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Apache is functioning normally

May 6, 2023 by Brett Tams

For anyone who’s dreamed of having their own little private pool with infinity views out over the ocean, the Waldorf Astoria Los Cabos Pedregal delivers — and for the points and miles enthusiasts among us, award nights can be surprisingly accessible.

Not every piece of this rugged paradise is perfect, though my recent stay came pretty close. Here’s a closer look at the Waldorf Astoria Los Cabos Pedregal.

The basics

The resort, part of the Hilton Honors portfolio, is located on the southern tip of Baja California Sur in Cabo San Lucas, Mexico. It first opened in 2009 and was rebranded to a Waldorf in 2019; it’s one of just 34 Waldorf Astoria properties worldwide.

One of the resort’s two beachside pools. (Photo by Brad Walters)

Other things to know at a glance:

Standard check-out time: Noon (later for Hilton elites if available).
Cancellation policy: Varies from as little as 14 days out during the off season to 90 days out during peak times.
Room types: Starting with standard rooms up to larger casitas and multi-bedroom private villas. There are 115 rooms and suites in total on the property.
Transportation: Los Cabos Airport (SJD) serves several hubs on all the major U.S. carriers. The hotel is about a 40-minute drive or cab ride away (Uber isn’t allowed to do pickups). If you’re adventurous and packed very light, the slow but comfortable Ruta del Desierto bus from the airport’s domestic terminal can get you as far as Puerto Paraiso mall, a mile from the resort, for $5. On the other end of the cost spectrum, private transport can be arranged with the hotel.
Parking: Complimentary valet parking.
Location: Along the southernmost stretch of beach in town, a 15-minute walk from the tourist center.

Balcony with plunge pool. (Photo by Brad Walters)

This property stands out even among other luxury properties in Los Cabos because every unit, from the standard rooms on up, comes with its own (small) heated pool. We’ll have plenty more on those pools below.

Booking with points

Paid rates all-in start at just over $1,200 a night for a standard room, but at high season those rates can more than double.

Awards start at 120,000 points per night for a base room, in which case your redemption would be worth no worse than 1 cent per point and easily north of 2 cents per point at peak periods.

As with many things in award travel, fortune favors those with the flexibility to drop everything and go. When I booked this with points in mid-March, every single day for the rest of the month was available at low-level award pricing:

What’s more, Hilton elites get every fifth night free when booking five or more consecutive standard award nights, which can effectively reduce the per-night rate to 96,000 points.

Watch out, though: Rates can jump to over 1 million points per night based on demand.

At last check, no 120,000-point dates remained for the winter 2023-24 travel season. If that’s when you want to go, watch award availability like a hawk, as it seems to come in waves.

🤓Nerdy Tip

American Express Membership Rewards transfer to Hilton Honors points at a 1:2 rate, meaning 60,000 AmEx points could theoretically cover a night here. If you prize luxury hotels over fancy flights, it’s a decent value.

The base room for award bookings is a Pacific View King. In my recent stay and a prior stay in 2021, the Hilton Honors Gold status conferred from holding the Hilton Honors American Express Surpass® Card ($95 annual fee; terms apply) scored me a double upgrade to an Ocean View Deluxe room. It’s the same size as the base room with a full, unobstructed ocean view.

Around the resort

Around the resort. (Photo by Brad Walters)

Design and layout

Cabo itself is situated in a landscape where desert, mountains and sea all seem to collide, and the resort’s design blends well with its surroundings.

Entry/exit tunnel. (Photo by Brad Walters)

In fact, you actually have to go through a little mountain — via a chandelier-lit tunnel — to get to the resort from town.

I arrived on foot, passing through a security checkpoint before getting whisked through the short tunnel on a golf cart. Once on the other side, I arrived at the open-air check-in lobby, where I was greeted with a welcome margarita.

While standard check-in time is 3 p.m., I arrived at noon, which gave me some time to explore the grounds before the desk texted me around 1 p.m. to tell me my room was ready.

Hotel beachfront. (Photo by Brad Walters)

Beyond the lobby, the resort sprawls out over 24 beachfront acres along and up the base of the mountainside.

Most common areas are grouped on two-tiered levels; it only took me a few pleasant minutes to walk from one end of the resort to another.

Hotel grounds. (Photo by Brad Walters)

The tiered design assures that every unit has a view of some kind, although some views are better than others.

Generally speaking, the higher on the property you go, the more expansive the view — but the more you’ll see between you and the ocean.

Casita with personal pool, as seen from main walkway. (Photo by Brad Walters)

In terms of privacy, it can vary wildly. The outdoor spaces of some of the casitas around the pool are quite exposed, as are the lower levels of some of the larger buildings. I wrote ahead to request a more private room and was happy with what I wound up with.

Inside the common area. (Photo by Brad Walters)

Although the resort’s design can feel somewhat spare from the outside, the small details stand out once indoors.

Food and beverage

The property features four restaurants ranging from fancy to poolside casual, along with three bars and a coffee shop.

As a Hilton Honors Gold member, I could enjoy the $34 continental breakfast buffet for free at Don Manuel’s, which is open for all meals of the day but serves breakfast starting at 7 a.m.

Granola with yogurt and berries. (Photo by Brad Walters)

Continental breakfast included granola, fruit, cereal, coffee, freshly squeezed juice and a selection of pastries.

Breakfast chilaquiles. (Photo by Brad Walters)

For an upcharge of $13 (including taxes) I upgraded to the Mexican breakfast, which included made-to-order huevos rancheros, chilaquiles, omelets and a rotating daily special, among other hot items.

For the sheer selection alone, it’s more than worth the price to upgrade, especially since you’re allowed to sample as many items as you’d like.

Pastry station, included with continental buffet. (Photo by Brad Walters)

Everything I tried was good, but the most memorable items I had were the crackling, delicious buffet pastries and a spiced hot chocolate.

The walkway to El Farallon, by day and at last light. (Photos by Brad Walters)

The highly regarded (and priced to match) El Farallon is open for dinner from 5 p.m. to 11 p.m. I didn’t partake during my short stay, although if I carried the Hilton Honors American Express Aspire Card ($450 annual fee), this would be a solid way to use up much of the $250 annual Hilton resort credit that comes with the card. The cliffside location looked stunning.

Agave Study bar. (Photo by Brad Walters)

Meanwhile, a recent addition to the resort’s bar offerings is Agave Study at Peacock Alley, which offers mezcal and tequila tastings paired with local bites.

Champagne bar, complete with swings. (Photo by Brad Walters)

Down on the beach you’ll find a separate champagne bar with swings for chairs, a fun place to spend a few minutes even if you’re not indulging.

Additionally, the resort offers cooking and cocktail-making classes for a fee.

Pools and hot tubs

Adult pool. (Photo by Brad Walters)

The hotel features two main pools, one for adults and one for all ages. Each was consistently busy during my stay; these photos are generally from early in the day.

Both pools are designed with an infinity-style setup overlooking the long beach, which is shared with a few other hotels but felt secluded otherwise, given that it’s essentially cut off from the town proper.

Swim-up bar. (Photo by Brad Walters)

The adults-only pool boasts a shaded swim-up bar, while the family pool features a built-in hot tub.

Family pool with hot tub in center. (Photo by Brad Walters)

Just see an attendant and they’ll set you up at an available lounger with umbrella shade as desired. Sunscreen is available at both pools, too.

Poolside service was prompt and friendly, with several small water bottles delivered in a bucket of ice as soon as I got settled. (That said, I far preferred spending time in my own little balcony pool, where it’s a lot easier to imagine you’re the only one at the resort.)

Staff occasionally comes around with free popsicle treats, which is a nice touch.

Family pool. (Photo by Brad Walters)

Farther up from the beach are a small circular kids pool, suitable for splashing around, and a pool reserved for spa guests with small waterfalls built in.

🤓Nerdy Tip

As with most beaches around Cabo San Lucas, the ocean here isn’t really suitable for casual swimming due to waves that crash like thunder, plus an immediate, steep drop-off into deep water. For a more peaceful wave experience, take a short ride to busy Playa el Medano or a longer trek to gorgeous, less touristy Playa Palmilla.

Other amenities and extras

Gym. (Photo by Brad Walters)

Elsewhere at the resort, you’ll find:

The aforementioned spa, with a full complement of paid treatments.
A kids club, which offers “family movie nights, curated programming, scavenger hunts, Spanish classes [and] cooking adventures,” the resort says.
A business center (basically just one room with a computer) and meeting facilities.
A well-appointed fitness center with yoga and a variety of other classes available.
A gift shop.
Two tennis courts.

Additionally, you’ll receive an email before arrival outlining the various paid excursions the resort is happy to set up for you, including land and sea activities.

In the room

Building 1. (Photo by Brad Walters)

Once my room was ready, I was escorted over and given a full tour by the agent who had checked me in. My unit was on the third of four floors of Building 1, beachside on the edge of the property next to El Farallon.

Previously, I’d stayed in Building 3, higher up near the lobby. The views were excellent in both cases, but I preferred Building 1 because there was no visual distraction between me and the beach/ocean.

Infinity view from inside the balcony pool. (Photo by Brad Walters)

The star of the show was the infinity ocean-view balcony and plunge pool, which is roughly 12 feet long by 4 feet across. It’s 3 feet deep with a full-length step-down that can seat at least 4 comfortably.

Full pool, looking down toward the beach. (Photo by Brad Walters)

While nobody would confuse this for a full-size pool, you can paddle around and even do mini-laps if you desire. Or you can sit, stretch your legs, soak for hours, and (in season) scan the horizon for whales — your choice.

The only whales I spotted were a couple of cruise ships as they meandered past, alas.

The plunge pool got good morning sun but was shaded for most of the day, which I actually appreciated. It’s kept at a comfortably warm temperature (between 80 and 84 degrees year-round, the resort says) and felt nice even on mild 65-degree nights.

Looking north from my balcony pool. (Photo by Brad Walters)

The balcony features slanted privacy slats on the side making it easy to see out while shielding others from seeing in. There’s plenty of comfy seating, although I wouldn’t have minded a full-size lounger in lieu of one of the two small sitting couches.

Daybreak view from balcony. (Photo by Brad Walters)

In terms of outside noise: I didn’t hear much of anything while in my room (score one for the soundproofing), but on the balcony, it’s pretty much impossible not to hear others nearby enjoying their outdoor space. If you’re anywhere near a main pool, you’ll likely hear that during the day, too, but it’s nothing a good pair of earbuds can’t cancel out. At night, all I could hear with my balcony open was the sound of crashing waves.

Closet door, fireplace, minibar/coffee/safe area with TV above. (Photo by Brad Walters)

The room was a cozy 856 square feet, which included a knob-controlled fireplace and an oh-so-comfy king bed. (The square footage includes the outdoor space, too.)

Looking in from the balcony. (Photo by Brad Walters)

Looking in from the front entryway. (Photo by Brad Walters)

Generous closet space. (Photo by Brad Walters)

The open bathroom boasted a rain-water shower and a large soaking tub with a loofah and what looked like honey but was actually bubble bath solution. It also had a mini seating area that functions as a visual buffer as much as anything else.

Sink area plus shower. (Photo by Brad Walters)

Bathtub. (Photo by Brad Walters)

Toiletries come in the form of pump-style bottles meant to carry over from guest to guest, a slight letdown to those who like to take home leftover samples of fancier stuff than we’d otherwise use day-to-day.

Customized minibar. (Photo by Brad Walters)

Rooms include complimentary mini-bars stocked with water and soft drinks. (Did I get in touch in advance to request a fridge full of zero-calorie Coke products? Maybe…)

🤓Nerdy Tip

Tap water in Mexico isn’t safe to drink, but the staff will bring you as much water as you need upon request for free. As far as room service dining goes, that’s available too, but for an extra cost.

Tequila, nuts and fruit upon arrival. (Photo by Brad Walters)

Also in my room, and complimentary for all guests, was a 200 mL bottle of Clase Azul Reposado tequila (a roughly $40 value and equivalent to four or five shots) with a ramekin of warm nuts, along with some apples. The tequila bottle is yours to take home and makes for a nice keepsake of your stay.

Every unit on property, from standard rooms to stand-alone villas, also includes the following:

A Nespresso machine.
Plush bathrobes for use during your stay.
A set of binoculars, useful for whale-watching.
A nice toiletry bag that was stocked (rather sparsely, in my case) with mouthwash, shoe shine, a sewing kit and a shower cap. The bag is yours to keep.
A beach bag, also yours to keep.
Free Wi-Fi, which was reliable all over the property (at least for basic internet browsing).
An afternoon snack of warm tortilla chips served with outstanding guacamole and pico de gallo, plus a pair of Corona beers, available from 4 p.m. to 6 p.m. and delivered upon request. (The hotel has a chat feature in the Hilton app that makes this or any other request seamless.) On both of my stays the resort accommodated my request for margaritas rather than beers.
A safe to lock your valuables.

Afternoon chips with guac, pico de gallo and margaritas. (Photo by Brad Walters)

An evening turndown service is offered in addition to morning housekeeping, but allow a wide time window for both. When asked at check-in when I’d prefer my turndown I said 8 p.m., but it wasn’t done yet when I returned to my room a little before 9. By then, I was ready to fall asleep to the crashing waves and texted the front desk to (nicely) say never mind.

🤓Nerdy Tip

I initially thought I’d have to unplug a lamp by the bed to charge my phone, but upon looking more closely, I found that the night tables have a well-camouflaged set of plugs and USB outlets on the sides adjacent to the bed.

Stand-alone beachfront homes, some of which feature hammocks. (Photo by Brad Walters)

Larger suites and stand-alone villas might include such extras as a fire pit, a larger private pool, beach hammocks, a full kitchen or even a dedicated butler.

Beyond the resort

Cabo San Lucas marina. (Photo by Brad Walters)

If you’re staying longer than a couple days, it’s well worth budgeting some time to get to know the Cape region, preferably by car.

Central Cabo San Lucas (just outside the resort) exudes an overtly touristy party vibe that might not be for everyone. Large cruise ships dock here often, and strolling the pedestrian zone that encircles the marina is a great way to feel like you’re back in the States.

That said, if it’s endless shopping you’re after, check it out — just try to time your visits to avoid those midday cruise crowds. You can walk through the tunnel into town or request a golf cart to take you as far as the outer security gate, from which the marina is a 5-minute walk.

Playa Palmilla, near San Jose del Cabo. (Photo by Brad Walters)

San Jose del Cabo, closer to the airport, is San Lucas’ more sedate, artsy counterpart. The strollable streets of its compact central core radiate from Plaza Mijares, a large car-free public square. A pleasant walk (or bike ride, along separated green lanes) southward along the estuary and then westward alongside the beach resorts is a pleasant way to pass a couple of hours.

If you like San Jose, you’ll likely love Todos Santos, an even more charming, artsier outpost about an hour north of San Lucas. Even farther afield, La Paz is known for its pretty colonial downtown. The largely unspoiled East Cape is also worth exploring, but you’ll want a 4×4 to access many of its jewels.

When to go

Cabo San Lucas has a dry, relatively mild season from roughly December through March. The rest of the year is warm to hot, with rains mostly confined to August through October. Hurricanes are a factor to consider; for instance, Hurricane Kay brought heavy rains as it passed just west of Cabo in September 2022.

For me, the sweet spot for visiting Cabo is between mid-November and New Year’s, when the ocean is still warm enough for comfortable swimming (at wave-free beaches) but the air temperature isn’t sweltering and rain chances are minimal.

The bottom line

When this property became bookable with Hilton points it was an instant darling in the world of award travel, and for good reason.

It’s more than just that warm pool of your own, where hours can easily slip away gazing out at the ocean with a pleasant margarita buzz.

It’s also the gracious service that’s there when you need it but never hovers, delivered with a palpable sense of pride that makes it easy to forgive a few relatively minor lapses.

Given that the base rate for many standard-issue Hilton properties these days is 40,000 points per night, it’s easy to wonder how much longer this oasis can be enjoyed for just triple that amount. Soak it up while you can.

This stay was independently reviewed and paid in full by the writer.

All information about the Hilton Honors American Express Aspire Card has been collected independently by NerdWallet. The Hilton Honors American Express Aspire Card is no longer available through NerdWallet.

(Top photo by Brad Walters)

How to maximize your rewards

You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for:

Source: nerdwallet.com

Apache is functioning normally

May 5, 2023 by Brett Tams

Hotel credit cards can pack a punch when staying with a related brand. They can add bonus points, potential elite status and even free hotel nights to a member’s loyalty account.

But, which one is better?

When it comes down to the World of Hyatt versus the IHG credit card, the answer will vary. It depends on which brand you stay with most often and where your future travel plans take you (especially if you’re saving up for a big redemption).

This analysis will help you decide which card works best for you.

Comparing earning rates and annual fees

Both have similar annual fees, which evens the playing field in that regard. Hyatt’s card costs $95 each year, while the IHG card carries a $99 fee. Neither is too daunting in exchange for the benefits that come with them.

Here’s what to expect when it comes to how many points you will earn from each card:

Each card offers bonus points when staying at its own hotels and within specific spending categories.

It’s time to drill down further to discover the other perks that can help tip the scales.

When to choose the World of Hyatt Credit Card

You travel where Hyatt has a presence

It is important to actually benefit from the perks and opportunities that come with a credit card. World of Hyatt has a smaller global footprint than IHG, so where you go matters.

This card will make sense for you if you can take advantage of perks like the free Category 1-4 anniversary night certificate and earn higher status through stays from your travels.

Since the card comes with Discoverist status plus five elite qualifying nights, you also have a head start on earning the next elite status level if you can find World of Hyatt hotels in your destinations.

These are the perks that come with the card — and come in handy when staying at a Hyatt property:

An anniversary free-night certificate to use at a World of Hyatt Category 1-4 property after the account anniversary each year.
Another free night certificate for a Category 1-4 property after spending $15,000 within a calendar year.
World of Hyatt Discoverist status.
Five elite qualifying nights toward achieving the next status tier.
Another two elite qualifying nights each time you spend $5,000 with the card.

You spend a lot on travel, food and working out

The bonus spending on the World of Hyatt Credit Card can be quite lucrative, especially on travel, dining and gym memberships. For many, these may be common purchases that yield extra points, and the more you spend, the more you can earn.

It goes beyond points with this card, as you can earn additional elite qualifying nights resulting in a higher elite status and an additional free night certificate.

These added perks provide extra incentive to keep spending on the card, especially since its points tend to extract greater value.

When to choose the IHG® Rewards Premier Credit Card

You stay often with IHG

Compared to World of Hyatt, IHG has a much larger global presence. This means you have more opportunities to earn bonus points and take advantage of perks like the free night certificate at IHG properties.

Receiving the fourth night free on award redemptions of at least four consecutive nights can represent major value if you make several award stays. And the more points you earn, the more redemptions you can make. You even receive a bonus if you pay for points.

When you stay at IHG properties, you also benefit from the perks of Platinum status. The benefits of this credit card can be generous if you spend a lot. They include:

Free night certificate on your account anniversary each year, valid for a stay worth up to 40,000 IHG One Rewards points per night (additional points from one’s account can supplement the certificate to book a more expensive property).
Receive the fourth night free on award reservations of four consecutive nights.
20% off the purchase of IHG One Rewards points.
$50 in United flight credits.
A credit for the TSA PreCheck or Global Entry fee once every four years.
IHG One Rewards Platinum status.

You spend a lot on the card, especially on gas

While the World of Hyatt Credit Card does provide perks for spending more than $15,000 as well as for every $5,000, the IHG® Rewards Premier Credit Card offers even more bonuses.

Cardmembers receive a $100 statement credit and 10,000 bonus points after spending $20,000. An even bigger bonus is in store for spending at least $40,000: IHG One Rewards top-tier Diamond status.

This can be useful if you put a lot of business or other expenses on a credit card (like gas, which earns 5x bonus points) and travel frequently to IHG family hotels.

Which card is right for you?

It depends on which brand you prefer for hotel stays and makes the most sense for your travel patterns.

If all things are equal, the World of Hyatt card offers more value for the points earned and comes with the potential for two free anniversary night certificates. But, if you tend toward IHG stays, the credit card can catapult you to top-tier status if you spend a lot and lots of points along the way.

They’re both packed with value for a small annual fee.

How to maximize your rewards

You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for:

Source: nerdwallet.com

Apache is functioning normally

May 5, 2023 by Brett Tams

It’s the stuff of nightmares: You’re footing the bill for an important dinner, only to be quietly told by the server that your card has been declined. That’s one possible outcome of attempting to charge above your card’s credit limit.

Credit card issuers determine your credit limit when you apply for a card, basing their decision on your personal financial information including income, other debts and payment history.

Sometimes, though, an extra-expensive month or unanticipated major purchase means you risk going over your credit limit. (Having a low credit limit to begin with also puts you at risk of exceeding it.)

But depending on the terms of your card, you may be able to charge above your credit limit — although by just how much is unclear. And even if the charge goes through, you may face other consequences.

Here’s what happens when you go over your credit card’s credit limit.

🤓Nerdy Tip

A credit limit is the amount you can charge to your credit card during any given billing cycle. With most cards, once you pay your credit card bill — even if you make a payment that’s lower than the total due — you can charge up to the credit limit again during the next billing cycle. Over time, the card issuer may adjust that limit if there are changes to your income level or spending. You may also be eligible for a credit limit increase just by requesting one.

A declined charge or over-limit fee

If you attempt to charge beyond your credit limit, it’s possible your credit card will be declined at the point of purchase, which can make for an embarrassing moment. But that’s not always the outcome.

Some credit card issuers will allow you to go over your credit limit at their discretion or if you opt in to the ability to do so. Capital One, for example, won’t charge you a fee for over-limit purchases when you opt in to this service, while Chase may let you opt in but in some cases will charge a fee. However, the amount that you’re approved to go over isn’t predictable, and this isn’t an open invitation to keep adding charges to your account. The issuer may put other limits on your account until you make a payment. (See below.)

The Credit Card Act of 2009 put some rules in place to curb over-limit fees, and these fees have become rare. In any case, card issuers can’t approve an over-the-limit purchase — and charge a fee for it — unless the cardholder opts in to allow it.

A higher minimum payment or more immediate due date

Even if an issuer allows you to exceed your credit limit, the company may increase the minimum payment due by the amount you charged above your credit limit. This means the over-limit charges must be paid at the end of that billing cycle, and you can’t carry that as part of your credit card balance.

You might also be on the hook to immediately repay the excess amount (or even the total balance due), without the ability to wait until the bill arrives as usual.

🤓Nerdy Tip

Note that charge cards work differently from traditional credit cards. A charge card has no set spending limit, so there’s generally no credit ceiling to “exceed.” However, unlike with credit cards, a charge card requires you to pay your bill in full each month. You typically can’t carry a balance.

A pause on more charges

Some issuers will stop you from putting additional charges on your card until you make a payment that puts your account back below its limit. This can also include other transactions like cash advances or balance transfers.

Changes to your card’s terms

Issuers reserve the right to change some of your card’s terms at any time, including the credit limit and interest rate. They may also close your account.

A decrease in your credit scores

One factor that’s part of calculating your credit scores is your credit utilization ratio, which is the amount of your total credit limit that you charge. In general, we recommend charging no more than 30% of your limit (and less is even better). Exceeding your credit limit or maintaining high balances can lower your credit scores over time.

An issuer opting to close your account can also affect your scores because losing an account can lower the average age of your accounts and decrease your overall credit limit, making it that much easier to max out other credit cards later.

Ways to avoid going over your credit limit

Set up alerts: Adjust your account preferences on the issuer’s website or app so you’ll receive a text or email when your card balance reaches a certain amount. You can also get alerts when your payment deadline is close or when a charge over a certain amount is made on your card.
Make small payments throughout the month: You don’t have to wait until the due date to make one big payment. Making multiple smaller payments throughout the month can help you maintain a smaller balance and lower the risk of going over the limit.
Ask for a credit limit increase: A low credit limit may not match what you need from your credit card. You can call the number on the back of your card to see whether you’d be eligible for a credit limit increase.
Open another credit card: If your current issuer declined your limit increase request, applying for an additional credit card may be the solution. It’ll raise your total credit limit and give you another card to fall back on for unexpected expenses. Just be extra careful because managing multiple credit cards can get more complicated.

Source: nerdwallet.com

Apache is functioning normally

May 4, 2023 by Brett Tams

The number of people enrolled in TSA PreCheck just set a record high — as did the number of people applying to join.

The Transportation Security Administration said in March that TSA PreCheck surpassed 15 million active members, marking an all-time high since the program launched in December 2013.

And the number of people applying seems to be growing. The TSA said that on Feb. 21, 2023, a record 19,200 people applied for TSA PreCheck membership on a single day.

TSA PreCheck is one of the U.S. Department of Homeland Security’s Trusted Traveler Programs, which includes others like Global Entry and Nexus. If approved for TSA PreCheck, travelers can pass through airport security without taking off their shoes or belts. They can also leave electronics and compliant liquids inside their bags.

And without all that fumbling around of clothes, shoes and laptops, TSA PreCheck tends to improve security wait times. Across airports that have separate PreCheck lanes, the TSA says, 92% of members wait less than five minutes for security screening.

Why more TSA PreCheck members could be good news for all

“If everyone had TSA PreCheck, overall wait times would be shorter because travelers wouldn’t be required to take off shoes or remove electronics,” Scott Keyes, founder of travel deals site Going, said in an email.

TSA PreCheck enables more people to funnel through security in the same period of time.

“If there are 20 people in the regular line and even 30 in the PreCheck lane, those 30 are probably still getting through faster,” says Daniel Green, co-founder of Faye Travel Insurance.

It’s not unlike the express checkout at the grocery store, reserved for people with, say, 10 items or fewer. Thirty shoppers with just five items almost always check out faster than 20 customers each with a cart full of groceries.

But if more people end up with TSA PreCheck, will that just shift those long queues to the TSA PreCheck line?

Harriet Baskas, who runs a blog called Stuck at the Airport, has that exact worry.

“Now that more people have PreCheck … the PreCheck lines at many airports are getting longer,” she says. “Sometimes it feels as if — and in some cases it really is the case — that PreCheck lanes are longer than regular lines.”

But this concern assumes that airports will continue to maintain the same number of PreCheck lines as they have had, even as enrollment figures grow.

“My guess is, if more people had PreCheck, they would convert more lanes to PreCheck lanes,” Green says.

His theory is founded on one of the strongest motivations of them all: money.

“Let’s not forget that there’s an incentive for having more people in PreCheck, as travelers pay for this perk,” he says, in reference to the fee needed to apply for membership.

How to apply for TSA PreCheck (and skip paying the application fee)

Apply for TSA PreCheck by filling out an online application on the TSA website. It takes about five minutes to complete and requires you to enter personal information such as name, gender, email address and phone number. After that, you’ll schedule an in-person interview at an enrollment center where you’ll go through a background check and fingerprinting.

The application fee is $78. If approved, you’ll get TSA PreCheck membership for five years, upon which you must pay $70 to renew your membership online.

How to maximize your rewards

You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for:

Source: nerdwallet.com

Apache is functioning normally

May 3, 2023 by Brett Tams

If you’re struggling to save enough for a home down payment, a 401(k) loan might look like a quick and easy solution, especially if you have more money stashed in that account than anywhere else.

Among Americans with retirement accounts, including 401(k)s, the median account value was $65,000, according to the Federal Reserve’s Survey of Consumer Finances, based on the most recently available 2019 data. The median value of transaction accounts, such as savings, checking and money market accounts, was $5,300.

Many employer plans allow 401(k) loans, and the upsides can be attractive: Essentially, you’re borrowing from and paying interest to yourself. The loan generally doesn’t count as debt when lenders calculate your debt-to-income ratio.

But borrowing from retirement savings has downsides, and some financial planners advise against it, period.

“I generally hate the idea of people borrowing from a 401(k) to purchase a home, given the possible risks,” says JP Geisbauer, a certified financial planner and principal of Centerpoint Financial Management in Irvine, California.

Yet Nathaniel Moore, a certified financial planner and president of Agape Planning Partners in Fresno, California, says he understands why someone would be tempted. “If it means going from paying high rent to getting into a place you own, I get it,” he says.

Here’s what to consider if you’re thinking about it.

Rules for borrowing

Most 401(k) plans permit loans, but federal law doesn’t require them to. Log on to the website where you track your 401(k) to find loan information or contact your employer’s human resources department or plan administrator.

Some loan terms vary among employer plans, but all plans must abide by federal rules:

Loans are capped at $50,000 or 50% of the vested account balance, whichever is less — or up to $10,000 if 50% of the vested balance is less than $10,000. If your balance is $200,000, you may be able to borrow up to $50,000. If your vested balance is $70,000, the maximum loan amount would be $35,000.
You have a set amount of time to repay the loan plus interest; otherwise, it will be considered a distribution or withdrawal. You’d pay income tax on a distribution and, if you’re younger than 59 1/2, an additional 10% tax penalty. The plan sets the interest rate, typically 1% or 2% above the prime rate.
Generally, 401(k) loans must be repaid in five years, but a plan can give more time to repay a loan for purchasing a primary home. Payments must be made at least quarterly over the loan term.
If you get fired or quit your job, the plan can require you to repay the full outstanding loan balance. If you can’t pay, the unpaid amount will be subject to taxes and, if you’re under 59 1/2, the 10% tax penalty. You can avoid the tax implications by rolling over the outstanding balance to an IRA or another eligible plan by the next annual federal tax filing deadline. About 4 in 10 Vanguard plans allowed participants to continue repaying loans after leaving their jobs in 2021, according to a 2022 Vanguard report.

Risks of using a 401(k) loan

Even if you’re convinced a 401(k) loan is the way to go, it’s important to understand the risks at the outset.

One is the potential tax burden if you can’t make the quarterly loan payments or leave your job and can’t repay the outstanding balance on time.

You could also fall behind on saving for retirement. Besides losing potential investment gains on the borrowed money, the loan repayments could crimp your ability to contribute to your 401(k). In fact, some plans don’t allow employees to make regular contributions until the loan is paid off, says AnnaMarie Mock, a certified financial planner with Highland Financial Advisors in Wayne, New Jersey. Pausing contributions would be especially costly if you missed out on matching contributions from your employer.

But there’s another less-obvious risk, which Moore finds particularly troubling: Once you’ve taken one loan, it gets easier to tap into it again. “You’re reprogramming your mindset to where now the 401(k), which was designed to be protected and provide income in the future, is accessible,” he says.

Loan costs, repayment and alternatives

Take these steps if you’re thinking about borrowing from your 401(k):

Check your plan’s rules for 401(k) loans

Get details about the interest rate, fees, payment amounts and how long you’d have to repay the loan.

Calculate whether you can afford loan payments

Tally the loan payments along with other obligations.

“That 401(k) loan is going to get taken out of your salary right from the start, so make sure that with the new home expenses, your lifestyle expenses and saving, you’re not operating at a deficit each month,” Mock says. If the loan payments are unaffordable, she says, “the only other place where you’re going to be able to support that lifestyle would be from credit card debt, which is very expensive.”

Learn what happens if you leave your job

If the plan requires paying the outstanding balance in short order — as most plans do — strategize how to repay that sum to avoid tax consequences.

Consider alternatives

Finally, check out other options to help buy a house, such as low-down-payment mortgages and your state’s first-time home buyer programs, Mock advises. Perhaps one of those could eliminate the need for a 401(k) loan.

Some conventional loans have down payments as low as 3%. FHA loans, insured by the Federal Housing Administration, have down payments as low as 3.5%. And if you’re a service member or veteran, you may qualify for a zero-down-payment VA loan backed by the U.S. Department of Veterans Affairs. USDA loans for rural home buyers also don’t require down payments.

Still want a 401(k) loan?

Moore offers these tips:

Take only what you need, which may be less than the maximum you can borrow.

Be aggressive with repayment. Just because you have a certain number of years to repay the loan doesn’t mean you have to use all that time. “Try to pay it back as fast as possible.”

Beware of the tendency to borrow again. “You don’t want to get in the habit of looking at your 401(k) like a piggy bank.”

Source: nerdwallet.com

Apache is functioning normally

May 3, 2023 by Brett Tams

A divorced spouse can receive up to 50% of an ex-spouse’s Social Security benefits if the marriage lasted at least 10 years and the divorced spouse is divorced at least two years, unmarried and at least 62. The benefit doesn’t increase existing payments or reduce the ex-spouse’s benefits.

Who qualifies for spousal retirement benefits after divorce?

In order to qualify for divorced spouse benefits from Social Security, six things have to be true

Your marriage lasted 10 years or longer.
You’ve been divorced for at least two years.
You are at least 62 years old.
You are unmarried.
The Social Security retirement benefit you would receive based on your own work history is less than the Social Security divorced spouse benefit.
Your ex-spouse is entitled to Social Security retirement benefits.

If you’ve remarried, you may become eligible again if your later marriage ends in annulment, divorce or death

You qualify for spousal retirement benefits whether you were a stay-at-home spouse, worked full time or a combination of the two.

How much Social Security does a divorced spouse get?

A divorced spouse can receive up to 50% of their ex-spouse’s full retirement benefit. You must wait until you reach full retirement age if you want to claim your full benefit. For most people, full retirement age for Social Security is between 66 and 67.

Although most people can start receiving benefits at age 62, the Social Security Administration may permanently reduce the monthly benefits by as much as 30% when filing before full retirement age

Spousal benefits decrease by 25/36 of one percent for each month before normal retirement age, up to 36 months. If you retire more than 36 months before full retirement age, your benefit reduces another 5/12 of one percent for every month that exceeds 36 months

You’ll be enrolled automatically in Medicare Part A and Part B when you turn 65 if you’ve already claimed Social Security or qualify due to disability. Otherwise, you must enroll yourself in Medicare when you turn 65.

Estimate your Social Security retirement benefits

Your actual benefit may be lower or higher than estimate made with this calculator, because it does not take into account your actual earnings history.

We assume you have earnings every year until you begin receiving Social Security benefits. If you had several years of noncovered employment or your earnings changed significantly from year to year, this calculator will overestimate or underestimate your benefit.

Can you collect Social Security divorced spouse benefits and your own retirement benefits at the same time?

You cannot double-dip on Social Security retirement benefits. Instead, you receive the greater of:

This means that technically you can receive a combination of both benefits if your own retirement benefit is less than what you’d receive from the spousal benefit. You’ll receive an additional amount to make your own retirement benefit equal to the spousal benefit.

For example, if the Social Security Administration determines that Jane Smith’s spousal benefit is $1,000 monthly but her own Social Security retirement benefit is $600, she’ll receive her $600 retirement benefit plus $400 as a spousal benefit.

Can your ex’s current spouse collect spousal benefits if you do?

Collecting Social Security benefits as an ex-spouse does not affect your ex-spouse’s benefits or their new spouse’s benefits

. The calculations are completely separate, and one person’s benefits generally do not interfere with any current or future spouses or additional divorces.

How to file for Social Security divorced spouse benefits

You can apply for Social Security divorced spouse benefits online, over the phone at 800-772-1213 or at your local Social Security office.

Can you apply for Social Security divorced spouse benefits if your ex hasn’t yet applied for Social Security?

Yes, divorced spouses can apply for Social Security benefits even if their ex-spouses have not retired yet. In order to qualify, you must be at least 62 years old, have been divorced for at least two full years and married to the former spouse for 10 years or longer.

If you collect Social Security divorced spouse benefits, do you have to inform your ex-spouse?

No, you do not have to tell your ex-spouse that you applied for Social Security benefits.

Although it may be helpful if your ex-spouse provides the information necessary to file for divorced spouse Social Security benefits, you can apply without it.
On your application, you’ll need to provide your ex-spouse’s full name and date of birth, plus the date and place of your marriage and how and when it ended. That information should be enough for the Social Security Administration to find your ex-spouse’s work history, which is necessary to calculate the benefit

.

Source: nerdwallet.com

Apache is functioning normally

May 2, 2023 by Brett Tams

The First Access Visa® Credit Card is an option for those who are looking to build credit but would prefer an unsecured credit card without a security deposit. The card, issued by The Bank of Missouri, is widely accepted at retailers.

However, there are some serious drawbacks that make other cards for bad credit or no credit more appealing options. The First Access Visa® Credit Card piles on a laundry list of fees, and should you get into debt, it charges an astronomical interest rate. Though you can earn cash back on your spending, it’s a pittance compared with the annual cost of carrying this card.

Here are five things to know about the First Access Visa® Credit Card.

1. It’s an unsecured card for credit building …

For the most part, credit cards for those with bad or no credit are secured cards, which require a security deposit upfront. That deposit becomes your credit limit, and it’s eventually refunded to you when you establish or shore up your credit scores and graduate to an unsecured card.

But that security deposit can set you back the moment you get a secured card, sometimes by $200 or more. The First Access Visa® Credit Card doesn’t require a security deposit, but other costs associated with carrying this card might make a security deposit seem more palatable, especially if you can qualify for a card with a relatively modest deposit requirement. With the Capital One Platinum Secured Credit Card, for instance, you may be eligible for a $200 credit limit with a security deposit as low as $49.

The First Access Visa® Credit Card does report your payment activity to the three main credit bureaus — Experian, Equifax and TransUnion — which can help you build credit over the long term with careful use, such as paying your card bill in full and on time every month.

2. … But it charges a flurry of fees

The First Access Visa® Credit Card charges a surprising amount of pricey fees, while other credit-building options cost substantially less. Here’s what you’ll pay as a cardholder:

Program fee: You must pay this one-time $95 fee within 60 days of your application getting approved. Once you do, you can activate and begin using your card.
Annual fee: $75 for first year, then $48.
Monthly servicing fee: This fee is waived for the first year but then costs $8.25 per month, or $99 per year.
Additional card fee: Adding cards for authorized users will cost $29 per card, per year.
Credit limit increase fee: You must have the First Access Visa® Credit Card for a year before you can potentially qualify for a credit limit increase. If you do, you’ll pay a fee of 20% of the credit limit increase, which eats into your overall credit limit. So if you’re granted an increase of $100, you pay a $20 fee and get an actual increase of only $80.
Premium plastic card design fee: Pay up to $10 for a “premium” card design.

If you just pay those first three fees and skip adding cards, requesting a credit limit increase or opting for a snazzier card design, the First Access Visa® Credit Card will cost you $170 in the first year and $147 per year after that. Unlike a security deposit for a secured card, that’s money you won’t get back.

3. You can earn cash back, but with caveats

Rewards aren’t a main priority when you’re building credit, but the First Access Visa® Credit Card does earn 1% cash back. Still, there are several things to note about the card’s rewards program.

First, unlike with most other rewards cards, you earn cash back not by making purchases with the card but rather by making payments on your card bill. Second, you have to wait six months before you can redeem any rewards for a statement credit. And finally, you must redeem in increments of 500 points, or $5.

If you’re open to a secured card, some no-annual-fee options also earn cash-back rewards that are much more straightforward. The Discover it® Secured Credit Card earns 2% cash back at gas stations and restaurants on up to $1,000 in combined spending each quarter and 1% cash back on all other purchases. There’s no waiting period to redeem, either. You can redeem your rewards at any time, in any amount. New cardholders can qualify for a sign-up bonus, which Discover phrases like this: INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match.

If you’re seeking rewards but want to avoid an upfront security deposit and an annual fee, some “alternative” credit cards can tick all those boxes. These types of cards consider financial factors beyond credit scores, like your income, when you apply.

4. Beware of the sky-high interest rate

The ongoing APR is 35.99% Fixed APR, which is staggeringly high, even compared with other cards for bad credit. Making on-time payments of at least the minimum amount due will help you establish credit, but if you don’t pay your bill in full, it can lock you into a cycle of expensive debt that can take years to get out of.

5. A checking account is required

You must have a checking account to qualify for the First Access Visa® Credit Card, which can present a challenge to anyone who wants to build credit but is unbanked.

An alternative is the OpenSky® Secured Visa® Credit Card, a secured card with a $35 annual fee. You can fund your security deposit with a check if you’re able, but you can also do so with a Western Union transfer or money order.

Source: nerdwallet.com

Apache is functioning normally

May 2, 2023 by Brett Tams

Kate Wood, home expert at NerdWallet, noted that it’s not a tremendous surprise. “Mortgage interest rates rose in March, so it makes sense that fewer buyers signed contracts,” she said. “Affordability is already a major challenge due to higher home prices, and every time interest rates increase, the situation gets harder for buyers.” The trade … [Read more…]

Apache is functioning normally

May 2, 2023 by Brett Tams

The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.

Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.

This week’s episode starts with a discussion about Social Security.

Then we pivot to this week’s money question from Amy, who wrote, “Hi, Nerds. I love your podcast and I wanted to get your take on a question I have. I am in my late 30s and I am just starting to think about investing for retirement. I have a decent amount of money in a savings account that I can use to invest. I’ve done a fair amount of research into investing, and index funds come up a lot as a smart option. My question is, aren’t ETFs an even better choice given that they’re more tax efficient? I plan to buy and hold and don’t expect to do much with my investments until I retire. Please help me figure out if ETFs end up costing investors less than index funds do when the time comes to sell them.”

Check out this episode on either of these platforms:

Our take on estimating Social Security benefits

Figuring out how much money we will need to live comfortably in retirement is a notoriously imprecise exercise. To make planning for our future selves a little easier, a team of Nerds created a Social Security benefit calculator, which generates an estimate of your Social Security benefit as a monthly and yearly figure. This number can help you figure out how much money you’ll need to have in other retirement savings accounts like IRAs to reach your retirement goals.

This number, while a useful data point, is still just an estimate. Your actual Social Security amount could be different depending on your income history and the age at which you retire. For example, today, you may plan to retire at age 62, the current earliest age of eligibility for Social Security. In reality, you may end up working until the full retirement age of 70. Delaying Social Security withdrawals for those eight years will significantly increase your retirement benefit.

Our take on tax-efficient retirement investing

Saving for retirement can feel like a never-ending chore, especially when you won’t see the fruit of your (literal) labors for several years. To entice us to save, the government offers tax breaks on certain types of retirement accounts, namely 401(k)s and IRAs. With traditional 401(k)s and IRAs, you get your tax break up front so that retirement contributions reduce your taxable income. Roth 401(k)s and IRAs, on the other hand, delay the tax benefit until retirement when you can make withdrawals tax-free.

Contained within those retirement accounts are the actual investments: stocks, bonds, mutual funds, index funds, ETFs or options. ETFs and index funds are popular options because of their relative low cost and promise of high returns. Generally speaking, ETFs have less tax liability than index funds. It’s possible to owe capital gains taxes on your profits on index funds without even selling a single share.

Our tips

Understand how accounts are taxed. Roth IRAs, 401(k)s, and other retirement accounts are taxed more favorably than brokerage accounts.
Consider different investment options. Once you have your retirement account, you have a number of choices like target-date funds or mutual funds.
Investments have their tax differences, too. ETFs are more tax efficient than index funds, but the difference is fairly small and it’s not typically a major factor in retirement accounts.

More about tax-efficient investing on NerdWallet:

Episode transcript

Sean Pyles: Choosing the right investments for your retirement accounts can be a head-spinning endeavor. Do you continually tweak your investment mix or just let things ride?

Liz Weston: And how do you choose between retirement accounts like 401(k)s and Roth IRAs?

Sean Pyles: Well, this episode we will help a listener sort out their retirement investment decisions.

Welcome to the NerdWallet Smart Money podcast, where you send us your money questions and we answer them with the help of our genius Nerds. I’m Sean Pyles.

Liz Weston: And I’m Liz Weston.

Sean Pyles: OK. We’ll get to the part where we ask our listeners to send us their money questions in a bit. But first, Liz, welcome back.

Liz Weston: Hey, it’s great to be back. Thank you.

Sean Pyles: So Liz, you had a little eat, pray, love journey through Europe, spent a lot of time in France. Do you have any profound money lessons for us now that you’re back?

Liz Weston: Well, this is the biggest one, don’t wait until retirement to travel and do the stuff that you want to do. I’ve been taking paid and unpaid leaves multiple times in my career and they are so worth doing if you can swing it.

Sean Pyles: That sounds lovely. Well, I am glad that you’re back. And listeners, just so you know what’s up on our end too, my other co-host, Sara Rathner is about to head off on her own spiritual journey called maternity leave. So Liz will be back in the hosting seat with me over the next few months. All right. And now we are at the part where we ask our listeners for their money questions. So to keep it short and sweet, listeners, we know that you have burning money questions and it is our job to answer them. So send your money questions our way.

Liz Weston: Maybe you want some advice about how to make the expensive summer travel season more budget friendly, or you’re wondering about how to pay for a bathroom remodel or maybe your question is even less specific. Whatever you’re wondering about, please send us your questions. Leave us a voicemail or text us on the Nerd hotline at 901-730-6373, or you can email us at [email protected].

Sean Pyles: This episode, my other co-host, Sara and I answer a listener’s question about how to choose the most tax efficient investments for their retirement account. But first, to kick off this episode, Liz and I are talking about another big part of retirement planning, Social Security benefits, specifically understanding how much you might get.

Liz Weston: It’s easy to underestimate how important Social Security is going to be to your retirement planning, but it is huge. Every thousand dollars in monthly income that you get from Social Security is $300,000 that you don’t have to save.

Sean Pyles: Wow.

Liz Weston: Yeah, and not only is that income guaranteed for life, but it’s inflation adjusted, so your buying power isn’t eroded over time and you don’t have to make a bunch of decisions about how to invest the money, it just comes to you. So one of our Nerds, Tina Orem, has created a calculator to help you estimate your benefit. Welcome to the podcast, Tina.

Tina Orem: It’s great to be back. Hi.

Liz Weston: Tina, right about now, a lot of our audience is thinking, “Huh, I’ll never see a dime from Social Security.”

Sean Pyles: Yeah. Well, we’ve been hearing for years that Social Security is going broke.

Tina Orem: Yeah. So in March, the Social Security Administration actually released a statistical analysis and it basically said that that part of Social Security, the so-called trust fund, is going to run out of money in 2034. And at that point, the estimate is that the taxes you and I pay on our earnings, basically a part of it, will still be enough to pay something like 80% of promised benefits. So, I mean, 80% isn’t nothing.

Liz Weston: Yes, and Social Security is the most popular federal program ever. I can’t imagine any politician who wants to get reelected allowing people who are getting benefits to have those benefits cut. So the program may change, but it is highly doubtful that it’ll go away.

Sean Pyles: Yeah. And also just to beat back the cynicism among my fellow millennials and my Gen Z brethren, I think the whole “Social Security is going to run out of money, so why should we even try” defeatism could be a self-fulfilling prophecy. So if folks in my generation really want this benefit, make your voice heard and ensure that it’s there for you. The battle is not over, folks. So anyway, Tina, let’s hear about this calculator that you devised.

Tina Orem: Sure, yeah. We put this calculator together because we know a lot of people wonder what they’re going to get from Social Security and when they’re going to get it. And I think that’s a reasonable thing to wonder, especially when you’re thinking about your retirement savings and those bigger questions of, how much money will I need every month and where’s that money going to come from? So this calculator is intended to help consumers with that. And I want to be sure to give a shout-out to our engineering team, the product team, our editors, we all helped produce this calculator. And I’m saying that not just to be sure to acknowledge and credit the people who worked on this, but I also want to tell people that this calculator is made by a team of people, and we vetted it and tested it and we put a lot of thought into how to make it useful and easy for consumers.

Liz Weston: Awesome. So what do people need to know about using the calculator?

Tina Orem: Okay, a few things. So the first thing I want to say is that the calculator is easy to use. You just enter your date of birth, you enter the age of which you want to start taking Social Security retirement benefits, your annual income this year, and then an estimate of your annual salary increases going forward. So that’s it. The second thing I’ll say is that this is an estimate, we don’t have access to the last 35 years of your personal income and earnings history. So that’s what the Social Security Administration uses to calculate your exact, to-the-penny benefit. So we make an estimate of your previous earnings based on what you tell us you earned this year. So the catch is, if you were out of the workforce for several years, or maybe you had income and it fluctuated a ton, or you were in a line of work where they may not have withheld Social Security taxes from your paychecks, your benefits are much harder to estimate with this tool.

But if you had a fairly steady paycheck and Social Security tax has been coming out of those checks, this tool should give you what we think is a pretty good estimate of the size of your monthly Social Security retirement benefit check at various points in time. And I say various points because there are three in particular that are of particular interest when it comes to Social Security: There’s the age at which you want to retire, there is what Social Security Administration calls your full retirement age, which I’ll get to in a second, and then age 70.

Sean Pyles: OK. So this might be a good time to remind folks of how Social Security benefits are actually calculated. Tina, can you give us a super quick, simple explanation of this very complicated matter?

Tina Orem: Yes, because it turns out the formula for calculating Social Security benefits is actually pretty complex. But simply put, how much Social Security tax you pay into the system over time influences the size of your eventual retirement checks. That’s the first thing to know. The second thing is that when you decide to start taking Social Security retirement benefits has a really big effect on the size of your check. And there’s one key age to that I want to point out, and that is what I said, the full retirement age. So that’s the age at which you’re entitled to 100% of your Social Security retirement benefit. And the Social Security Administration decides what your exact full retirement age is, and that’s based on when you were born. So for most people, it’s sometime between age 66 and 67.

Liz Weston: I’m guessing for most of our listeners who are born in 1960 and after it’s going to be age 67. You can start Social Security as early as 62, but you’re essentially settling for a permanently reduced check, and why would you do that?

Sean Pyles: This was one of the most interesting parts of the calculator as I was playing around with it is seeing just how much you can get monthly or annually by delaying your retirement even a year or seven years or something like that. You can get thousands of dollars more per year just by holding off the age at which you received these benefits.

Liz Weston: Oh yeah, it’s huge. And there’s been a lot of research done over the past few decades showing that most people are better off waiting. And that’s sometimes a hard message to get through: Like people want to grab the money when they’ve got it, but you really do get more than sufficient payoff if you wait.

Sean Pyles: And another cool thing with this calculator is that you see the Social Security break even age, which is the point at which the amount of benefits you receive having waited a few to start getting your benefits begins to outpace the amount you would’ve gotten if you’ve started getting them at an earlier age.

Liz Weston: Yeah.

Sean Pyles: All right. Well, Tina, what should folks do with the information they get from this calculator?

Tina Orem: Well, I think one good use of this information is to get an idea of what’s really going to be available to you when you want to retire. So for example, if you’ve used our retirement calculator and you have an idea of how much money you’ll need per month during retirement to live the life that you want to live, then knowing what portion of that is going to come from Social Security can help you get a tighter handle on how much you need to save for retirement.

Another thing the calculator I think will get you thinking about is when you want to retire. So if you know that you’re going to get a bigger monthly check by waiting to start taking benefits, would waiting work for you? How long is too long? When will it be no longer worth it or affordable to wait? So that information can help you get on the same page with your partner and with yourself frankly about when you’re really going to retire.

Sean Pyles: And where can people get more information around Social Security benefits?

Tina Orem: Yes. Well, NerdWallet does have a ton of helpful content about Social Security on the site, everything from how it works and different types of benefits that come from the Social Security Administration and what happens to your retirement benefits in certain situations and ways to maximize your benefits. And of course, you can always take a look at the Social Security Administration’s website or visit a local Social Security office.

Liz Weston: And we should mention that if you do have a more complicated situation, you can see your actual Social Security estimated benefits on its website by creating a my Social Security account. Probably a good thing to do anyway just to secure that and make sure that nobody else can get your information, but it’s a way to see what Social Security’s estimates are based on your actual earnings history.

Sean Pyles: All right. Well, Tina, thank you so much for talking with us and for building this super cool calculator.

Tina Orem: Yeah, my pleasure. I hope it helps people.

Sean Pyles: And with that, let’s get onto my money question conversation with Sara.

This episode’s money question comes from Amy. Here it is, as read by Smart Money producer, Rosalie Murphy.

Rosalie Murphy: Hi, Nerds. I love your podcast and I wanted to get your take on a question I have. I am in my late 30s and I am just starting to think about investing for retirement. I have a decent amount of money in a savings account that I can use to invest. I’ve done a fair amount of research into investing and index funds come up a lot as a smart option. My question is, aren’t ETFs an even better choice given that they’re more tax efficient? I plan to buy and hold and don’t expect to do much with my investments until I retire. Please help me figure out if ETFs end up costing investors less than index funds do when the time comes to sell them. Thank you, Amy L.

Sara Rathner: To help us answer Amy’s question on this episode of the podcast, we’re joined by investing nerd, Alana Benson. Welcome back to Smart Money, Alana.

Alana Benson: Thanks for having me.

Sean Pyles: Alana, it’s always so good to have you on because we have so many investing questions and our listeners do, too. But before we get into them, a quick disclaimer that we are not about to give any investment advice, we are not ever going to give you investment advice or tell you what to do with your money. This is for general educational and entertainment purposes. Okay, let’s talk about some different investment vehicles that people can use to invest or save for retirement. 401(k)s and Roth IRAs are pretty common, but what about straight-up brokerage accounts or robo-advisor accounts?

Alana Benson: So I just want to start off by clarifying some language for our listeners. First of all, saving does not equal investing. Saving can mean putting money into a savings account. It can mean stashing your money under your mattress. We do not necessarily say that that’s a good idea, or it can mean putting it into a high yield saving account. But investing means putting your money into a specific investment account, which is different than a bank account, and then purchasing investments from there. So a lot of people use that language interchangeably, just like to clarify, maybe we say saving for retirement, but really we mean investing for retirement.

Sean Pyles: Yeah. And one key important difference is that when you do have an investment account like a 401(k), you have to make sure that the money you’re putting into there is being invested because some people will make this really tragic mistake where they’ll put money into these accounts for many years and it will not have been invested, and then they’re not actually growing their money through investments and compound interest and all of that good stuff.

Alana Benson: Absolutely. That is a devastating mistake.

Sara Rathner: Yeah, the money defaults to essentially being held in cash in a money market account, same thing almost. So you should just be aware that what the money sits in when you put it in first before you tell it where to go is essentially cash. Once you tell the money where to go in terms of picking investments and you set up that automatic transfer of money from your paycheck into those investments, that’s when you can sit back and hope that the market works your way over the next 30 plus years, which it may or may not do, as we know.

Alana Benson: Yeah, and I think it’s really important as well to talk about where you invest, which means your account type, so a 401(k) or a Roth IRA. The actual account type is just as important as what you actually invest in from that account, which is stocks or bonds or mutual funds. So understanding the difference between an account, which is not actually an investment. So if someone says they’re investing in a Roth IRA, the Roth IRA is not the investment that’s going to make the money, it’s just the account type where those investments live. So they might be investing in stocks or mutual funds from their Roth IRA.

Sean Pyles: One thing we should probably clarify, as well, is that we talk a lot about Roth IRAs and 401(k)s because those are tax-advantaged accounts and we’ll get into what that means more in a little bit, but using a brokerage account or a robo-advisor account for retirement savings is not very common. People typically don’t use that as their primary investment vehicle, correct?

Alana Benson: That depends. I think if it’s someone who has a 401(k) available to them, then that’s going to be something that if you have an employer that offers that, that’s great. And 401(k)s tend to have much higher contribution limits, so you can actually put more money in. But if you don’t have an employer that offers that, or if you are self-employed, then you may be looking for other options.

Sara Rathner: So Sean mentioned 401(k)s and Roth IRAs, which are two different kinds of investment accounts that are often used for retirement savings. Is there a general order of account types for investing that financial advisors recommend?

Alana Benson: So typically the idea is to start with a 401(k) if you have one. 401(k)s are great, we talk about them a lot on this podcast. You often get an employer match through them, which equates to free money. So the idea is that you start with a 401(k). You contribute enough to get your employer match and then you consider pausing on that or put as much in that as you want if you don’t want to make this complicated. But if you’re OK with a couple complications, once you get your match, then consider IRAs. Traditional IRAs, Roth IRAs, they both have different tax advantages, but the reason that you would move from a 401(k) to an IRA is because the tax advantage for IRAs is really strong.

So you get your match with a 401(k), then move to an IRA once you can max that out, then move back to a 401(k) and you could max out that 401(k). I like to think of it almost like a waterfall with buckets. So if water is pouring into the first bucket, you fill up that first bucket and then once it starts overflowing, it can start filling up the next bucket. So don’t feel stressed out if you can’t necessarily do all those things right away, but the first bucket is getting that match. If you can contribute enough to get your match, that’s awesome, then the overflow goes into an IRA once you can max that out, then into maxing out your 401(k).

Sean Pyles: And what about folks who maybe don’t have access to a 401(k) through an employer? Can you talk about how solo 401(k)s and SEP IRAs might fit in?

Alana Benson: Yeah. So solo 401(k)s are great, they’re designed for business owners with no employees. SEP IRAs are another option. Folks who are self-employed are really going to need to look at their specific circumstance, whether they have employees or if they don’t and figure out what retirement accounts are going to work best for them. That may be a conversation to have with a financial advisor just because those things can get a little complicated. But a really important thing is that once you figure out where, again, that type of account that you want to invest in, maybe the order in which you want to have your money flow through those investment accounts, then you can figure out how you want to invest. So we have the where, which is the account type, the what, which is the actual investments, and then the how, which is, “do you want to choose your investments by yourself and manage them by yourself or do you want to not worry about that?”

So, if you don’t want to worry about it, you don’t want to think about it or stress about it, you can have a robo-advisor do it for you, which is a pretty low-cost way. These are online algorithms that basically take your risk tolerance, your age, other personal factors into account, and then they build and manage a portfolio for you for a fairly modest fee, which is great. That makes it super easy. You can automate it, have money taken out of your bank account, and then you don’t have to worry about it. You could also work with a traditional financial advisor, but that will cost more. And then if you want to do it yourself, you know, there’s all kinds of research. You can do stock investing, you can use mutual funds or index funds. There’s lots of options and we have lots of information on how to do that on nerdwallet.com, but that’s really how of how you do this.

Sean Pyles: I want to go back to a term that we’ve mentioned a couple of times so far, and that’s tax-advantaged. Alana, can you explain how that pertains to 401(k)s, Roths and the like, and why it’s such a big deal?

Alana Benson: So tax-advantaged is just a fancy word for, “you get a nice tax benefit,” which is a good thing, you should be excited about any kind of tax benefit because most likely it will equate to more money in your pocket. So traditional 401(k)s and IRAs, you can say, “Hey, I contributed this amount of money,” and so you’ll get a nice tax break up front. But Roth accounts, so either a Roth 401(k) or a Roth IRA, they don’t offer an upfront tax deduction, but you get to take your money out tax-free in retirement. So you put it in after you’ve already paid taxes on it, and then that money grows tax-free for many, many years. So a lot of people find Roth accounts more attractive for that delayed benefit, but it will depend on you and your individual tax circumstance. But again, this is why you might move from a 401(k) if it’s a traditional one to an Roth IRA, it’s because of that really healthy tax benefit.

Sara Rathner: OK. So in contrast to tax-advantaged investment accounts like certain kinds of retirement accounts, there are also taxable brokerage accounts too, and those are either offered by traditional brokerages or banks or robo-advisors and they don’t have this special tax treatment, right? How are they taxed?

Alana Benson: Again, we just want to clarify some terms and I’m really, really glad you asked this question because these things can often get conflated, which is why I’m so adamant about what, the where and the how. Robo-advisors may be able to be tax-advantaged if you use them in the right account. So again, robo-advisors, that’s how your investments are going to be managed. Many robo-advisors offer retirement accounts like IRAs, but not 401(k)s since those are offered through your employer. But if you open a taxable account through a robo-advisor, yes, it won’t have those tax benefits, but if you open a Roth IRA and you’re having it managed by a robo-advisor, then you will be able to get the tax benefits.

Sara Rathner: So again, it’s not about who is furnishing the account, but it’s about the type of account that you have.

Alana Benson: Exactly, and that’s why it’s so important to pay attention to your account. A lot of people, they might start up with a robo-advisor, don’t have the background information and the robo-advisor maybe would put them into a taxable brokerage account, but maybe they’d prefer to be in a retirement account. So it’s important to have that background even heading into something like investing with a robo-advisor so you know exactly what you’re getting yourself into.

Sara Rathner: Right. So all that being said, let’s go back to how these accounts are taxed. If you’re looking at a taxable brokerage account for investing purposes, what sorts of taxes do you need to just be aware of when you’re making investment decisions?

Alana Benson: Yes, this is the joy of long-term versus short-term capital gains taxes, which are taxes, so we aren’t huge fans of them. But if you are investing and you are making money, there will come a day where you need to pay taxes on the profits that you make from selling your investment. So you hold an investment for a long time, hopefully you make a bunch of money off of it, that money you might need to pay some form of capital gains tax. If you’ve held onto an investment for more than a year, you’re going to pay what’s called long-term capital gains tax, and that tax rate can be 0%, 15% or 20% depending on a couple factors like your taxable income and your filing status.

In contrast to that, if you hold onto an investment for one year or less, you’ll have to pay short-term capital gains, which are taxed at your ordinary income tax rate or your tax bracket. And the end takeaway of all of this is that long-term capital gains are likely more advantageous for you. And so, if you can hold onto investments for longer than a year, you’ll be taxed at a better rate.

Sara Rathner: Good thing to keep in mind for anybody who is thinking about the taxation of their investments, and Amy and their question mentioned a concern about the tax efficiency of their retirement investments. So it sounds like in their case, the 401(k) and Roth strategy combined could be an option for them. But let’s turn to different investment options within all of these different kinds of investment accounts that we’ve talked about so far. How feasible or common is investing in an ETF or exchange-traded fund or an index fund through your 401(k)? And maybe we should also start by defining those terms for our listeners who might be unfamiliar with them.

Alana Benson: I think that’s a great idea. ETFs are funds, so funds are basically baskets of investments. It’s a whole bunch of stocks all stuffed into one investment that you buy all at once versus buying a single individual stock. Exchange-traded funds are a type of funds as are index funds or index mutual funds. And a couple different things are important here. So whether or not you’re actually able to pick your own investments as specifically as exchange-traded funds or index funds is going to depend on your specific 401(k) plan, so that’s something that you’ll need to ask your 401(k) provider about.

But a lot of 401(k)s will actually set you up with what’s called a target-date fund. Target-date funds are really interesting because they automatically adjust your allocation over time. So if you start investing when you’re 20, your target-date fund will likely have a riskier group of investments held within it. And as you get closer to your target date of retirement, which is why they’re called that, your allocation will shift to be more conservative over time, and that’ll just happen in the background. That’s what most 401(k)s are made up of. So going in and changing what you’re investing in a 401(k) is pretty rare. You’ll likely just be in the investment in a target-date fund that is selected for you by your 401(k) provider.

Sean Pyles: Well, just to get to the core of our listener’s question and ask it straight out, are exchange-traded funds or ETFs a better “choice” for retirement investing versus index funds since ETFs are more tax efficient?

Alana Benson: Yes. So ETFs technically are more tax efficient than index funds just because of how they’re structured. When you sell an ETF, you’re typically selling it to another investor who’s buying it and the cash is coming directly from them and then you have to pay capital gains taxes. But it’s a little bit different with an index fund. And the long story short is that you could potentially owe capital gains taxes without actually selling a share because of how they’re structured. That being said, this happens a lot less frequently with index funds and ETFs than it does with other types of mutual funds. And from a tax perspective, ETFs generally have the upper hand over index fund, that’s true, but it’s a pretty minute difference and you probably will not have a huge tax bill just because you invested in an index fund versus an ETF. So if you have the option, maybe go with an ETF. If you don’t, I really don’t think you should be too stressed out about it.

Sean Pyles: OK. But in general, if you are investing for retirement through a retirement account like a Roth IRA or 401(k), the ETF versus index fund question probably isn’t that big of a concern since you most likely are not actively buying and selling stocks within these accounts, right?

Alana Benson: I’d say that’s true. And I think also to get to the listener’s question is that she’s talking about potentially doing this through a 401(k). Again, I’d stress like it’s fairly unlikely that you can actually do that unless your 401(k) provider allows you to do that. So the time that you’d run into this question is if you were investing, like you said, through a Roth IRA where you have to pick your investments yourself. Again, unless you are using a robo-advisor, in which the robo-advisor would pick investments for you. And most of the time robo-advisors invest you in a handful of ETFs and index funds as well. So you’ll be in the same investments no matter what.

Sara Rathner: So it sounds like what’s worth losing sleep over isn’t necessarily these decisions that don’t have massive differences between them, but more so just getting started on investing for retirement in the first place whenever you’re able to and consistently setting money aside for retirement over time and just letting those investments hopefully grow.

Alana Benson: Exactly.

Sara Rathner: So everybody save for retirement if you can. Anyway, Alana, is there anything else folks should keep in mind when deciding where and how to invest for retirement?

Alana Benson: I think you really said it. Keep in mind that the importance of account types should not be understated. So don’t just open a standard brokerage account if you think you could benefit from the tax advantages of something like a Roth IRA. Really make sure you know what type of account you want to get into and then start worrying about what types of investments you want to get into.

Sean Pyles: Well, Alana, thank you for joining us.

Alana Benson: Thank you for having me.

Sean Pyles: And now let’s get on to our takeaway tips. Sara, will you please kick us off?

Sara Rathner: Of course. First, understand how accounts are taxed. Roth IRAs, 401(k)s and other retirement accounts are taxed more favorably than brokerage accounts.

Sean Pyles: Next up, consider different investment options. Once you have your retirement account, you have a number of choices like target-date funds or a mutual funds.

Sara Rathner: And finally, investments have their tax differences too. ETFs are more tax efficient than index funds, but the difference is fairly small and it’s not typically a major factor in retirement accounts.

Sean Pyles: And that is all we have for this episode. Do you have a money question of your own? Turn to the nerds and call or text us your questions at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected] Visit nerdwallet.com/podcast for more info on this episode. And remember to follow, rate and review us wherever you’re getting this podcast.

Sara Rathner: And here’s our brief disclaimer. We are not financial or investment advisors. This Nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

Sean Pyles: This episode was produced by myself with help from Liz Weston. We had fact-checking help from Pamela de la Fuente, Kaely Monahan mixed our audio, Jae Bratton wrote our show notes and a big thank you to the folks on the NerdWallet copy desk for all their help. And with that said, until next time, turn to the Nerds.

Source: nerdwallet.com

Apache is functioning normally

May 1, 2023 by Brett Tams

I was 10-weeks pregnant and craving pizza while on vacation in Germany. We picked a well-reviewed restaurant, only to be told that no tables would be available that night. My husband, who meant well, suggested we try our luck at a different restaurant a few doors down. But it didn’t serve pizza, and for me at that moment, nothing but pizza would do.

So, naturally, I burst into tears.

Thankfully, we swiftly found another option and my highly specific food craving was satisfied. But traveling while pregnant is tricky, assuming it’s safe for you to do so (always talk to your doctor or midwife first). Not only might you be dealing with nausea, fatigue, food cravings you may not be able to accommodate in other countries, and other maladies, but also some travel activities can be unsafe during pregnancy.

I traveled a few times while pregnant, both for work and leisure, leaning on a few helpful credit card perks to make the experience as comfortable as possible. Your card’s benefits could smooth the way to a less chaotic, and more enjoyable, travel experience.

3 times credit card perks make it better

When booking travel: Insurance and seat upgrades

Travel protections like trip cancellation insurance can come in handy if you need to back out of your trip due to a covered reason, like illness. Note that what counts as a “covered reason” can vary by card, and some situations related to pregnancy may not be covered. This can include travel after a certain week in your pregnancy, or if you become pregnant with multiples before booking travel. Review what your card does and doesn’t cover, and consider additional travel insurance if needed.

Thanks to big sign-up bonuses, airline credit cards speed up the time it takes to earn a substantial number of miles. Booking flights directly through airlines with those miles can give you an out if you need to cancel your trip. Some airlines will refund your miles with no fees if you back out, even close to your travel date.

If you’re accustomed to toughing it out in the back of the plane, this might be a good time to cash in miles earned from airline cards on a seat upgrade. A dangerous health issue to avoid is deep vein thrombosis, a blood clot that can travel to your lungs. Your risk of DVT increases in pregnancy. “More spacious seating with increased mobility could decrease lower extremity swelling and venous stasis, which can increase the risk of DVT,” Dr. Meghan Zysik said in an email. Zysik is an attending obstetrician and gynecologist at Albany Medical Center, part of the Albany Med Health System in Albany, New York.

At the airport: Ditch the luggage and lines, embrace the lounges

The times I traveled alone, I didn’t want to hoist my carry-on bag into the overhead compartment, and there’s never a guarantee a kind stranger will offer to help (especially if you aren’t visibly pregnant yet). With airline cards, you typically get a free checked bag, saving you $60 in bag fees per round trip flight. “Everybody has to pay attention to their body,” says P. Fadwah Halaby, a certified nurse midwife in West Palm Beach, Florida. “Don’t lift it if it feels like it’s going to hurt.” Halaby recommends limiting lifting any bags weighing more than 25 pounds.

Now that you can move through the security line unencumbered by baggage, don’t let that statement credit for TSA PreCheck or Global Entry go unused. Not only is this benefit worth at least $78 in value, but it’ll also get you out of line, and off of your feet, faster. “Prolonged standing can lead to physical discomfort and worsen lower extremity swelling,” Zysik said. “Take the time saved with PreCheck to eat a meal, sit, and rest or doing calming routines such as meditation.”

A perfect place to do all those things is an airport lounge, which some travel cards grant you free access to.

During the trip: Hotel freebies and away-from-home medical care

Your credit card company may offer referrals to local medical providers if you need assistance during your trip. This can include providing names of English-speaking doctors and hospitals, and even helping you stay in contact with your family. You’d have to pay any out-of-pocket costs for these services, but you’ll get help during a stressful time.

Hotel credit cards come packed with extras to make your stay more relaxing. One of my cards earned me status, granting free access to a lounge at our hotel in Berlin that provided breakfast, happy hour and all-day snacks. You can also get a few more hours of rest with late checkout, another benefit of cards that give you automatic status at hotel brands.

Take reasonable precautions

Before heading out of town, talk with your doctor or midwife because some medical conditions during pregnancy may increase your risk of health complications. Certain activities are off limits, like scuba diving. Your medical provider can also recommend medications that can ease pregnancy symptoms.

And, of course, they may insist you refrain from travel entirely. “You have to use common sense. It really needs to be said,” Halaby says. “Do you have a diagnosis? Are you being treated for something in particular that may or may not be good for traveling?” If any of that is the case for you, a relaxing staycation may be the more medically sound option.

This article was written by NerdWallet and was originally published by The Associated Press.

Source: nerdwallet.com