December 2016
15 Things You Should Avoid Buying During the Holidays
Tips for Smart Holiday Giving
7 Ways to Go Broke in Retirement

15 Things You Should Avoid Buying During the Holidays

The season of giving is also the season of getting. You’re likely spending lots of money purchasing gifts for friends and loved ones during the holidays. But proceed with caution! There are a number of things you shouldn’t be buying between Thanksgiving and Christmas. Why? Because certain items tend to be considerably less expensive outside the peak holiday shopping season.

Here are 15 things you’ll be better off not buying during the holidays, and purchasing at other times of the year.

  1. Cars
    • Forget the notion of waking up on Christmas morning to find a new car in the driveway. Instead, think New Year’s Eve (during business hours, of course) to get the best deal on a new vehicle. Car dealers are in the mood to haggle and clear their inventory before year’s end to make room for new models and earn manufacturer incentives. Looking for a used car? Hold off until April for the best deals. It’s the month dealers tend to buy the most at auction, giving you the best selection.
  2. Exercise Equipment
    • You might see a few sales on fitness gear and apparel in late November and December, but January is when the real deals appear on exercise equipment, according to Benjamin Glaser of DealNews.com. Hey, we’ve all done it and retailers know it; we resolve to lose weight and get fit in the New Year. To that end, those retailers have sales on fitness equipment in January. Look for markdowns of 30% to 70% on fitness DVDs, treadmills, elliptical trainers, stationary bikes and complete home gyms.
  3. Caribbean Cruises
    • Cruising during the holidays can often mean more crowds and higher fares, says Colleen McDaniel, managing editor of Cruise Critic. By booking a cruise for January, February or March, you can take advantage of lower fares, avoid the holiday crowds and beat the spring break rush. The industry’s “wave season” also takes place during that time, when cruise lines offer added discounts that may help you save even more on your trip, she says. You can score some of the best cruise deals if you book at the last minute — just don’t expect the really cheap tickets to get you a stateroom with a view.
  4. Bedding
    • If you’re considering stocking up on bedding during the holidays — we’re talking everything from comforters to sheets and pillow cases — wait a few weeks longer for even deeper discounts, according to the deals website BensBargains.com. Take advantage of “white sales” in January at big-name retailers including Macy’s, Target and Kohl’s. Savings on bedding during these annual sales can add up to as much as 50%.
  5.  Broadway Tickets
    • You can get two tickets for the price of one to several popular shows during Broadway Week (which is actually two weeks). In 2017, it runs from January 17 to February 5. The “twofer” tickets go on sale January 5. Some shows might even offer the discount for up to four weeks, according to one Broadway insider. In general, January and February are good months to see Broadway shows. It’s off-season and the dead of winter, so ticket prices tend to drop. Avoid the crush between Christmas and New Year’s.
  6. Furniture
    • If you need to spruce up the living or dining room before guests arrive for the holidays, don’t expect to find a good deal on a sofa or table and chairs before Christmas. Instead, wait until after Christmas, when furniture stores hold clearance sales to make room for new styles that are usually released in February. For example, furniture retailer Room & Board has an in-store and online clearance sale once a year, typically the day after Christmas. Expect discounts of up to 50% on discontinued furniture styles and in-store floor samples.Also, many stores offer 0% financing along with the big discounts during annual clearance sales. Put this note on your 2017 calendar: Because new styles often are released in August, too, July is another good month to look for deals on furniture.
  7. Gift Cards
    • Gift cards are a no-brainer when you’re stumped for ideas. However, if you can hold off until after the holiday shopping frenzy has died down to purchase gift cards, you could save yourself some money.Here’s the scoop from deals experts: Some people who receive unwanted gift cards for the holiday turn around and sell them for cash online. Web sites such as CardCash.com and Cardpool.com buy the gift cards at a steep discount and re-sell them below face value. Since sites typically get flooded with gift cards right after the holidays, the average card price is driven down due to the increased inventory. Also on eBay right after the holidays, gift cards can sell for up to 15% cheaper than the original price.
  8. Winter Sports Gear
    • Hold off on gifts for winter sports enthusiasts until the New Year. Snowboards, skis, ice skates, goggles, hockey gear and more will be marked down at least 10% to 20% in January, according to DealNews. If you can wait a bit longer, expect even deeper discounts during clearance sales in February and March when the winter sports season winds down.
  9. Jewelry
    • A new piece of jewelry ranks high on many holiday wish lists. But high demand often means higher prices, so you may want to give your sweetheart a rain check and wait until after Valentine’s Day to buy that pearl necklace or those diamond earrings. You can save 15% to 25% on jewelry during post-Valentine’s Day sales, says Howard Schaffer of deal site Offers.com.
  10. Luggage
    • If you need to replace a beat-up roll-on that’s been tossed around too many times by airline baggage handlers, March is the best time to buy luggage. Retailers mark down luggage because sales have slowed after the busy holiday travel season and haven’t picked up yet for summer travel, according to Deals2Buy.com, a deals and coupons website. Look for discounts ranging from 20% to 70%.
  11. Mattresses
    • You probably don’t expect Santa to shove a mattress down your chimney. But if you were thinking about giving your holiday guests something more comfortable than a futon to sleep on, you might want to reconsider buying a mattress during November or December. You’ll save as much as 70% by waiting until Memorial Day sales in May to buy a mattress. In the meantime, promise your guests a plush mattress next year and hope they don’t mind sleeping on the couch this year.
  12. Perfume
    • Perfume sales often peak around Christmas and Valentine’s Day. So retailers tend to discount perfume heavily after these holidays have passed. FreeShipping.org founder Luke Knowles says consumers can expect prices on perfume to be slashed by as much as 50% in late February and March, with the best sales at websites dedicated to perfume.
  13. Tools
    • Tools typically are discounted during Black Friday sales. But wait to buy a new drill, wrench set or tool chest around Father’s Day instead. You’ll save 5% to 15% more on tools in June when retailers have sales on gifts for dads, says Offers.com’s Schaffer.
  14. Winter Apparel
    • Retailers will offer discounts on coats, sweaters and other cold-weather clothing during Black Friday and Cyber Monday sales. However, the deals will be even better in January when stores have clearance sales on winter apparel to make room for spring clothing. You can expect to see markdowns of at least 75%.
  15. Holiday Decorations
    • Resist the urge to buy new holiday decorations before Christmas because you can get them at bottom-of-the-barrel prices in January, according to Glaser of DealNews.com. Retailers typically mark down ornaments, garlands, artificial trees and décor as much as 90% after December 25. If you don’t mind the red-and-green theme or chocolates shaped like a wreath, you can also load up on deeply discounted edible holiday treats in January. Buy durable decorations that will last in storage until next year.

Tips for Smart Holiday Giving

A lot of good causes will be vying for your charitable dollars this holiday season, said Ines Novacic on CBSNews.com. But with more than 1 million charities throughout the U.S., “knowing which cause to donate to can get tricky.” The first question donors should ask themselves about their charity of choice is this: “Is it going to put the majority of my contribution toward programs and services?” Charity Navigator, which provides ratings for approximately 8,000 U.S.-based charities, “says at least half of a charity’s budget should go toward its programs, and no more than 20 percent should go toward fundraising and marketing costs.”

Try to avoid “knee-jerk” giving, like in response to a phone or email solicitation, said Kerri Anne Renzulli on Money.com. Your money will go further if you give directly to an organization rather than through a third party. Telemarketer fees, for example, eat up an average of two-thirds of the money raised, while crowdfunding sites often charge a 5 percent fee on each donation. Some people give small amounts to lots of charities “in the hopes of spreading love,” but you should avoid this route too. Because of administrative costs, “the $3 it might cost a charity to handle a donation, for example, is only 3 percent of a $100 donation—but 30 percent of a $10 gift.” Finally, make sure you “look past the name.” The organization’s mission might not be what you think it is.

How can we be sure “that we’re getting the most bang for our charity buck?” asked Nurith Aizenman on NPR.org. Nonprofit GiveWell.org uses a data-driven approach to recommend charities where donors’ money will go furthest. Against Malaria Foundation, GiveWell’s top-ranked charity for 2016, distributes $5 bed nets in African nations to protect against malaria-carrying mosquitoes. Because the needs in developing nations are so much greater, a dollar accomplishes more there. As a result, GiveWell’s recommended charities are all outside the U.S., a factor that may not suit donors who “feel particularly moved to help others who are close to home.”

Don’t forget, though, that “you can make a difference without emptying your wallet,” said Katie Dupere in Mashable.com. If you’re financially strapped this holiday season, consider donating your time, effort, or expertise to a worthy cause. You can find local nonprofits that welcome volunteers by searching on GivingTuesday.org or VolunteerMatch.org, while services like CatchAFire.org can match your skills to specific organizations. You can also donate what you have on hand, like gently used clothing. If you do have a bit of cash to spare, shelters are always looking for low-cost essentials like new socks and underwear. Or you can always give later, when your financial situation improves. Donations are needed year-round, not just in December.

Source: The Week, December 16, 2016

7 Ways to Go Broke in Retirement

Retirement is a major milestone that brings many life changes. One thing that doesn’t change for most people: the fear of running out of money. According to the Transamerica Center for Retirement Studies, the most frequently reported retirement worry is outliving savings and investments. Across all ages, 51% of respondents cited this concern, and 41% of retirees claim the same fear. Additionally, only 46% of retirees think they’ve built a nest egg large enough to last through retirement.

Now is the time to face your fears. Take a look at seven ways you could go broke in retirement and learn how to avoid them. Some you can avert with careful planning; others you have little control over. But, you can prepare your finances to make the best of whatever may come your way.

You live too long:

More time to enjoy the life you love is a joy; trying to afford it can be a pain. Current retirees are expecting a long retirement—a median of 28 years, according to the Transamerica Center for Retirement Studies. And 41% of retirees expect their retirements to go on for more than three decades. Women have to plan for an even longer life. According to the Centers for Disease Control and Prevention, a man who was age 65 in 2014 can expect to live to age 83, on average, while a woman of the same age may reach 85.5 years.

When saving for retirement, plan for a long life. But if it starts to look like your nest egg will come up short, you have to adjust your budget. For example, it might behoove you to downsize your home or relocate to an area with low taxes and living costs. You may even consider finding ways to pull in extra income, such as starting an encore career, taking a part-time job or cashing in on the sharing economy, if you can.

You spend too much:

It might seem obvious, but most of us—retired or not—are guilty of making this mistake and could benefit from a reminder to quit it. In fact, according to the Employee Benefit Research Institute, nearly 46% of retired households spent more annually in their first two years of retirement than they did just before retiring.

And retirees on a fixed income are particularly vulnerable to the ill effects of committing this error. “One of the biggest mistakes, I think, is that people continue to spend the way they did in their earning years without taking a close look at their current income,” says Carrie Schwab-Pomerantz, senior vice president at Charles Schwab and author of The Charles Schwab Guide to Finances After Fifty. “For retirees, budgeting is more important than ever.”

You rely on a single source of income:

Multiple income streams are better than one, especially in retirement. Case in point: Social Security is the primary source of income for 61% of retirees, according to the Transamerica Center for Retirement Studies. And 44% of retirees report that one of their biggest financial fears is that Social Security will be reduced or cease to exist in the future. Based on current projections, Social Security will only be able to pay 77% of promised retirement benefits beginning in 2035.

A pension (which 42% of retirees use as a source of income), or inheritance likely can’t stand alone to support you through retirement, either. But when you put them all together, along with your self-funded retirement accounts—such as 401(k)s and IRAs—then you have a more stable and diversified financial base to rely on throughout your retirement.

You get sick:

As you age, your health is bound to deteriorate, and getting the proper care is expensive. According to a 2015 report from the Employee Benefit Research Institute, a 65-year-old man would need to save $68,000 to have a 50% chance of affording his health-care expenses in retirement (excluding long-term care) that aren’t covered by Medicare or private insurance. To have a 90% chance, the same man would need to save $124,000. The news is worse for a 65-year-old woman, who would need to save $89,000 and $140,000, respectively. Be sure you’re doing all you can to cut health-care costs in retirement by considering supplemental medigap and Medicare Advantage plans and reviewing your options every year.

Long-term care bumps up the bill even more. For example, the median cost for adult day health care in the U.S. is $1,473 a month; for a private room in a nursing home, it costs a median of $7,698 a month, according to Genworth. No wonder 44% of retirees fear declining health that requires long-term care and 31% fear cognitive decline, dementia and Alzheimer’s disease. Consider getting long-term-care insurance to help cover those costs, if you are not already self-insured.

You bankroll the kids:

A mistake made out of love is a mistake all the same. You may feel obligated to assist your children financially—paying for college, contributing to the down payment for a first home and covering them in emergencies, for example. But doing so at the expense of your retirement security may cause bigger problems for both you and your kids in the long run.

“It sounds awful to think a parent won’t help [his children], but you’re only going to become a drag on your kids eventually if you don’t really focus on your own financial security during those later years,” says Schwab-Pomerantz. “You gotta take care of yourself first.”

You are underinsured:

Cutting costs in retirement is important, but scrimping on insurance might not be the best place to do it. Adequate health coverage, in particular, is essential to prevent a devastating illness or injury from wiping out your nest egg. Medicare Part A, which covers hospital services, is a good start. It’s free to most retirees. But you’ll need to pay extra for Part B (doctor visits and outpatient services) and Part D (prescription drugs). Even then, you’ll probably want a supplemental medigap policy to help cover deductibles, copayments and such. “Medicare is very complex, and it’s more expensive than people realize,” says Schwab-Pomerantz. “So it definitely needs to be part of the budgeting process.”

And don’t forget about other forms of insurance. As you age, your chances of having accidents both at home and on the road increase. In fact, according to the Centers for Disease Control and Prevention, an average of 586 adults who are 65 and older are injured every day in car crashes. Beyond your own medical expenses, all it can take is a single adverse ruling in an accident-related lawsuit to drain your retirement savings. Review the liability coverage that you already have through your auto and home policies. If it’s not sufficient, either bump up the limits or invest in a separate umbrella liability policy that will kick in once your primary insurance maxes out. Premiums on a $1 million umbrella policy might run about $300 a year.

You get scammed:

Older adults are particularly vulnerable to scam artists and fraudsters. The FBI notes that seniors are prime targets for such criminals because of their presumed wealth, relatively trusting nature and typical unwillingness to report these crimes. Even worse, the perpetrators may be closer than you think. According to a study from MetLife and the National Committee for the Prevention of Elder Abuse, an estimated one million elders lose $2.6 billion a year due to financial abuse—and family members and caregivers are the perpetrators 55% of the time.

Some common scams to watch out for: Con artists may pretend to represent Medicare to collect your personal information. Cheap prescription drugs marketed online could be knock-offs, and you may be handing over your credit card information in exchange for endangering your health. Charity workers seeking donations for disaster aid might actually pocket the money for themselves. Just be sure to exercise caution any time you are being asked for personal information or donations, or when a deal seems “too good to be true.” Chances are, it probably is.