Money has a great article out today in which they highlight the fact that recent stock market turmoil is opening up a great opportunity for near-retirees looking for some high yielding dividend companies. Falling stock prices are enough to make anyone a little wary of going into the market but seeing blue chip stocks fall should be welcomed by near-retirees because it allows you to bolster up your portfolio with solid stocks paying hefty dividends, dividends in the 4% range. 4% is a magic number because that’s the rule of thumb many financial planners use when estimating how much of your next egg to draw upon each year.

What’s nice about the 4% dividend is that it’ll be inflation adjusted, because it’s tied to the stock price, which is an advantage over bonds, which are fixed income. But what about the risk of a recession or a bear market? Well, in the case of financial unrest, people tend to go back to the blue chippers as a foundation and so you’ll be nicely positioned to take advantage of the influx of funds to your newly acquired companies.

Still not convinced? Here’s a hard case example:

Ned Davis Research recently crunched the numbers for Money and found that a high-yielding portfolio launched at the worst time in the past 40 years - before the 1973-74 bear market - not only would have kept your income growing at the pace of inflation but would have increased in value eightfold (assuming an initial withdrawal rate of 4.5 percent).

An S&P 500 portfolio, on the other hand, would have been used up by now. Over time, high-paying stocks also generate more income than government bonds. That’s because while bond income is fixed, dividends aren’t.

So, dividend yielding blue chippers… something to think about.

If you give someone a gift of over $12,000 dollars a year, you are required by law to pay the tax on that gift over the gift tax amount. The gift giver is responsible, not the gift recipient, which seems to go contrary with one’s expectations.

What is a gift? A gift is anytime there is a transfer of property from one person to another. Another condition of a gift is where the giver is receiving less than the full value of the property in return, in many cases the giver is receiving nothing. What this also means is that the tax is supposed to be paid even if it’s not considered a gift.

For example, let’s say you sell your car to your son or daughter for $1. The market value of the car is worth $2,000, you’ve effectively given a gift of $1,999 to your son or daughter and if your total gift is over $12,000 that year, you owe a tax.

In addition to the annual limit, there is a lifetime gift limit of $2M and this is including anything in your estate that you may pass on. So, if you’re planning on giving any large gifts this year, remember to do so before December 31st and it’ll count for this year.

When you’re “retired,” you’re generally going to be on a pretty fixed income. You might take some odd jobs here or there to supplement your income and pass the time, you might try out paid volunteerism to put polished skills to work, but in general your income is going to be fixed. For that very reason, you want to keep your debt expenses as low as possible because it’s likely that your variable expenses, things like food, gas, etc., are going to increase as the years go on because of inflation.

So, unless you can truly afford it, looking years down the road, avoid taking on unnecessary debt because it can tap out your fixed income very quickly and force you back to working - something you likely wish to avoid when you’re officially retired.

My Retirement Blog is honored to host this week’s Festival of Frugality as the 95th edition finds its home here for the first time. Without much ado, here is the festival:

Gems of the Week

• Alison presents Under the Weather and Over the Counter, a review of meds and how the generics will often do just fine when you’re not feeling fine.
• Silicon Valley Blogger presents 8 Lessons I Learned From The Cheapest Family In The Nation.
• Very appropriately, Summer presents Make Your Own Cheap Halloween Costumes.
• The Dough Roller presents Stop Frittering Away The Fruits Of Your Frugality.
• Frugal Panda presents 57 Creative Ideas to Save Money As a Pet Owner.
• juicefairy presents Great Kitchen Makeover Tip. Whoops!

Food, Groceries, Couponing

• Brett McKay presents 27 Ways To Save Money On Food.
• King of Debt presents Skip Ragu and Prego, Make Your Own Tomato Sauce.
• Single Ma presents Over 40 Ways to Reduce Your Grocery Bill.
• patti presents Joe’s Lunch.
• Melissa presents Couponing Strategies - “Separate And Save For Sales”
• paidtwice presents Bulk Buying: My Next Steps.
• FrugalTrader presents Saving Strategy: Brown Bag Your Lunch!.
• GP presents Getting Grounded and Green.
• Kris presents Cheap Healthy Pork: Recipes, Methodology, and Tips.
• Brett McKay presents 27 Ways To Save Money On Food.

In The Household

• plonkee presents fake it till you make it.
• Moorea presents Femme Economics: Save on Laundry and Dry Cleaning.
• FIRE Finance presents Live Rent Free and Earn as a Caretaker.
• Stephanie presents Do It Yourself Basket Planter.
• the baglady presents Discovering Cooperative Living in the San Francisco Bay Area.
• juicefairy presents Great Kitchen Makeover Tip.

Everything Else

• JvW presents Emotionally Frugal
• Super Saver presents Exercise for Free.
• glblguy presents Money Saving Monday Tip #12 - Repair Your Own Car
• Logan Flatt, CFA presents How to Get Ahead In America (4th of a 12-Part Series).
• The Happy Rock presents The $0.60 Verizon Cell Phone Battery At Amazon.com.
• Amy Allen Clark presents Day 30: Life’s Great Lessons.
• Matt Wolfe presents Set Up A Website For Your New Business Cheap.
• FMF presents Save Money by Only Using a Cell Phone.
• The Financial Blogger presents Becoming Frugal Through Your Goals.
• Kyle James presents What I Learned About Frugality from Ken Burns, The War.
• R.Pettinger presents Tips for Reducing Electricity and Gas Bills.
• Ken Nubo presents How to get a discount on almost anything.
• The Free Geek presents Broke? Alcoholic? How to Drink on a Dime: 10 Surefire Tips.
• Raymond presents The 3,000 Mile Oil Change Myth - Save Your Money.
• juicefairy presents Great Kitchen Makeover Tip.

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Next week the Festival of Frugality moves to FIRE Finance so submit your entries early and often!

Some banks offer special bank offers for seniors such as reduced costs, increased interest rates, and favorable fee structures that may or may not be better than traditional offers. For example, the most basic “senior account” is a simple checking account that has no monthly maintenance fee. It’s a way for banks to court the funds of seniors while being cognizant of their biggest concern, reducing costs. However, as Smart Money has noticed, it’s often not that much better than typical alternatives. Their prime example is that the senior account at U.S. Bank, Silver Elite Checking, has an interest rate that’s 0.01% better of their regular Free Checking - not that great. The real benefit comes in things like free checks, cheaper fees on deposit boxes, traveler’s checks, and other services you may find yourself using.

While Smart Money reviews a bunch of banks, I thought Bank of America’s Advantage for Seniors seemed like it had the best deal. The benefits include free checks (worth $17 per order), cashier’s checks ( worth $10 each), traveler’s checks (worth $2.50 each), as well as a free standard-size safety deposit box ($44 annually).

Source: Smart Money

Wow… the Carnival of Personal Finance has hit its 120th edition and My Retirement Blog was tapped to celebrate its centennial and a fifth, having a carnival go this long is pretty amazing when you consider so many have come and gone. This one is a bit of a doozy, with a ton of submissions, so please take the time to go through and pick and choose what you read. I’ve briefly scanned most of them (not all I’m afraid), and pulled out a few favorites. The rest I put into general categories that I thought made sense, though I may have mis-categorized a few (sorry in advance!). Enjoy!

My Favorites

• Shadox from Money and Such presents Rent is Not Waste, and says, “I am tired of hearing people saying that renting a house is a waste of money. It’s not. Renting is an investment. In many case, a better investment than renting a house.”
• Silicon Valley Blogger from The Digerati Life presents Watch Prices Go Up: Interesting Facts About Inflation.

• The Financial Blogger from The Financial Blogger presents There Are no Needs for an Emergency Fund. Very contrarian.

• NCN from No Credit Needed presents The Emergency Fund.

Credit & Debt

• Golbguru from Money, Matter, and More Musings presents Sign The Back Of Your Credit Cards - Useless Fraud Prevention Advice?, and says, “Don’t sign your credit cards. It’s useless as a deterrent, as anyone who takes your card then has a sample of your signature which they can not only use on any charge slip, but on your checks as well.”
• Mandy from Frugal Dollar presents The Day I Realized Almost Everyone was in Debt.
• Mr Credit Card presents Guaranteed Credit Card For Bad Credit Folks.

Frugality

• Sarah from Frugal Underground presents Frugal Vacations.
• Four Pillars from Quest For Four Pillars presents I can be frugal too!, and says, “Four Pillars gives an example of where he was frugal which is a departure from his past.”
• Kris from Cheap Healthy Good presents Treating Food-Borne Affluenza: 15 Tips to Curb Your Foodie Leanings.
• Ashley from College of Cash presents href="http://www.collegeofcash.com/living-off-student-loans/">Living Off Student Loans, and says, “Extra money from student loans is not to be spent on play things.”
• Shawna from One Girl’s Quest presents Eating at home really does save a fortune.
• Jason Dean from Smart Money Daily presents Four Easy Ways to Save on College Costs, and says, “One of the most difficult things about starting college isn’t having to do your own laundry–it’s navigating the maze of financial aid, student loans, scholarships, and money in general. Luckily, there are a few things that you may not have considered that can help take some stress away from paying for college.”
• Penny Nickel from Money and Values presents Over-the-counter drugs: generic vs brand-name, and says, “It’s almost always smarter to buy generic rather than brand-name drugs. Are there times when it’s not?”

Investing/Retirement

• Mariette from Boulevard to Retirement presents Balancing Your Life with Your Retirement Vision.
• Pinyo B. from Moolanomy presents Determine Your Retirement Needs In 3 Easy Steps.
• KMC from Advanced Personal Finance presents How to Deal With a 401(k) Plan That Sucks.
• TFB from The Finance Buff presents Cascading Asset Allocation Method.
• Randy from Boulevard to Retirement presents It’s Hard to Eat Your House.
• Brian from Financial Reference presents A Quarter to Remember.
• Art Dinkin from Moment on Money presents Impact of Sub-Prime Loans, and says, “What are sub-prime loans and why are they effecting the stock market? This post examines those issues as well as examining the impact of this crisis.”

Taxes

• Chief Family Officer from Chief Family Officer presents How much should you contribute to a Flexible Spending Account?.
• Mike from TwoWiseAcres presents 5 Tax Fee Ways to Make Money with Real Estate Investing.
• J at IHB and HFF from Home Finance Freedom presents Home Mortgage Tax Deduction Snake Oil: Housing Myths Part 7.

General Personal Finance

• nickel from FiveCentNickel presents Switching to a Bank of America Money Market Account.
• FMF from Free Money Finance presents Ask for More Money When You’re Offered a Job, and says, “Don’t just take a job offer without asking for a better salary.”
• Brett McKay from The Frugal Law Student presents Who
  Takes Care of the Finances in Your Family.
• Sarah from Frugal Underground presents Review: Mighty Bargain Hunter.
• MoneyNing from Personal Finance Blog by Money Ning presents Perceived Cost vs Real Cost, and says, “The perceived cost is often not the same as the real cost!”
• Exjackly from Exjackly.com presents Personal Goals and Financial Life, and says, “This talks about setting goals and discusses considerations beyond the standard SMART acronym that should be applied.”
• Smarty from Growing Money presents Business Idea #3: Taxi Debit Cards.
• The baglady from The Baglady presents The Dangers of Keeping Score with Money.
• Brip Blap from Brip Blap presents Saving Too Much, and says, “There are a few times when saving isn’t the best idea!”
• Tyler from MarriedAndBroke.com presents Having Your Important Information Secured But Accessible to Your Spouse
• chica with issues from One Snarky Chica with Issues presents A guide to the best personal finance websites and resources.
• paidtwice from I’ve Paid For This Twice Already presents Extra Paycheck Strategy.

• Bob Vineyard, CLU from InsureBlog presents The Government Made Me Fat.

• Millionaire Mommy Next Door presents How To Calculate Your Net Worth (and see how you compare).

• Matthew Paulson from FinanceIsPersonal.com presents Con Artists Stealing Guardianship of Senior Parents.
• Jason Shafrin from Healthcare Economist presents A Random Walk, and says, “What happened during the Tulip bulb craze in 17th century Holland? Could the South Seas bubble in England have been prevented? The Healthcare Economist reviews the seminal book “A Random Walk Down Wall Street” which has answers to these questions and important investing advice.”
• Trent Hamm from The Simple Dollar presents Making A Major Life Change: Is It Time For Kathy To Abandon The City?.
• Madame X from My Open Wallet presents All These Mortgage Sob Stories…, and says, “Do people who can’t understand the financial transactions required to borrow a home deserve any sympathy when they end up in foreclosure?”
• FIRE Finance from FIRE Finance presents Are Banks Safe In A Falling Market?.
• Yan from ProBargainHunter presents Extreme saving: hide your money from yourself.
• bluntmoney from Blunt Money presents Procrastinating on Finances.
• The Happy Rock from The Happy Rock presents 4 Reasons We Rush Into Replacing Our Cars, and says, “A look at a few reasons why we rush into replacing our older cars.”
• Clever Dude from Clever Dude Personal Finance presents Don’t let pride ruin your life.
• Dan Melson from Searchlight Crusade presents Low Equity (or Worse!) Relocations in a Buyer’s Market.
• DR from The Dough Roller presents Hillary Clinton’s Health Care Plan is Slick, So Watch Your Step, and says, “A critical
  look at the real cost of Hillary Clinton’s health care reform plan.”
• Nina from Queercents presents Women and Men: Thinking Differently about Money, and says, “More analysis on the topic
  of Gender and Money.”
• Ben from Money Smart Life presents Six Ingredients for Generating Passive Income.
• plonkee from plonkee money presents standing up to the green-eyed monster, and says, “I’m trying to stop being envious of my successful friends, its not really improving my finances.”
• MoneyNing from Personal Finance Blog by Money Ning presents Are you motivated enough to be financially free?, and says, “It takes persistence to be financially free!”

Okay, that was a bit of a sensational title but there’s a reason for that. Deep inside each and every one of us, you and you included, is the financial wherewithal to build a retirement asset base that would likely exceed your expectations. Often times, right before we take a path, we look at the horizon and make value judgments about whether or not we can complete the journey. The decision isn’t so much based on our ability or our surroundings, but some subject decision made in a split second based entirely on the destination and not on the journey itself. It’s very difficult to envision a time when you can look at an account balance and see seven digits (not counting the decimals!). A million bucks is a lot of money and some may see it as entirely out of reach… but it’s not.

In forty years, if you contribute around $1720 a year and it earns 11% a year, your account balance will be over a million dollars. That’s right, a mere $1720 in forty years will be worth over a million dollars. Of course, in that time, a million dollars won’t be worth as much as it is worth now (at 3% inflation, in forty years it’ll be worth around $300k in today’s dollars) but psychologically the impact is still there. Unleash your retirement asset avalanche (ignore the cheese factor!) by saving little by little and you can reach the pinnacle regardless of how far it may seem.

Check out the latest edition of Millionaire in the Making, it features a couple with a combined income of $86,000 who managed to save $100,000 in their 401(k) and $50,000 in IRAs. So, how do they do it?

Make It Automatic - Amy uses auto-deductions to put $10,000 a year away in her 401(k), taking advantage of the $3,000 in matching funds her employer gives her.

Stay Aggressive If You Can - The bulk of her savings are in stock mutual funds, taking advantage of her relative youth by investing in higher risk, higher return investments.

Stay Thrifty - “The couple keeps their budget balanced with real dedication to thriftiness – Amy has declared Jesse “a professional scrounger.” He’s learned to make his own shirts after buying the fabric, and she says the couple tries to prolong the life of all their belongings.”

So, make it automatic, be aggressive if you’re young, and stay thrifty.

That’s the subject of the latest headline from Yahoo Finance’s personal finance How-To section and it’s certainly one worth reading if you’ve been considering using the home equity you’ve built up in your home as a way to supplement your retirement income. They profile three basic strategies for tapping into home equity: downsizing into a smaller home, relocating to an area with a lower cost of living, or creating an income stream with a reverse mortgage.

Relocating
They recommend this if you can find a location that is both cheaper and won’t negatively impact your lifestyle. If you’re used to living in Manhattan, living on a farm in rural Pennsylvania will likely cramp your style and significantly impact the way you live your life. That’s not to say rural life is bad, it’s just bad for a socialite used to painting the town red. One pitfall they warn is that you need to fully research how much life really costs in the area you’re moving to, sometimes there are hidden costs and you must find them before deciding.

Downsizing
Downsizing and relocating are very similar in that you’re getting out of your current house and moving into another one (or apartment, condo, etc.) that costs less. The only thing to add with downsizing (which also applies to relocating) is that the first $250k ($500k if you’re married) of profit is tax free if you’ve lived in the house for the last two years.

Reverse Mortgages
Want to stay put but draw out some money? A reverse mortgage may be an option for you, it allows you to receive payouts tax free and can come as a lump sum, a line of credit, or even an annuity. Reverse mortgages are a little tricky and have many rules so review the article and seek professional help to see if it’s right for you.

According to a recent survey done by Boston College’s Center for Retirement Research, employers may not be all that interested in keeping someone on after the official retirement age. Working past 65 has long been the advice of experts to those who haven’t built up a large enough nest egg to retire at the traditional age of 65 and it’s long been accepted as one of the best ideas for dealing with that particular problem, but it sounds like no one ever asked the employers!

The center conducted two surveys, the first discovered that employers liked older employees just as much as they liked younger employees - not terribly surprising if you consider the employment laws in the US. No one wants to claim they like younger employees better, that’s called age discrimination.

The second survey took a look at the expectations of employers out of their older employees in terms of retirement. Half of the 400 nationally representative companies believed that their 50+ employee population won’t have the nest egg to retire at 65 and that half will likely want to work a few extra years (quantitatively at least 2 years longer), so it’s clear that at half of employers are aware of this but in general employers are “lukewarm” to the idea of working longer.

What this means for most is that if you are slacking on retirement savings because you plan on working towards 69, remember that it’s not a guarantee.