You may need less retirement income than you think-By Robert Powell

New research calls the venerable 80% income-replacement rule into question

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New research indicates that retirees—especially in higher income brackets—might need to replace less of their pre-retirement income than they think.

Financial planners have long suggested that individuals replace 80% of their income in retirement from various sources to maintain the same standard of living they had while working.

But in a recent article in Research magazine, Michael Finke, a professor at Texas Tech University in Lubbock, notes that the rule doesn’t necessarily reflect how a person’s income grows while he or she is working — nor how expenses change and even decline in retirement. What’s more, the guideline focuses on gross income rather than take-home pay.

Consider: In retirement, you likely no longer contribute to social security medicare and your retirement account. That means your replacement rate is down to no more than 77% of your final year’s salary — or 60% or less if you use average lifetime income, Finke says.
If you subtract other expenses — commuting and a lower federal income-tax bill (assuming you’re in a lower tax bracket in retirement than you were in your working years) — the replacement rate falls lower still.
“The 80% rule is wrong because it’s too simplistic,” Finke says. “Most of us don’t want to replace our gross income. We want to replace our paycheck.”
The guideline, he adds, is especially distorted for high-income Americans.
“The highest 20% of earners aren’t even spending half of their gross income,” he says. “So if you think they need 80% of their gross income, then they’d have to spend more in retirement than they’d ever spent during their working years — and this doesn’t sound like a good life plan.”

So, what’s a better way to figure out how much income you need?

First, if you’re at, or very near, retirement, you can use your actual target consumption, says David Blanchett, head of retirement research at Morningstar Investment Management, a wholly owned subsidiary of the Chicago-based fund-research company Morningstar Inc. For those still several years or more from leaving the office, the key is pinpointing what specific expenses will change at retirement and adjusting one’s replacement rate accordingly. “A household that is saving 20% of their pay, for example, in a 401(k) needs to replace a lower percentage of their final pay than one saving only 5% because they are used to living off less,” Blanchett says.

Finke adds: “Most of the wealthiest retirees don’t spend down their money at all. This means that if they didn’t want to give it to their kids they could have had a lot more fun when they were younger.”

The story “How much retirement income will you need? Maybe less than you think” first appeared on WSJ.com

Culled from MarketWatch

The Rationale for the Pension Reform Act- Odunze Reginald C

The origin of pension’s dates back to ancient time, the Holy Bible in the book of Numbers 8 vs. 25, stated “but at the age of fifty, they must retire from the regular service and work no longer” and according to King James version, it states” And from the age of fifty years they shall ceased waiting upon the service thereof and shall serve no more”

Why then do people view retirement as a wreck, the reason is that they have not save enough to cater for retirement during old age. There is a strong connection between planning, enough pension pot(Retirement Savings Account balances) and happy retirement.

And according to Robert Kiyosaki, in his book Rich dad, poor dad, he noted that “people work for two reasons, to save for retirement and to make lots of money” Continuing Kiyosaki noted that “an individual’s reality is the boundary between faith and self confidence, and a person’s financial reality will not clear until he or she go beyond the fears and doubts of his or her own self imposed limits. Those self imposed limits are what limit the retiree from enjoying a happy an successful retirement

Pension is an important issue, as a time will come when you will longer be able to  work, at that time , you fall back on your pension .

What is pension?  According to Wikipedia “A pension is a fixed sum to be paid regularly to a person, typically following retirement from service. There are many different types of pensions, including defined benefit plans, defined contribution plans, as well as several others. Pensions should not be confused with severance pay; the former is paid in regular installments, while the latter is paid in one lump sum.”

Continuing Wikipedia noted that” The terms retirement plan and superannuation tend to refer to a pension granted upon retirement of the individual. Retirement plans may be set up by employers, the government or other institutions such as employer associations or trade unions. Called retirement plans in the United States, they are commonly known as pension schemes in the United Kingdom and Ireland and superannuation plans  in Australia and New Zealand.

A pension created by an employer for the benefit of an employee is commonly referred to as an occupational or employer pension. Labor unions, the government, or other organizations may also fund pensions. Occupational pensions are a form of deferred compensation, usually advantageous to employee and employer for tax reasons. Other vehicles (certain lottery payouts.

The common use of the term pension is to describe the payments a person receives upon retirement, usually under pre-determined legal or contractual terms. A recipient of a retirement pension is known as a pensioner or retiree

The following are the rationale for the Reform

Most public sectors schemes are unfunded

Unsustainable pension liabilities

Weak and inefficient administration of the scheme in both private and public

Aging make defined benefit scheme unsustainable

Many workers in the private sector were not covered by any form retirement benefits arrangement

Existence of diversified arrangement which were largely unregulated in the private sector.

There was also mismanagement fund, corruption and large scale misappropriation of public fund

There were no organized data base of  the pension contributions

The idea of enacting the pension reform act 2004 came up when the committee set by the federal government in conjunction with bureau of public enterprises’ on the sale of NITEL and NEPA. Discover that the foreign buyers could not price it effectively because of huge pension liabilities. Because one question they continuously ask is are you operating define benefit scheme or define contribution scheme.

The committee to the presidency and the result was formation of a committee to look into ways of reforming the pension scheme. The result was the pension reform act 2004 this has been amended as Pension Reform Act 20I4.

Odunze Reginald is the Lead Consultant, Chareg Consulting, a management and marketing  consultant  a social media and social marketing consultant , you can visit our twitter anchor @regydunze, find us on Facebook @ Reginald odunze and reginaldodunze.com, at google+ @ Reginald Odunze and at Linkedin@reginald odunze.

How technology will transform retirement - By Joseph F. Coughlin

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For the next generation of retirees, the question that will trump all others will be a simple one: How do you add life to longer lives?

As people live longer, and spend more time in retirement, the challenge will be to get more out of those years. How do you find a rewarding second career? How do you stay close with friends and family? How do you maintain independence and mobility? How do you embrace new experiences?
The equally simple answer: technology.
The next-generation retiree will have an unprecedented array of technologies and tech-enabled services to invent a new future for working part time, remaining social, having fun, living at home, staying healthy and arranging care.
Many of the solutions will be driven by the “Internet of Things”—where household objects can use Internet connections to think, talk and communicate with one another, enabling an entirely new on-demand service industry for older adults. Kitchen appliances will monitor a person’s diet and relay that information to a doctor. Older people will order up services they need to handle chores that have become too difficult, everything from housecleaning to car rides. Even clothing will connect people to a larger network of services that will monitor, manage and motivate them well into older age.
This new world of retirement will come with plenty of challenges—among them, costs and possible loss of privacy. But if the challenges can be met, these innovations could transform retirement into a new and vibrant period of life that is about living better as much as it is about living longer.
Here’s a closer look at some of the innovations.
STAYING ON THE JOB
Retirement was once a clear line between work and not working. Today, a career may be completed, but work is not over. Recent AARP research suggests that nearly four out of 10 baby boomers are planning to work in retirement. Some over-50s report that they plan to work until they drop. These days, that’s easier hoped for than done. Not only do older people battle the preconceptions of bosses and co-workers about older workers, but they also face a rapidly changing work environment that demands new skills. And they’re often forced to think of work in a new way, as a series of contract projects rather than a regular job.
Now technology is offering new options and flexibility. Telecommuting isn’t a new idea, but it’s crucial for retirees who want the freedom to accept whatever opportunities suit them without disrupting their lifestyle. With smartphones and tablets, the newly retired can be productive from home, beachfront or grandchild’s playground.
The Internet also frees retirees from having to seek out colleges to brush up on job skills. Massive open online courses, or MOOCs, let retirees learn what they need to stay competitive or enter a new field.
The available training isn’t just for work skills. There’s also help available online for retirees who want to practice their interview technique. Artificial-intelligence-based coaches will help retirees test themselves with a variety of virtual interviewers. An avatar will shoot tough questions their way, readying them for an interview with a potential boss who is younger than their own children.
All of that applies to retirees who will want to seek out a traditional professional job behind a desk. But the Internet is also opening up options for retirees who don’t want to be confined to an office, who want a sort-of retirement. Consider peer-to-peer companies, which let people connect with other people to order services. It often doesn’t take special training or experience to hire oneself out to these services, and they provide the ultimate in flexibility. Active retirees who don’t mind spending the day on the road, for instance, might sign up to become drivers with Uber.
The peer-to-peer economy can also help retirees earn an income from one of the biggest investments they’ve made over their lifetime: their house. Services like Airbnb let retirees rent out space in the family home—which probably has lots of room now that their children have gone. Airbnb recently reported on its blog that 10% of its hosts are over 60 years old.
STAYING CONNECTED TO FRIENDS AND FAMILY
Most people worry about their physical health in older age, but well being is strongly related to the ability to maintain a social life. Friends, family and regular social interaction keep people vital—yet many retirees end up feeling isolated as friends and family scatter. And, of course, many retirees must face the loneliness that comes after the loss of a spouse.
Applications such as Skype already make it possible to enjoy a virtual dinner with a distant grandchild, and communication is due to get even easier and more elegant. For one thing, communication will break free from the confines of a computer or television screen: Imagine an entire wall of the home projecting images of distant friends, letting people share coffee together.
Social media, meanwhile, will get more specialized as sites begin catering to older adults who want to get online and stay connected. One online community, from Connected Living Inc., connects older adults in senior housing with each other and their families; it has signed up more than 60,000 users in 36 states over the past seven years.
Sites are also springing up that help older adults find romance. Over-50 dating site OurTime.com, affiliated with Match, has seen more than two million people join in the past year. And tech-savvy retirees are transforming social sites once thought to be only for the young, such as Facebook, into their hangouts to share and connect with friends and family alike.

 

WSJ

Technology may also help ease face-to-face contact with friends and family. Older adults may find themselves forgetting crucial details about someone, even a close acquaintance, which can lead to frustration and embarrassment. Augmented-reality glasses in development now—think Google Glass—will project reminders in front of users’ eyes when they run into someone: the last conversation they shared, for instance, or the names of their children. The glasses will provide other helpful information, depending on context. If the retiree invites the friend home for dinner, the glasses can provide step-by-step instructions to prepare a meal from a new recipe.
STAYING MOBILE
Being able to get around independently is a crucial ingredient to a quality life in older age—visiting a friend or going out at for an ice-cream cone on a hot summer night. Research shows that reduced mobility to go where you want when you want leads to declines in both mental and physical well being.
Once again, technology is serving up solutions. Autonomous technologies, such as automatic parking, collision warnings and blind-spot detection, will make it possible for retirees to keep driving safely and longer than they otherwise would. Looking even further ahead, we can expect autonomous vehicles to take over driving entirely; all a retiree will have to do is text their self-driving car to pull up and take them anywhere.
Still, some retirees won’t want the burden of owning and maintaining a vehicle, or won’t have particularly strong feelings about giving up the driver’s seat. For them, there are services like Lyft and Uber that promise a ride with the touch of the smartphone.
And here, too, high-tech goggles may play some role in diminishing the frustration that comes with limited mobility. When real-world travel becomes too difficult for retirees to manage, these goggles will provide the option of virtual travel. Headsets such as the Oculus Rift integrate high-quality graphics and software to deliver immersive and interactive experiences. Using videogame technology, retirees can tour a Paris museum or feel the bumps of a jeep ride on African safari, all from their favorite chair.
A HOUSE THAT KEEPS ITSELF
Taking care of a home can be a fraught issue for retirees. Many find themselves losing the energy or inclination to tackle cleaning and upkeep. Soon the Internet of Things will help with those jobs, not only making maintenance easier but also transforming the home into a helper, companion and even caregiver.
Already, there are systems that make it easier to control the basic functions of the home. A smart thermostat and monitoring system enable people to run nearly everything in their home by smartphone while away on vacation. And distant relatives can use those same systems to make sure their loved ones have their home properly heated or cooled.

 

WSJ

Appliances may also help retirees by keeping track of things and taking over simple tasks. An Internet-enabled refrigerator, for instance, will maintain a daily inventory of its contents, alert owners when something is low and even arrange for home delivery of favorite foods—saving retirees the burden of keeping an eye on supplies and making regular runs to the store.
New types of appliances will also begin to appear in retirees’ homes to aid their everyday chores. Early examples include the Roomba vacuum, which can spare owners’ aching backs, and Amazon’s Echo, a compact device that lets people check their schedule, order home deliveries and more, all by voice.
Some appliances will even provide a kind of companionship for retirees who suffer from mental issues or isolation. Paro is a therapeutic robotic seal designed to help calm people with conditions like dementia. The robot has nearly 100 sensors allowing it to respond to touch with movements of its head, flippers and tail; blinking of its eyes; and sounds.
Of course, not all the Internet-enabled household help will come from machines. Internet service companies such as Washio and Hello Alfred are emerging to make aging at home easier, allowing people to summon human helpers to get small jobs done, like taking out laundry to be cleaned or tidying the house.
MACHINES TO MONITOR HEALTH
One of the frustrating ironies of retirement is that people often find themselves forced to deal with multiple chronic conditions even as their ability to manage those conditions diminishes. Even worse, many people are living with conditions they don’t know about: As people get older, they are more likely to cope with seemingly imperceptible decline, only seeking out medical help when a crisis emerges.
Now the Internet of Things is promising to help retirees—and the family members who are often their primary source of care—stay on top of their health. Machines might keep track of details a retiree might find hard to remember during an appointment, or might not think to be concerned about. An intelligent coffee maker might communicate wirelessly with a smart toothbrush, and together they would learn what time their owners typically wake. Sleep late or wake early, and the gadgets will alert a physician that the retiree has broken with routine. A tricked-out bathroom, meanwhile, will feature a mirror that scans owners’ faces to detect warning signs of cardiovascular disease and risks of heart attack or stroke.
Devices would also monitor physical data that can be a burden for retirees to record and report. A smart toilet, for one, might report to a distant call center its owner’s weight, blood-glucose level and other vitals.
Clothes will also go high-tech. Smart materials and sensors woven into underwear will detect retirees’ activity level and vitals such as heart rate. Eventually, these clothes will have features that will reduce the chance of injury by cushioning the impact should the retiree fall. But before that happens, sensors in the carpet will detect that a retiree’s walk has become a shuffle and alert family or physician.
Robots will put in an appearance here, too, to spare retirees and families the burden of daily worry and traveling to constant doctors’ appointments. Operated by a remote nurse, a robot will roll through the home to check in on retirees, review vitals and even have a chat before returning to sleep mode in a corner.
***
Clearly, the transformative potential of all these technologies is powerful. But let’s pause for a reality check. These innovations bring new questions of their own.
For one, there’s cost. The services the Internet of Things will provide will become so convenient, and so vital to our care and well being, that they will be a significant and necessary cost. Yet most people already aren’t saving enough for retirement. How much more will they need to put aside? And will the added costs increase the already-growing divide between the haves and the have-nots in America?
It also means some institutions will need to rethink how they deal with older Americans. If people can live longer at home, will we need as much senior housing as we do now? And how will health care adapt to the data coming from smart toilets, toothbrushes and toasters? Most doctors and nurses have little time to fully discuss a health condition during a visit, let alone monitor endless streams of data.
On the individual level, what does it mean when people’s homes and even clothes are collecting big data about their most personal behaviors? The privacy issues of big data aren’t confined to older people, of course, but they are among the most vulnerable members of society, so the concerns are especially pressing.
Finally, it’s vital to remember that technology alone won’t solve our problems. However powerful our gadgets and appliances become, they will never be able to entirely replace the human touch, or completely remove the normal pains and frustrations of getting older.
And they won’t be able to deliver their fullest benefits unless we have a compelling vision of what we want retirement to be. Even now, expectations and the very context of how we live are changing so quickly that it’s tough for many retirees to know what they’re supposed to do during this next stage of life. Unlike previous generations that only had to plan for a few years of life after work, baby boomers and those that follow must anticipate decades.
The ultimate retirement plan for individuals and society is to imagine an older age that is more than simply living longer: a new, exciting period of life that is about living better.

Culled from The Wall Street Journal

New Rules Could Help Millions Save for Retirement - By Janna Herron

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States may soon be able to automatically enroll workers into state-sponsored IRAs if their employers don’t offer retirement plans, thanks to a new move by the Obama Administration that circumvents Congress.

The Labor Department on Monday proposed a safe harbor from federal pension law so states can offer workers only an opt-out option—rather than an opt-in one—for these retirement plans. The proposal would also allow employers to make automatic deductions from employee paychecks to go into the state plans.

The goal is to get as many of the 68 million workers who lack access to employer retirement plans to start saving. Less than 10 percent of these workers have set up an IRA on their own, and research has shown that participation in employer 401(k) plans with automatic enrollment is 10 percentage points higher than those without.

So far, Illinois, Oregon, Washington and California have already passed legislation to create payroll-based retirement savings vehicles, while 19 other states are considering it.

“Overall, it’s a great opportunity for states to promote saving for retirement,” says John Crosby, a certified financial planner and head of the government relations committee for the Financial Planners Association in New Jersey. “Hopefully, what will happen as a byproduct is that employees are going to realize the benefit and put more money aside.”

Crosby has been working with state legislators and business groups on the state’s plan called New Jersey Secure Choice Retirement Saving Program. Under the plan, employees without workplace retirement savings plans will automatically have 3 percent of their salary deducted into the retirement plan. They can opt out if they want.

Crosby says New Jersey, along with most states considering similar plans, will outsource the management of the funds to an investment company such as Vanguard or Fidelity to select assets for the greatest return. Workers will still have to abide by IRA rules that limit contributions to $5,500 a year.

“But if you put away $5,000 every year for 40 years at 7 percent, that’s almost a million dollars,” Crosby notes.

The move by the Labor Department comes less than two weeks after the federal government introduced myRA, a basic retirement savings plan similar to a Roth IRA.

President Obama has recommended automatic IRA enrollment for employees without a workplace retirement savings plan in every budget since taking office, according to a blog post from Labor Secretary Tom Perez and Jeffrey Zients, director of the National Economic Council.

“But Congress has failed to act on this proposal,” they wrote.

Culled from The Fiscal Times

7 Ways to Maximize Your Retirement Savings When You Leave the Workforce -By Donna Fuscaldo

Retirement isn’t the end of the line anymore and can easily last for twenty years or more. If you are like millions of people, you probably didn’t save enough for this phase of your life. But that doesn't mean you're in a hopeless situation. There are a host of ways to maximize your savings even if you are facing a significant shortfall.

Curb Your Expenses

Income doesn’t flow as freely in retirement, so being mindful of your expenses becomes essential if you want to maximize the amount you save. Depending on how much you want to put away for the years to come you could downsize your home or your lifestyle or curb the little expenses that quickly add up. Either way the idea is to free up more money to save for future costs.

Delay Taking Social Security Until 70

A surefire way to boost your savings is to get more each month from Social Security, yet far too many people take it as soon as possible. Waiting has a lot of benefits, mainly for your bottom line. If you were born in 1943 or later and delay collecting Social Security benefits beyond your retirement age, you’ll see an 8% annual increase each year until age 70. The longer you wait, the more you can earn and thus save.

Cut Income Taxes

No one thinks of saving money when it comes to income taxes but in retirement you can even find some savings there. When you retire your income declines which automatically means lower taxes. Not to mention there are deductions that weren’t available to you when you were working that can save you more money. To lower their tax income further, retirees should curb their expenses, so they draw down less from their retirement accounts.

Get A Part-time Job

The ideal way to increase savings is by working. Retirees can get a part-time job and save all of their earnings. Having a part-time job boost savings, but it also gives retirees a purpose. Retirees that started collecting social security benefits need to be careful they don’t run afoul of IRS rules. If they earn more than $14,160, the benefit is reduced by $1 for every $2 above that limit. People who are in full retirement won’t see their earnings impacted at all.

Consider Using A Rewards Card

When it comes to credit cards, you want one that rewards you for the purchases you are going to make—that is where rewards credit cards come in. For retirees who like to travel getting a travel reward card can reduce the amount of money they spend on airfare and hotels, freeing more up for savings. If you spend on specific things each month then a cash back, the credit card that gives you a percentage back on everyday purchases may be right for you. Keep in mind that the only way a rewards credit card will boost your savings is if you pay it off each month and don’t spend unnecessarily just to get the extra rewards points.

Be More Aggressive With Your Investments

While this strategy is not for everyone, investors can increase their return and thus their savings by being more aggressive in their investments. The knee-jerk reaction when someone enters into retirement is to become conservative, moving most of their money into bonds and stable large-cap stocks. Doing that was the norm in the past but because retirement often lasts longer than in the past you have to be less conservative in the early years of retirement. That doesn’t mean throwing all your money into high-flying stocks or risky investments, but it does mean increasing your risk tolerance somewhat while staying diversified.

Be Mindful of Bank Fees

Any easy way to curb your expenses and boost your savings is to be mindful of the fees you pay for banking with a particular financial institution. That’s because banks can charge a range of fees such as a fee to maintain a checking account or a fee for using an ATM outside the bank’s network or for overdraft protection. These fees may be nominal, but they can quickly add up. Take ATM fees for one example. Go to a non-bank cash machine and you can get hit with a $3.00 just for withdrawing money. These days there are a lot of banks and financial institutions that have low costs or are willing to wave fees. If your bank doesn't help out, it may be time to find another one so more money can go to your savings.

The Bottom Line

In a perfect world, everyone would enter retirement with enough money saved to live out their golden years but the harsh reality is many people don’t have much saved at all. If you fall into the latter category, it doesn’t mean you will end up desolate. From getting a part-time job to getting a little more aggressive with your investments, there are a ton of ways to maximize your savings when you are already in retirement

Culled from Investopeadia

Survey: Americans dreaming of a no-credit Christmas -By Marcie Geffner

When it comes to holiday spending, cash will be king this year, according to the latest Bankrate Money Pulse survey.

Seven in 10 Americans say they will use either cash (39%) or a debit card (31%) for most of their holiday purchases. Just 22% say they will put the bulk of their holiday spending on credit cards.
Deciding how to pay for holiday purchases can have a big impact on consumers' bottom line. That's because shoppers this year will spend an average of $805.65 on gifts, decorations, food and other holiday-related purchases, according to a survey for the National Retail Federation, a trade group in Washington, D.C.
"Paying with cash or debit means people definitely have changed their priorities. They're going to buy what they can afford and no more. That's very good," says Ronit Rogoszinski, wealth advisor at Arch Financial Group on New York's Long Island.

Wealthy more likely to use credit

Income and age appear to be factors in the decision to use cash over plastic, the survey found.
Americans with household incomes of less than $30,000 were most likely to say they will use cash for most purchases (53%), while 21% of those with household incomes greater than $75,000 say cash will be a first option. Indeed, high earners were the most likely wage demographic to indicate they will use credit cards for most of their holiday purchases.
That's not the case for millennials. Just 14% say credit cards will be their No. 1 choice. This reflects something an earlier Bankrate survey found: 18- to 29-year-olds just don't like credit cards.
So how will young adults pay for their holiday purchases? Nearly half of millennials (48%) say they will use a debit card the majority of the time.

Debit vs. credit

That choice can have both positive and negative consequences.
Debit cards are "great for budgetary control," says nationally recognized credit expert John Ulzheimer, but they don't offer as much protection for consumers as credit cards.
Federal law limits consumer liability for credit card fraud to $50, and the 4 major credit card companies -- Visa, MasterCard, American Express and Discover -- lower that risk to 0 liability.
That means you'll almost never lose money if your credit card is used in a fraudulent manner.
Debit cards don't have those same protections. Debit card holders are liable for $50 if they report fraud within 2 days and up to $500 if they report within 60 days. Any loss will probably be returned, but not immediately, leaving consumers to contend with less money in their bank accounts in the meantime.
"It's a lot safer to use a credit card," says Ulzheimer, who formerly worked at the credit bureaus FICO and Equifax. "Although the counter-argument is that you can also get into a lot more debt, which is absolutely true."
Retail store-branded credit cards offer the same trade-off. They also have higher interest rates and lower credit limits, which can hurt a consumer's credit utilization ratio and, in turn, their credit score.
"Buying $1,000 of holiday presents on a retail card means something very different from buying $1,000 on a credit card with a $30,000 limit. In one case, it's almost immaterial. In the other, it could be very problematic," Ulzheimer says.

Smartphone use not yet catching on

Of course, cash, debit cards and credit cards aren't the only ways to make purchases. The Bankrate survey also asked consumers about spending via mobile payments (commonly referred to as mobile wallets) and by check.
The survey found that spending by check is a dying payment form, with just 3% of Americans indicating that's the dominant method they will use this holiday season.
As for mobile payment services like Apple Pay, Android Pay and Samsung Pay, consumers have yet to warm to this technology.
The Bankrate survey found that 84% of smartphone users do not plan to use a mobile wallet app to make an in-store purchase this holiday season.
Millennials are the most likely age group to use a smartphone to pay, with 19% indicating they will use a mobile payment service in store over the holidays. Americans 65 years and older are the least likely age demographic to make a mobile payment (8%).
Jason Oxman, CEO of the Electronic Transactions Association, a Washington, D.C., trade group that represents electronic payment companies, says smartphones eventually will replace plastic cards.
"Using your phone to pay makes a lot of sense," Oxman says.
Security is a concern among shoppers who don't plan to make a mobile wallet purchase. The Bankrate survey found that 36% thought the platforms weren't secure enough, even though fraud is more likely to occur with a swipe card that has a magnetic, or "mag," strip on it.

One other way to spend

Cash is a great option for managing "budgetary control," Ulzheimer says.
The downside, according to Oxman, is that cash can be lost or stolen, and there's no replacement plan for paper money. Cards also can be helpful if a purchase needs to be returned, exchanged, is defective or gets broken.
Another idea Ulzheimer likes is to shop with gift cards accumulated during the year or earned through a credit card rewards program.
"It's a fantastic thing to wake up after the holiday season and get your credit card bills," he says, "and there's nothing on them."

Methodology: Bankrate's Money Pulse survey was conducted Nov. 5-8 by Princeton Survey Research Associates International with a nationally representative sample of 1,000 adults living in the continental U.S. Telephone interviews were conducted in English and Spanish by landline (500) and cellphone (500, including 276 without a landline phone).

Statistical results are weighted to correct known demographic discrepancies. The margin of sampling error is plus or minus 3.8 percentage points for the complete set of data.

Culled from Bankrate.com

7 Ways Millennials Are Getting Retirement Saving Wrong - By Beth Braverman

The transition into financial adulthood hasn’t been easy for millennials. They graduated with student loans into a terrible job market. So, it’s no wonder that retirement took a back burner for many of them while they were underemployed and living in their parents’ basements.

Half of millennials don’t have a 401(k) and only three in ten are actively planning for retirement, according to a recent study. At the same time, a whopping 60 percent of millennials believe Social Security—a key retirement component—will go bankrupt before they retire, another study found.
As the employment picture brightens, millennials have a second chance to bolster their finances, including putting together a basic plan to meet their retirement goals. Here are seven common mistakes that millennials are making while planning for the future.
They don’t have a rainy day fund.
An emergency fund doesn’t seem like part of retirement planning. But having one will keep you from dipping into your retirement funds to cover an unexpected event like a car breakdown or big medical bill.
Only one in five millennials have at least five months’ worth of expenses saved up, according to a recent Bankrate survey, even though the rule of thumb is six. “I know it seems ridiculous to have money sitting around in the bank earning nothing,” says Lynne Ballou, a managing partner with Ballou Plum Wealth Advisors “But an emergency fund is your best friend.”
It also helps you avoid costly penalties that come with early retirement withdrawals and saves you from losing years of earned interest. Think about it: a $5,000 withdrawal that would have earned 5 percent equals a loss of $35,200 after 40 years, or when you’re closing in on retirement. That’s not chump change.

They’re underestimating their costs.
Seven in 10 millennials think they’ll spend less than $36,000 a year in retirement, or 30 percent less than what average retirees are spending now ($46,757), according to a recent survey by Generational Kinetics. That average will increase considerably with inflation over the next thirty years.
“Millennials are unrealistic about retirement,” says Wayne Copelin, founder and president of Copelin Financial Advisors in Sugar Land, Texas. “They’ll say, ‘No, I can live on less than that.’”
They’re not saving enough.
At a minimum, millennials should be saving enough in their 401(k)s to get the full employer match if one is offered, but two in five are leaving some or all of this extra benefit on the table, according to a July report by T. Rowe Price. That’s free money and a 100 percent return on investment.
Overall, millennials should be aiming to set aside at least 10 percent to 15 percent of their salary for retirement, instead of the current 6 percent median for this group.
Consider this: A 23-year-old who saves 10 percent per year can retire comfortably at 70, or five years earlier than those saving only 6 percent. Saving 15 percent would bring the retirement age down to 65, according to a recent analysis by NerdWallet.
In 2015 and 2016, millennials can save up to $18,000 in a 401(k) account.

They’re missing out on an opportunity to invest in a Roth.
Unlike a 401(k) or a traditional IRA, a Roth IRA or Roth 401(k) allows after-tax savings that can be withdrawn tax-free in retirement. Those are great vehicles for young savers who are likely in a lower tax bracket than they will be in retirement.
“The beauty of being younger is that generally your income won’t disqualify you from any retirement savings tool,” says Craig LeMoine, a professor of financial planning at The American College in Bryn Mawr, Pa.
Roth accounts also offer some tax flexibility for withdrawals when paired with more traditional retirement accounts. For example, if withdrawing from a traditional IRA or 401(k) would push you into higher income bracket, then you could withdraw the money from a Roth account instead.
This year, millennials can put a total of $5,500 in a Roth IRA, a traditional IRA or a combination of the two.
Their investment mix is too conservative.
Perhaps because they witnessed the carnage in the stock market during the financial crisis of 2008, millennials are risk-averse investors, to the detriment of their retirement savings.While 85 percent of millennials are saving for retirement, only a quarter of them own stocks, a Bankrate survey this spring found.
“Staying out of stocks is a mistake,” says Joshua DeJohn a financial advisor with Waterstone Financial Services in Pittsford, N.Y. “You need to have long-term exposure to equities in order to grow your assets.” That’s because stocks offer bigger returns over time, so the growth in your savings can outpace inflation.

Use an online asset allocation calculator to determine an appropriate blend of stocks and bonds for your risk tolerance, or select a target-date fund that will automatically rebalance investments to become less risky as you approach retirement.
They’re putting too much money toward their kids’ education.
Since many millennials are still paying off student loans, they know first-hand the burden that college debt can be in the early years of adulthood. To shield their children from this strain, millennials are increasingly over-investing in their children’s 529 college accounts at the expense of their own retirement.
Millennial parents want to cover on average three-quarters of their children’s college costs, and half want to pay the entire bill, according to
a Fidelity report in September.
Fund your retirement first, because you can’t borrow to pay for your golden years. Then help your children select an affordable college and a major that provides a decent return on investment to pay back any student loans.

They’re betting on an inheritance.
Some millennials may be too optimistic about a potential inheritance. One in ten millennials expect to be gifted their retirement, according to a September study from Insured Retirement Institute and the Center for Generational Kinetics. But a quarter of their Baby Boomers parents believe it’s better to spend all your money and let the next generation create its own wealth, according to an HSBC report released last year.
Even Boomers who want to leave money to their millennial kids may have trouble doing so, given their own retirement planning shortfalls. “

“Boomers are spending more money because they’re living longer and they’re healthier,” says Lauren Locker, head of Locker Financial Services in Little Falls, N.J. “They’re still trekking around and traveling in their 80s. I’m not sure there will be anything left for the millennials.”

Culled  from The Fiscal Times