I’ve been thinking about my parents a lot lately, since they are approaching retirement age. My husband’s dad retired last year, and his mom expects to retire this year. So I’ve been contemplating their situations. I also had a brief email conversation with Patrick over at Cash Money Life in which he wondered how many people are considering putting off retirement because of the current economic issues. So, really, it is no surprise that over this past weekend I’ve received a few emails to this effect:
I’m a couple of years away from retirement. Should I put it off for a …read more

We’ll take a little break from all bailout all the time to answer a reader question:
Three years ago my husband and I were talked into purchasing permanent life insurance policies as a means to eventually supplement our retirement.  This was in addition to my husband’s 401k but at the time was my only contribution to retirement of any kind.  We are both 33 now and my question is was this a really bad decision?  What is your opinion of using your cash surrender value for retirement? Should we get out while we can and put the money in our IRA …read more

I received this interesting question from a reader last night:
I’ve been hearing a lot about inflation lately. But now I’ve started to hear about deflation. What is deflation?
An excellent question! At its most basic, deflation is a fall in prices. It is the opposite of inflation. In the sense of this economy, deflation is most connected with the stock market and with housing prices — both of which are falling. (Consumer prices haven’t quite reached a state of deflation, so it’s not very helpful to household budgets.)
One of the biggest worries right now is that the economy will enter a …read more

I love me some questions from readers, and I thought this one, in light of my recent adventures in banking, was a great one:
Is overdraft protection worth it?
One of the things I love about personal finances is that they’re, well, so personal. Really, it depends on your habits. First, though, a little background on overdraft protection.
What is overdraft protection?
Overdraft protection is a loan. It is a line of credit that you are allowed (usually between $1,000 and $10,000, depending on what you are approved for) to use when your account goes into the red. The idea is to help you …read more

As the new school year approaches, many people turn their thoughts toward school costs. And this includes college costs.
Here is a question I received from a reader about college costs:
My oldest daughter will be starting college in three years. What can we do now to prepare for saving money on college costs?
First of all, kudos for thinking ahead. Like many other life expenses, college costs are something that you need to plan and prepare for. Here are three things you can do to prepare for saving money on college costs:

Research scholarships, and consider steps that can be taken in order …read more

I got this great question recently from a reader:
I really don’t use my health insurance that much, beyond preventative care visits and a couple of regular prescriptions. What is it that is causing my health insurance premiums to go up?
This is a common question that many people are asking right now. After all, the cost of health care has become expensive — prohibitively so in some cases. Indeed, I just received notice that my health insurance premium is being increased by $70 per month, starting in July.
But why is this happening? Lucky for me (and my questioning readers) there are …read more

Today I am pleased to answer a reader question about investing. Here it is:
I’ve heard a lot lately about the advisability of investing in index funds. What is an index fund?
If you’ve been reading advice about investing lately, you might have the same question. After all, many financial planning experts and investing analysts recommend index funds for long-term investing, as well as a good choice when it comes to riding out a down stock market.
An index fund is a mutual fund that follows a specific index. The S&P 500 Index is one of the more popular for this purpose. You …read more

Here at Yielding Wealth, there has been many posts about the tax rebate, and the economy and a possible recession. And, of course, I’ve got many questions along these lines:
There is a lot of debate about whether we are in a recession, and how we can prevent a recession. I want to know: What IS a recession?
This is an excellent question! Many people are wondering this.
The definition of a recession is basically two consecutive quarters of negative GDP growth.
Of course, there is debate over that simple definition as well.
At the National Bureau of Economic Research, a committee defines a recession …read more

Jennifer Hoffman over at My Organized Biz is once again prodding me. This time with a question about the 401(k). When it comes to retirement plans, even in times of economic downturn, the main advice it “don’t panic.”
Many people, in times like this, violate the main rule of investing: “buy low, sell high.” Instead, they freak out and sell low. A measured and calm approach to your 401(k) — and other retirement plans — is what is needed.
First, look at your allocation and compare it to your goals. You may need to do some shifting around, but in general if …read more

Jean, over at Small Business Boomers and of The Thriving Writer fame, submitted this question for Ask the Piggy Bank:
I’m looking at buying an annuity and I’m wondering what the difference is between a variable annuity and a fixed one.
This is an excellent question. Annuities are used as retirement income. Basically, they are savings investments that offer an annual rate of return.  They are tax-deferred and pay a death benefit should you die before collecting. Like other retirement investment accounts, you can’t access them before age 59 1/2 without penalty.
Fixed annuity
When you add a fixed annuity to your retirement …read more