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Retire Early: Tips for Young Americans to Avoid the Fate of Older Generations

Young Americans remain optimistic on retirement, try to avoid fate of older generations

Is retirement a distant dream for young Americans? Not necessarily. A recent survey by Bankrate found that 63% of Gen Z and Millennials are optimistic about their ability to retire comfortably. That’s good news, but it’s important to remember that optimism alone won’t get you there. It takes concrete steps to make your retirement dreams a reality.

The couple is wearing casual clothes and sunglasses, and they have a large jar labeled "Retirement Savings" sitting between them.

Why are young Americans so optimistic about retirement?

There are a few reasons why young Americans are more optimistic about retirement than older generations. First, they’ve seen the financial struggles of their parents and grandparents firsthand. This has made them more aware of the importance of saving for retirement and making smart financial decisions.

Second, young Americans have access to more information and resources than ever before. There are countless websites, books, and apps that can teach you about retirement planning and investing. This makes it easier to get started and stay on track.

Finally, young Americans have time on their side. Compound interest is a powerful tool, and the sooner you start saving, the more time your money has to grow.

How can young Americans avoid the fate of older generations?

Here are a few tips for young Americans who want to avoid the financial struggles of their parents and grandparents in retirement:

  • Start saving early. The earlier you start saving, the more time your money has to grow. Even if you can only save a small amount each month, it will add up over time.
  • Take advantage of employer-sponsored retirement plans. Many employers offer 401(k) plans, which are a great way to save for retirement. If your employer offers a 401(k) match, be sure to contribute enough to get the full match. It’s free money!
  • Invest your retirement savings wisely. Don’t just stick your money in a savings account. Invest in stocks, bonds, and other assets that have the potential to grow over time.
  • Create a budget and stick to it. This will help you track your spending and make sure you’re not overspending each month.
  • Avoid debt. Debt can make it difficult to save for retirement. If you have debt, make a plan to pay it off as quickly as possible.

Retirement doesn’t have to be a distant dream for young Americans. By taking steps to save early and invest wisely, you can set yourself up for a comfortable retirement.

Here are a few additional tips for young Americans who are serious about saving for retirement:

  • Automate your savings. Set up a recurring transfer from your checking account to your retirement account each month. This way, you’ll save money without even having to think about it.
  • Increase your savings rate as your income increases. Aim to save at least 15% of your income for retirement.
  • Rebalance your portfolio regularly. As you get closer to retirement, you may want to shift your portfolio to more conservative investments.
  • Get professional help. If you need help creating a retirement plan or choosing investments, consider working with a financial advisor.

Retirement is a big goal, but it’s achievable with planning and discipline. By starting early and taking smart financial decisions, young Americans can avoid the fate of older generations and enjoy a comfortable retirement.

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Source:

The Most Important Things You Should Teach Your Children

LendingClub Raises Rates Following the Fed move

It didn’t take long for LendingClub.com to raise the rates on all new loans in response to the Fed rate change last week. Online Lending and Fed rate increasesLendingClub said Tuesday it would raise interest rates for new loans by an average of 0.25% to match the Federal Reserve’s December move.

Not as quick as many credit cards, but quick enough to make loan investors happy. The higher rates are not anticipated to slow down the growth of LendingClub and no decrease in loans is expected per MoreMerchant.

Online lending clubs like LendingClub and Prosper rely on being able to offer lower rates to those seeking loans than traditional banks by letting individuals invest in loans and make better returns than savings accounts, CDS, and others.

“This adjustment was widely expected” says, Karen Hanks of MoreMerchant.com, “the real question is why is Prosper so slow to follow suit.”

Below is the table from an email received from Lending Club which outlines the rate increases across loan grades. The most significant rate increase comes from E-grade loans. This is interesting as the rates on E-grade loans had dropped too far or do they see a weakening in the market with more high rick borrowers defaulting at a higher page?

 

Here are the details of the recent interest rate changes:

Loan Grade Previous Interest Rate Updated Interest Rate*
A 6.89% 7.00%
B 9.82% 9.93%
C 13.12% 13.37%
D 16.75% 17.09%
E 19.10% 19.87%
F 23.38% 23.64%
G 27.49% 27.64%

*Average Borrower interest rate as of 12/22/2015.

CEO and founder Renaud Laplanche says:

“The value we deliver to our customers is not dependent on the absolute level of interest rates. Our marketplace’s rates will continue to adjust in such a way that borrowers benefit from the same savings against credit card rates, and investors continue to find very attractive risk-adjusted returns compared to other fixed income alternatives,” said Laplanche. “Our ability to compress the spread between these two rates, using technology and low-cost operations, remains unchanged irrespective of the rate environment.”

Investors are pleased with this rate adjustment, while borrowers will hardly notice at this point. The big question is, when will Prosper adjust their rated?

LendingClub and Prosper affects from Fed Interest Rate Change

The Federal Reserve is expected to follow the first post-crisis rate rise by lifting US borrowing costs Online Lending and Fed rate increasesagain in March, according to a survey of economists. More than two-thirds of the 42 top economists polled expect another 25 basis point increase in the central bank’s benchmark rate and be raised two to three times in 2016.

Prosper.com and LendingClub.com are expected to achieve continued growth in a time of rising interest rates. Lenders will be rewarded over time with an increased return and borrowers will indeed face higher rates, yet lower than the conventional bank rates.

These changes will not impact the bottom line of online lending growth in a negative way, and MoreMerchant.com believes that the online lenders may actually see a positive with money available for lending and borrowers more perceptive to the lower rates charged by the online lending groups.

Review of Prosper and LendingClub from an MBA

I have been using LendingClub and Prosper for years. As one of the early investors utilizing P2P I can give an honest review of theses two sites and what I have learned. As you know, I like to keep it simple. In coming days I will give you the basics to determine if investing with Prosper, LendingClub or others is for you.

With the low interest rates in savings accounts and the turmoil in the markets many of you are wondering if this is your way to invest wisely. Let me save you some time and help you with your investment goals.

Follow More Merchant – P2P Investing with Prosper and Lending Club and learn from someone that has been investing since the beginning.