How Much Should Retirees Have in their Checking Account?

Once you leave the workforce, Social Security benefits are going to cover about 40% of your pre-retirement income. You’ll have to come up with the remainder of the money you need for a comfortable retirement. Typically, you’ll be taking money out of your 401(k) or other brokerage account to help fund your retirement. But you obviously don’t want to sell stock and wait for a withdrawal from your brokerage account every time you have an expense. As a result, you’ll need to keep some money in your checking account so you can pay bills and cover everyday living expenses. Just how much money should you have though? Here’s how to figure it out. This is how much you should have in checkingYour checking account is the place where you should keep your day-to-day funds. This is the account you’ll use to pay bills like rent or a mortgage and utilities. You’ll also be paying for expenses like doctor copays and grocery costs out of this account.Typically, you’ll have your Social Security check deposited into checking as a retiree, as well as money from a pension that comes in monthly, if you’re receiving one. And, when you take a distribution from a retirement account or get money from an annuity, you’ll usually put it into checking as well. Since you’ll likely have money coming into and out of this account each month, you don’t necessarily want to keep a ton of extra cash in it. After all, these funds are meant to be spent and you’ll access them regularly. You don’t want to keep a ton of money in your checking account that isn’t meant to cover your routine expenses.Typically, it’s a good idea to have enough in your account to cover the upcoming month or two of expenses, along with a cushion to avoid getting hit with overdraft fees. This cushion could be around an extra $500 to $1,000, so even if you forget about a check you wrote or a payment that’s being withdrawn, you won’t go into negative territory in your account.Don’t forget to keep some money in savings as wellWhile you don’t want to keep a lot of money in your checking account where there is a risk the funds could be spent, you do want to have a pretty substantial amount of money outside of brokerage or investment accounts. This is where a savings account comes in. In fact, retirees should aim to have about two to five years of living expenses in a savings account, so they don’t have to take withdrawals from the stock market during a downturn. This money can help see you through until the market recovers. A savings account is a better place for this money than a checking account, because you won’t be tempted to just spend the money if it’s earmarked for living expenses in case of a bad market year. Plus, you’ll earn a higher interest rate in a savings account than in a checking account in most situations. By carefully considering how much to have in reserves and choosing the right account for it, you can ensure you don’t end up with too much — or too little — in your checking account when you need the cash after you’ve retired and your paychecks have stopped coming.

3 Things Home Insurance Doesn’t Cover That Could Come as a Surprise

When buying homeowners insurance, most people expect that they will be protected against losses that they face with their property. After all, the point of buying insurance is so a disaster does not empty a property owner’s bank account and destroy their financial security.Unfortunately, while home insurance policies cover lots of possible sources of loss — including things like fires and theft — there are some hazards that are not typically covered by a standard policy. And many of these exclusions could come as a big surprise.In particular, homeowners may be shocked to discover their insurance will not protect them from the following disasters.1. FloodsWater can do a tremendous amount of damage to a home in a short period of time. And, some water damage is covered. If a fridge or tub leaks, for example, your homeowners insurance will likely pay for the resulting consequences.Unfortunately, insurance won’t cover the water issue most likely to cause you problems. That’s because rain and storm flood damage are typically excluded from a standard homeowners insurance policy. This means if a hurricane brings torrential rains or a major rainstorm causes a creek beyond a home to flood, insurance won’t be there to help you.Homeowners who are located in a designated flood zone will typically be required by their mortgage lenders to purchase add-on flood coverage (which is available through FEMA’s National Flood Insurance Program). Even those not in a designated flood zone may wish to look into a policy, though, if they have water near their home and they are concerned about a bad rainstorm leading to uncovered losses.2. EarthquakesMost natural disasters are not covered by a standard homeowners insurance policy either. This includes earthquakes.There are standalone earthquake policies that can be purchased, though. This includes traditional earthquake insurance that would provide reimbursement for the value of lost items if a covered event happens, as well as parametric insurance that covers only specific events such as when an earthquake meets a certain intensity level.3. SinkholesSinkholes can be a frightening experience, sometimes opening up to swallow whole buildings. Unfortunately, homeowners insurance is not going to provide coverage for them if homeowners have only a standard policy.Sinkholes are more common in certain states than others, with an elevated risk existing in Alabama, Florida, Kentucky, Missouri, Pennsylvania, Texas, and Tennessee. Those who face a risk of losses caused by a sinkhole may be able to get add-on coverage for their existing insurance policy. Many insurers offer sinkhole riders that will pay for both repair or replacement of the building as well as repair or replacement of any property damaged by a sinkhole.It is important to understand the different options that exist to provide coverage for hazards excluded from a standard insurance policy. But, it’s only possible to find and buy the right protection if homeowners know what isn’t covered.Homeowners can’t afford to wait until a disaster happens to understand the limitations of a standard homeowners insurance policy. Anyone who owns a property should review their insurance contract carefully, and consider talking with their home insurer if they aren’t sure if something is covered. It’s better to find out before the flood, earthquake, or sinkhole that the disaster won’t be covered than to learn this after the fact and be left with devastating financial loss.

5 Things That Are Always Worth Buying at Costco

I’ve had a Costco membership since the U.S. invaded Grenada (1983, for all you history buffs). Through the years, I’ve seen plenty of my favorites come and go. However, there are some items I can count on to be available anytime I shop. Not only do these five products stick around, but they are legitimately worth every penny I pay.1. Bed sheetsIf you happen to notice that people you run into seem a little crabby, it may be because they’re not giving their bodies enough time to rest. According to Gallup, Americans sleep, on average, 6.8 hours a night. That’s one hour less than we slept in 1942, and less than the seven to nine hours recommended by experts. You know how toddlers fuss and stomp their feet when they’re tired? We adults do the same thing.All that to say, sleep is vital, and because I know how miserable I am when I cheat myself out of rest, I’m all about having a comfortable bed. For me, a comfortable bed begins with a great set of sheets.Costco is where it’s at when looking for soft, comfortable sheets that won’t empty your checking account. For example, Costco’s Hotel Signature 800 Thread Count 6-Piece Queen set is $100. What’s great about 800 thread count sheets is that they’re soft and dense, two great features if you’re looking for luxury.In comparison, Amazon’s Hotel Signature 800 Thread Count set is $135.You might not always find the set you want at Costco, but it pays to check. Besides, if you’re in the store, you can feel around until you find the ones that make you want to crawl into bed for some shut-eye.2. Rotisserie chickenThere are plenty of reasons shoppers snap up Costco’s delicious rotisserie chicken. For one, they’re perfectly seasoned, and at roughly three pounds, they can feed a family. Oh, and they’re also only $4.99. What’s not to love about serving a picture-perfect chicken rather than slaving over a hot stove? Heck, a few aisles away, you can pick up all the sides you need to round out the meal.To give you an idea of what a bargain these are, we check a couple of other stores famous for their ready-to-serve rotisserie chicken. Jewel-Osco’s version (which is also delicious) is $6.99, and Walmart’s is $6.97.3. Kirkland Signature Flex Tech 13 Gallon Kitchen Trash BagYou know what I can’t stand? Paying for trash bags. The idea of handing over money for a product that’s going to, literally, end up in the trash is more than my savings-obsessed heart can handle. Even worse is when a trash bag leaks all the way from the kitchen to the garage.With that out of my system, these Flex Tech bags truly are the best. You can get 200 bags for $21.50. That’s less than $0.11 per non-leaky bag. And when they say “flex,” they mean flex. These things can hold far more than you might expect, which is what I want.In contrast, Walmart’s Great Value trash bags cost a little over $0.15 a piece. Home Depot’s Flex Pro 13 gallon bags are over $0.13 each, and the Amazon Basic Flextra trash bags run $0.20 a piece.4. Kirkland Signature Baby WipesMy boys graduated from college and started families of their own years ago, and yet I continue to purchase baby wipes. For me, they’re the Swiss Army knife of quick cleanups. For example, last weekend, my husband and I visited family in a nearby state. As we were driving home, he spilled coffee all over his pants.No problem. Cleaning up was as easy as reaching behind the passenger seat for a package of baby wipes. They’re just wet and thick enough to clean a mess. Wet wipes are also great for cleaning sticky fingers, wiping down dogs who smell a little too “earthy” after rolling in the grass, and even cleaning mud off floor mats.And here’s the deal: You get 900 baby wipes for $22 at Costco. That’s less than $0.025 each.5. Shelled pistachiosPeople have been eating pistachios for thousands of years. In fact, archaeologists believe mankind began eating them as early as 7,000 B.C. However, it wasn’t until the mid-19th century that they came to the U.S.As long as your stomach can handle the pistachio seed, there are tons of health benefits, including:High levels of potassium and unsaturated fatty acids, both with antioxidant and anti-inflammatory properties.May lower your chances for cardiovascular disease.Full of fiber and minerals.Can make you feel fuller longer.Adds good bacteria to your gut.Plus, you don’t even have to shell them yourself because it’s already been done for you. If you’re a snacker like me, pistachios can be a healthier option.Kirkland Shelled Pistachios cost a little under $0.71 per ounce. At Walmart you’ll pay $0.98 an ounce, and at Target you’ll shell out $0.96 an ounce.Naturally, saving money is important, but it’s not the only consideration. Your favorite Costco items are likely to be the things you use regularly and can’t imagine buying anywhere else because they work so well for you.

4 Better Ways to Spend $2 Than Buying a Powerball Ticket

3. Pay off high-interest debtIf you carry a balance on your credit card, paying it down is a reliable way to improve your financial situation. Unless you’re using a 0% intro APR credit card, the interest can compound in the same way the assets did in the table above. Only in the case of debt, it can accrue faster and it will work against you rather than for you.The difficulty is that, depending on how much you owe, becoming debt free can seem like an impossible task. Buying a lottery ticket may seem like an easier solution, if it wasn’t such a long shot. Instead, make a debt repayment plan and put the money you would have spent on lottery tickets toward your balance. If you can pay more, so much the better.The average credit card interest is around 20%. Let’s say you owe $500. If you pay $25 each month toward that debt, our credit card payoff calculator shows that you could pay it off in 25 months. You’d still pay over $100 in interest, but you’d pay a lot more if you only made minimum payments on that debt.4. Do something funSome people enjoy the thrill of buying a lottery ticket and may think that $2 is worth it for the excitement. Depending on what floats your boat, that lottery ticket money could pay for a less fleeting form of entertainment. True, high living costs mean $310 over a year doesn’t go that far. But it could pay for a couple of nights in a hotel or some nice meals out. It would certainly fund a couple of movie nights or cover a class to learn a new skill.Bottom lineThe attraction of possibly winning millions of dollars or more from a $2 powerball ticket is clear. The thing is that there are much more reliable ways to build wealth. According to a study by Ramsey Solutions, 75% of millionaires put their success down to investing consistently over time. Why not use your lottery ticket money to follow in their footsteps?

This $8 Addition to Costco’s Bakery Is Getting Rave Reviews

Costco is known as a source for bulk grocery items and household essentials. But if you shop there often enough and tend to frequent the bakery section, you might also draw the conclusion that Costco’s cakes, cookies, muffins, and assorted surgery items not only offer great value for your money, but are downright delicious.Costco has done a particularly good job of introducing new products to its fresh baked goods lineup this year. It’s added a sinfully rich peanut butter pie and a lemon meringue cheesecake that’s been described as “almost 4 pounds of heaven.” And now, Costco has another yummy offering on hand — and at a price so low you might think it’s too good to be true.Introducing Costco’s latest bakery creationCostco’s latest bakery item is a sour cream butter pound cake. And while it may not exactly be the healthiest thing you bring home from Costco this month, if you need a dessert for a picnic or barbecue, it may be worth picking up. That’s because in true Costco fashion, you get a generous-sized pound cake at a price point of just $7.99 (though do note that Costco prices can vary by region, so the cost of this creation might vary depending on your geographic area).So far, Costco fans seem to be enjoying their sour cream butter pound cake. Reviews posted to various social media sites have been singing the cake’s praises. So if you’re someone who enjoys pound cake, you may want to give Costco’s version a try.Is Costco’s sour cream butter pound cake worth your money?It’s easy to make the argument that a giant cake is worth $7.99 — at least in theory. But the reality is that if you don’t end up consuming all of it, you may not end up saving money, but rather, wasting money.In fact, that’s a risk any time you buy perishable food from Costco in bulk, whether it’s baked goods, a prepared meal, or even something like produce that may not last for more than a few days beyond when you bring it home. So as is the case with any Costco purchase you make, you’ll need to ask yourself whether you really think you’ll consume the entire sour cream butter pound cake.If you have an event where you’re tasked with bringing dessert, then this may be a no-brainer purchase. But buying a sour cream butter pound cake to enjoy yourself could backfire on you — either in the form of wasted food (and money) or a very severe stomach ache.The nice thing about Costco’s bakery department is that you can load up on delectable desserts without running up a huge credit card tab. But you’ll want to make sure those desserts are likely to be eaten before they go bad.Of course, there’s always the freezer option, which may be one you’d like to exercise if you want to try Costco’s latest bakery creation but don’t have an event coming up. Just do yourself a favor and freeze leftover portions individually. Otherwise, you might end up having to defrost half a cake in one fell swoop, thereby risking the problem of food waste all over again.