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Highlights of the March 2008 Issue of MONEY
[Full stories also available online at www.CNNMoney.com]
SPECIAL ISSUE: BOOMERS' GUIDE TO FINANCIAL FREEDOM
WHAT'S NEXT, by Janice Revell, page 84
In the years ahead, five key trends will dominate your financial life. The message: So far you've been lucky, baby boomer. Now it's time to be smart.
There's a saying in economics: If something can't go on forever, it won't. Inevitably, the tailwinds that the economy has enjoyed for the past quarter-century will have to play themselves out, if only because the conditions that created them no longer exist. Maybe today's market turmoil is a sign the moment has arrived; maybe the boom has a bit more oomph in it. Either way, though, it's a safe bet that the next 25 years won't unfold exactly like the last 25 — and the strategies that will work best for you in the years ahead won't be the same that worked in the past. No forecast is a sure thing, obviously, but each of the five trends you'll read about has an air of inevitability. MONEY explains what to expect — and how to make the most of it:
- Investment Returns Will Cool Off
- The Fastest Growth (and Biggest Gains) Will Occur Abroad
- Taxes Will Go Up
- Your Career Will Get... Complicated
- The Most Reliable Retirement Plan Will Be Plan B
THE MIDLIFE MONEY CHECKUP, by Penelope Wang, page 92
Are you still on pace to reach your goals despite today's market woes? Find out by taking this nine-step test of your financial health. It won't hurt a bit.
Will that future work out the way you want? Hard to say, but you'd be wise to see how you're doing so far. That means conducting a head-to-toe money checkup that covers everything from investing to insurance. Once you know the state of your financial health, you should find it easier to get in shape and then stay on track toward your goals, whether they include early retirement, career changes or starting a business. How do you take this test? Ask yourself the same questions that a financial planner would pose. Your answers will lead you to your diagnosis and, if you find ills, a cure.
WHAT DO YOU OWE YOUR KIDS?, by Marlys Harris, page 102
Sure, you want to give them a boost in life. But for both your sake and your kids', you have to cut the financial cord sometime. Here's how.
Research shows that moms and dads have been spending quite a bit on their adult kids in recent years. Over the past 30 years, there's been a 50% increase in the number of children living in their parents' homes — which by itself increased parents' outlays by nearly 20%. All told, a 2007 survey by Ameriprise Financial found, about nine out of 10 parents give money to their grown kids for major expenses: credit-card balances, car insurance, student loans, you name it. Parents' openhandedness could be hurting, not helping, your kids by keeping them everlastingly immature and ill-equipped to deal with financial challenges or setbacks on their own. MONEY provides these guidelines for deciding when giving makes sense, whether you can afford to let the money go and what the consequences might be:
- Assess Their True Need
- Remember Who's First
- Have a Vision Thing
- Let There Be Strings
- Map an Escape Route
SPECIAL REPORT: SURVIVAL STRATEGIES, by Stephen Gandel, page 78
The economy and the markets may be in for a hard fall. Here's how you and your family can land safely.
Falling home values, rising unemployment, declining confidence among consumers and businesses and, lately, a swooning stock market. We may or may not be entering an official recession (defined as two consecutive quarters of shrinking economic activity), but either way 2008 has gotten off to a scarier start than most anyone predicted. Here's how to set yourself up for the opportunities that will come if the downturn is short — and keep yourself safe should the hard times stick around.
HOW TO SEE EYE TO EYE ON MONEY, by Carolyn Bigda, page 35
Five ways you and your spouse can bridge your differences and keep your finances on track.
A 2007 survey by Fidelity Investments found that some 30% of couples gave different answers about the ages at which they'd retire, how they would live in retirement and whether they would continue working in old age. Whatever the reason for the divide, these discrepancies can lead to financial trouble. MONEY presents five ways to find common ground:
- Put a Price Tag on Your Ambitions
- Separate Your Cash...
- ...But Not Your Knowledge
- Create Automatic Checks and Balances
- Hold Weekly Money Meetings
PLUS: 3 FAST FIXES
CAUTION: FALLING YIELDS AHEAD, by Carolyn Bigda, page 45
With the Fed aggressively cutting interest rates, here's what to do with your cash.
Now that the Federal Reserve has cut short-term rates by nearly two percentage points since early September, say good-bye to 5% yields. Here are the best places to park your cash now.
THE GREAT PROPERTY TAX SQUEEZE, by Joe Light, page 51
Assessments are expanding, but prices are contracting. Ready to fight back? Here's how.
Every major national index has now recorded a drop in home prices, and plenty of once sizzling markets have gone cold stone. The pullback in prices could give you an opportunity to ease your property tax squeeze. Fewer than one in 50 homeowners try to appeal assessments even though up to 60% of properties are overvalued by assessors, according to figures cited by the National Taxpayers Union. So if you file an appeal that's based on more than your indignation, you've got a good chance of success as long as most of your town doesn't do the same. Follow these steps to bring down your bill as painlessly as possible.
CROSSOVER APPEAL, by Peter Valdes-Dapena, page 115
Don't want a gas-hogging SUV? Minivan too grim? Car too cozy? Then this ultra-hot auto category may be for you.
Woe is your auto dealer: Last year closed out with what looked like the worst sales in a decade. In fact, he might be at the soup line right now had it not been for one surprising success: the crossover. A bright spot in an otherwise abysmal year, some 2.4 million of these half-car, half-SUV vehicles were sold in 2007, an increase of 16% over '06, according to Autodata. Road-tested picks from several categories are mapped out.
*NEW COLUMN: THE BOTTOM LINE, by Pat Regnier, page 128
THE HEALTH-CARE DEBATE YOU OUGHT TO HEAR
The Presidential candidates' health-care-reform plans talk about things you want, like choice and affordability. They're mostly silent on what you might lose. Since candidates pretty much adhere to their party lines, MONEY imagines how a health-care debate would play on TV. But if we could slip a little truth serum into their water glasses...
MUNIS: THE NEW POWER PORTFOLIO, by Asa Fitch, page 65
In a stomach-churning market, investors are finding safety — and value — in an often overlooked asset: lowly municipal bonds.
If there's a lesson to be learned from the stock market's recent slide — triggered by massive losses on exotic and risky mortgage-backed securities — it's that there's nothing wrong with simple, boring investments. Like girders supporting a bridge, plain-vanilla bonds can help buttress a portfolio in a shaky market such as this. Well, you can't get more basic than municipal bonds. And because the yields on munis have not fallen as sharply during this sub-prime crisis as those on Treasuries, most munis are paying out more than comparable bonds issued by Uncle Sam. And that's despite the fact that income from municipal bonds is largely exempt from federal income taxes. Income from Treasuries is not.
DEPARTMENTS
START: Should You Fire Your Accountant? Why it could make sense to use a PC instead of C.P.A. A Reward For Good Borrowing Behavior Been an angel in managing your credit? You may get a boost in your FICO score. Your Money and Your Life If you spend days searching for the best price, maybe you're putting too low a value on your time. PLAN: Health and Wealth If you need medical care, consider bringing the hospital to your home. The Long View Four ways to fool yourself into saving smarter. INVEST: The Intelligent Investor Get past your brain's spendthrift ways. Sivy on Stocks Some parts of this market are now real bargains.
MONEY is available in digital format. To access this version go to http://digital.money.com
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