Ask Bud about buying an Inflation-Adjusted Immediate Annuity

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This is a contribution from Bud Hebeler who runs Analyzenow.com

Dear Mr. Hebeler:

Thank you for your books and spreadsheet in assisting with retirement fund disbursement planning.  Your conservative thoughts are a rudder in the sea of misinformation. 

Here’s my hypothetical question for you:  Inflation and annual expense ratios are onerous costs for wealth accumulation. I can and have populated my asset allocation with low cost admiral shares of Vanguard’s mutual funds so those are minimized.( I like the ability to adjust your investment fees in the “what if” section of the spreadsheet. I’m going to use that feature to show people the real cost of a fund charging 1.5% vs. 0.2% annual fees.) 

Inflation is a whole horse of another color. As you point there is no reason inflation will be constant or that it will remain moderate.  If I go to the Vanguard Retirement Center planner, I can use their Annuity for Life calculator to give me a quote for an immediate annuity.  This says that for each $1,000 I place in the immediate annuity they will provide $4 per month, adjusted for inflation, for the rest of my life, starting at age 50.  That’s $48 annually per $1,000 or 4.8%. And that amount is indexed to inflation. 60% taxable. 

Being a frugal fellow I’ve also saved additional money, half in an IRA and half in post tax investments, that I’d like to not place in an annuity, but maintain in my current portfolio of about 60% stocks and 40 % bonds. This seems to be an intelligent move. It’s a hedge against inflation for my basic living needs and I maintain control of a larger amount of my assets.

Thanks, 

Gary S.

 

Thank you for asking.  I believe that Vanguard’s inflation-adjusted immediate annuity is a good investment for part of a retiree’s savings.  I think it’s better than getting into the commodities or collectibles markets to offset inflation.  I think that things are so wild now that there is some possibility that we could either go into something like the Great Depression or have hyper inflation–or even a combination of the two.

There are two things to be cautious about:  (1) That you have enough other investments to handle surprises that might require a large amount of immediate cash without borrowing, and (2) the solvency of AIG, Vanguard’s underlying insurer.  AIG is one of the world’s largest insurers, has a good rating, and I believe that Vanguard could step in if AIG got into trouble, but who knows?  (AIG has had a problem recently, but I understand it’s not serious as a % of its total assets.) 

You might also consider using I bonds to accomplish the same thing without the worry about solvency.  Until this January, you could buy $30,000 worth each year per Social Security number, but now the US, fearing another burden from inflation, cut the maximum to $5,000 a year.  However, you can buy $5,000 from a bank and $5,000 from Treasury Direct.  That’s a total of $20,000 for a couple each year.

If you were over 55, I would suggest that you consider using a direct transfer of money from your IRA to buy the immediate annuity.  Then use your taxable account to hold your equity investments.  That will give you a more favorable tax break.

Of course, my own sense of what way the economy will go and what are good investments is just my own opinion–and I could be very wrong.  That’s why I never put all of my eggs in one basket no matter how strongly I feel about such things. 

Bud

49% of people have saved less than $25k in the US

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This is a contribution from Bud Hebeler who runs Analyzenow.com

USA Today had an article (4/11/08) that had a table showing that 49% of the people have saved less than $25k in the US. (And that doesn’t account for any of the debt on the other side of the ledger.) Even more disturbing, the table shows that 40% of those between 45 and 54 have saved less than $25k and 36% of those over 55 have also saved less than $25k. In the latter group, only $51% had saved more than $100,000. Find out more on this in http://www.ebri.org/files/RCS08_FS2_Saving.pdf

To give you an idea of the impact, a person who has saved $25,000 for retirement could spend only $1,000 of that per year (increased by inflation each year) for retirement and would not have money for emergencies. A person who had $100,000 at the start of retirement could spend only $4,000 a year for retirement. Yet, both my analysis and that of Fidelity Investments shows that a couple will need over $215,000 savings just to pay for Medicare Part B and a Medigap health policy.

I often cite the decline of national savings over the past two decades as an indicator of real trouble to come. This is just further evidence. There are going to be lots of babyboomers on welfare. This isn’t just a tax impact. It’s a huge effect on consumption and therefore industry and therefore on the economy, jobs and the stock market.

Incidentally, the article graciously mentions my Web site, www.analyzenow.com, but the site you should look at for additional perspective on savings statistics is http://www.ebri.org/files/RCS08_FS2_Saving.pdf.

Bud

Proposed Federal Housing Rescue Plan a Taxpayer Funded Bailout for People Who Failed the Marshmallow Test

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I just read the NY Times article on a proposed “HomeOwner Rescue Plan” for people who’s houses are now worth less than their mortgages. In the both the article and the comments there are a number of people who say that unless this bailout happens, then millions of people could lose their homes or have to severely curtail their lifestyles and that this is un-acceptable in America. The main rationale seems to be that if some people bear economic pain then it could hurt everyone else. Some of the proposals include forgiving mortgage amounts that are above the current value of the house. The last time I checked the only people offering “pay what you can afford” plan are charities. If we start forgiving debts and freezing ARMs then we’re letting the US government into the business of re-writing private sector contracts. When Hugo Chavez in Venezuela nationalizes Exxon assets - he gets demonized…but if the US Nationalizes the debt of people who bought houses they can’t afford that’s saving the country?

There is and will be a lot of economic pain as a result of this mess, but it’s better that the economic pain is born by the people who made the bad decisions versus people who made good decisions and lived within their means. People who make good economic decisions tend to use resouces efficiently - if the US wants to maintain its position in the world, then we need to use our resources efficiently. It should be a net positive if we reward (or don’t punish) people who’s values and actions are aligned with prudent decision making and efficiency vs. the “I need it now” mentality that has been at the fore until recently.

Reminder to self - blog on the Marshmallow Test in the near future

There are plenty of people in the US that used the loose credit environment to take on debt that they could not afford, so that they could live an unsustainable lifestyle. That’s their decision - but I shouldn’t have to pay higher taxes, so to pay off their new Lexus or whatever lifestyle choice they made. If someone didn’t take the time to understand the loan they were getting - well - tough cookies - hopefully they’ll learn a lesson and won’t make the same mistake next time.

Let’s not forget that the vast majority of people out there are not going to lose their homes. If some people lose their houses - well there are lots of renters out there that I’m sure would be happy to buy them up at rational prices. If housing prices come down - well then more people can afford to buy houses. There are plenty of people out there who have been waiting to buy houses at prices that won’t keep them in debt the rest of their lives - just because some people decided they couldn’t wait that doesn’t mean I want to pay for their house/car/RV/Vegas vacation/etc.

It’s better for us to clear out this mess all at once - if the government tries to bail out homeowners - it will just extend the period of pain before this is worked through and re-direct the resources of the productive prudent people in this country to subsidize people who paid irrational prices for their houses.

Below an interesting chart to put housing prices in perspective.

[housingmarket_nytimes.jpg]

If Passed, the FHA Modernization Act of 2007 Harkens Good Things for Reverse Mortgage Borrowers

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How Much Money You Can Get for a Reverse Mortgage Will Increase and Qualifying for a Reverse Mortgage Will Get Easier with the FHA Modernization Bill

The FHA Modernization Act is designed to improve the Federal Housing Authority’s ability to help Americans obtain safe and affordable home loans and many see the Act as an answer to some of the woes of the subprime debacle. The Act is a bipartisan measure and has the support of the Bush Administration as well as both consumer and industry groups.

S. 2338, the Federal Housing Authority (FHA) Modernization Act, is good news for borrowers interested in a Reverse Mortgage. The Bill has been passed by the Senate by an overwhelming majority (93 to 1) and many hoped that it would be tacked onto the Economic Stimulus Package and be signed into law this week. However, it was not and is now waiting to be voted on by the House of Representatives. The House version of this Bill differs in many ways, but on HECM Reverse Mortgage issues, the House and Senate versions are identical.

The FHA Modernization Act Will Improve the Terms of Reverse Mortgages

The FHA Modernization Act will change the HECM program (HECM is the most popular type of Reverse Mortgage) in the following ways:

  • Offer a Single National Loan Limit: Currently the actual amount you can qualify for with a HECM Reverse Mortgage varies depending on your county. The FHA Modernization Bill sets a single national limit of $417,000.. For most borrowers this means more money is available to them.

  • Eliminate of the Authorization Cap: Currently only a set number of Reverse Mortgage loans may be granted. The FHA Modernization Act eliminates this limit, enabling the FHA to authorize as many loans as the market demands.

  • HECM Could Be Used for Home Purchase: Currently Reverse Mortgage borrowers must reside in their home for at least one year before they can get a Reverse Mortgage on it. The FHA Modernization Act enables borrowers to actually purchase a home with a Reverse Mortgage — assuming an adequate down payment. This change makes a Reverse Mortgage an appealing loan for retirees who are downsizing and others.

  • HECMs Could Be Used on Coops: Currently only single family homes are eligible.

As a whole, these changes should mean more money and better terms for seniors doing a Reverse Mortgage.

Learn More About FHA Modernization and Contact Congress Now

If you wish to see the FHA Modernization Act become law, consider contacting your Congressperson. You can locate them here: http://www.house.gov/

To learn more about The FHA Modernnization Act, visit here:

http://www.opencongress.org/bill/110-s2338/show

Who Should Fund The Boomer’s Retirement?

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So, my Mom met with her accountant last week. She is getting a life insurance policy to cover her business partner’s expenses if something were to happen. Her accountant suggested putting a Long Term Care Insurance rider on the life insurance policy.

Great idea, right?

Yes, the Long Term Care rider might be a great idea. The costs of Long Term Care are an expense that most retirees have not planned for and not having long term care insurance can completely devastate your finances. Please review information on the need for long term care insurance here

http://www.newretirement.com/Planning101/Serious_Medical_Crisis.aspx .

But, here comes the shocking part of the recommendation: The accountant suggested that that my mother ask my brother and I (her children) to fund the monthly premium on the rider since we would end up paying for Long Term Care expenses if she hadn’t taken care of them herself.

Indeed, Long Term Care insurance payments are likely less expensive than the ultimate cost of Long Term Care, but why should we, her children, pay for either. We would of course fund her needs — or make arrangements for her to move in with us — if necessary, but why is the general population and a financial expert recommending that it is indeed our responsibility to fund these things?

Social Security, Medicare, Long Term Care Insurance and More — Who Should Pay for It All? Boomers? Children of Boomers? Grandchildren of Boomers?

We children of boomers are already going to have to fund Social Security and Medicare. The baby boomers are retiring with these programs being unfunded. We will be paying our taxes to fund our parents (and grandparents) retirement.

What’s worse, the under- or un-funding of these programs is not even factored into the known and mounting deficit that we are inheriting.

We children of Boomers have an incredible financial burden to bear.

Retiring Boomers Should Consider Who Should Fund These Costs

Please boomers and those advising boomers, please think about the sanity of putting these costs on your children and grandchildren. Is this what you want your legacy to be?

Retirement should be earned. Barring severe health issues, there is no logical reason to retire before you have saved enough money to cover your costs.

Senate Moves to Add Senior Benefits to Economic Stimulus Package! Senior Outrage Gets Results

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Seniors have successfully expressed their outrage at being excluded from benefiting from the Economic Stimulus package proposed by the House.

Congratulations! Congratulations?

Senate Democrats announced today that they will add $150 billion in rebates for senior citizens living off Social Security. This move will likely cause a clash with the White House and House leaders who sponsored the narrower package that excluded seniors from receiving funds in the stimulus package.

Whether or not the plan will save the economy from a recession is still in question. However, including seniors in the stimulus plan insures that financial help could be delivered to those most arguably in need — our nations retired who live on a fixed income.

Although, adding senior benefits would likely mean shrinking the size of payments to those earmarked earlier.

  • Who do you think most “deserves” stimulus package benefits?
  • Will the stimulus package save economy from recession?
  • Does anyone actually need these benefits?

Economic Stimulus Plan Offers Nothing to Retirees

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Retirees in particular should be outraged at the federal government’s economic stimulus plan: http://news.yahoo.com/s/ap/20080124/ap_on_go_co/economy_stimulus

House leaders and the White House announced today — Thursday Jan. 24, 2008 — a tentative agreement on an economic stimulus package of roughly $150 billion that would pay stipends of $300 to $1,200 per family and provide tax incentives for businesses to encourage spending. A stipend of at least $300 would be paid to all workers receiving a paycheck, even those who did not earn enough to pay taxes last year.

The plan does not extend low income programs like unemployment benefits or food stamps. And, most critically it does not offer anything to seniors not receiving a paycheck (Social Security checks do not count.) Retirees who do not “earn a paycheck” but pay taxes do not benefit at all by this “stimulus” package.

Retirees need to think about the following questions and issues:

  • Do you believe that this plan will prevent a recession or delay it?
  • What long term problem does $300 per family solve?
  • Will inflation continue to increase and, if so, how are you going to protect yourself from inflationary pressure?

The current economic crisis is not about liquidity, it’s about solvency. A cash injection might keep the children and grandchildren of retirees spending on HDTVs and Xbox 360s, but it is not going to pay off anyone’s bad mortgage. It will just end up inflating the economy and depleting what’s left of the U.S. dollar.

Most alarming is that the cost of food, health care, and energy have risen at a rate far faster than wages have increased for the average American. Some cash is not going to loosen wallets tightened by the rising prices of these core goods.

Retirees earn a fixed income and are the group who are most hurt by inflation. The value of your existing savings and income are greatly diminished. (Read more here about how inflation can devestate a good retirement plan: http://www.newretirement.com/Planning101/Inflation.aspx)

So, this economic stimulus plan does not offer any short term relief to retirees and could potentially hurt them even more in the long run because it does nothing to cure the fundamental economic ills we are facing.

Reverse Mortgages: Will they help some seniors avoid foreclosure? Perhaps

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As I’m sure you’re aware there is a rising tide of foreclosures that is threatening up to 2 Million households. This is affecting all age groups and unfortunately it doesn’t look like the Hope Now plan to freeze some mortgage rates will bail out many people. However, some housing advocates and legal-aid attorneys are suggesting a new alternative for senior households: taking out a reverse mortgage and using the proceeds to settle current distressed mortgages.

Reverse mortgages are mortgages whereby the payment streams of traditional mortgages are reversed. Instead of the bank lending you a sum of money to finance a new house and you paying the loan back over time (a forward mortgage), a reverse mortgage is structured such that the bank either makes monthly payments to you, gives you a lump sum or issues you a line of credit (all based on your home equity) and the loan is repaid with interest when you either sell your home or die. The big difference with a reverse mortgage is that it is a non-recourse loan - the amount due on the loan can never exceed the value of your house (which is good for the borrower). The lending bank takes the risk that the loan amount won’t grow faster than the equity in your home.

The major drawback of a reverse mortgage is that you will lose some or all of the equity you have built up in your home when you move or pass away. But if you are struggling to make high interest payments and face foreclosure, taking out a reverse mortgage may be an option to prevent the loss of your house. The major qualification for a reverse mortgage is that you have built up enough equity in your home and that you and your spouse are both 62 years old - there are no credit or income requirements.

It used to be difficult to find lenders willing to issue reverse mortgages and buy products other than the plain vanilla government-backed HECM (Home Equity Conversion Mortgage), especially at reasonable costs. Now, more than a dozen large banks and mortgage lenders, the largest issuers being Wells Fargo and Financial Freedom, offer a variety of reverse mortgage products, and there are thousands of smaller lenders throughout the nation. Costs have gone down – although they are still high, with fees typically more than 5% of the home value – and some issuers have reduced the minimum age requirement to take out a reverse mortgage to below 62. It has also given people more flexibility. For example, government-backed mortgages are subject to government rules, one of which prevents homeowners from cashing out above a certain limit (borrowing limits are capped based on where the homeowner lives). But private lenders who have stepped into the reverse mortgage business, such as Banc of America Corp., allow homeowners to borrow more than the limit on HECMs.

As competition in the market increases - expect to see lower fees and more innovation in the reverse mortgage market. Large lenders have become interested in creating a secondary market for securities backed by reverse mortgages; they have started to buy these products and plan to securitize them and sell them to investors on Wall Street. This means more available credit for reverse mortgages, which will decrease the costs of these products.

But more choices, especially with the increased availability of proprietary products offered by private lenders, result in more homework for the consumer. It is essential that distressed homeowners who are looking to purchase a reverse mortgage investigate the options available. It is important for the client not to blindly follow a salesperson’s recommendations, and that appropriate and challenging questions are asked to ensure suitability. Don’t fall into the trap of predatory lenders; this is hopefully one of the lessons learned from the subprime mortgage crisis.

Professional Athletes Bounce Out of Retirement — The Top 15 Anti Retirement Stories in Sports

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What is it with professional athletes? Why can’t they retire? They announce to the world that they are going to retire, and often do so for a little while. But then they go back to work. For top athletes, if it is not the money that keeps them working, what is it?

Some athletes return to their sports, others try new sports, some become coaches and many more transition into other highly successful careers.

Top 15 Anti Retirement Stories

Here are the Top 15 stories of athletes bouncing out of retirement:

  • Michael Jordan: The king of retirement remorse is of course Michael Jordan. He went from arguably the best basketball player ever to baseball player and then back to basketball player… Then he became a basketball manager – as owner of the Washington Wizards. And then he made the stunning announcement that he would return to play in 2001 – And play he did, racking up records. Jordan’s final pro-basketball season was the 2002-2003 season. But Jordan is only 44 years old; we don’t think this retirement story is over. What’s next for Jordan?
  • Lance Armstrong: Armstrong’s first retirement due to cancer clearly was not what or when he wanted it to be. He returned to professional cycling in 1998 and won SEVEN consecutive Tour de France titles. While we think Armstrong is officially retired from cycling, we are impressed with his new career as cancer fundraiser and we’ve heard the rumors that he may re invent himself as a civic leader – Governor Armstrong? Senator Armstrong? President Armstrong?
  • Roger Clemens: Clemens is the pitcher who gained most of his fame while playing for the Boston Red Sox and the NY Yankees. He has changed his mind about retirement three times, just like Michael Jordan! The difference between them though is that Clemens is still playing! Clemens is one of the oldest pitchers in major league baseball at 46. Will he ever actually retire?
  • Floyd Mayweather Jr: Just this weekend, after his fight for the WBC welterweight title, boxer Floyd Mayweather Jr. announced for a second time that he would retire. “Just to be the face of boxing is a blessing, but I have to walk away. I was once told never to let boxing retire you”. But then he added: “If they give me a price I can’t resist…,” implying that he may fight again if paid enough money. Mayweather’s first retirement came after his “super-fight” against Oscar de la Hoya, which he won and for which he earned $35 million.
  • Brett Favre: Favre is currently in his 17th season in the NFL; during 16 of those 17 seasons he has been the starting quarterback for the Green Bay Packers. After a series of personal tragedies throughout the 2003-2005 time period, Favre commented that the 2006 season would be his last. However, Favre continued to play in the 2007 season, which is still ongoing.
  • Martina Navratilova: Navratilova started playing professional tennis in 1975 and finally retired completely in 2006, just shy of her 50th birthday. In 1994 she announced her retirement from the singles tour but she continued playing doubles and mixed events. Years later, in 2002, she started playing a few single events and in 2004 she became the oldest player ever (47) to win a singles match at a Grand slam event.
  • Muhammad Ali: Nicknamed, the “Greatest of All Time”, Ali started his professional boxing career in 1960, after winning a gold medal at the Rome Olympics. His career reflects, besides endless athletic achievements, numerous controversial moments, including his 1964 announcement that he was a member of the Nation of Islam and his refusal to serve in the US army during the Vietnam War. Ali ended his career in 1981, after his first and only loss by anything other than a decision. Most younger folks know Ali not from his days as a boxing professional, but as a spokesman for Parkinson’s Disease.
  • Jim Thorpe: Thorpe was one of the most versatile athletes who ever existed. He won Olympic Gold medals in the pentathlon and decathlon in 1912 and reinvented himself as a professional baseball, football and basketball player for many years. Professional athletes with Thorpe’s record usually have nothing to worry about when it comes to finances. However, Thorpe found it tough to support his family after he retired from sports – it was the era of the Great Depression - and the fact that he was an alcoholic did not help. He held various jobs, including a small role in the Warner Brother’s movie “Jim Thorpe – All-American”, but he eventually died broke.
  • Charles Oakley: Oakley, the basketball player famous for his quotes, played forward in the NBA as a member of five teams throughout his decade-long career. He retired in 2004 after a season with the Houston Rockets. This past year rumors were floating around about a potential comeback. Asked about it, Charles said: “I’m not going to come back for no veteran’s minimum. I’m coming back for a good salary. You can’t buy me. Money can’t buy me. But I’m not coming back for no bull—- money.” NBA team execs, anyone out there willing to pay him $10 million?
  • George Foreman: After an unexpected and hard fought loss to Muhammad Ali in the 1974 Rumble In The Jungle, Foreman retired. He came back in 1976, but retired again in 1977 after a physically exhausting fight against Jimmy Young. But, here is the real comeback story: in 1988, almost ten years after hanging up his gloves, he made his return into the ring. In 1994, at age 45, he became the oldest player in boxing history to win a heavyweight title. He retired for the third time in 1998. Although most of Foreman’s extensive fortune has been made for his other career – TV spokesman for the George Forman grill and other products.
  • Pele was a former Brazilian soccer star, who received the title “Athlete of the Century” by the International Olympic Committee. After countless of individual and team awards throughout his 20-year career, Pele retired in 1977 and has since been an ambassador for soccer and has also been involved in various acting and commercial ventures. So, what will Pele’s next role be?
  • Bjorn Borg: The former #1 tennis player had what can be considered one of the worst comebacks in the history of sports. Before retiring for the first time in 1983, Borg had an amazing 9-year stint, setting records that still stand today. Almost ten years after his first retirement he attempted a comeback on the men’s pro tour. He was completely unsuccessful and retired for the second time in 1993. However, Borg is still active on the seniors tour, and enjoys playing with friends such as John McEnroe. He also owns a clothing line with his name attached to it.
  • Wilt Chamberlain: After he retired from basketball, The Big Dipper transformed himself into a world-class volleyball player. For fun, he ran marathons. He also turned down multiple offers to return to basketball as well as to play pro football and box professionally. Though retired from sports, Chamberlain had successful subsequent careers as a coach, businessman, writer and even actor
  • Bob Cousy: Cousy joins Bjorn Borg in the worst comeback category. Cousy retired from the NBA for the first in 1963, after helping the Boston Celtics win 6 NBA titles. He returned after 6 years, at the age of 41, because he received an offer he could not refuse. His performance was terrible, but he boost ticket sales by 77 percent!
  • Ricky Williams: After playing for the New Orleans Saints, Williams retired iin 2004 after he tested positive for marijuana. But Williams returned to the NFL in July 20005 but in early 2006 it became clear that Williams had again violated the NFL’s drug policy, and he was suspended for the entire 2006 season. In October 2007 Williams made his return to the NFL, although he injured himself almost immediately. Can Williams recover and keep clean from now on and go for a fourth retirement?

Why Can’t Athletes Retire?

Research has shown that many professional athletes find the transition from a life of professional sports to a life without it very tough. A few reasons that athletes can’t stay retired include:

  • Age: Athletes retire when they are relatively young. They still have thirty, forty, fifty or more productive years ahead of them.
  • Addiction to the Limelight: Professional players – especially ones at the tops of their games – are adored by fans. Once retired, it can be lonely.
  • Addiction to the Thrill of the Game: Playing sports is undeniably thrilling. Retiring from that excitement can be tough.
  • Depression After Retirement: Transitioning out of professional sports is a huge adjustment. Changing one’s whole way of life is extremely stressful.

Anti Retirement Athletes Set Trends for Baby Boomers

It used to be that regular people – not professional athletes — worked until they were too frail to do so anymore. In fact, until recently only 16 percent of men in the United States worked past their 65th birthday.

However, many recent surveys show that 60 – 90 percent of today’s retirees will work after their retirement. And the reasons these people aren’t retiring are similar to the reasons cited by athletes. Somebody retiring today at age 65 probably has another 20 years of life. That is a long time without the money and satisfaction provided by a career. And many retirees report depression after retirement – citing that they miss the purpose and routine of their work.

Money 2.0: Two Dozen Finance Startups That Want to Help You Solve “Mo Money, Mo Problems”

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How do you manage your money? Not simply going to the bank and depositing your checks, but actually managing your money? How do you keep track of how much you’re paying for essentials and utilities, and measure if that’s too much? How do you keep track of who owes you money, and who you owe money to? How do you figure out how to maximize the money you’ve got, whether by getting a better return on it, or simply putting it to work somewhere where you know it will do some good (for you, for your friends & family, or for the world in general. How do you decide how to invest your money? Do you rely on professional advisers or do you go it alone? If you don’t have answers to any of these, or if you are looking for a way to better handle your money, you might want to consider these startups:

Mint – A financial management company and toolset that provides a simple and automated way to track spending, as well as find both lower prices on monthly services (such as gas, food, and utilities), and higher rates of interest on savings accounts and other monetary set-asides. Winner of the TechCruch40 conference in 2007.

Economic Security Plannner – A tool to help you plan for both the most likely and worst-cases in your financial future, enabling you to construct a retirement plan that makes sense, based on the uncertainties that may exist in the future.

REX agreement – A unique financial arrangement that allows seniors to cash in on their home’s equity without a loan, by turning over a percentage of their future equity changes to the lending company. The site has calculators and detailed explanations of how the process works.

Tripit – A travel/points organization designed to build itineraries more easily. Email the plans you wish to make to Tripit, and they will build you a master itinerary with all travel and booking plans included, which you can then look over and approve/use.

Equity Key – Another debt-free means of generating money from the equity in your property, tailored specifically for seniors. Like REX, Equity Key offers a lump sum of money in exchange for a percentage of your home’s future appreciation, thus leaving you with no debt and no drain on your present equity.

Prosper – A community lending and borrowing system set up to allow peer-to-peer lending between individual consumers. Users post either the sort of loan they are looking for, or the sort they can afford to offer, and the company mixes the available loans together into a single master-loan for the borrower.

Billmonk – A free site aimed at helping you easily track what is owed, not necessarily money, with roommates, friends, landlords, and family. The site enables you to remember (for example) who owes who lunch, who borrowed that book you’ve misplaced, and how much you owe your relatives for various purposes.

Dimewise – A cheap, web-based Financial Management option, simplifying the information you will receive, and enabling you to more easily keep track of your finances.

 

Foonance – An expense-tracking website that helps you make a virtual bank, and set limits on spending. Create what’s called a “Money Store”, a virtual repository of money, and then log transactions in and out of it, to easily track in and outflow.

Fundable – A website that assists you in generating online funding for any project through a collections campaign, or conversely, to donate money towards what you see as worthy causes. Used for everything from student films to recovering from a personal disaster.

Pledgebank – A pledging system that permits the internet to assist people who wish to pledge to improve their lives or those of others. Make a pledge with the condition that you will do it, only if a certain number of other people pledge to help in some way (not necessarily with money), or browse existing pledges and assist as requested in making it happen.

Kiva – “Loans that change lives”, a program by which people can loan money to entrepreneurs around the world using micro-loans through local credit or banking institutions. Relatively small amounts of money can make possible drastic improvements in the lives of would-be entrepreneurs in third world countries.

Virgin Money – A lending service associated with Richard Branson that compiles various non-traditional sources of lending, primarily a form called “Circle Lending”, meaning notarized, legally-binding loans between friends and family, a method which often means far more manageable rates than otherwise would be possible.

Lending Club - An online lending community and lending match software suite with which people can borrow and lend money directly to one another within the network, garnering better rates and bypassing traditional banking fees.

Zopa – A UK-based “Social Financing” site, pairing lenders with borrowers from within the community and offering guarantees to ensure lenders retain their investment. Worth a look.

 

Risk Metrics – Experts of financial risk management for both Wall Street and consumer-level investment, who can help potential investors better understand and manage the risk that is entailed in their investment strategies and portfolios.

Billeo – Password, shopping, and billpay assistance programs that permit people to handle more of their financial errands online. Affiliated with Wells Fargo Bank.

 

Wesabe – A network site for people who want to share experiences and recommendations about personal financial decisions. Essentially an account and money management site paired with an online financial community of other consumers, who assist one another in finding deals and avoiding pitfalls.

Cake Financial – A place where you can track your performance in the stock market or with your investments and follow the actual portfolios and trades of both various “top-performing investors” and your network of selected friends or trusted investors.

Zecco – A free trading community and web brokerage firm, promoting specifically their $0 trades for all users above a certain minimum balance (and for the first ten trades per month). Also offers market data tools, opinions and insight.

Covestor – A real-trade sharing service for proven self-investors, all of whom undergo a screening process before they are allowed to participate in the community, thus offering a source of high-quality analysis by other people who manage their own money. If you meet the criteria, it’s worth a consideration.

ProQuo – A personal information protection company, helping to put consumers in control of their own personal information, allowing them to receive the offers they want from various marketing sources and (more importantly) eliminate the ones they don’t.

1-800-pharmacy – A unique mail-order pharmacy that offers customers easy access both through a toll-free number and website, and gives customers rebates on their pharmaceutical and health & beauty purchases, as well as credit for referring others.

Smart Hippo – A new company that develops innovative applications for connecting consumers with financial service providers. They claim to be the first ever website that allows individuals to use the power of a community (and bulk buying) to save money when shopping for rates on financial products and services.

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