Twila Van Leer

What’s Hot? What’s Not? Let the Shopping Begin!

November 21, 2014 By Twila Van Leer

Hot selling Christmas items include products featuring Disney's Frozen characters. — Hot selling Christmas items include products featuring Disney’s Frozen characters.

Thousands of Americans will step away from the Thanksgiving table, leave stacks of dirty dishes and head right into the front lines of the annual shopping barrage. More stores are opening on the Turkey Day holiday to accommodate early shoppers.

Last year, Macy’s, one of shopping’s bellwethers, opened at 6 p.m. Thanksgiving. That prompted several large retailers to open a bit earlier. And so it goes in the world of selling. And there’s no whimsy about it. The science of money spending indicates that the retailers who aren’t careful about when they open could lose substantial amounts to competitors.

According to the researchers, here is what you can expect:

The word from the gurus is that most stores will hold off until at least 5 p.m. to allow potential customers to stow the turkey (and do the dishes). Some folks who are tired of the “holiday creep” may even reward those such as Costco and Nordstrom, which have opted to close on Thanksgiving.

If you think “frozen” refers only to the weather this year, be aware that the popular animated Disney feature this year is fueling all kinds of products that will top the list of many a small fry. Shortages may occur. (Remember the Cabbage Patch and Tickle-Me Elmo.)

Target, for instance, has gained exclusive rights to 60 Frozen items. And there is a widely available Snow Glow Elsa, complete with a gadget that plays some of the movie’s top tunes, including “Let It Go.”

Even so, the retail experts say there are not likely to be big lines or crazy antics related to Frozen items. No must-have toy has hit the stores since the 2009 craze for Zhu Zhu Pets. Today’s children have become attached to video games and the erstwhile adult toys such as iPad.

The shift in kiddy preferences has such tech sites as Twitter, Facebook, back-in-stock apps and Black Friday forums practically dormant and waiting for anxious parents and grandparents to show up eager to know where they can find the newest toys.

Brick-and-mortar retailers have marshaled new delivery options to offset the competition from online sales. Many will ship purchases direct to a customer’s address, more conveniently than an online source can get things through their fulfillment centers miles away from the customer. Target, Walmart, Macy’s and Amazon all are testing same-day delivery in certain markets. Many retailers also are bringing the competition home, allowing customers to buy online and pick up at the store.

Retailers, Target among them, are offering free shipping through Dec. 20, but some outlets are going in the opposite direction. Amazon, for instance, has raised its free shipping threshold to $35, where it used to be $25. Walmart officials are watching warily, but think Target will lose money on its free shipping police and they are not likely to follow suit. Nordstrom, Neiman Marcus and Reebok will stick with free shipping policies they established a long time ago. Freeshippingday.com will offer free shipping from more than 1,000 merchants on Dec. 18.

Red flags are up in all areas of commerce as the memories of recent data breaches continue to reverberate. CreditCards.com predicts that 45 percent of American shoppers will avoid stores such as Target and Home Depot because of drastic data breaches in the past year.

Price matching is becoming more common among retailers as competition heats up. Fewer than 5 percent of shoppers actually press for a price match, especially if the price difference is not substantial enough to warrant the inconvenience. Many retailers suspend price match policies during the mania of Black Friday and Cyber Monday.

To accommodate shoppers, some retailers such as Target and Best Buy are creating their own Wish List apps. The lists include more holiday gifts in certain dollar amounts to facilitate shopping. Wishybox and Wishlistr and several other apps also appeal to shoppers with specific items in mind.

Letting The Present Rob The Future

November 6, 2014 By Twila Van Leer

Proper planning for retirement really helps alleviate stress.

The comparative wealth of Americans born into the post-World War II economy is taking a toll on retirement expectations. With the greatest economy known to history, Americans have tended to become a “gimme more” population, a condition that is reflected in soaring national debt and near-depletion of some natural resources.

The national stress is often mirrored in personal finances. Too many Americans are approaching retirement only to find they don’t have the resources to match their expectations for the “golden years.” Now it’s too late to cut expenditures and put more into savings. The alternative is to lower expectations and live more frugally than they had planned.

For those who still can affect the future, there are some common-sense steps that will ease the challenge when retirement arrives:

Savings: Put a percentage of your income into savings and investments to build a cache for the future. The more generous you are to yourself, the greater the expectation you can have of being able to control your life as you age. Recognize the difference between needs and wants and act accordingly.

Housing: In that spirit, consider housing. You may want a mansion, but you need secure shelter for your family. Opting for a smaller home that does not consume a large percentage of your resources will give you more leeway in the future. Consider all the factors, including down payment, interest, mortgage payments and upkeep over the time you expect to live in the home, then decide if luxury now will offset a skimpy retirement fund.

Possessions: Consider the mental costs of owning many “things.” The care and keeping of many possessions can cause considerable stress, which can in turn manifest itself in physical ailments, psychiatrists say. Count the cost of the time you may spend looking after, protecting and replacing excess possessions. An “attitude of gratitude” rather than obsessive collecting will help you toward a balanced life.

Health: Look after your physical health as a foundation for your retirement. Living long but not well is not a good option. Two in three Americans are overweight or even obese. This contributes to increases in such complaints as diabetes, heart disease and some cancers. Surgical remedies for obesity have surged from 13,386 operations in 1998 to 220,000 in 2009.

Overeating is the simple underlying factor in overweight, compounded by lack of exercise. A huge increase in the number of high-calorie foods and drinks consumed by Americans is part of the problem, abetted by too-large servings, according to health experts. They advise eating about half what a restaurant serves. Reduced trips to eateries and an increase in home-cooked meals will be easier both on the budget and on the calorie intake.

In summary, living lean involves having money in reserve, providing for a reasonable retirement and putting needs before wants. It’s an approach to living that can result in a less stressful, more satisfying present and the prospects of a better future.

Start Early To Teach Kids Finances

October 28, 2014 By Twila Van Leer

Saving money is a good habit to get into. — Teaching kids to save money can help them in all aspects of life.

Like everything else, children have to learn the basics about personal finances in ways that make sense to them. Unfortunately, money matters often are overlooked when it comes to what’s important for them to know.

Starting early and being consistent are the keys to helping your children avoid the big bump that comes with hitting the financial world uninformed.

Start with regular savings. If the child has an allowance, convince him or her that putting a portion of that money into savings is a good idea. Don’t just assume they will go along with that approach. If they can be taught to save toward a particular goal, such as a new toy or a special outing, it will be more meaningful. But if they only save money to spend it immediately, they may miss the message. Only a portion of their savings should be in this category.

Many parents (nine out of 10, according to some sources) expect children to work for their allowance, another little dose of the real world that may come in handy as they embark into their own financial independence.

Sharing your family financial basics with children as they are able to understand is good backup for savings accounts. If your own finances are in disarray, they will have a hard time coming to healthy conclusions. Remember that the amount of the child’s allowance or savings is not as important as the consistency.

Starting early and regularly to absorb the basics of money management is the key to responsibility later on. When faced with their first forays into auto ownership, college and other adult expenses, they won’t be overwhelmed with it all. The loan officers with whom they deal will be more impressed if they have the vocabulary and the familiarity with financial terms and concepts.

Sound, lifelong money management skills may be the best gift you can offer to your children.

Will You Work Past Retirement?

October 27, 2014 By Twila Van Leer

There’s a new term going around among economy experts. “Unretirement.” It has to do with Americans who have reached ordinary retirement age, but haven’t retired.

Chris Farrell of MarketPlace thinks it’s a good thing that will help in the country’s recovery from the recession that began in 2008. Not only does prolonged working benefit the “unretiree” but it is a boon to younger workers, he argues. Farrell even wrote a book about the phenomenon, titled “Unretirement.”

Geoffrey Norman of the Wall Street Journal is another who thinks working longer can have significant benefits. Too often, fresh retirees find there is too much time, too little money to support the retirement dream, he said.

One benefit of working past normal retirement is that Social Security pays more. The annual benefit increases by 8 percent for each year beyond age 65 until the beneficiary reaches 70.

Advocates of the longer work period also argue that there are health benefits, both physical and mental, for the “unretirees.” The majority (62 percent) of those who follow that path say they are motivated by a desire to stay mentally engaged, according to the research group Merrill Lynch and Age Wave, as reported in the Washington Post.

There is criticism from some younger workers who say the unemployment rate is affected when older folks don’t retire. But Farrell says that when older people are getting jobs, it stands to reason that younger people are too. “We’re all in it together. The pie will continue to grow.”

People who continue to work beyond normal retirement keep contributing to the FICA pool that supports Social Security and help keep the system running, he noted.

The Baby Boom phenomenon will have run its course by 2030, when all the Boomers will have reached 65. The huge bulge of retirees will taper off and a more gradual retirement wave be achieved, Farrell believes.

Not everyone agrees. A writer for the Financial Advisor says that “the retirement of massive numbers of Baby Boomers over the next decade or so will put a drag on the U.S. economy. The number of young people coming into the work place is going down at the same time, which will add to the effect.

Farrell remains optimistic. “We are on the verge of a broad, positive transformation of our economy and society,” he proclaims, partly due to the fact that many Americans are working longer.

Here’s The Scoop on Roth IRAs

October 27, 2014 By Twila Van Leer

Make saving money automatic every month. The easier it is to save the better for you in the long run.

Many Americans have a Roth IRA as one component in their retirement scheme, or rely on such an Individual Retirement Account as the mainstay of their plans.

A 19-year-old who began contributing $1,500 to such an account could expect to have some $608,000 by age 65, given 7 percent average annual earnings. That’s a healthy bit of money to support one’s post-employment years.

Of course, not every Roth IRA holder leaves his savings to accumulate that much retirement income, but the prospect of being able to make a large purchase (a down payment on a home, perhaps?) is also enticing.

Money goes into a Roth IRA and accrues interest completely tax free until it can be withdrawn, usually after the holder is age 59½ or older. Studies show that a Roth IRA usually is started by someone 18 to 39. There is no minimum age requirement so young people who have earned income are eligible.

The Roth IRA is one of few savings methods that allow putting after-tax money into an account and withdrawing it tax-free. So, if you began contributing the $5,500 allowable deposit this year, and maintained that level for 25 years at a 3 percent return, you’d accumulate $200,525, with $63,025 in tax-free earnings.

While the original idea behind IRAs was to build retirement security, this method of savings now is used by many individuals to put money aside for purchasing a home or paying for advanced education.

A Roth IRA involves income limits. Single individuals can contribute if their modified adjusted gross income is less than $129,000. The contributions phase out as modified adjusted gross income reaches $114,000. For couples, the limits run from $181,000 to $191,000 filing jointly.

Your Roth IRA contributions are not tax deductible, but the earnings grow tax-free. You don’t pay taxes when you withdraw from your account if it has been growing for at least five years.

Withdrawals usually begin at 59 ½ , when you become disabled or die (in which case the money goes to a beneficiary), or if you are purchasing a first-time home, which allows a $10,000 one-time withdrawal.

Traditional IRAs require that you begin withdrawing money at age 70 ½ , but Roth IRAs do not have that requirement. You can convert from a regular IRA to a Roth IRA, but distributions will be taxed in the year you do.

If you will be in the same or a higher tax bracket during retirement, the Roth IRA is a good option, but if you are in need of tax deductions now, a traditional IRA is probably your best bet.