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How saving money differs in your 40s, 50s and 60s

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We already told you how your financial goals and habits vary from decade to decade in your 20s and 30s. The same is true as you move into your 40s and up until retirement. Here are some pro tips on how to take full advantage of each unique decade.

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Things to DO in your 40s

Do meet with a financial planner to make sure you’re on the right track to retire when you want and with the right amount to continue living the lifestyle you want. Retirement may seem very far away, but you don’t want to let yourself be caught in your early 60s playing catch-up on your 401(k).

Do decide how saving for major purchases balances with your retirement saving. If you have children, are you going to pay for all or some of their college tuition? What about your children’s weddings? These are examples of things that can cause parents to be caught off guard and can put a pause on your important retirement saving. For more information on these decisions, take a look at our recent post on Kids’ college vs. retirement: where to save?

And one thing to AVOID in your 40s

Don’t miss out on the maximum match from your employer on your retirement plan. As we’ve recommended from your first job in your 20s, be sure to take full advantage of the match from your employer. Of course, going above that amount is also a great idea; just be sure you’re reaching that minimum amount to get your full match.

 

Things to DO in your 50s 

Do think of this decade as your time to save the most (less expenses with children out of the home and typically higher income than you earned earlier in your career). Consider paying off high-cost debt, such as your mortgage, if you haven’t already and then save aggressively.

Do add catch-up contributions to your retirement savings. Even if you’re tracking well toward your retirement goals, you’re allowed to save more now, so do it!

And one thing to AVOID in your 50s

Don’t wait until your 60s to purchase long-term care insurance. The average age to buy this type of insurance is 57. If you wait until a few years later, it will be much more expensive.


Things to DO in your 60s
 

Do prepare aggressively for retirement…even before your planned last day of work. It’s difficult to predict when health, layoffs or extra time needed to care for your aging parents will cause you to retire earlier. This is the case with more than 40 percent of workers.

Do think about downsizing. This isn’t something that needs to wait until you’re already retired. If you’re single or if it’s just you and your spouse in your home, consider where you want to live for the next few decades and if moving makes sense.

And one thing to AVOID in your 60s

Don’t keep the same insurance policies you had in your 30s. You might not need life insurance anymore. Check your long-term care insurance policy to see what benefits it includes.

Remember, whether you’re 21 or 68, it’s never too late to improve your financial plan.

 

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References: *2012 National Association of REALTORS® Profile of Home Buyers and Sellers

Inspired by a Daily Finance article

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Ms. Ponce is a Financial Center Manager for UMB Bank. She is responsible for managing the Collinsville micro-market. She joined UMB in 1991 and has 23 years of experience in the financial services industry.



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Kids’ college vs. retirement: where to save?

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In a perfect world, you could save for your retirement AND your children’s higher education. But what if it comes down to a choice between the two…which one should be the priority? Loving parents may not love our answer.

Of course, launching your college-graduated children into the world debt-free is an admirable goal and the topic of an upcoming blog post. However, doing so at the expense of your own retirement goals is not advisable.

Parents are starting to move their focus more toward retirement savings and less toward their children’s education costs, according to a report from Fidelity Investments. The survey reported among long-term savers, 55 percent are saving for retirement while 33 percent are saving for their children’s college tuition. That split was closer to equal last year, but many parents are realizing that their children have several options to help pay for college—loans, scholarships and grants—options that simply don’t exist when saving for retirement.
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How to save for retirement

You may not realize that savings anxiety exists at several different income levels. The lack of retirement preparation in the $20,000 to $30,000 income range (with nearly nine out of 10 individuals reporting they were not prepared) was surprisingly close to those making $100,000 to $150,000 (with nearly eight out of 10 giving similar answers).*

So how do you take charge of your financial future? If you’re in your 20s or 30s, you have more time to ensure a comfortable retirement. Just make sure you start right away. If you’re older than 40, we have a blog post next month that will offer specific advice for saving in your 40s, 50s and 60s. Regardless of your income, the best way to start is by taking the simple advice: determine what you can put away starting right now and do it. The sacrifice now will be worth it later.

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*Source: American Consumer Credit Counseling survey

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Bryan Joiner is a Financial Center Manager for UMB Bank, N.A in St. Charles, Missouri. He is responsible for managing a team that advises consumer and small business clients on financial decisions, such as how to lower debt and save more. He joined UMB in 2011 and has three years of experience in the financial services industry.



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4th step to buying a home: searching & making an offer

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Have you:

Good! Then it’s time to start house hunting. As a mortgage loan officer for the last 10 years, I certainly have a lot of knowledge in real estate, but still always refer to experienced realtors for this next step. Their knowledge of the housing market, along with expertise in real estate contracts, are the key to making the best selection of the property in which you could spend at least 5 years (but for some of you, potentially the rest of your life). I referred to Anita Trozzolo, a Kansas City realtor to give us some guidance for this next step.

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Create a priority list

You are making perhaps the biggest purchase of your life, and you deserve to have that purchase fit both your wants and needs.

Your priority list should include the basics, such as:

  • neighborhood and size
  • number of bedrooms and bathrooms
  • basement (finished or unfinished)
  • a kitchen that comes with appliances

If you can’t get a home at your price with all the features you want, then what features are most important?  Start prioritizing.  For instance, would you trade fewer bedrooms for a finished basement?  A longer commute for a larger home and lower cost?

What type of home best suits your needs?

You have several options when purchasing a home from a traditional single-family home, duplex, townhouse or condo.  Each option has its pros and cons, depending on your wants and needs, so you need to decide which type of property is best for you. You can also save on the purchase price in any category by choosing a fixer-upper. Keep in mind, though, the amount of time and money involved to turn a fixer-upper into your dream home might be much more than you expected.

Regardless of your choice, it’s important to target your search. By using options such as general location and affordability, you can refine your search and focus on homes that offer the most desirable features. However, based on my experience with the hundreds of first time home buyers for whom I successfully found and negotiated their first home, it is imperative to nail down location first.  The majority of buyers purchase homes from their choices in their most desired location.

Here are some more tips for your search:

  • Make sure your realtor understands your wants and needs.
  • Your agent must be patient, and show you as many homes as you would like to see. This is most likely the largest purchase of your life!
  • Have your agent set you up on an automatic home search program. This is an efficient way to guide you in your search.
  • Drive through neighborhoods on your off time to check out the area.
  • Choose your favorites before submitting an offer, and tour as many times as you feel comfortable.  Oh, and don’t forget to bring parents and friends. The more eyes the better!

Submit an offer, and most importantly understand the sales contract.  Your agent will assist you with the following:

  • To determine how much to offer, your realtor will show you a market analysis of all the recent sold properties comparable to the home or homes you’re interested in.
  • Obtain all material defects known from the seller through the seller’s agent.  
  • Discuss types of insurance that is required.
  • Counsel you on what price to offer the seller.
  • Make sure closing costs are explained and negotiated.
  • Make sure home warranty is explained and negotiated.
  • Explain the sales contract and all other forms associated with the contract.
  • Present your offer to the seller.
  • Negotiate your offer and counteroffers.
  • Set up inspections.
  • Provide the contract to the lender and closing company.
  • Stay in constant communication with the lender.
  • Arrange and attend the closing.
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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.




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5 Ways to Make the Most of Summer’s End

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With autumn quickly approaching, here are 5 budget-friendly ideas for capitalizing on the remaining summer days (and nights). 08-05

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Alex is the senior consumer-banking leader for UMB Bank in Colorado. He leads the region's financial centers in the Denver and Colorado Springs market, small business banking and benefits solutions channel. Alex provides senior leadership and strategic planning/execution to UMB’s western territory. He also serves on UMB Financial Corporation's senior leadership team. Alex joined UMB in 2011 and has 14 years of experience in the financial services industry.



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Financial Word of the Week: Debt-to-Income

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FWOTW

Last week we explained what Loan-to-Value meant, specifically with mortgages. Now it’s time to tackle another important ratio: Debt-to-Income (DTI).

Your DTI ratio tells lenders how much of your income goes towards your debt and is another number you want to be low. Lenders will look carefully at your DTI ratio, along with your credit score, LTV, and other factors when considering you for a loan. You should aim for a DTI ratio of approximately one third (or lower).

How to calculate

Add up all of the debt payments you make each month (mortgage, student loans, vehicle loan, outstanding credit card balance, etc.). Then divide it by your gross monthly income (pre-tax). So if you make $50,000/year or $4167/month and have $1,500 in debt to pay each month, your DTI would be $1,500 ÷ $4,167 = 36%.

If you’re thinking of buying your first home, calculate how much house you can afford with this calculator, but also factor in how much debt you already have.

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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3rd step to buying a home: finding the right realtor

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Who better to continue our journey of Steps to Buying a Home than our associates, Natalie Crumpton and Josh Cummings, UMB Unit Finance Managers, whose expert realtor guided them while on HGTV’s House Hunters‡? 

Natalie shares their story along with advice for finding the right real estate agent.

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Last summer we spent a lot of time looking at potential new homes online. At the time, we were living in a one bedroom condo in downtown Kansas City and were both ready to transition into something a little bigger we could call home. We began by searching different real estate databases, slowly narrowing homes down by the must-haves on our list: an open kitchen, a band room for Josh’s drums, a deck for entertaining and a spacious backyard for our new puppy.

Once we established our budget and wish list, we reached out to our realtor, Monte, who had been Josh’s real estate agent a few years ago and helped him to pick out the one bedroom condo we were living in at the time. What we loved about Monte (and still do) was how committed he was to making sure we found the right home (in the right location, for the right price) that suited both of our needs. He was patient, flexible with our schedules and always willing to go the extra mile as our realtor. So it came as no surprise when he was more than willing to accommodate another one of our requests: to let a camera crew follow us around and document our journey for national TV.

House Hunters
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Here’s how it happened: It became somewhat of a tradition to turn on HGTV on Saturday mornings and watch House Hunters while we were searching for homes online. We would take turns discussing what we liked and didn’t like about each house and try to guess which one the couple would actually choose. So once we decided we were ready to buy, Josh applied for the TV show online on a whim, assuming it was a long shot. It came as a shock to both of us when one of the producers contacted us a few weeks later to tell us they were interested in filming an episode in Kansas City. After a few more phone calls and interviews, a camera crew was sent our way to document us on our home-buying adventure.

Along for the ride (and steering the wheel), was our wonderful realtor Monte; who not only went above and beyond what we expected from a realtor, but he also made the home buying experience as smooth and enjoyable as possible. With Monte, we felt like we were with a family member that genuinely cared about us as people, rather than just a real estate agent that was seeking a quick commission. He always had our best interest in mind and was passionate about making sure we found the perfect home.  We’re very grateful for the experience; both for the opportunity to be on House Hunters with footage to look back on of the first home we bought together and for having a realtor like Monte to share it with and make our transition as smooth as possible.
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What to look for in a realtor

When choosing the right realtor, make sure to consider the following qualities:

  • Integrity and candor
  • Understanding of what you are looking for in a home
  • Knowledge of the local housing market
  • Quality references and connections
  • Detailed knowledge of the purchasing process
  • Strong work ethic and passion for job
  • Flexible to your schedule and time frame
  • Committed to exceeding your expectations
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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Ms. Crumpton is an AVP/Unit Finance Manager for UMB. She is responsible for financial support in the Operations & Technology Group. She joined UMB in 2007 and has 7 years of experience in the financial services industry.



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How saving money differs in your 20s and 30s

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Have you noticed that your eating, sleeping and entertainment habits changed after high school and again after college? The same is true of your financial situation. With a different lifestyle comes different financial needs, which is why we’re bringing you a few dos and don’ts for these crucial decades.

generations

Things to DO in your 20s…

Do contribute to a 401(k), one of the 9 financial habits we told you about earlier. How much should you save? At least as much as it takes to receive what your employer is willing to match. Beyond that, 10 to 15 percent of your pre-tax income is a great start.

Do lay a sound financial foundation by developing good habits. Contrary to what you may hear, how MUCH you save for retirement when you’re young isn’t as important as saving consistently starting as soon as possible.

Do find inspiration in growth charts / calculators like these. It’s hard to focus on something that is decades in the future, such as retirement, so calculate how dramatically your goals can be reached if you start early. For example, if you start saving $300/month in your 20s, you could have nearly $100,000 by the time you’re 50 (and that’s only factoring a less than 1 percent annual interest rate).

And one thing to avoid in your 20s…

Don’t ONLY save for your retirement. Many people in their 20s make this mistake. Since you can’t touch this money until you’re 59½  (with limited exceptions), you’ll need to make sure you have separate savings for emergencies and non-retirement goals.

 

Things to DO in your 30s…

Do ask yourself if you should buy a home. The median age of first time home buyers is 31*. While that doesn’t mean that age will be the right time for you, it does indicate that your 30s are a great time to start considering home ownership during this decade. If you’re a star student and are reading this section as a 20-something, good job. Because the money you save in your 20s will come in handy when it’s time to buy a home in your 30s. The down payment, closing costs and inevitable home repairs that pop up as soon as the home becomes yours add up quickly.

Do get life insurance if you now have dependents. It’s a bummer to dwell on, so don’t over think it. You and your family will appreciate the financial peace of mind it gives.

And one thing to avoid in your 30s…

Don’t be afraid to talk to your children about money. If you are among the 30-somethings with children, you can start teaching them as young as pre-school or early elementary school the concept of spending and saving. Playing imaginary restaurant or store with them is a great learning tool.

Stay tuned for how to save in your 40s, 50s and 60s!

 

 

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Reference: *2012 National Association of REALTORS® Profile of Home Buyers and Sellers

Inspiration for article from Daily Finance

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Johnson is a VP/Financial Center Manager for UMB Kansas City. He is responsible for driving sales and relationship activities within the Walnut Lobby Financial Center. He joined UMB in 2007 and has 11 years of experience in the financial services industry. Mr. Johnson earned an Associate’s Degree from MCC. He is currently pursuing a Bachelor’s of Science Degree majoring in Management and Finance from Park University.



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Financial Words of the Week: Fixed Rate / ARM

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FWOTW
Previously, we defined interest  as the cost of borrowing money. You have a range of options when it comes to interest rates. Before you take out a new loan or credit card, be sure you understand those options.

When looking at mortgages, you will likely see fixed rate and adjustable rate mortgages. With a fixed rate mortgage, your lender sets the interest rate during the application process, and it does not change for the life of the loan. With an adjustable rate mortgage, your interest rate will change regularly, based on a published reference rate. The frequency of this change depends on your mortgage.

Loans other than mortgages can be either fixed rate or variable rate. The definition of a fixed rate loan is the same as a fixed rate mortgage, but variable rate loans differ from adjustable rate mortgages in how frequently the rate can change. If the reference rate changes frequently, the interest rate on a variable rate could change monthly. Many car loans have fixed rates, while most credit cards have variable rates.

If you are unsure what your interest rate is on an existing loan, you can look at the terms and disclosures on your monthly statement or your loan paperwork. If you are applying for a new loan or line of credit, the application disclosure should tell you how the interest rate is set.

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Financial Words of the Week: Points, Origination Fees and Closing Costs

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FWOTW
All three of these terms refer to costs associated with applying for a loan. Lenders sometimes charge these fees to cover the cost of underwriting, appraisals, document preparation and other parts of the process. Generally, the fees will be higher with mortgages than other loans. Mortgages have more complicated requirements compared to other loans. Origination fees are one-time flat fees that cover the costs of processing the loans. By comparison, closing costs may include expenses associated with the real estate transaction that cannot be included in the mortgage amount. A point is one percent of the dollar amount financed. Lenders may let you pay points to lower the interest rate or they may charge points instead of origination fees. Some examples of possible closing costs:

  • Appraisal: The cost of hiring a real estate professional to determine the value of the house
  • Inspection: Hiring an engineer or building professional to examine the structural condition
  • Flood Certification: By law, every mortgage made through federally-regulated or insured lenders must include a flood certification. This assessment determines if the property resides in a high-risk flood area. Homeowners with mortgages in high-risk areas must have flood insurance.
  • Realtor Fees: Real estate agents are paid based on the cost of the house, normally around 3 percent of the selling price.

Mortgage laws vary greatly from state to state. Additionally, each mortgage lender has different products and offers. Because of these complex issues, your costs may be different from those listed above. The best way to learn more is by working with an experienced mortgage loan officer. They can walk you through the full process and help you understand the costs involved. Be sure to check the blog for our “steps to buying your first home” series. So far, we’ve covered Pre-Approval (Step 1) and Choosing the Loan that’s Right for You (Step 2).

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Financial Word of the Week: Jumbo Mortgage

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FWOTW

What is a jumbo mortgage? A loan for a big house? Jumbo mortgage refers to a mortgage for more than a certain dollar amount. The limit is currently $417,000 for most areas, with a higher limit in certain high-cost regions. Mortgages of less than $417,000 may be called conventional mortgages. Many federal homeownership programs do not apply to jumbo loans. Lenders often charge higher rates for jumbo mortgages or have more restrictions on the loan, even for the same borrower. If I’m looking at a house that’s $420,000, does this apply to me? Maybe. A number of factors affect the total amount financed. Your down payment, the loan terms and where you’re buying will all influence the size of the loan. These potentially complex issues present another reason why it’s so important to work with an experienced mortgage officer. When you get pre-approved, your mortgage officer will help you understand your situation and how much you can afford. Your mortgage will be as unique as your home, so make sure you get the individual attention you deserve. luxury house

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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