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Should I Use $165K in Child Support to Pay My Kids’ Loans?

by Author29/11/202307/08/2023

Dear Penny,

I will be getting nearly $165,000 in child support arrests from my former husband. I have two kids in college. (Dad doesn’t contribute.)

We’ve taken out private student loans to pay for their college tuition. Should I pay toward the loans, or should I invest in something yielding a higher interest rate than their loan interest? I am currently paying all the interest, so as not to compound their loan amounts. I do intend to use part of a yearly bonus to pay off some of the loans as well.

-K.

Dear K.,

Sure, it’s possible to get returns that are higher than the interest you’re paying. In an average year, an S&P 500 index fund produces returns of about 10%, which is probably a lot more than the interest rates on your loans. Of course, you could also lose money, as we’re all painfully aware of in the abysmal stock market year of 2022.

Meanwhile, paying down your kids’ student loans presents a guaranteed return in terms of the money you’ll save on interest. But the biggest rewards aren’t quantifiable.

Think about the enormous burden you’ll be lifting off your kids’ shoulders if they can start their careers owed a combined $165,000 less. Think of how much less stressful living on an entry-level paycheck will be. Think of the dreams they won’t have to delay because you’ve made their debt more manageable.

But this isn’t just about your children. Since it sounds like your name is on

Is Taking Social Security at 62 a Huge Mistake?

by Author07/11/202307/08/2023

When your 62nd birthday approaches, you’ll have a big decision to make: Should you take Social Security at 62 and accept lower benefits? Or should you delay Social Security to get a higher benefit amount?

The answer to whether taking Social Security at 62 is the right move for you depends on several factors: your life expectancy, whether you’re retiring early and your overall financial situation. Here are some things to consider in your retirement planning.

How Claiming Social Security Early Works

If you’re claiming Social Security based on your own record or you’re taking spousal benefits, you can start benefits as early as age 62. If you’re a surviving spouse, you can begin receiving benefits at 60. However, by taking benefits earlier, you’ll face a lifetime benefit reduction.

Your Social Security benefit is based on your primary insurance amount. That’s the amount you’d receive if you started your benefits at full retirement age. If you were born in 1960 or later, your full retirement age is 67. Full retirement age ranges from age 66 for those born in 1943 to age 66 and 10 months if you were born in 1959.

Any time you take Social Security before your full retirement age, you’ll have to accept a reduced benefit. Your benefit will be 6.66% lower for each year of early benefits. If you start them at that the earliest eligible age of 62, your benefits will be 30% lower than they’ll be if you wait until you reach normal

Invest in I Bonds Now and Earn 9.62% Risk-Free for 6 Months

by Author31/10/202307/08/2023

Freaking out over inflation?

US government-backed Series I savings bonds — also known as inflation bonds or I bonds — are a nearly risk-free investment that’s rocking a record 9.62% interest rate.

That rate is set to drop to roughly 6.5% on Nov. 1, which means there’s only a short time to lock in that 9.62% rate for the next six months.

The interest rate on I bonds changes every six months, on Nov. 1 and again May 1.

But when you buy an I bond, you lock in the current interest rate for six months from your date of purchase.

So, anyone who buys I bonds by Friday, Oct. 28 will earn 9.62% on their deposit until April 28, 2023. After that, the rate announced Nov. 1 (estimated at 6.5%) will go into effect, and so on.

According to the Treasury Department, you must complete your purchase and receive a confirmation email by 11:59 pm October 28 to get the 9.62% rate.

That’s why so many people are pouring money into I bonds this week — they’re trying to secure six more months of 9.62% interest on their savings.

But before you rush to buy I bonds, there are a few things you need to know.

What Are I Bonds?

Series I bonds are the only inflation-protected security sold by the US Treasury Department.

Since I bonds are backed by the full faith and credit of the US government, your risk of losing money is basically zero. (Historically,