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POS, Dashboard, Credit Verification Products; Freddie and Fannie Changes; Today’s CPI Suggests Fed Holds Steady Tomorrow?

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POS, Dashboard, Credit Verification Products; Freddie and Fannie Changes; Today’s CPI Suggests Fed Holds Steady Tomorrow?

By:
Rob Chrisman

Tue, Jun 13 2023, 10:38 AM

Sad?: “Invitations to the Unabomber’s funeral were mailed out, but no one wants to open them.” Hopefully not sad: for anyone wanting to know about comp for processors, underwriters, or LOs, STRATMOR’s current blog is, “Compensation: Ever Changing.” Sad for real: Comerica (CMA) announced that it is “organically” exiting mortgage banker finance, aka, warehouse lending. (Talk to your rep for details.) Sadder: this story about what to do when the U.S. becomes uninsurable. “Climate change means actuaries are making a radical new calculation about the price of risk.” Some would say sad, but with a hint of optimism: volume in residential lending, although it did pick up last month! According to Curinos, May 2023 funded mortgage volume decreased 37 percent YoY and increased 23 percent MoM. In the Retail channel, funded volume was down 44 percent YoY and up 23 percent MoM. The average 30-year conforming retail funded rate in May was 6.36 percent, -1bps lower than April and 136bps higher than the same month last year. Curinos sources a statistically significant data set directly from lenders to produce these benchmark figures. (Today’s podcast can be found here and this week’s is sponsored by SimpleNexus, the homeownership platform that unites the people, systems, and stages of the mortgage process into one seamless, end-to-end solution that spans engagement, origination, closing, incentive compensation, and business intelligence. Today’s has an interview with Black Knight’s Frank Poiesz on what lenders need to do to be ready to adopt AI solutions safely.)

Broker and Lender Products, Services, and Software

Most fans enjoy the “free baseball” that comes with extra innings. However, fans at the longest game in professional baseball history might beg to differ after the 33 (mostly scoreless) innings they took in. But did you know that Down Payment Resource can help you score more volume by recovering some of the 33 percent of declined loan applications that could have been saved with homebuyer assistance? In a market where lenders need to hang on to every fundable loan, Down Payment Resource’s DPA directory of over 2,000 homebuyer assistance programs is an essential tool to help qualified borrowers build wealth through homeownership. Request a personalized Declined Loan Analysis to learn how many more borrowers you can send home.

AFR Wholesale® is incredibly honored to be recognized as the “Champion for Wholesale Manufactured Home Lending” by the USDA. As we continue to celebrate National Homeownership Month, what more of a heartfelt appreciation we have for being selected and highlighted at the USDA SFH Guaranteed Lender Awards in Washington, DC. Chris Guerin, AFR’s EVP of Origination and Business Development said it best when accepting this award, “At AFR, we firmly believe that local third-party originators play a pivotal role in the real estate market…It is through their expertise and tireless efforts that we can provide the vital financial support necessary for aspiring homeowners.” So, with a profound sense of gratitude and pride we would like to send a heartfelt thank you to our AFR partners. Here’s to a future where affordable housing becomes a reality for all. Have a USDA transaction? Contact us today! www.afrwholesale.com , [email protected] or call 1-800-375-6071.

“Your borrowers can eSign their SSA-89 with Service 1st! Eliminate wet signatures in your disclosure packages. Pioneers in the industry for 4506-C/TRV Services® accessible through most LOS platforms, supporting eSign and Day 1 Certainty. There is pain in the market with unpredictable service and rising costs for VOE cascades/waterfalls. We know how important borrower experience is for you. We are 100 percent onshore support and order fulfillment. S1 is the mortgage industry’s performance leader in credit and loan verifications with over 80 percent same-day supplements. Nearly half of all manual VOE/I are completed in under 12 business hours. Learn why we’re Service 1st! Contact us today.”

In a turbulent mortgage market, it’s all hands-on deck. Brokers, credit unions and banks are challenged to do more with less and running a tight and profitable ship means being as efficient as possible. That’s why lenders are turning to Black Knight’s mortgage automation technology to help find new cost savings, decrease turn times and increase the effectiveness of mortgage employees. Powered by a competitive, automation-focused loan origination system, Black Knight’s solutions operate in the cloud and feature time-saving tools like an online point of sale, AI document classification and indexing, a pricing engine, fee service and more. In a market where every second counts, there’s no time to waste. Read more here about how automation is helping lenders navigate choppy seas. Then schedule a demo with Black Knight to see what their automated solutions can do for you.

Is your focus to do more with less? A BI solution should highlight where there are opportunities to incorporate efficiencies and reduce costs. The most forward-thinking industry leaders are turning to Richey May’s RM Analyze to learn what they need to know now more than ever: how to operate even leaner. It’s half the cost of a full-time employee, and you gain access to a strong bench of talent with a rich background in the mortgage industry and access to hundreds of reports in no time. With these insights you can make meaningful decisions for your business and do more than just survive. Learn how to operate leaner.

Does it feel like your current point-of-sale vendor has lost focus on mortgage? As a mortgage-specialized partner, Maxwell is committed to giving lenders a competitive advantage in a tough mortgage market. Compared to a top competitor, Maxwell Point of Sale averages a 5.9 percent higher pull-through rate from rate-lock to close. For the average lender using Maxwell POS, this equates to $42MM in additional loan volume. Maxwell also focuses on providing an excellent borrower experience, with a 17 percent faster turn-time from application submission to conditional approval. Schedule a call with the team to learn how Maxwell Point of Sale can start working for you and your borrowers quickly.

Fannie and Freddie News

Do you know what a Gold Book is? When looking at what we’re producing, non-Agency volume (think non-QM, jumbo, or portfolio product) runs about 5-10 percent, FHA & VA & USDA about 25 percent, and the rest, consistently, is conventional conforming. So, Freddie Mac’s and Fannie Mae’s moves are closely watched.

Freddie Mac launched a new mortgage product to support members of Native American communities. HeritageOne℠ will provide affordable financing options for single-family properties on tribal lands in rural areas, creating greater access to homeownership. It will also provide financial counseling and other resources to members of Native American tribes, especially first-time homebuyers. The intent behind HeritageOne is outlined in Freddie Mac’s 2022-2024 Duty to Serve Plan, which specifically details the company’s commitment to provide housing support for tribal members in rural tracts within Indian Country.

Freddie Mac Seller/Servicer Guide Bulletin 2023-13 provides updates addressing:

HeritageOne℠ mortgages, a new conventional loan offering for borrowers who are members of federally recognized Native American tribes purchasing property located in Native American tribal land. The addition of borrower paystubs to be included in the assessment in Loan Product Advisor® asset and income modeler (AIM) for income using direct deposits. Expanded single-wide manufactured home eligibility and revised manufactured home appraisal requirements.

Updates to Guide Form 400, Warranty of Completion of Construction. New cash-specified payup types for 10-,15-, 20- or 30-year fixed-rate mortgages, when you sell for Cash using the Best-Efforts execution option. 2023 Area Median Income Limits and how Area Median Income is used for Credit Fee Caps.

Get an early assessment of Freddie Mac affordable product eligibility to maximize benefits for your borrower. Affordable Check lets you quickly and easily identify candidates for competitive conventional loan programs. Watch this Affordable Check API video to learn more.

Fannie Mae SEL-2023-25, June Selling Guide update includes information regarding allows temporary interest rate buydowns for mortgages secured by manufactured homes; allows 7- and 10-year adjustable-rate mortgage (ARM) borrowers to be qualified using only the note rate;

adds clarifying details for amounts that may be included with the payoff of existing loans in limited cash-out refinance transactions; and makes miscellaneous updates.

Freddie Mac will be hosting the 5th annual Rural Research Symposium on November 2nd at the Hilton at the Mall in Washington D.C. This year, the symposium will be in-person and offers a platform for academia, nonprofits, government, and industry to gather, present research and discuss the state of housing in rural markets.

Capital Markets

How has your experience been transitioning to updated agency AMI values? Are you looking to obtain loan-level pricing, improve efficiency, and ensure data accuracy when committing your loans to Freddie Mac? MCT’s Rapid Commit features intelligent best execution capabilities and is the first secondary marketing software firm to integrate with Freddie Mac’s Income Limits API created for first-time home buyer AMI limits. “MCT’s Income Limits API with Freddie Mac has ensured we are pricing out loans with accurate LLPA values when we have loan sales. Given the complexities of the new income and region related LLPAs, this integration has allowed us to not skip a beat,” said Arie Pisarevsky, Capital Markets – Hedge Manager at Bay Equity Home Loans. “We appreciate how MCT and Freddie Mac work together to continue adding value for us with these API integrations.” Learn more about MCT’s integrations with Freddie Mac or schedule a call today.

It’s crunch time. Consumer prices today, followed by the latest Fed decision and Chair Powell’s press conference tomorrow. Following ten consecutive rate hikes, there’s cautious optimism that the fed funds rate may be approaching the peak of this tightening cycle. However, the Fed decision and hawkish/dovish tilt of the Summary of Economic Projections will impact rates for the foreseeable future. Even if the Fed opts for a pause in its interest rate hikes, a more prolonged break from the Fed’s aggressive tightening stance is unlikely and expectations for another 25 basis points increase in July remain in place. After tomorrow’s Fed decision, the central banks of Europe and Japan hold monetary policy meetings later this week.

Getting a little ahead of myself here, when is any homeowner with a 3 percent mortgage going to see the opportunity to refinance into a lower rate? How about those with a 4 percent rate? Before the Fed decision, the U.S. Treasury will finish selling $296 billion worth of debt. That started with $123 billion worth of bills and $72 billion worth of notes yesterday with the remainder set for auction today. The market did a good job absorbing nearly $200 billion worth of bills and notes to open the week, good news as prices of Treasuries declining would likely ultimately increase mortgage rates. The current average mortgage rate is just under 6.5 percent. Despite elevated inflation and interest rates, consumer spending among Americans rose a strong 2.3 percent in April from a year earlier. It’s puzzling that people aren’t cutting back when almost everything is more expensive.

Today brings the aforementioned all-important May CPI report. Headline CPI increased .1 percent, exactly as expected month-over-month and 4.1 percent year-over-year with the core reading rising 0.4 percent month-over-month, as expected and 5.3 percent year-over-year versus 0.4 percent and 5.5 percent previously. Real weekly earnings were -.7 percent when it was seen declining 0.1 percent month-over-month. Prior to CPI, markets received an update on NFIB small business optimism for May, as if anyone cares. Later today brings Redbook same store sales, a Treasury auction of $18 billion reopened 30-year bonds, and the beginning of the Fed’s two-day FOMC meeting. After the inflation data, 30-year Agency MBS prices are better .250-.375 and the 10-year is yielding 3.70 after closing yesterday at 3.77 percent. The 2-year is at 4.53.

Employment and Transitions

At its annual all-employee State of the Union event, Homeowners Financial Group announced the promotion of Nitesh Patel, who was named EVP of Operations. Patel has worked in the mortgage industry for more than 20 years and joined Homeowners as a Closing Manager in 2007, three years after the company’s inception. Instrumental in the nationwide growth of Homeowners, he has played a key role in the company’s ability to weather down markets and emerge on the other side as a stronger lender with increased market share. “It’s been an honor to work with Nitesh for the last 16 years,” said HFG CEO Bill Rogers. “He’s brought so much to this company and I’m looking forward to the next stage of his growth and his contributions to Homeowners.” “My main goal is to make sure that we’re driving home our company’s core values and ensuring our clients’ needs are being met,” Patel said. Homeowners Financial Group continues to add key personnel in selected markets; reach out to David King.

Movement Boost, Movement Mortgage’s new down payment assistance program, aims to eliminate barriers and make the dream of homeownership a reality for homebuyers across the country. The program is available nationwide (excluding New York) to help qualified FHA borrowers cover the required 3.5 percent down payment and even a portion of closing costs. Movement Boost will expand the company’s impact across the country, particularly for first-time homebuyers. The program builds on the momentum started with Movement’s Grab The Key and Comunidad initiatives to help even more diverse and often underserved communities take the first steps toward homeownership. Want to learn more about Movement Boost and Movement’s Impact Lending initiatives? Join a virtual discovery call with members of the company’s leadership team this Thursday, June 15 from 3-4 pm ET. Participation is anonymous!

Draper and Kramer Mortgage Corp. announced that Coleen Bogle has been promoted to Chief Marketing and Growth Officer. Bogle, who has 15 years of mortgage marketing management experience, joined the company in 2015 as Director of Marketing and Communications and will oversee growth and recruiting for the company. Congratulations!

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Source: mortgagenewsdaily.com

Apache is functioning normally

As analysts scrutinize commercial real estate’s potential to destabilize the banking industry, the sector also faces a slowdown in loan purchases from one of its largest investors — life insurers.

Mortgage loans acquired by the life insurance industry plunged 59.9% to $14.86 billion in the first quarter compared to the same period a year earlier, according to new research published by S&P Global Market Intelligence. The amount was the smallest first-quarter number since 2014, while also dropping to its lowest mark since the COVID-impacted months of mid 2020.

Uninsured commercial mortgages, which typically make up the majority of loans acquired by life insurance companies, saw an even steeper falloff of 63.8% to $9.34 billion from $25.77 billion in the first quarter of 2022. The total share of commercial loans relative to overall quarterly acquisitions came out to 64.8% in dollar volume.

Meanwhile, uninsured residential securities saw their share grow to 29.1% of insurer purchases, marking noticeable diversification since 2020. The split that year between commercial and residential acquisitions was 77.2% to 11%.

“The changing landscape of general account asset managers may be as responsible for that trend as a desire to diversify,” according to Tim Zawacki, principal research analyst at S&P Global Market Intelligence.

The latest data comes as commercial real estate loans show hints of deterioration in recent performance, as federal officials also weigh in about the risk they may hold. Delinquencies in the first three months this year came in higher from the fourth quarter across all investor types, according to the Mortgage Bankers Association. Commercial loans held by life insurance companies 60 days or more past due had a delinquency rate of 0.21% up on both a quarterly and annual basis. But while elevated, they were still well below historic lows.

The office loan market, in particular, is the source of much of the current anxiety, largely fueled by growing numbers of vacancies resulting from resistance toward a return to in-person work. Delinquent office loans hit a five-year high in May, with more than 4% of loans packaged within securities more than 30 days past due, real estate data provider Trepp recently said. 

Compared to a year earlier, life insurers have also significantly cut back on their acquisitions of office-property loans, with just $693.53 million worth purchased in the first quarter, representing an 81% annual decrease, S&P Global’s analysis found. The total added up to just a 7.4% share of all mortgages the industry acquired, well off 14.2% a year earlier and 33.5% in the first quarter of 2018.

Making up for some of that dropoff were investments in multifamily and industrial properties, which include distribution centers, data hubs and manufacturing plants. But the industry’s acquisitions in those assets also took a steep dive as well, with multifamily purchase volume falling on an annual basis by 65.8%, and industrial down 58%.

MetLife held the largest mortgage portfolio volume of all insurers with $60.24 billion at the end of the first quarter, well outpacing Northwestern Mutual and New York Life at $51.92 billion and $38.66 billion, respectively. None of the top 10 mortgage holders increased their acquisition numbers on a year-over-year basis, S&P Global said. 

Still, while headwinds appear, insurers insist that the credit quality in their mortgage portfolios is strong, as many expressed confidence in recent earnings calls about how they would perform in a downturn thanks to underwriting standards and previous stress-test analysis.

“Life insurers are traditionally viewed as conservative lenders, focusing on commercial mortgages with relatively low loan-to-value ratios and high debt-service coverage ratios,” Zawacki said.

While first-quarter numbers showed some initial signs of stress from changes in mortgage-loan valuation, problems were limited to a few companies. Unrealized valuation decreases of $120.2 million were the highest in absolute terms in at least 15 years, but only two insurers were responsible for most of the loss.

Insurers will feel the effects of current commercial mortgage troubles, but more serious impact may turn out to be isolated, rather than becoming a wider industry crisis, S&P determined.

Source: nationalmortgagenews.com

Apache is functioning normally

Is it time to play defense? Economists have a fairly simple story to tell about the 2023 economy: things are weird. Inflation raged out of control in 2022, but has been falling in 2023. A volatile stock market remains below its 2021 highs, but still trended positive since the start of the year and may have entered a new bull market. Mortgage rates have tripled, but try telling that to the housing market. Economists and investors alike have issued steady warnings about a coming recession, but it feels like each month’s labor statistics beat the last.

A financial advisor can help you prepare your portfolio for a potential recession. Find a financial advisor today.

In other words, nobody really has a handle on what’s happening out there. That said, there are some potentially troubling signs ahead, especially for the third quarter of 2023. Several long-term factors may come to a head in late summer, ranging from top-level issues such as banking instability and delayed-impact Federal Reserve rate hikes to bottom-up issues such as resumed student loan payments. Together, it might all be enough to finally tip the economy into a long-awaited recession.

The right approach to this, as Morgan Stanley argued in a recent brief, might be to start thinking defensively.

“The stock market has managed to stay positive for much of this year. However with interest rates at their highest level in more than a decade and economic growth slowing, not to mention recent turmoil in the banking sector, uncertainty looms large,” writes Daniel Skelly, managing director and head of Morgan Stanley’s wealth management market research and strategy team.

“Additionally, equity valuations are already high relative to earnings – and current earnings estimates may be inflated. As a result, investors may see another drop in the stock market before they can truly declare the bear market over,” Skelly also writes.

In the face of this uncertainty, Skelly says investors may want to consider playing defense in the back half of 2023. In particular, he recommends seeking out dividend stocks. The reason is volatility, as dividend stocks tend to be an excellent buffer against unpredictable markets for four key reasons.

Price Supports

Dividend stocks tend to have built-in support against price volatility. In the short term, when companies issue a dividend to their shareholders, the price of a stock tends to drop. This has to do with a number of factors, most often the fact that new investors don’t want to invest if they’re being left out of the upcoming payments.

That’s not a bad thing, though, because when the share price drops for a dividend-paying stock the asset’s overall yield rises. For example, say you pay $10 per share for a stock that pays $1 in dividends. That’s a 10% yield on your investment ($1 dividend payment / the $10 you paid to receive it). If the share price drops to $8, but the company maintains its $1 per share dividend, that yield floats up to 12.5%.

That builds in a counter-cyclical pressure on the stock. As the share price falls, the yield increases. As the yield increases, more investors will get interested in the stock. That new interest will presumably drive new investment, boosting the share price back up. It’s not a guaranteed cycle, there’s much more going on here, but it can help smooth out volatility relative to stocks that generate their value entirely based on returns.

Stronger Returns

Historically, dividends have played a much larger role in market returns than many investors realize. As Morgan Stanley notes, in recent years dividend payments have lost ground compared to capital gains. From 2013 to 2022, only about 17% of the stock market’s overall returns came in the form of dividend payments. However, this has less to do with reduced payments and more to do with the explosive gains in stock value over that decade.

Historically, though, dividend payments have accounted for anywhere between 37% and 40% of the market’s overall returns.

Morgan Stanley expects a reversion to norms. “The next several years are likely to be marked by lower equity returns and higher volatility,” Skelly writes, “which could lead dividends to account for a greater portion of total stock market return.”

If the economy does slip into a recession, or even if the stock market simply enters longer-term bear territory, then capital gains-based returns will suffer. Long-term investors who can afford to wait out a downturn will probably be fine, but anyone who is looking to generate returns in the next year or two will probably face much less reliable, often less profitable, share prices. Dividend stocks can help offset that risk.

Signals for Good Fundamentals

Long-term investors should take note too, though.

As Morgan Stanley writes, dividends are a very strong bellwether for the underlying strength of a company. “When a company can reliably pay dividends or even increase them, it likely has a certain level of financial strength and discipline. For investors, this regular income stream can offer some hedge in what continues to be an uncertain stock market. In fact, in 2022, the S&P 500 overall lost about 18%, but the S&P 500 Value Index (which is often used as a proxy for dividend stocks) kept its losses to about 5%, and the S&P 500 High Dividend Index lost about 1%.”

In essence, when a company can afford to pay or maintain dividend payments, it’s signaling that it has significant cash on hand above and beyond its business needs. Now, to be sure, this is not always the case. It is not unheard of for corporate leadership to recklessly reward themselves and other investors at the expense of long-term business interests. So make sure you evaluate a company’s whole picture. If dividend payments take place in the context of weak leadership or an atmosphere of poor judgment, pay attention.

Otherwise, dividends can show that the company has strong revenue, good cash reserves and a handle on its debt, and that it expects this situation to continue. Especially if the economy enters recession, that’s an excellent signal for fundamental value. It suggests that this company can be a good long-term investment, regardless of current share prices.

Inflation Hedge

Finally, dividend stocks have historically been an excellent hedge against inflation.

Dividend-paying stocks tend to make up an enormous portion of the stock market’s return during periods of high inflation. One analysis by Fidelity found that when inflation was at 5% in the 1940s, 1970s and 1980s, dividends made up 54% of the S&P 500’s overall returns. This is in large part because companies can adjust their dividend payments on a quarterly basis, letting them keep up with the changing value of money.

In an atmosphere of ongoing inflation, dividend stocks are historically a strong choice.

Where to Focus Your Attention

For active stock pickers who would like to pursue a defensive dividend strategy, Morgan Stanley recommends four key areas of investment:

  • Industrials: Manufacturing and logistics firms are likely to benefit from increased infrastructure and defense spending, according to Morgan Stanley.
  • Health care: Medical firms have tended to outperform the market in past recessions, and are poised to take advantage of new technologies.
  • Consumer goods: Morgan Stanley expects these firms to raise consumer prices and recover well from high commodity prices over the past year.
  • Global stocks: Investing in global high-dividend stocks can allow investors to diversify their portfolios and capitalize on the momentum in this area.

When you look for dividend stocks, be somewhat judicious. In particular, be careful of stocks with yields that are too high, Skelly advises. This can signal an imbalance between the stock’s share price and its dividend payments, suggesting high payments that the underlying business may not be able to sustain.

Also, look at the stock’s price-to-earnings (P/E) ratio. Despite concerns over bear market territory, investors are also worried that many of the market’s high-performing stocks may be overvalued relative to the company’s underlying earnings. In those cases, investors can often expect the stock to lose value, and to lose value particularly quickly in the event of a recession.

Bottom Line

Many investors are worried about a recession in late 2023. To insulate your portfolio, Morgan Stanley recommends investing in dividend stocks to take advantage of their historic stability and potential for outsized returns in down markets. Active stock pickers who wish to pursue this strategy may consider dividend stocks in the industrial, health care and consumer goods sectors.

Dividend Investing Tips

  • If you need help investing in dividend stocks or want more guidance when it comes to your whole portfolio, consider speaking with a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Interested in dividend investing? You’ll want to familiarize yourself with how dividends are taxed. The exact dividend tax rate you pay varies by the type of dividends you have: non-qualified or qualified. Here’s everything you need to know about dividend taxes.

Photo credit: ©iStock.com/Cn0ra, ©iStock.com/kate_sept2004, ©iStock.com/pigprox

Eric Reed
Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.

Source: smartasset.com

Apache is functioning normally

One of my jobs at The Motley Fool is to serve as the internal financial planner for Fool employees. Lately, however, I’ve been answering more questions my colleagues have about their parents — and it’s more likely about their mothers or mothers-in-law. The truth is, women face a more difficult task when it comes to retirement planning, for several reasons:

Women earn, and have, less. According to the Census Bureau, women earn just 77% of what men make. They are also more likely to interrupt their careers to raise children or take care of older relatives. According to the Social Security Administration, the typical woman spends 12 years out of the workforce. This results in lower retirement benefits and smaller portfolios. On average, a female’s 401(k) is 40% less than a male’s.

Women live longer. Generally, retirement begins when a person leaves the workplace and ends when life leaves the person. The longer someone lives, the longer retirement lasts — and the more assets will be needed. On average, gals live five years longer than guys, which means they tend to be retired longer. Add to this the fact that, with most couples, the wife is a few years younger than the husband, and you can see why most women should plan on spending their last few years on their own. Which leads us to…

Women are more likely to spend part of their lives single. Though my wife may not believe it, marriage enhances retirement security. According to a National Bureau of Economic Research study by Susann Rohwedder and Michael Hurd, 80% of married couples in the 66-69 age group are adequately prepared for retirement, whereas just 55% of single persons have enough resources. Unfortunately, more than twice as many older women are single than older men. According to the Census Bureau, 19% of men over the age of 65 live alone, compared to 40% of women in the same age group. More than two-thirds of 85-year-olds are women.

Women tend to retire earlier. According to the Center for Retirement Research at Boston College, the average retirement age for men is 64, whereas the typical woman retires at age 62. This is often because a wife will retire at the same time as her husband. It’s just another reason why women can be expected to fund a longer retirement than men.

Women often leave financial planning to their husbands. According to a survey from ING Direct and Dailyworth.com, 40% of married women leave retirement planning to their partners, and almost 30% say they don’t know what their main source of future retirement income will be. This leaves widows and divorcees vulnerable when they find themselves single again, and could contribute to a general lower knowledge about money matters. According to studies by Dr. Annamaria Lusardi, director of the Financial Literacy Center, women score 12 percentage points lower than men on tests about concepts such as inflation and diversification, as well as other measures of financial literacy.

What’s a Woman to Do?
While all those statistics can be discouraging, the good news is that there are plenty of solutions. Here are the steps all women (and the men who love them) can take.

Become a money master. Regardless of whether you’re single, married, or living in a hippie commune where no one bathes but someone has to pay the bills, make sure you keep learning about financial planning and have a hand in the household finances. According to a study from Hartford Financial Service and the MIT AgeLab, couples who share the financial housework are more prepared than couples that rely on just one member to do all the financial lifting; the former group is more likely to have saved more and developed a plan for what will happen when one spouse passes away. This doesn’t mean that each spouse must do everything together, but it does mean that each spouse should know enough about what’s going on, and how to manage the family finances in the case the other spouse becomes ill or passes away.

Manage the couple’s benefits with the survivor in mind. The timing of when one spouse begins receiving Social Security and pension benefits (if any) can affect the financial security of the other spouse. The questions to ask are: 1) Will the primary beneficiary receive a larger benefit for delaying, and 2) how much of the benefit will go to a surviving spouse? In the case of Social Security, the benefit does increase for each year of delaying, which can be very important source of income for a retiree whose lifetime earnings record is not as high as her or his spouse’s, because that higher benefit will continue to the lower-earning spouse when the higher-earning spouse passes away.

Be ready to be on your own. The last time I covered this topic in a GRS post, a reader linked to a New York Times article, written by a woman who had once been an advocate for stay-at-home motherhood:

So I was predictably stunned and devastated when, on our 40th wedding anniversary, my husband presented me with a divorce. I knew our first anniversary would be paper, but never expected the 40th would be papers, 16 of them meticulously detailing my faults and flaws, the reason our marriage, according to him, was over….

The judge had awarded me alimony that was less than I was used to getting for household expenses, and now I had to use that money to pay bills I’d never seen before: mortgage, taxes, insurance and car payments. And that princely sum was awarded for only four years, the judge suggesting that I go for job training when I turned 67. Not only was I unprepared for divorce itself, I was utterly lacking in skills to deal with the brutal aftermath.

I hate to be so cynical as to suggest every person should be ready to become single at any moment, but I do think everyone should have a Plan B at the ready.

Delay retirement until everyone is ready. The decision to retire should not be based solely on whether both spouses have enough money to cover expenses, but also on whether a surviving spouse would be secure should the other spouse pass away. According to the Hartford study, the typical widow sees her income drop 50% when the husband passes away, yet expenses drop just 20%. To make sure they have enough in their later years, people should continue to work — and save — until they have enough to survive on their own, and not retire just because their spouse does.

Everyone should know the team. If you use any financial-services professionals — accountants, advisors, attorneys — both spouses should know at least enough to know what they do for you, and how to contact them. If you don’t use pros because one spouse does the work, you may want to begin assembling a team in your later years to smooth the transition in case that one spouse is no longer able to do the job. You can start with a fee-only financial planner, such as those who belong to the Garrett Planning Network or the National Association of Personal Financial Advisors.

The Times, They Are A-changin’
These kinds of posts can be tricky, since they’re based on generalizations that obviously don’t apply to every woman or couple, and can come off as sexist. To be sure, I know plenty of couples in which the wife is in charge of the household finances. These folks tend to be younger, which is why I think the difference in retirement prospects for women and men is partially a generational issue. It’s certainly my experience that women in their 70s — like my mother, who found herself divorced and re-entering the workforce in her 50s — are more comfortable leaving all the financial housekeeping to their husbands, and also less comfortable talking about money. Maybe that’s just my personal experience. But I do hope, as the income gap between men and women shrinks, and more men share in the child-raising responsibilities (for example, The Motley Fool offers paternity leave to new dads), that a post like this will be largely unnecessary several years from now.

Source: getrichslowly.org

Apache is functioning normally

Since launching in 2021, hundreds of thousands of users have used the TPG App to track more than 100 billion points and miles.

To help users maximize their points potential even more, the TPG App has a new feature called “Rewards Boost,” giving users even more personalized insights into choosing their next credit card.

How the new feature works

The TPG App already tracks users’ spending across all of their connected cards, including via its “Out Making a Purchase” Card Advisor feature, which helps users choose the most optimal credit card already in their wallet for a specific purchase in real time.

The app’s latest feature, “Rewards Boost,” analyzes users’ existing spending habits to recommend a credit card based on their highest spending category to maximize earnings. It also shows users exactly how many points they could have earned the previous month by using those cards.

For example, let’s say you spent a significant amount of money, $1,200, on dining last month via your Capital One Venture Rewards Credit Card.

Rewards Boost would let you know that 2 miles per dollar per purchase earned from the Venture card would equate to 2,400 miles per month. This card earns users 2 miles per dollar per purchase, a stellar return for flat-rate rewards and certainly better than earning no rewards at all. However, Rewards Boost would notify you that another card, such as the American Express® Gold Card, would have earned you more since it earns 4 points per dollar on dining at restaurants (including takeout and delivery in the U.S.) in addition to 4 points per dollar on up to $25,000 in purchases at U.S. supermarkets per calendar year (then 1 point per dollar).

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By using an Amex Gold on those dining purchases, you could have earned 4,800 points, equivalent to $96 when used as Amex Membership Rewards, per current TPG valuations. If May was a typical month for dining spending for this person, then over time, using this card would equate to over $1,150 annually in points just in the restaurant and dining category.

Though you may be deterred by the Amex Gold’s $250 annual fee (see rates and fees), Rewards Boost would inform you that you’re still saving more than $900 in net points value – and that’s before factoring in the aforementioned spending categories, in addition to 3 points per dollar on flights booked directly with the airline or through the Amex Travel portal and 1 point per dollar on all other eligible purchases. These earning rates are on top of the statement credit offered by this card, including $120 in Uber Cash annually and a $120 annual dining credit (both divvied up as $10 monthly credits).

The real value of Rewards Boost

We get it — one of the biggest hurdles for getting a new credit card is understanding whether it will truly be valuable to you and your personal spending habits. Also, the high annual fees of some cards (looking at you, The Platinum Card® from American Express; see rates and fees) can be enough to scare off even seasoned credit card veterans.

With Rewards Boost, you don’t have to worry about keeping track of every credit, perk or other benefit a card offers just to barely offset an annual fee for a card that doesn’t fit your lifestyle. Rewards Boost tells you the exact value you could be saving on a monthly and annual basis just by switching to using a card to complement your biggest spending category.

Bottom line

Not only does Rewards Boost show your best next card, but it takes all the guesswork out of whether a card will actually be a valuable addition to your wallet.

Download the free TPG App to see how you can boost your rewards today!

Related reading:

For rates and fees of the Amex Gold Card, click here.
For rates and fees of the Amex Platinum Card, click here.

Source: thepointsguy.com