Latest news with #ChristopherStroup
Yahoo
2 days ago
- Business
- Yahoo
8 Common Mistakes Retirees Make With Their Social Security Checks
Beginning to take Social Security benefits can be an overwhelming process for retirees since there are lots of rules and regulations, often tucked into the fine print, so to speak. It's easy to make choices, or fail to, that can have a negative impact on your Social Security checks in big and small ways. Find Out: Read Next: Here are some common mistakes retirees make with their Social Security checks so you can hopefully avoid them. Many retirees decide to start collecting Social Security benefits as soon as they reach the minimum age of 62, often without fully understanding the long-term implications of beginning benefits. 'Claiming benefits early can lead to permanently reduced monthly payments,' said Christopher Stroup, CFP and owner of Silicon Beach Financial. 'Claiming your benefits at age 62 can result in decreased benefits upwards of 25% to 30% versus waiting until full retirement age.' Moreover, just because you postponed taking it at 62, for example, doesn't mean you have to keep waiting until you're 67. You can take it at any time in between and receive the prorated amount. Learn More: A related aspect of this, according to Patrick Ray, senior vice president at Wealth Enhancement Group, is not understanding the timing between when you file and when you first start receiving your checks. The Social Security Administration gives people roughly a three-month window from application to first receiving your checks. Ray explained that he works with many retirees that leave their work payroll upon retirement, which means they're no longer getting a paycheck, and often misinterpret the timing of when they'll get their first checks. 'So, if someone decides to retire in June, they probably should start the process in April as it turns out because that does not happen overnight.' Some retirees overlook the potential benefits that could be available through spousal claims, Stroup said. 'A spouse can claim benefits based on their own earnings record or up to 50% of the other spouse's benefit if it's higher. For couples where one spouse has significantly higher earnings, failing to strategize around spousal benefits can result in missed opportunities,' he explained. A big common mistake retirees make is not understanding that Social Security benefits can be taxable, depending on a retiree's total income. Stroup said, 'Many retirees forget to account for how their Social Security income will be taxed, which can influence their retirement income strategy.' Ray agreed, saying, 'People do not know that their Social Security [tax] lands anywhere between 15% and 85% of their benefit depending on what their household adjusted gross income is. So, it makes for an interesting discussion when someone finds out that their tax responsibility is short because they didn't withhold enough or they don't withhold anything,' he said. This is why it's critical to speak to a tax or financial advisor before you even take Social Security, Ray said. Another mistake is the lack of understanding how Social Security benefits impact their other retirement assets, Ray said. 'If the plan was to reduce what they take out of their retirement monies to otherwise coordinate with their need for monthly cashflow, a lot of people use Social Security as an added buffer of additional monies that they've all of a sudden come into when, in fact, it makes a ton of sense to consider reducing what they remove from their retirement assets.' Most of these mistakes, Ray said, can be chalked up to not planning appropriately and far enough in advance. 'The moral of the story is plan, plan, plan. You can't afford enough time to plan appropriately for what's best for you and your family. That's the takeaway.' He shared that 74% of people over the age of 50 do not have a written financial plan. Another common mistake Ray sees in his clients is people thinking they'll have more money to spend in retirement than they did when they worked, due to Social Security. 'It just goes back to planning and projecting and budgeting all aspects of what retirement looks like so that you're prepared to transition accordingly. Running financial projections is a big deal.' Many people don't consider how long they will live and how many years in retirement they truly need to fund, Ray said. He considers this another aspect of poor planning. 'If the males in your family have all died before 75 years old, it's reasonable to assume that you might not make it past 75 years old. But that doesn't mean that you shouldn't run a financial projection to see what it would look like in case you lived 85 years old or 90 years old and commensurate with the other thought process.' Not doing so means you risk running out of money because you live too long. Most of these mistakes can be avoided with thoughtful planning and the help of a financial advisor. More From GOBankingRates 3 Luxury SUVs That Will Have Massive Price Drops in Summer 2025 7 Things You'll Be Happy You Downsized in Retirement 4 Affordable Car Brands You Won't Regret Buying in 2025 This article originally appeared on 8 Common Mistakes Retirees Make With Their Social Security Checks Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CBS News
26-05-2025
- Business
- CBS News
How to escape the payday loan debt cycle, according to experts
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. There are strategic steps to follow to escape a payday loan debt cycle. RabiaPayday loans can trap millions of people in expensive debt cycles, even as economic conditions improve. With many Americans living paycheck to paycheck, these high-cost loans offer quick cash when emergencies strike. But interest rates can exceed be exorbitant and fees make full repayment nearly impossible. Unfortunately, the pattern works by design: borrowers can't repay in full, so they roll over loans or take new ones to cover old debt. This isn't necessarily personal failure — it's a structural problem built into the payday lending system. If you're caught in this situation, breaking free requires strategic action and expert guidance. Below, financial experts share actionable ways to pay off your pay day loan debt — along with the benefits and drawbacks of each approach. Start exploring your debt relief options here. How to escape the payday loan debt cycle, according to experts Christopher L. Stroup, a certified financial planner and founder of Silicon Beach Financial, recommends starting with negotiation. "Many borrowers don't realize that some payday lenders will agree to a structured repayment plan if you explain your financial hardship," he says. "While there's no guarantee they'll say yes, it's a low-risk move that can stop the debt from snowballing." Beyond negotiating with your lender, experts suggest taking these steps: Work with a professional who deals with debt "[Consult] a professional [at] a credit counseling agency or debt solutions company," Howard Dvorkin, chairman of says. "They've seen the worst payday loan emergencies you could imagine, so they know how to deal with them." A qualified financial counselor can help you come up with money in your budget to escape the debt cycle. Andi Wrenn, founder of Coaching Capability and board member of the Association for Financial Counseling, Planning Education (AFCPE), regularly helps clients find hundreds of dollars per month in their spending without giving up enjoyable activities. She points to one client who went from overspending to paying all debts and saving money within three months of working together. While working with a professional costs money, Wrenn says clients usually find more savings than they pay in fees. Get started with a professional debt relief company today. Stop using high-interest loans Cutting access to expensive borrowing can help you get out of a payday loan debt cycle. Wrenn suggests trying the following alternatives: Ask your bank about a personal loan Request a reduced interest rate on existing credit cards Transfer high-interest debt to lower-rate cards Ask family members for help Sell unused items around your house These strategies can make a positive impact quickly. For example, Wrenn points to one couple who raised $750 in one month by selling items online and hosting a garage sale. The downside to these approaches varies. Personal loans require good credit, family loans can strain relationships and selling belongings takes time and effort. But even modest progress helps break your dependence on payday lenders. Build a small emergency buffer with a side gig "Building a small emergency buffer — just $250 to start — can prevent future reliance on payday lenders," Stroup emphasizes. The fastest way to build this buffer is through side gigs. Wrenn recommends focusing on services with minimal start-up costs. Dog walking, pet sitting, babysitting and tutoring are some worth considering. The main drawback of this pursuit is time, but you can capitalize on existing skills and work on your schedule. Explore debt consolidation options Debt consolidation combines several debts into one monthly payment at a much lower interest rate. Stroup recalls working with clients who refinanced a few payday loans into a single personal loan through a credit union, cutting rates from over 300% down to 11% to 18%. Qualifying for debt consolidation can be challenging, though. You may need good credit, a co-signer or collateral. Another concern is choosing the right debt consolidation organization. Wrenn warns that many charge fees to manage your debt, but sometimes make late payments. This can further hurt your already struggling credit score. Enroll in a debt management plan (DMP) A debt management plan (DMP) through a nonprofit counseling agency can be a lifeline when payday loans get overwhelming. According to Stroup, it consolidates unsecured debts into one monthly bill while reducing interest rates and late fees. DMPs aren't without consequences, however. Creditors close accounts you include in the plan, and you can't open new credit during the three to five-year timeline. This temporarily lowers your credit score. Dvorkin says this shouldn't be your primary concern, though. At this stage, "worry more about debt and less about credit score," he advises. Because without debt help, it's likely your score will plummet further. The bottom line Overcoming payday loan debt is within reach, but you need to change the spending habits that created the problem in the first place. Wrenn encourages looking at your wants versus needs and coming up with a plan for how to spend, save and eventually invest. It may also help to discuss debt relief options with a financial counselor, who can work with you to create a sustainable plan. Get started with a debt relief plan now.
Yahoo
25-05-2025
- Business
- Yahoo
5 Ways Trump's Suggested Income Tax Elimination Could Hurt the Middle Class
Income taxes may seem like one of those unchangeable facts of life that you just have to deal with as long as you work. However, one of President Trump's tax reform proposals is to consider doing away with income tax altogether for people who make less than $150,000 per year. Trump has also proposed eliminating taxes on overtime pay, Social Security Benefits and tips. Find Out: Learn More: While the initial result might seem positive — keeping more of your earnings — Christopher Stroup, CFP and president of Silicon Beach Financial, warned that there could be financial downsides that might actually hurt middle-class wallets down the line. While it's unclear if and when any of these proposals might move beyond theory, Stroup explained what might come of eliminating income taxes for this segment of American workers. If income tax disappears, expect higher sales taxes, property taxes and other fees to make up the difference, Stroup said. 'Middle-class households, who spend a greater percentage of their income on essentials, would bear the brunt.' A 10% national sales tax, for example, would make everyday necessities significantly more expensive while benefiting wealthier Americans with lower tax burdens. Be Aware: Income tax plays a major role in funding Social Security and Medicare. Without it, where does that money come from? Stroup explained that 'a tax overhaul could lead to benefit cuts, delayed eligibility or even privatization.' Middle-class workers and retirees who rely on these programs the most could face financial instability just as they need guaranteed income the most. If there's no income tax on a certain level of earnings, then some entrepreneurs and small-business owners who benefit from income tax deductions on expenses like health insurance, retirement contributions and home offices would not have these deductions. 'Without an income tax, these deductions disappear,' Stroup said. 'This could increase net tax burdens and make it harder for self-employed professionals to reinvest in their businesses while larger corporations find new loopholes.' Most states rely on federal funding for infrastructure, education and public safety — much of which comes from income taxes, Stroup explained. 'If those funds dry up, states would likely increase property and local taxes, disproportionately affecting middle-class homeowners. The result? Higher costs without the benefits of improved public services.' Eliminating income tax primarily benefits high earners who derive most of their wealth from investments rather than salaries, Stroup said. 'Middle-class professionals who rely on wages would still face taxes in other forms, whether through consumption or payroll taxes.' This shift could exacerbate income inequality, making it harder for working families to build long-term wealth. These are all just speculations at the moment, as no official tax reforms have been passed either by executive order or through an act of Congress. More From GOBankingRates 6 Hybrid Vehicles To Stay Away From in Retirement 7 Luxury SUVs That Will Become Affordable in 2025 This article originally appeared on 5 Ways Trump's Suggested Income Tax Elimination Could Hurt the Middle Class
Business Insider
24-05-2025
- Business
- Business Insider
The very first thing to do if you want to spend less, according to financial planners
Even if you know you need to spend less, it can be hard to know where to start. Learning how to budget can be overwhelming without guidance, and not going in with a strong plan can lead to frustration and difficulty sticking to your goals. Business Insider asked CFP® professionals what their first response would be if their clients asked them how to spend less. Their responses fell into three major groups, all focused on understanding how you can make your budget work for your savings goals. Understand your motivation to spend less When asked the first thing they'd say if a client wanted to know how to cut spending, multiple financial planners said they would first want to dive into the client's motivations. Understanding your motivations will not only keep you dedicated to spending less, but it will also help you determine what cost-cutting steps you should take going forward. "I think understanding the why is really important, right?" says Christopher Stroup, CFP® professional, founder and financial advisor at Silicon Beach Financial. Stroup says the cause could be credit card debt, a dwindling bank balance, or just wanting to be more proactive about saving. "Ask what's behind their reason for that, so we can better understand what to do next." Once you have a firm grasp of why you want to save, you can start diving into your current spending habits. See if your current spending matches your priorities Before you can start cutting down on expenses, you need to know what expenses there are to cut. "The first thing I tell them is to understand what they're spending now; to really get clear on, OK, what are you currently doing? Let's make a list," says Angela Moore, CFP® professional, financial guide at Fruitful. She says that doing this can help you spot easy places you can save, whether by cutting subscriptions you aren't using or negotiating bills down. Valerie Rivera, CFP® professional, founder of First Gen Wealth, says it's important to review your spending and make sure it's aligned with your priorities. "So I ask them, do you feel like, now that you've reviewed your spending, that your money is going to where you prioritize? And a lot of times, what I hear is, 'Oh my goodness, no, I had no idea that I was spending this much on takeout.'" If you're struggling to know where to start on sorting your spending, a budgeting app can help. Apps like Rocket Money, Monarch Money, or the YNAB App can auto-sort your expenses and categorize them for you. You'll probably have to go through and manually sort your expenses afterward, but budgeting apps give you a place to start if you're overwhelmed. Apps like Rocket Money even offer concierge services, which will do things like cancel subscriptions or negotiate bills for you. These services come with fees, so you'll have to decide whether those fees are worth the money you'll save. You'll also want to consider whether you're willing to pay money for a budgeting app, or if you'll want to use a free one. Free budgeting apps are hard to find, but many apps, including the YNAB App and Monarch Money, offer free trials. If you just need help getting started, you could start a free trial with one of these apps and copy the information into a Microsoft Excel sheet before the trial is done. Choose one or two areas to focus on cutting spending in your budget Once you know what you're spending on, you'll need to actually start cutting spending. Adrianna Adams, CFP® professional, head of financial planning at Domain Money, says that once you know what you're spending on, it's time to choose one or two places to cut spending. "The very first thing is you have to do a deep dive of where your money is going, because you need to pick one or two things to focus on," says Adams. "When clients just try to pare back everything, it's very hard to really make any habitual changes," she adds. Choosing budgeting areas to concentrate your energy on also lets you keep discretionary expenses that are meaningful to you while cutting spending in areas that aren't as important.
CBS News
19-05-2025
- Business
- CBS News
Pros and cons of annuities that experts say to know now
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. An annuity could be a smart addition to your retirement plan, but you'll want to understand the full picture before investing in one. Getty Images The recent economic ups and downs have left many Americans worried about their retirement savings. As they face issues like market uncertainty, persistent inflation and longer lifespans, more retirees and pre-retirees are turning to annuities for financial stability. What exactly are annuities, though? "[They] are financial products designed to help you grow your retirement income and protect you from outliving it," says Craig Hawley, president of Nationwide Annuity at Nationwide Financial. In practice, they involve investing money with an insurance company, which then provides you with regular income payments that can help supplement your retirement income. But while annuities can be a smart way to earn more during retirement, they also come with a few benefits and downsides you should consider before investing. Here's what to know. Learn more about the annuity options available to you now. Pros and cons of annuities that experts say to know now As pensions become rarer and Social Security seems less certain, more people are looking at annuities. "[They] can fill that retirement income gap," notes Christopher L. Stroup, a certified financial planner and founder of Silicon Beach Financial. Below, industry experts share insights to help you decide whether annuities could fit your retirement strategy. Pros of annuities to know now Experts point to a few annuity pros to know today: Guaranteed lifetime income: "Annuities are the only investments that can guarantee income for life," says Hawley. This matters more as people live into their 90s and beyond. "Annuities are the only investments that can guarantee income for life," says Hawley. This matters more as people live into their 90s and beyond. Market volatility protection: Fixed and indexed options protect your money when markets fall. "Many annuities provide some stock market upside or a guaranteed fixed rate while providing buffers on the downside," says Brandon Goldstein, ChFC, a financial planner at Prudential Advisors. Fixed and indexed options protect your money when markets fall. "Many annuities provide some stock market upside or a guaranteed fixed rate while providing buffers on the downside," says Brandon Goldstein, ChFC, a financial planner at Prudential Advisors. Tax-deferred growth: Your money grows tax-free until you take it out. "This allows savings to accumulate," Goldstein notes. "And [you can] recognize gains in retirement when tax brackets might be [lower]." Your money grows tax-free until you take it out. "This allows savings to accumulate," Goldstein notes. "And [you can] recognize gains in retirement when tax brackets might be [lower]." No limits on contributions: Unlike 401(k)s or IRAs, you can contribute large sums to annuities. Stroup says this is "ideal [if you've] maxed out other retirement accounts and need another place to shelter assets." Unlike 401(k)s or IRAs, you can contribute large sums to annuities. Stroup says this is "ideal [if you've] maxed out other retirement accounts and need another place to shelter assets." Customizable options: "You can choose income now or later, fixed or variable payments and even add protections for a spouse or heirs," says Stroup. Find out more about the benefits of investing in annuities today. Cons of annuities to know now Here are a few potential annuity cons experts say to know before buying one: Fees: "Annuities often come with administrative fees, expense risk charges and [costs] for [extra] features," says Hawley. These can reduce your returns over time. "Annuities often come with administrative fees, expense risk charges and [costs] for [extra] features," says Hawley. These can reduce your returns over time. Limited access to your money: "Some annuities limit how much you can withdraw in the initial years, as many are designed for longer-term ownership," Goldstein explains. "Some annuities limit how much you can withdraw in the initial years, as many are designed for longer-term ownership," Goldstein explains. Early withdrawal penalties: Goldstein warns that taking money out before age 59.5 can result in a 10% penalty plus income tax. Goldstein warns that taking money out before age 59.5 can result in a 10% penalty plus income tax. Complex terms: "Annuities aren't set-it-and-forget-it," Stroup points out. "The contracts can be hard to understand, with surrender charges and opaque investment options." "Annuities aren't set-it-and-forget-it," Stroup points out. "The contracts can be hard to understand, with surrender charges and opaque investment options." Inflation risk (for fixed annuities): "Fixed income can lose purchasing power, especially [during] high inflation if the contract doesn't include a cost-of-living adjustment," cautions Stroup. Key considerations before buying an annuity Retirement and savings experts say it may help to keep these tips in mind as you explore annuities: Balance your investments: Avoid putting all your retirement savings into annuities. Keep some money in easily accessible accounts to cover unexpected expenses or emergencies. Avoid putting all your retirement savings into annuities. Keep some money in easily accessible accounts to cover unexpected expenses or emergencies. Research the company's strength: Goldstein emphasizes that the issuing company backs annuities — not the government or the Federal Deposit Insurance Corporation (FDIC). Review ratings from independent agencies to ensure the annuity company is financially solid. Goldstein emphasizes that the issuing company backs annuities — not the government or the Federal Deposit Insurance Corporation (FDIC). Review ratings from independent agencies to ensure the annuity company is financially solid. Make a financial plan first: Figure out your retirement budget. Goldstein recalls a client who, after proper planning, found that an annuity combined with their Social Security gave them confidence they'd have enough monthly income to cover bills. Figure out your retirement budget. Goldstein recalls a client who, after proper planning, found that an annuity combined with their Social Security gave them confidence they'd have enough monthly income to cover bills. Review current economic conditions: Interest rates and inflation outlook impact annuity returns. Higher interest rates generally lead to better annuity payouts. Meanwhile, high inflation can erode the value of fixed payments over time. Ask your advisor how today's economic environment might influence annuity rates The bottom line So, is an annuity worth it? It can offer valuable retirement security for some people, but it's not for everyone. "Be clear about your goals and how they fit into your broader retirement plan," advises Hawley. Some retirees need income before Social Security kicks in, while others prioritize protection against market swings or outliving their savings. Before making decisions, speak with a qualified financial advisor who understands your finances. They can determine if an annuity makes sense and which type might work best. With professional guidance, you'll find the right balance between guaranteed income and flexibility for whatever your future holds.
