on where you stand in retirement saving might mean you can start to take it easy or that you have to pick up the pace. Here are some things to do at this stage:

  1. Check your progress towards targets. Given all the variables involved in retirement planning, the passing years represent a considerable amount of time for things to get off track. As time goes by, it is important to keep re-checking your progress to see if any remedial action needs to be taken.
  2. Take advantage of “catch-up” contributions. Once you reach age 50, you may be eligible to make so-called “catch-up” contributions to your retirement plan. These are additional contributions over the usual dollar limits that applies to younger contributors. For example, for 2017 people aged 50 and over at the end of the calendar year can contribute an additional $6,000 to a 401k plan, or $1,000 to an IRA. This is an important extra tax benefit that older workers should try to utilize.
  3. Embrace a key benefit of age – discounts. People in their 50s often feel young enough to want to resist the idea of aging, but there are certain aspects of it you should embrace – namely discounts and special deals. From preferred pricing on many purchases to no-fee checking accounts, there are a number of money-saving offers that you will become eligible for in your 50s.
  4. Reassess your retirement time horizon. By now, you will be in a position to know a lot more about how much longer you will want – or need – to work. This is based both on how you feel physically and emotionally, and on your financial condition. If you now plan on retiring significantly sooner or later than originally planned, your retirement plan will have to be adjusted to reflect this new time horizon.
  5. Consider when to adjust your asset allocation. As people approach retirement age, they often start downshifting to a more conservative asset mix. You may not be ready to do this just now, but based on your planned retirement age you should start anticipating when to begin this transition.

Retirement saving for people in their 60s

This a transitional decade for many people, as they pass from active careers to part-time work or retirement. Here are some steps that process entails.

  1. Plan for when to access Social Security. You can start receiving Social Security benefits at any time between age 62 and age 70, and the longer you hold out the bigger your benefit will be – though of course, it will also be received over fewer years. When you should apply to begin receiving benefits depends on your immediate needs, of course, but it also depends on your health and your marital status.
  2. Make a sustainable plan for drawing on retirement savings. Beyond Social Security, you may have other retirement savings that you will start drawing upon in your 60s. Since you don’t know how long you are going to live, come up with a plan that draws on these savings at as sustainable a rate as possible, so you don’t use them up to quickly.
  3. Consider career extension options. Some people have a need to keep working, while others have a desire to. Think of things that might help you extend your career, such as a downshift in responsibilities, cutting down on hours, becoming an independent contractor, or perhaps tapping into an entirely different skill set.
  4. Look into switching back to a Roth IRA if you are continuing to work. If you switch from a full-time career to a part-time job, the resulting drop in income may place you in a lower tax bracket. If you are continuing to contribute to an IRA, see if the tax bracket change means that switching to a Roth IRA makes sense at this point.

Retirement saving for people in their 70s

At this point, your emphasis has probably shifted from building savings to preserving them. Here are some moves to help preserve your retirement savings through your 70s and beyond.

  1. Set up required minimum distributions. Most tax-advantaged retirement plans require that you start taking at least a minimum amount out of the plan by age 70 1/2. Make sure you are set up to meet this requirement, but remember, just because you are required to take the money out does not mean you have to spend it. If the required minimum distributions exceed your immediate needs, preserve the money as after-tax savings, because you might need it in later years.
  2. Make sure investments are aligned with liquidity needs. As you start to draw money out of retirement plans and other savings, make sure that money is invested in things that will provide sufficient liquidity when it comes time to make your withdrawals.
  3. Research long-term care and payment options. Later on, should you need to enter an assisted living or managed care facility, you will find these arrangements can be very expensive. It pays to plan ahead, because it is much easier to gain admittance to such facilities when you are still able to pay for it yourself than if you become dependent on Medicaid.
  4. Set up a burial trust. Becoming eligible for additional government assistance generally requires that you first draw your savings down to a minimal amount. A burial trust is exempt from this requirement, and so allows you to provide for your funeral without leaving the burden to family and friends.

While young adults often assume retirement saving is primarily a concern for older people, notice how there are more new moves to make in your 20s and 30s than later in life. This is typical of the fact that the earlier you start retirement savings, the more options you have for positively impacting your future. Start now, and then stay on the path as you move through your career.

GRS is committed to helping our readers save and achieve their financial goals. Savings interest rates may be low, but that is all the more reason to shop for the best rate. Find the highest savings interest rates and CD rates from Synchrony Bank, Ally Bank, and more.

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Rising Interest Rates and Refinancing

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Rising interest rates can mean many things for the U.S. economy, but one thing is always certain when it comes to homeowners: when rates go up, refinancing goes down.

With the Federal Open Markets Committee — the 12-member group that helps decide monetary policy as part of the Federal Reserve — set to meet on Dec. 13 and 14, mortgage rates could be on track to do something they have rarely done in recent years, which is to move higher. While a rise in mortgage rates is not ideal for the home refinance market, it calls more for a shift in tactics rather than completely giving up on the idea of refinancing.

5 ways to refinance when rates rise

Here are five ways you can think about refinancing when rates are rising:

  1. Shift to a shorter loan. 15-year mortgage rates have been running about 80 basis points below 30-year rates, so even if rates overall have moved a bit higher, there might still be room to lower your interest rate by shifting to a shorter loan. Also, even without dropping your rate a shift to a shorter loan should save you interest costs in the long run because you will be paying interest over fewer years.
  2. Consider variable rates for short time horizons. If you anticipate being able to pay of your mortgage in a few years, consider a shift to an adjustable-rate mortgage (ARM). These offer even lower rates than 15-year loans, and if you choose an ARM with a long initial reset period, you can reduce your exposure to rising rates.
  3. Take advantage of improved credit. The job market has gotten stronger in recent years, and now that you’re a few years older perhaps your income and credit rating have improved from when you first got your mortgage. If so, this might help you qualify for a lower mortgage rate, and make refinancing worthwhile even though average rates have started to rise.
  4. Use refinancing for payment management. Lowering your mortgage rate is not the only reason to refinance. If you are having trouble making your monthly payments, refinancing to a longer repayment period can help make those payments more manageable. Even though this is likely to result in you paying more interest over the life of the loan, it is preferable to risking default. Another option is using cash-out refinancing for debt consolidation, because mortgages are still cheaper than most other sources of debt, such as credit cards.
  5. Do some comparison shopping. When rates are on the move, comparing mortgage quotes from different lenders becomes especially important. Different lenders are going to react to a rising rate environment at different times and to different degrees, so shopping around might make an especially big difference.

Related >> Refinancing Made Easy: Our Story

Most of all, a rising rate environment calls for decisiveness about mortgage decisions. If you see a worthwhile opportunity, you need to act before higher rates eliminate that opportunity.

GRS is committed to helping our readers save and achieve their financial goals. Savings interest rates may be low, but that is all the more reason to shop for the best rate. Find the highest savings interest rates and CD rates from Synchrony Bank, Ally Bank, and more.

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How to Get Passive Income

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Side jobs are always a popular topic on Get Rich Slowly.

Whether your goal is to boost savings, supplement retirement income or pay down debt faster, you are not alone in choosing to work nights, weekends or in-between other demands.

This can mean Uber driving, dog walking, freelance writing, even assembling IKEA furniture for a fee, essentially wherever skills and interests intersect with demand for those services.

The U.S. Bureau of Labor Statistics says about 20 million Americans are working part-time for so-called “non-economic reasons,” meaning issues such as childcare or income restrictions prevent them from working full-time or they simply do not want to work full-time.

One topic close to the classic “side hustle” is passive income. But what is it and how does it stack up to other types of earnings? The concept is called passive income because it requires little to no time on your part, yet can yield some serious recurring money.

If you have a website or own a domain name, joining a CPS affiliate network is relatively easy and there are some very good and reputable affiliates, including Amazon and eBay. Lesser-known affiliate programs are just as noteworthy and can generate revenue for use of your website as well. We’ll get to that list in a bit.

First things first, though: consider if your website is poised to become an affiliate website. Are you an authority on a particular subject? Does your website focus on a definable niche?

Determine Your Audience

If you can say “yes” to either one of these questions, your next step is to evaluate what kind of affiliate advertising would parallel your mission and serve your visitors. For example, writers and linguists who visit Grammarist, a website for word junkies and students surfing for extra grammar help, will find a banner ad for Maxwell House and Adobe’s Creative Cloud. I guess they think people who write love coffee and cool technology. (Right on both counts.)

Assume it’s a successful pairing, you’d be paid on the basis of clicks, purchases or leads that come from your pages.

How Affiliate Websites Work

The affiliates provide all the marketing muscle you might need, including banner ads, logos, tracking applications and tips on how to optimize your site to attract more viewers, and ultimately, clicks. Most have a team of managers who will help you get started and make sure you are on the right path. The goal is for your website to drive people to purchase name brand and not-so-name-brand retail products.

Additionally, some affiliates compensate you for posting on Facebook, Tumblr, Twitter and other social media sites. Taking this a step further, some will pay you for sending out links via email. One thing: if any affiliate marketer asks for money upfront, shut them down. You should never have to pay someone else to host ads on your website.

Related >> Reader Story: Turning a Side Hustle into Self Employment

If this is something you are looking into as an additional household or business revenue stream, I would recommend talking to the affiliate’s support team, asking a lot of questions, giving it a test run and determining how much time and energy you are expending relative to the actual return on investment. The key is building traffic to the sales page. For example, if you are a blogger and the ads are on your blog page, the more you promote your content, the greater your return as an affiliate. Use your affiliate link in the target page URL ad on Google Adwords too.

Here are some networks you may want to consider.

Noteworthy Affiliate Networks

The Blue Book Top 10 affiliate networks (in alphabetical order) for 2016 are:

Amazon Associate Network is offering up to 10 percent fees for selling the various retail product offerings on its site.

Avangate claims its merchants offer commissions up to 75 percent, special bonuses and payment for licensing services.

AvantLink stresses quality over quantity and does not promote gaming or adult content sites. Ten years in business.

CJ Affiliate by Conversant allows its affiliate publishers to post retail coupons, set up email campaigns and distribute links to third party affiliates. The business model is based on loyalty or rewards.

ClickBank sells lifestyle products created by “passionate” entrepreneurs and claims to be a top 100 internet retailer.

eBay’s Partner Network currently is offering double commissions for the first three months that you join its affiliate network. Just post interesting items that you find on eBay to your blog, website or social media sites and you will receive a commission for each time an item sells.

LinkConnector offers fraud-free protection. Has been in business more than a decade.

Rakuten Affiliate Network claims it’s a Top 3 ecommerce company in the world. Offers more than 17 million products.

RevenueWire’s Affiliate Wire claims it partners with the best advertisers in the industry, as well as with the best software and digital merchants.

ShareASale focuses on technology, service and community responsibility. In business 16 years.

These are not endorsements. Rather it is a quick review of the affiliate marketplace and the major players within it. Please do your own research before signing up with any affiliates.

Let us know what has worked for you when it comes to passive income.

GRS is committed to helping our readers save and achieve their financial goals. Savings interest rates may be low, but that is all the more reason to shop for the best rate. Find the highest savings interest rates and CD rates from Synchrony Bank, Ally Bank, and more.

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Why I’m Still Glad We Bought Our Mexican Home

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In 2005, my husband and I bought an old house in the center of Guanajuato, Mexico. I wrote a post about it for Get Rich Slowly at the time.

The benefits — some of which we didn’t foresee when we bought the house — are many: having a stable investment during economic uncertainty in the U.S, especially the 2008 downturn; a potential future home if I’m widowed; enhanced fitness simply by walking everywhere; a community of both Mexican and expat friends to broaden our outlooks; and access to a world of home-exchange opportunities as a result of having an attractive home in a beautiful city.

Retiring on Less

The overall contours of our lives haven’t changed much in 11 years: our primary home remains an apartment we rent for $850/month near the bay in Eureka, on California’s North Coast; and our second home, the house in Mexico, where we usually live between Thanksgiving and March.

When we bought our home, Barry was 63 and I was 54, and neither of us was thinking about retirement. Today, we still work professionally, but not as intensely as 20 or even 10 years ago, and we’re more conscious of long-term security than we were.

As I discussed in my original article, we paid $107,000 for the house, and spent another $80,000 over the next three years of no-rush remodeling. We wanted to be on a quiet, pedestrian street in el centro, near everything, without a car. Guanajuato is pricier than some cities in Mexico because it’s a UNESCO World Heritage site and a university town. Other lesser-known towns are also very attractive but less expensive. Zacatecas, for example, is a beautiful colonial city barely known outside Mexico.

How Much to Save for Retirement

Rental Income and Home Exchanges

When we aren’t staying in our home, we cover expenses by renting it through Vacation Rental by Owner, or VRBO, a basic cost of $349/year, which includes access to VRBO’s efficient — but rather inflexible — payment system.

We also list our home on Craigslist, but most of our bookings come from VRBO. An expat up the street avoids the listing fee by renting her apartment through Craigslist exclusively and using Paypal to manage her rental payments.

We rent our home for $1,200/month. We don’t make a huge profit, but we like having the house occupied, and the extra amount we make pays our airfares.

We’ve had several property managers and are very happy with our present one, Mario, who is bilingual, originally from Guanajuato, and has lived and worked in the U.S. He meets our guests at the airport, walks them through the home upon arrival, is on call during their stay, and makes sure the house is in good condition when they leave.

Besides paying Mario, our costs include our cleaner, Mari; our on-call handyman, Juan (with an 160-year-old adobe home, maintenance is never-ending!); and our occasional gardener, Feliciano, who helps us with our little patio garden.

We also belong to a home exchange agency, homeexchange.com, for $120/year. Since joining, we’ve had delightful (and free, of course) home exchanges with people in Brittany, Prague, Ireland, and Portland, OR.

Aging Considerations

If Barry died before me, I could see our Mexican home becoming my base, as I’m comfortable speaking Spanish and have friends there. Guanajuato is a very human-scale, appealing, walkable town. Walkability is a priority for me, as I witness the drawbacks my (no longer driving) 95-year-old father is facing in his typical U.S. car-centric suburb. I do not want to live in a car culture when I’m in my 80s and 90s (or now, for that matter).

Related >> Essential Guide to Retirement at Every Age and Stage

Medicare is not covered outside the U.S., however, and some expat friends have moved back to the States as they aged and became more frail. Others have applied for Mexican health care insurance. As anyone familiar with “medical tourism” knows, you can get excellent and more affordable health care outside the U.S. We get our dental work done through our Mexican dentist, Gonzalo, who is the best, most thorough dentist we’ve ever had. I also had cataract surgery in Mexico.

Thinking About Living in Mexico?

It’s possible to live on very little in Mexico. We know many foreigners who earn an income in a variety of ways, including blogging, writing, offering workshops, leading tours, managing properties and teaching English. Creativity, initiative and an entrepreneurial spirit are essential.

If you’re interested in buying property in Mexico, you can go online and browse expat forums, but ultimately you can’t figure it out from a distance: you need to set aside some time to get to know the culture, find out about all the different options, and learn at least some Spanish. (We visited Guanajuato five times before we bought our house, renting various apartments and house-sitting, and two of those visits spanned several months). With a standard six-month visa, you can explore different parts of the country, travel around on comfortable long-distance buses, rent a room or apartment in a town that appeals to you, and meet both locals and expats. Only then will you be able to decide if retiring in Mexico is right for you.

For us, buying a home in Mexico was one of the best things we ever did.

Share in the comments: Would you consider retiring outside of the U.S.?

GRS is committed to helping our readers save and achieve their financial goals. Savings interest rates may be low, but that is all the more reason to shop for the best rate. Find the highest savings interest rates and CD rates from Synchrony Bank, Ally Bank, and more.

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Alternatives to Day Jobs

Work + Freedom

I’ve been earning a living since the Bronze Age (circa 1973), without ever holding a day job. Over the decades I’ve had my share of money struggles, but I found my way around them and am now, at 65, in the best financial shape of my life.

Here are seven lessons that helped me arrive where I am today.

1. Take risks. My final semester of college, while attending Tulane University, I decided after graduation to leave the swampy lowlands of New Orleans and live near mountains. While researching possibilities, I read an article about the exciting, vibrant city of Vancouver, British Columbia and decided to apply for Canadian residency. To my shock, I was accepted just two months later. After taking the train across Canada, I started my new life in Vancouver in July 1973.

Tip: Avoid rash risks (don’t throw all your savings away on the lottery!), but do take strategic risks.

2. Develop a needed skill. After a year of doing odd jobs, I signed up for a one-year course that certified me to teach English as a second language. In 1975, I taught my first ESL class to a roomful of Chinese students. ESL turned out to be perfect for me: part-time, well-paying, and flexible. When I wasn’t teaching, I began freelance writing for magazines and newspapers. I taught ESL to adults for 10 years in Vancouver, Boston and Seattle, while on the side I published essays, articles, and columns on self-help and travel.

Tip: Look for needs in the community that you can help meet — and turn into income.

3. Live carefully. Instead of buying a car, I rode a bicycle and used public transit, which allowed me to avoid hefty fees for car payments, insurance, registration, gas, parking, maintenance, and all the rest . When I married in 1978, my husband and I had a joint car, but I rarely used it. I didn’t acquire a car of my own until I was 36.

Tip: Question every major purchase, especially those deemed “essential” by our culture.

4. Capitalize on personal interests. While teaching ESL, I lost 25 pounds. Eager to share my strategies, I approached the local university’s continuing education department and offered a workshop on alternatives to dieting. The class filled immediately, with a waiting list. After a reporter from The Seattle Times interviewed me, I was invited to lead more workshops and give talks. Meanwhile an article I wrote for Weight Watchers Magazine was reprinted in magazines in the UK, Australia, South Africa, and Brazil. My weight-loss “side” business was doing so well, I decided to make it my primary focus.

Tip: Study your areas of success with a view to how they might help other people, and turn into profit centers.

5. Promote yourself. My experience with The Seattle Times taught me that access to media can work to your advantage. After learning how to write a press release, I approached local print media, radio and TV, offering myself as a guest on shows and inviting reporters to attend my workshops. One journalist who interviewed me about how women could succeed in the workplace wrote a column about a workshop of mine that she attended. Her column was syndicated in newspapers all over the country. Soon I started receiving calls from Phoenix, Chicago, and Boston, and my business went national.

Tip: Take advantage of all media, and don’t overlook traditional sources like your local newspapers, radio and TV stations.

Related >> The Essential Guide to Retirement

6. Cross-pollinate. In a weight-loss workshop, I discussed the importance of healthy communication with family members. Afterwards a participant asked me if I’d be interested in leading a seminar on communication skills in her professional workplace. Would I?! Not only did I enjoy working with a larger group, I discovered a new word and a new field: “training.” I also learned it was much easier to get paid generously by a business with an Accounts Payable department than by a string of individuals who often asked for a discount or a delay in paying.

Tip: Be open to opportunities to apply your existing skills to new, more lucrative markets.

7. Find your tribe. After I ‘discovered’ training, I joined the American Society of Training & Development, and later the National Speakers Association. In both organizations, I met colleagues, accepted leadership positions, learned about clients’ needs, got referrals and business, and gained visibility. Colleagues with more experience helped me avoid “OPM” (other people’s mistakes). The more questions I asked of senior colleagues, the more I learned.

Tip: Surround yourself with people who have been in your field longer than you, and ask a lot of questions. Don’t be embarrassed to be a beginner.

In many ways, I was lucky. I started off debt-free in an era of economic opportunity. More than once, I was in the right place at the right time with the right people. But I also made smart decisions, said ‘yes’ to opportunities, and found allies. These are timeless skills that will help anyone succeed, no matter how old — or young — you are.

GRS is committed to helping our readers save and achieve their financial goals. Savings interest rates may be low, but that is all the more reason to shop for the best rate. Find the highest savings interest rates and CD rates from Synchrony Bank, Ally Bank, and more.

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Retirement Savings

A photo of a road with a jogger

It’s a common set of questions: How much will I have in savings when I retire and am I using the right tools to get there?

Let’s tackle the first one first.

There are four components to this kind of retirement savings projection:

1. Investment returns

While financial planners often use historical average returns for these assumptions, you may be wise to be more conservative. Assuming lower-than-average returns will help you prepare for sub-par market conditions, and is especially appropriate these days since bond yields are much lower than their historical norms.

2. Inflation

Over the past 50 years, inflation has averaged 4.07 percent a year. That may not sound like much, but it is enough to cut the purchasing power of your money in half every seventeen years or so. When planning for future needs, you have to use inflation-adjusted targets rather than thinking in terms of today’s dollars.

3. Savings rate

Based on your income and budget, figure out how much you can plan on saving each year. This is a key component to focus on, because unlike investment returns and inflation your savings rate is something you can control. Just don’t make the mistake of assuming that you can catch up with higher savings rates in later years — challenge yourself to save aggressively from the start, because it often does not get any easier as you get older.

4. Spending

Forget about rules of thumb about replacing a certain percentage of your income. What you need to focus on is projecting your retirement spending so you have a feel for what expenses your savings will have to cover.

Between financial market returns and inflation, there is a strong element of unpredictability to retirement saving. Even so, making a reasonable estimate based on conservative assumptions gives you a starting point in terms of savings targets. As long as you are prepared to make regular course corrections to keep your savings rate on track, the picture should steadily become clearer as you approach retirement.

Related >> The Essential Guide to Retirement

Another central retirement question is whether target date funds are worth it. Here’s more on that:

Target date funds are a convenient approach for retirement savers who do not want to make complex investment decisions. They provide an easy way of giving people an asset mix that is generally appropriate for their time horizons. In doing so, they should also provide adequate diversification because they not only invest across a range of different stocks, but they also invest in different asset classes.
With that said, it should be noted than an inherent limitation of target date funds is that they essentially assume that all people with the same time horizon have identical investment objectives, but this may not be the case.

Some people are just more comfortable with taking risk than others, and so may want a more aggressive asset mix. Your investment approach may also vary according to how much money you have accumulated so far. If you have already put together a substantial nest egg, you may want to dial down the risk a little so as not to jeopardize it. On the other hand, if you have gotten a late start on retirement saving, you might be inclined to take a more aggressive investment approach in an effort to catch up.

So, two people of the same age and with the same number of years until retirement might reasonably wish to take different investment approaches. Therefore, it might be helpful to view a target date fund as a starting point, from which you might do some fine tuning to make it fit the specifics of your situation.

One final note about target date funds – make sure they do not get too conservative when you reach retirement age. You may live twenty or thirty years in retirement, meaning that you are likely to continue to need some active investments. In other words, the target date should not be thought of as an end date for your investment program.

GRS is committed to helping our readers save and achieve their financial goals. Savings interest rates may be low, but that is all the more reason to shop for the best rate. Find the highest savings interest rates and CD rates from Synchrony Bank, Ally Bank, and more.

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Buy Power Capital One Card Review

how to retire rich

Buy Power Capital One Card Review

Thinking of using a credit card for more than cash rewards or a free hotel stay? What if a credit card could help you save for something more substantial, like a new car or a flexible lease?

It is possible. The BuyPower Card from Capital One® card gives users 5% back on their first $5,000 worth of purchases without any opt-ins or rotating categories and then 2% thereafter. You can redeem rewards against the lease or purchase of a Chevrolet, Buick, GMC or Cadillac car or truck.

[See a full review on CardRatings.com]

There are other perks that make this a card to consider for anyone in the car market: 0% intro APR on purchases for the first 12 months.

Let’s dive in:

The Pros

  • Rewards never expire. This is a big deal because you can really take advantage of the fact most people plan their new car purchases well in advance. Expect to buy sometime in the next five years? This could be a good addition to your wallet if you plan to use it frequently.
  • No rotating categories, no limit on how much you can earn or redeem, and no required opt-ins, which can pose a problem for someone who forgets to check on such things. With those cards if you forget to opt-in you miss out on that quarter’s reward.
  • There are actually several car makers to choose from: Chevrolet, Buick, GMC or Cadillac. GM is the #1 car maker in the U.S. currently according to data from Edmunds.com.
  • No annual fee
  • No foreign transaction fee
  • You can combine your Buy Power rewards with dealer offers, which could be lucrative if you are willing to shop around. You can use your rewards at any dealer in the country.
  • A great card for General Motors brand loyalists.

The Cons

  • If you don’t use your card very often, the rewards might not be all that impressive. Ditto if you are in the market for a car in a hurry – you’ll need to use the Buy Power card for a while to really bulk up on the rewards.
  • For example, you spend $5,000 out of the gate and earn the full 5% — that’s only $250. But then you put an additional $3,000 a month for the rest of the year on your card at the 2% unlimited, and net another $720. Perhaps not enough to take you from base model to completely tricked-out, but plenty to justify a fancier navigation system or higher-end finishes.
  • This is not the card for balance transfers. There is an initial 0% on purchases, but not balance transfers. That APR is quite high considering the great zero balance transfer options for those with solid credit, such as with the Chase Slate. The cards says balance transfers receive a variable rate of 13.15%, 17.15%, 20.15% or 23.15%, based on your creditworthiness. Same for cash advances – which you should never use a credit card for anyway – are around 25%. Also good to know: If you are a part of the GM Employee Purchase Program, earnings from the card don’t count against that program.

The Takeaway

Capital One has made the Buy Power a strong addition to their existing line-up of cards, which are generally positively reviewed for their customer service.

Some consumers have questions about what credit score you need in order to be approved for this card. In general, this card is tiered toward those with good to excellent credit. That is generally considered to be around a 660 FICO score or higher, but your credit score is not the sole factor in credit decisions.

Get Rich Slowly experts recommend you pay attention to your credit health and get your free report yearly to check for any mistakes.

Related content: A step-by-step guide to getting your free credit report online

GRS is committed to helping our readers save and achieve their financial goals. Savings interest rates may be low, but that is all the more reason to shop for the best rate. Find the highest savings interest rates and CD rates from Synchrony Bank, Ally Bank, and more.

Disclaimer: This content is not provided by any company mentioned in this article. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any such company.

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Best Cities for Retirement

Best Cities for Retirement - Get Rich Slowly

Retirees may have different tastes in culture and recreation, but there are some basic aspects of a retirement living environment that have fairly universal appeal. Getrichslowly.org ranked the 20 best cities for retirement to help you decide where to spend your golden years, coming up with a diverse list, with choices that span across the country. There are some names on the list you might expect, and some that will probably come as a big surprise.


Getrichslowly.org took into account the following criteria when deciding where retirees may want to put down roots:

• Personal safety
• Low property taxes
• An affordable cost of living
• A moderate climate

The study looked at where 113 major U.S. cities ranked on each of those criteria, and then averaged those rankings to come up with a list of the 20 best cities for retirement.

With reputations misleading at times, the quantitative approach taken for this study and objective look at the data might cause you to consider a location you would not otherwise think of as a retirement haven.

Best Cities for Retirement 2017

Here is the top 20 list and why each place is great for retirees to settle:

1. Norman, Oklahoma

Best Cities for Retirement: 1. Norman, Oklahoma

A college town like the home of University of Oklahoma might not be an obvious choice for a retirement destination. However, an influx of young, well-educated people provides both economic stimulus and cultural diversity to add life to a community. But why did Norman in particular win the top spot on this list? It was above average in each of the four categories examined, and outstanding in two of those categories: cost of living, where it was the second most affordable, and safety, with one of the 10 lowest crime rates.

2. Raleigh, North Carolina

Best Cities for Retirement: 2. Raleigh, North Carolina

As part of North Carolina’s thriving Research Triangle, Raleigh offers healthy growth and a lively cultural and recreational environment. Quantitatively, it placed in the top quartile for safety, affordability and its moderate climate. Also, North Carolina’s property taxes are generally well below average.

3. Tampa, Florida

Best Cities for Retirement: 3. Tampa, Florida

This is one of the more traditional retirement locations on this list, offering a warm climate and proximity to beaches. With its major league sports and plenty of cultural options, Tampa also offers a big-city feel. In terms of the data looked at for this study, Tampa had the most moderate climate statistics, as measured in terms of avoiding extremes of temperatures and rainfall. It also ranked in the top 15 percent for safety, based on violent and property crime rates.

4. Savannah, Georgia

Best Cities for Retirement: 4. Savannah, Georgia

The coastal city of Savannah is so well-regarded for its beauty and architectural landmarks that it has become a popular locale for filming movies and television programs. As for what it can offer to retirees, the greatest strengths identified by this study were its safety and moderate climate, with Savannah ranking in the top 20 percent in both categories. It also is an affordable place to live, with Georgia’s property tax burdens and the overall cost of living in Savannah being lower than average.

5. Shreveport, Louisiana

Best Cities for Retirement: 5. Shreveport, Louisiana

Whether your vision of how you like to spend time in retirement involves a leisurely stroll through a rose garden, checking out some live music, or sampling some distinctive local cuisine, this Louisiana city has something to offer a variety of lifestyles. The study’s statistics show Louisiana generally has some of the lowest property tax burdens of any state. In addition, the cost of living in Shreveport is well below the national average. One caution though: Shreveport’s overall crime rate is a little higher than that of most cities in this study.

Related -> How much do you need to save for retirement?

6. Durham, North Carolina (tie)

Best Cities for Retirement: Durham, North Carolina

Since Durham is generally thought of as a sister city to nearby Raleigh, it is no surprise that it should also earn its way onto this list. Naturally then, Durham shares many of Raleigh’s favorable characteristics, though its higher crime rate (while still below that of most cities studied) pushed Durham further down in the rankings.

6. Round Rock, Texas (tie)

Best Cities for Retirement: 6. Round Rock, Texas

Most readers will probably find this to be one of the more obscure names on the list. However, that is one of the merits of crunching the numbers – it can unearth some previously unlikely retirement possibilities. Round Rock is very close to Austin, so it shares many of the latter’s attractions, but with a much lower crime rate and a lower overall cost of living.

8. Charleston, South Carolina

Best Cities for Retirement: 8. Charleston, South Carolina

History buffs will appreciate Charleston’s colonial architecture, while outdoors types will enjoy the fact that Charleston is convenient to both the Atlantic Coast and Francis Marion National Forest. Statistically, what stands out about Charleston for retirees are its low crime rate coupled with South Carolina’s generally low property taxes. Be advised though that despite those low taxes the overall cost of living in Charleston is a little higher than in most of the cities studied.

9. Los Angeles, California

Best Cities for Retirement: 9. Los Angeles, California

The first West Coast city on this list, L.A. has many well-known attractions. Still, you might think that L.A. is too big a city to be very retirement-friendly, but the stats show it has a few things going for it. Perhaps surprisingly, it ranked in the top 5 percent for safety due to its low crime rates. Naturally, the Southern California climate is another plus, and L.A. also benefits from California’s generally low property tax burdens. Those low taxes come in handy because, as you might expect from a city of its size, the cost of living in L.A. overall is among the most pricey found in this study.

10. McAllen, Texas

Best Cities for Retirement: 10. McAllen, Texas

Arts and technology come together to enliven the McAllen community, and it benefits from its proximity to both the Rio Grande and the Gulf of Mexico. It scored well primarily on the strength of having the most affordable cost of living out of any city in this study.

Related -> 11 things you may not know about retirement accounts

11. Fort Wayne, Indiana

Best Cities for Retirement: 11. Fort Wayne, Indiana

It’s not a warm-weather site, nor is it located on one of the coasts. So what does Fort Wayne have to recommend it to retirees? Primarily affordability, as Fort Wayne was in the top 10 percent of most affordable cities in this survey. It also scored fairly well for safety.

12. San Diego, California

Best Cities for Retirement: 12. San Diego, California

In contrast to Fort Wayne, San Diego is one of those cities many people would think of as a natural retirement choice. So why does San Diego rank below Fort Wayne on this list? Cost of living is the main issue as San Diego is one of the most expensive of the 113 cities studied. However, if you have the wealth to afford it, you might enjoy the fact that San Diego not only ranks in the top 10 percent for climate, but also for safety.

13. Charlotte, North Carolina

Best Cities for Retirement: 13. Charlotte, North Carolina

North Carolina has the distinction of being the only state with three cities to make the top 20. Charlotte combines a moderate climate with reasonably good rankings for safety and property taxes. The only flaw is the overall cost of living, which is a little on the high side.

14. Lexington, Kentucky

Best Cities for Retirement: 14. Lexington, Kentucky

Lexington is close to the state capitol of Frankfort, and is also reasonably convenient to Louisville and Cincinnati. The primary thing that helped Lexington make the top 20 is the city’s overall affordability, which is in the cheapest 20 percent of cities studied. Property taxes are relatively reasonable as well, and Lexington also ranked well on the basis of safety.

15. New Orleans, Louisiana

Best Cities for Retirement: 15. New Orleans, Louisiana

New Orleans is well-known as one of the world’s premier party places and for being a veritable gumbo of multi-culturalism, but is it really a suitable place for retirees? Specifically, what about the high-profile crime issues New Orleans has had over the years? Surprisingly, the average crime rate in New Orleans is toward the safer end of the spectrum compared with other major cities, and New Orleans also has a cheaper-than-average cost of living. Most of all, retirees might appreciate Louisiana’s low property taxes.

Related -> How to open a Roth IRA

16. Boise, Idaho (tie)

Best Cities for Retirement: 16. Boise, Idaho

This is one of the more surprising names on the list, and of course its climate ranks near the bottom. However, this is offset by a very reasonable cost of living and low property taxes, and most of all by safety. Boise’s low crime rate put it in the safest 10 percent of cities. There are plenty of warm weather cities on this list if that’s your priority, but Boise might be an off-beat choice if affordability and safety are more what you are after.

16. Montgomery, Alabama (tie)

Best Cities for Retirement: 16. Montgomery, Alabama

With little or no employment income, many seniors find their biggest tax worry is property tax. That could be a reason to consider retiring to Alabama, which on average has one of the lowest property tax burdens of any state.

18. Richmond, Virginia

Best Cities for Retirement: 18. Richmond, Virginia

While not outstanding in any one area, Richmond made the list by being above-average in all four categories of this study: safety, property taxes, cost of living and climate.

19. Gainesville, Florida

Best Cities for Retirement: 19. Gainesville, Florida

Gainesville scored well for its climate, which being in the northern part of Florida is less rainy than what you are likely to find in the southern part of the state.

20. Columbus, Georgia

Best Cities for Retirement: 20. Columbus, Georgia

Columbus scored well for affordability and its moderate climate. Be advised, though, that it is in the bottom half of the rankings for safety.

Again, there are some surprises on this list, along with more conventional retirement locales. That diversity is a benefit for retirees – not everybody’s priority is to move near a beach, so this list provides you with solid candidates representing a variety of very different lifestyles.

Comment: Did your city land on the Best Cities for Retirement? Where are you planning to retire?

GRS is committed to helping our readers save and achieve their financial goals. Savings interest rates may be low, but that is all the more reason to shop for the best rate. Find the highest savings interest rates and CD rates from Synchrony Bank, Ally Bank, and more.

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Best Checking Accounts for 2017

Best checking accounts

Checking accounts are notorious for just sitting there and doing nothing for you except holding onto your cash until you need to pay a bill. But there are accounts out there that do pay interest – albeit minuscule – and offer other benefits and enticements! We’ve done the research for you.

Several things to look for in a checking account:

• No minimum to open
• No minimum to earn interest
• No ATM fees (plus a large network)
• No monthly maintenance fee
• Free checks
• Mobile check deposit and transferring

Here are the best checking accounts for 2017:

360 Checking Account

Capital One 360

With its large network of no-surcharge ATMs, Capital One 360 offers a free checking account that is attractive for consumers looking to avoid common fees while earning interest. There is no minimum to open a 360 Checking account and customers have a variety of tools to manage their finances. These include online and mobile banking, including bill pay and mobile check deposit. Additionally, customers can easily access their money through a network of more than 40,000 free ATMs.

Interest Checking Account

Ally Bank

Online checking accounts provided by banks like Ally Bank give traditional brick-and-mortar institutions a run for their money in terms of annual percentage yield (APY). Not only do Ally Interest Checking account customers earn at least .10% interest on their balance, they could earn up to 0.60% for daily balances $15,000 or more. The high interest checking offered combined with no maintenance fees make Ally a great online bank for customers to grow their money.

High-Rate Checking Account

Alliant Credit Union

Alliant has one of the highest interest rates among the financial institutions featured on this list, advertising a rate 10.8 times the national average. To qualify for a High-rate Checking account, customers must sign up for eStatements and set up one or more monthly electronic deposits to the account. After, they have access to more than 80,000 free ATMs and even qualify for up to $20 per month on rebates when they are charged for using an ATM out of the Alliant network.

Total Checking Account

Chase Bank

Customers who want the benefits of both online and brick-and-mortar checking accounts frequently choose Chase for good reason. Chase has a wide network of 16,000 ATMs combined with 5,200 branches in addition to 24/7 customer support to meet your banking needs. This long-standing bank is also well-known for its online and mobile banking tools, including a popular mobile app. There is a $25 minimum deposit to open an account with a chance to waive a monthly service fee through any of the requirements listed on its website. Unlike some of the other banks listed, the Total Checking account does not earn interest.

Hybrid Checking Account

Radius Bank

If you’re willing to deposit $2,500 or more in a Hybrid Checking account, you can take advantage of up to 0.90% APY advertised by Radius. Checking account balances under $2,500 do not earn interest. To open an account, customers must deposit $10, but Radius does not require a minimum balance after depositing this amount. The bank offers free ATMs, not charging a fee when withdrawing from an ATM belonging to another bank and rebating out-of-network fees at the end of the statement cycle.

High-Interest Checking Account

Bank5 Connect

While Bank5 Connect’s online checking account is not a widely known compared to other banks’, it has features and an interest rate that makes it competitive in the market. Bank5 Connect has an APY of 0.76% and customers only need $100 to start earning this high interest rate. This high-yield checking account has other perks, like not having a monthly maintenance fee and a debit card rewards program, that distinguish the bank.

Online Advantage Checking Account

Mutual of Omaha Bank

In exchange for a $1,500 daily balance, Mutual of Omaha’s online-only checking account provides an advertised rate of 0.50% to gradually build your balance. Customers can open an Online Advantage Checking account with $100 and eligible to receive free checks for their first order. There is a $10 monthly maintenance fee, but for a low average balance of $100, the bank will waive the fee.

Compare Best Checking Accounts for 2017

Bank/Credit Union Account Interest Rate (APY) Monthly Fee Balance to Waive Fee
Capital One 360 360 Checking 0.20% Free N/A
Ally Bank Interest Checking 0.10% Free N/A
Alliant Credit Union High-Rate Checking 0.65% Free N/A
Chase Bank Total Checking N/A $12 $1,500
Radius Bank Hybrid Checking 0.90% Free $10 Opening Deposit
Bank5 Connect High-Interest Checking 0.76% Free N/A
Mutual of Omaha Bank Online Advantage Checking 0.50% $10 $1,500


Comment: Do you have a checking account from our Best Checking Accounts list? What accounts would you add?

GRS is committed to helping our readers save and achieve their financial goals. Savings interest rates may be low, but that is all the more reason to shop for the best rate. Find the highest savings interest rates and CD rates from Synchrony Bank, Ally Bank, and more.

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