Retirement: tools and fools
For the first time, a majority of Americans are using online tools to calculate how much money they’ll need to retire. Unfortunately, they’re raiding their retirement accounts to pay off debts they have today.
While online calculators for credit card debt and mortgage payments have been around for years, retirement calculators (like this one from the AARP) are newer and have caught on slower. But a survey released Wednesday shows 52 percent “who have calculated how much they need to save for retirement reported using an online tool.”
Of course, learning what you need to retire isn’t the same as actually saving for retirement. And actually, we’re sucking at that.
Also on Wednesday, TIAA-CREF released a scary and depressing poll that reported, “29 percent of Americans who participate in a retirement plan say they have taken out a loan from the savings in their plan.”
Even worse, “Among those who took out a loan, 43 percent have taken out two or more loans.” And among those, 44 percent “regret the decision.” But they still did it. Where did the money go? Here…
Credit: Balances boom, defaults drop
Earlier this month, The Wall Street Journal reported a “surge” in overall consumer credit, rising in April by $20.85 billion — “a 10.23 percent annual rate.”
Yet on Tuesday, Experian pleasantly reported, “National credit default rates reach 8-year low in May.” It was the seventh straight month of decreases.
“Mortgage default rates saw the biggest decline when compared to auto and bank card rates,” says David M. Blitzer, an Experian managing director. “New York was the only city to see its default rate increase, but it showed the largest drop-off from one year ago. Dallas posted a new historic low of 0.77 percent, while Chicago, Los Angeles, and Miami are at their lowest default rates since the start of the last recession.”
Home sales: cash no longer king
Bankrate reported Thursday that “mortgage rates inched lower this week, with the benchmark 30-year fixed mortgage rate dipping to 4.33 percent.” That same day, Zillow declared all-cash home sales plummeted.
“The portion of home purchases made with all cash fell in the first quarter compared to a year ago in a majority of metro areas nationwide,” Zillow says. “The share of cash buyers fell year-over-year in 102 of the 126 total metro areas.”
That’s significant, since these cash sales — from investors, foriegn buyers, and flippers — have propped up soft housing markets around the country.
But Zillow Chief Economist Stan Humphries sees an upside…
It can be difficult for more traditional buyers to compete with cash offers, especially in a tight inventory environment and among cash-strapped first-time buyers most likely to seek lower-priced properties. Housing is much more than an investment for most buyers, and it’s heartening to see more buyers armed with traditional financing begin to enter the market. This is a critical step on the way back to a more normal, balanced housing market.