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3 WAYS TO CUT
HEALTH CARE
BILLS P. 34
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INVEST NOW P. 37
THE HIGH COST
OF INFERTILITY P. 68

STARTS ON P. 44

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J U LY 2 0 1 4 V O L U M E 4 3 , N U M B E R 6

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F E AT U R E S

62

COVER STORY

P R O P ST Y L I N G B Y J A R E D L AW TO N

44

Find the
Right Cell Plan
for You
Theres most likely a
better, cheaper option than
the one you have today.
by Amanda Gengler
with Kara Brandeisky

The One
Retirement
Move You
Must Get Right

50 Heroes, 50 States

Investing your old 401(k)

may be the biggest nancial
decision youll ever face.
Plus: How to get the most out
of your 401(k) before a rollover.
by Ian Salisbury

Meet people who have made extraordinary

eforts to improve others nances.
by Daniel Bortz, Joan Caplin,
Ryan Derousseau, Srividya
Kalyanaraman, Antonia Massa,
and Donna Rosato

Photograph by gr e g ory

54

68

Waiting for Baby:

$55,000 and Counting
As they struggle with infertility,
this couple is also struggling
with mounting debts resulting
from costly treatments.
by Donna Rosato

J U LY 2 0 1 4

r ei d

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IsWorldMags.net
your portfolio TOO LOCAL
for a GLOBAL ECONOMY?

100%

of the time, over the past

30 years, the top-performing
equity market has been
outside the U.S.1

80%

of global GDP comes

from non-U.S. countries.2

only

26%

of the worlds publicly

traded companies are
based in the U.S.3

Diversify your portfolio with Fidelity international funds.

FDIVX
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FIGFX
FIDELITY INTERNATIONAL GROWTH FUND

FIVFX
FIDELITY INTERNATIONAL CAPITAL
APPRECIATION FUND

Fidelity.com/opportunity
800.FIDELITY

Before investing in any mutual fund, consider the investment objectives, risks, charges, and expenses. Contact Fidelity for a
prospectus or, if available, a summary prospectus containing this information. Read it carefully.
Past performance is no guarantee of future results.
Stock markets are volatile and can decline signicantly in response to adverse issuer, political, regulatory, market, or economic developments.
Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks, all of which are magnied in emerging markets.
Source: MSCI All Country benchmark returns 19832013.
Source: Gross domestic product based on purchasing-power-parity (PPP) share of world total. IMF, Haver Analytics.
3
Source: FactSet as of 11/30/2013. Data presented for the MSCI AC World Index, which represents 44 countries and contains 2,436 stocks. The index
is not intended to represent the entire global universe of tradable securities.
Fidelity Brokerage Services LLC, Member NYSE, SIPC. 2014 FMR LLC. All rights reserved. 675573.1.0
1
2

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J U LY 2 0 1 4 V O L U M E 4 3 , N U M B E R 6

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Plan
27 / MANAGE YOUR

SOARING COSTS

The CPI is low, but your own

expenses may be higher.

29 / ASK THE EXPERT

P H O TO G R A P H S B Y C O R A L V O N Z U M WA LT; WA R D R O B E ST Y L I N G B Y B R A N D O N B R A N S F O R D ; G R O O M I N G B Y STA C E Y C O K E R

How can I invest $50,000 for

income? How does a pension
gure into my portfolio? When
should I use 529 money?

68

30 / GREENING UP
THE GRASS

Spruce up your lawn for less.

34 / SAME PROCEDURE,
SO MANY PRICES

We arent ready to give up,

but if we do, it will be because
of money, no other reason.

FI RST
13 / THE BIG NUMBER
14 / FAST TAKES
16 / SOCIAL

Carrie Zampich, Waiting for Baby

CURRENCY

18 / TRAVEL
21 / STATS
IN THIS ISSUE

6 / Money.com
9 / Editors Note
10 / Letters
76 / The Numbers
80 / Money Well Spent

Cover photograph by
GREGORY REID

COLUMNS
32
Your Long Term
Just Got Longer
You may be sticking
around for more years
than you imagined.
Time to revise your
retirement plans.
by Penelope Wang

35 / WHAT TO ASK AT

CAREER SERVICES

A colleges placement ofce

is now one of the most
important stops on the tour.

Invest
40

THE NEW RETIREMENT

Ways to comparison-shop
for medical care.

THE SKEPTICAL
INVESTOR

Mergers Are
Back. Uh-oh
With lots of cash on
hand, corporations are
doing more dealsand
shareholders may lose.
by Paul J. Lim

Styling by Jared Lawton

37 / A NOT-SO-

PEACHY BULL

An all-time high for the

S&P 500 masks soft spots
forming among stocks.

42 / X-RAY: SPDR

GOLD SHARES

Can goldand this formerly

giant fund that tracks
itshine once again?

MONEY (ISSN 0149-4953) is published monthly (except one in January/February) by Time Inc. Canada Post Publications Mail Agreement No. 40110178. Return undeliverable Canadian addresses to: Postal Station A, P.O. Box 4326, Toronto, Ontario M5W 3H4.
GST No. 888381621RT0001. principal office: Time & Life Building, Rockefeller Center, New York, N.Y. 10020-1393. U.S. subscriptions: $15 for one year. Periodicals postage paid at New York, N.Y. and additional mailing ofces. subscribers: If the postal authorities
alert us that your magazine is undeliverable, we have no further obligation unless we receive a corrected address within two years. postmaster: Send address changes to MONEY, P.O. Box 30607, Tampa, Fla. 33630-0607. customer service and subscriptions: For
24/7 service, go to money.com/customerservice. You can also call 800-633-9970; write MONEY, P.O. Box 30607, Tampa, Fla. 33630-0607; or e-mail help@money.customersvc.com. 2014 Time Inc. All rights reserved. Reproduction in whole or in part without
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Money.com

MONEY ON THE WEB

Visit our new online
home for smart takes on
your money and your
life, at Money.com.

FOLLOW US!
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MEET THE MONEY HEROES

We spotlight 50 heroes in 50 states (plus one from the District of Columbia): people across the country
who are improving the nancial lives of otherslike North Carolinas Roy Fralin, who teaches money skills
to middle schoolers. Learn what inspires them and get their advice at money.com/heroes.

WHERE ARE YOU ON THE

ROAD TO WEALTH?

TABLET VIDEO
EXTRAS
Our Mannes on the Street
talks to people about their
personal money heroes,
plus more exclusive videos.

C O L UM N I ST

Whatever your starting point,

get the personalized advice that
will help you reach your goals.

money.com/adviserandclient

THE MONEY MATCH GAME

Denitive answers to your most

important retirement questions.

Play along as couples compare

their answers to questions
about spending, saving, and
nancial quirks.

money.com/retirementguide

money.com/loveandmoney

ULTIMATE RETIREMENT GUIDE

m o n e y. c o m

J U LY 2 0 1 4

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PAT REGNIER
keeps an eye on
the economy and
how it affects your
investment decisions.
@patregnier

P H OTO G R A P H S B Y A U D R A M E LTO N ; WA R D R O B E ST Y L I N G B Y E L A I N E H A R R I S O N ( H E R O ) ; G R E G O R Y R E I D ( TA B L E T ) ; C H A D G R I F F I T H
( R E G N I E R ) ; P H OTO I L L U ST R AT I O N B Y G A L L E R Y STO C K /A L A M Y/ I STO C K ( R O A D ) ; PAT M O L N A R ( R E T I R E M E N T )

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Write the Editor: managing_editor@moneymail.com

EDITORS
NOTE

Inspiration From Every

Corner of the Country
AIR FORCE OFFICER
KYLE SMOLEK
HELPS SERVICE
MEMBERS BE SMART
ABOUT MONEY.

P H O TO G R A P H B Y C O L I N B L O U N T

ICK YOUR SPOT for bad news

t h e s e d ay s : wa r- t o r n
(again) Baghdad, dysfunctional Washington, D.C.,
or, closer to you, the ofce,
where the pressure of doing two
jobs for one salary seems unlikely
to abate anytime soon.
Maybe you could use a little
inspiration, a little tonic that will
restore your faith in people.
This month weve got just the
ticket. Our 50 Heroes, 50 States
feature starting on page 54 proles
folks from every state and the District of Columbia who have made
extraordinary, sustained eforts to
improve the economic well-being of
people in their communities. Our

heroes range in age from 8 to 91.

Theyve helped ease the plight of
veterans, immigrants, and the sick.
Theyve taught financial skills to
school kids, recovering drug addicts,
and farmers wives. Theyve come to
the rescue of distressed neighbors
in Sandy Hook, Conn., and hurricane-ravaged Louisiana. Theyve
made a diference, and for most, this
will be their first recognition in a
national magazine. As senior editor
George Mannes, who oversaw the
package, puts it, The classic image
of a hero is someone who rescues
a family from a burning building.
Our story shows that if you strive to
make a lasting improvement in peoples quality of life, youre a hero too.

For more inspiration, click over

to our relaunched website at
Money.com, where youll find extended proles of our heroes, their
best nancial tips, and videos about
their work. At Money.com youll
also want to start following the
daily work of our writers, including
Brad Tuttle on consumer culture
and Paul Lim on investing. Youll be
the wiser (and given their flair,
slightly more amused) for it.
And be sure to check out our
cover story, The One Retirement
Move You Must Get Right (page 44),
which looks at whether to roll over
your 401(k) into an IRA when you
leave a job. Especially late into or at
the end of your career, your 401(k)
is likely most of your nest egg, and
the nancial services industry sees
the rollover as its golden goose. Our
story will help you understand what
youre being pitched and why, and
how to decide whats best for you.

CRAIG MATTERS

MANAGING EDITOR

twitter.com/craigmatters

J U LY 2 0 1 4

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LETTERS
& COMMENTS

Write to MONEY: money_letters@moneymail.com

RE: RICHER, TOGETHER [JUNE]

Im enjoying the Love

and Money series [money
.com/loveandmoney]. My
husband and I take time
each week to have a nancial conversation. I let him
know how budgeting for
the month is going, and he brings up anything we may
want to do in terms of special spending, investing, or
saving. It works for us! No matter who does what, open
communication is always the key.
sarah mullen, Charlotte
AUTO ARBITRATION
The Ask the Expert
[June] question about
lemon laws didnt mention Auto Line, a free
arbitration program
ofered by the Better
Business Bureau.
Consumers who use the
service arent bound to
accept the arbitrators
decision, but the auto
company must.
I have been a certied
arbitrator for this program for years and

would recommend it to
anyone who has a lemonlaw-related issue.
edmund m. diaz
Greenville, S.C.

MORE LANDLORD TIPS

I recently became a
landlord and have
another idea not mentioned in Avoid Rookie
Landlord Mistakes
[June]. I give my tenant
a small discount for setting up a direct payment
from his credit union to

THE ORIGINAL OUTLIER?

Galloway, Ohio

DINING-PLAN DOUBTS
While the advice about
tickets and hotels in
Theme Parks for Less
[June] is pretty good,
your Eat Cheaper suggestion is way of target.
The Disney Dining Plan
saves notable money
only if you eat at the
most expensive restaurants all the time. WDW
veterans will tell you the
dining plan works for
convenience, not for
huge dollar savings.
steve milz
Niceville, Fla.

10

m o n e y. c o m

J U LY 2 0 1 4

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Keep husbands
happy when
wives earn more?
I wish we had
that problem.
dianne villalobos
Its not surprising that
married couples check
their bank accounts more
often than they have sex.
I check my balances daily.
@egrahsl

Good read.
I learned a
couple things.
josh holbrook
Split who pays for each
goal when planning the
family finances.
@bethdandrea1

22% of husbands
and wives have
spent money their
partner didnt
know about? The
other 78% are
lying about lying!
travis scherling

P H O TO G R A P H B Y D A N S A E L I N G E R

In Inside Buffetts Brain [June], Robert NovyMarx notes the pernicious nature of data mining.
Isnt analyzing Buffetts track record an example
of data mining? Given millions of investors
employing countless styles, its logical to conclude
that chance alone will produce a few wild outliers.
peter c. walsh, Pacic Palisades, Calif.

my bank account. That

way he doesnt have to
worry about sending
checks, and we both
know exactly what day
his payment will come
through. Its helped me
tremendously so far.
mike myers

ONLINE COMMENTS
ON JUNES RICHER,
TOGETHER STORY

WorldMags.net
Will my family
be taken care of?
Will the anxiety about
taking care of my family
be taken care of?

Take some of the stress out

of protecting your family with
life insurance from AXA.
Term? Universal Life? Variable Life? AXA can help take some of the
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solution for you by breaking down the choices into small, manageable
steps. Can we help you take a small step? Contact your nancial professional
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Startup to IPO.
Change for the better.
Switch and you could save with GEICO.

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J U LY 2 0 1 4
THE BIG NUMBER
FAST TAKES
SOCIAL CURRENCY
TRAVEL
STATS

P R O P ST Y L I N G B Y A N G E L A C A M P O S

Percentage of
people whove had
a phone swiped
Yikes. One in 10 Americans has had a smartphone stolen,
according to a new study by mobile security firm Lookout.
This is a double bummer: Replacing a phone can be expensive, and the personal information we keep on these
gadgets is often priceless. Here, tips for keeping your device
(and data) safeand what to do when a thief strikes.

Photograph by yasu

+ j un ko

J U LY 2 0 1 4

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m o n e y. c o m

13

FIRST

WorldMags.net

FAST TAKES

Search a government list of FHA-approved

condominiums at money.us/fha_condos.

REAL ESTATE

Buying a Condo?
Come With Cash

CASH RULES IN CONDOS. Fifty-six percent of U.S. condominium sales in the rst quarter of 2014 were all-cash
transactions, according to RealtyTrac, compared with
38% of house sales. In Florida more than 80% were
all-cash, says CoreLogicup from 23% during most of
the 2000s. Todays high gures reect interest in condos
as rental properties, and investors tend to pay cash.
Plus, condo buyers are often downsizing baby boomers
bearing proceeds from a home sale. The biggest factor,
though, is tighter lending standards, including rules
limiting Federal Housing Administration mortgages to
developments meeting certain nancial standards.
Got enough cash for a condo? You may be able to
negotiate a good deal because sellers wont have to worry about nancing falling through. If youre military,
get a Veterans Afairs loan, since the VA ofers a zero
down-payment loan, even on condos. While the condo
development has to be approved, the VAs list of acceptable options is longer than that of the FHA. LISA GIBBS

CASH FOR
CONDOS
These states
have the highest percentage
of cash transactions for
condo sales.
note:

Got a 401(k) retirement plan? You

probably feel a bit
richer right now. The

14

m o n e y. c o m

J U LY 2 0 1 4

is $76,381, up
14% from last
year and 43% over
ve years.
Those rising balances, though, are
mostly the result
of gains during
the bull market,
now in its sixth
year. At some point
stocks will enter
negative territory
again, and all those

81%

76%
66%

Florida

Nevada New York Alabama Arizona

Figures are for the rst quarter of 2014. source: CoreLogic

401(k)s will sufer.

Meanwhile, the
amount that workers contribute to
their plans remains
stuck at an average
of 7% of pay, which
is down slightly
from the peak of
7.3% in 2007. And
nearly one in four
workers didnt
contribute at all.

QUOTED

Beyond lower
monthly payments, there are
no pros to this.

PENELOPE WANG

Illustration by j es s e

80%

l ef kow i tz

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Ron Montoya of edmunds.com, on

how the average length of new-car
loans is at a record high of 5 years.

P H O TO G R A P H B Y D R E A M ST I M E

401(k)s REACH
RECORD HIGHS

average 401(k) balance rose 18% in

2013 to $101,650,
a new record, according to a recent
Vanguard report.
Thats up 47% over
the past ve years.
For people within
10 years of retirement, the median
balancewhich
may better reect
the typical worker

81%

WorldMags.net

day fun.

Toyota RAV4
toyota.com/rav4

Options shown. Do not overload your vehicle. See Owners Manual for weight limits and restrictions. 2014 Toyota Motor Sales, U.S.A., Inc.

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FIRST

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SOCIAL CURRENCY

Join the conversation: twitter.com/money

facebook.com/moneymagazine pinterest.com/moneymagazine

READERS TO THE RESCUE

The workload for my

department has increased,
but our salaries have not.
How can we get raises?
Find out if
your colleagues feel
the same way.
Make notes on how
much the workload has
increased and over
what time period, then
present that data to
the leadership.

ashton manswell
Atlanta

Maybe you could

compromise by asking
for more time of instead of more money.

Unionize! Its a fact

that union-represented
workers are better
paid than their
nonunion cohort.

daryl c.
West Virginia

There are
some things
out of your
control, so
take control of what
you can: Find a job
with a company that
values its workers.

tony, Miami

sharon b.

fred, Baltimore

Send a letter respectfully requesting that the

department receive a
pay increase to match
the quality of your
work. Mention that this
will make the company
more competitive.

Logan, Utah

Could someone else do

your jobs in a procient
manner? Hiring and
training rookies costs
the company time, and
more money than it
would require to give
you raises. Present that
to your supervisors
and see what they say.

rob hekimian

THE EXPERT SAYS

Salt Lake City

Co-author of The Art of Woo and adviser

to the FBIs crisis negotiation unit

It depends
on the
demand for
what you do.
If you have valuable
skills, threaten to
leave unless you get a
raise. Otherwise, you
should just be thankful
you still have a job.

john mcgee

FACEBOOK
QUESTION
OF THE
MONTH

WHATS THE BEST

MONEY ADVICE
YOU EVER GOT?

5
(PA G E

My father always said, Your home is

your investment. Treat it like one, and never
borrow against it. He was so right!
susan macdonald
My grandfather was never well-to-do, but
he was always self-sufficient. He told me,
Its not what you make; its what you save.
willie chapman
My mom told me to pay my credit card
balance in fullnever only the minimum.
angie solorzano

My father: Nothing good

ever comes from going
to the ATM after midnight.
jack halas
When I got my first job, my dad told me to take
full advantage of my 401(k) match. Twelve years
later, I have a nice amount saved for retirement
and Im just 31! becky webster

San Marcos, Texas

Want solutions to a financial dilemma in your life? Email your question to

social@moneymail.com. To join our reader panel, go to moneymatterspanel.com.

16

m o n e y. c o m

My drill sergeant: Dont spend money on coffee,

cigarettes, or booze. henry sperling

J U LY 2 0 1 4

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P H O TO G R A P H B Y S H AY L A H U N T E R

Pick someone who has a good

relationship with the boss to be your
spokesperson. Ask if the group can
get bonuses or raises if the department meets a new performance
goal or metric. Yes, this may mean
working even harder, but at least
youll get a shot at the extra money.
g. richard shell

SEE
Y
MONE S
E
HERO )

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If it doesnt
smell right,
we wont invest.
So we dont just go
with the flow.
We never invest in a stock because its big, wellknown or because everyone else is investing in it.
In fact, we only ever invest in a stock because we
like it. Which is probably why so many people
invest with us.
For more information please visit
aberdeen-asset.us

Aberdeen Asset Management Inc., a wholly-owned subsidiary of Aberdeen Asset Management PLC, is an investment adviser under the
Investment Advisers Act of 1940. Aberdeen is a U.S.
registered service mark of Aberdeen Asset Management PLC.
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FIRST

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TRAVEL

Stay In-State
to Save
Our national parks are awesome. Too bad
youre not the only one who knows it!
To avoid the crowdsand trim your
billtry a state park instead. STIRLING KELSO

CRYSTAL COVE STATE PARK, CALIFORNIA

COST: FREE ENTRY; $15 PARKING

ADIRONDACK
STATE PARK,
NEW YORK
COST: FREE ENTRY
At roughly the size of
Vermont, this patch
work of state and pri
vate lands makes up
the countrys largest
state park. Another
plus: Its an easy drive
or Amtrak ride from
most of the Northeast.
Rather than heading
to pricier Lake Placid,
make Saranac Lake
your jumpingof
point; get a lakeview
room at Gauthiers
Saranac Lake Inn
starting at $99. Avoid
the summer hiking

crowd of the High

Peaks region by go
ing east to Split Rock
Mountain Wild Forest,
says InsidetheMap
.com outdoor guide
Elizabeth Lee.

The highlight of this park, located an hour south of Los Angeles, is its 3.2 miles of un
interrupted Pacic coastline. Spend a morning spotting sea lions and bottlenose dolphins,
then refuel with some ahi tacos at the Beachcomber caf, suggests Janelle Naess of La
guna Beach Walks. Or rent snorkeling gear from nearby Laguna Sea Sports ($20 a day) and
try to spot the uorescent orange garibaldi sh. Avoid the expensive hotels near the park
and save up to 84% at the onsite Crystal Cove Beach Cottages (from $42 for two people).

CURT GOWDY STATE

PARK, WYOMING
COST: $6 ENTRY
($4 FOR STATE RESIDENTS)
This 5.3squaremile park 30
minutes from Cheyenne is a
mountain biker favorite, with
more than 35 miles of trails. To
explore on two wheels, Wyoming
State Parks Todd Thibodeau
suggests Stone Temple Trail,
which winds through lodgepole
pines and aspen groves. Rather
keep your feet on the ground?

Hike the alpine and canyon

terrain of Waterfall Trail. Choose
from 12 campgrounds (permits
from $11) or head east to Terry
Bison Ranch, where fourperson
cabins are $90. Cheyenne has
the closest airport, but you could
save more than 40% by ying
into Denver, two hours south.

Find Your
Perfect Park
The U.S. has more than
7,000 parks in all 50 states.
Here, three tips for planning
a visit to one near you:

18

m o n e y. c o m

APP IT
Download the free
Pocket Ranger app
for info on every state park,
says Eugene Swalberg of Utah
State Parks. Youll nd trail, ac
tivity, and campground sugges
tions, as well as ofine features
such as maps and a compass.

PLAN AHEAD
Even small parks can
get busy on holiday
weekends. Make advance
camping reservations if youre
going at a prime time. Some
parks accept bookings as far as
11 months out, says Joe Elton
of AmericasStateParks.org.

J U LY 2 0 1 4

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GET A DEAL
Planning to visit regu
larly? Look for annual
pass ofers or local discounts.
One basic California pass, for one,
is $75 per vehicle and pays for it
self in eight outings. In Idaho, a
resident pass is $10 a year and
includes some camping fees.

C L O C K W I S E F R O M T O P : P H OT O G R A P H S B Y C A L A M Y/A L A M Y; T I M
F I T Z H A R R I S /G E T T Y; M AT T C H A M P L I N /G E T T Y

GREAT OUTDOORS

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Are you asking

enough questions
about the way your
wealth is managed?
In life, you question everything.
The same should be true when it
comes to managing your wealth.
Do you know what your broker is
basing their recommendations on?
Do they stand by their word? Do you
know how much youre paying in
fees? And how those fees affect your
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Schwab. We think youll like what our
Financial Consultants have to say.

Call 1-866-6SCHWAB or stop by a branch

to talk to a Financial Consultant today.

Wealth Management at Charles Schwab

PL ANNING I PORTFOLIO MANAGEMENT I INCOME STR ATEGIES I BANKING

Brokerage Products: Not FDIC Insured No Bank Guarantee May Lose Value
There are eligibility requirements to work with a dedicated Financial Consultant.
Wealth management refers to products and services available through the operating subsidiaries of The Charles Schwab Corporation of which there
are important differences including, but not limited to, the type of advice and assistance provided, fees charged, and the rights and obligations of the
parties. It is important to understand the differences when determining which products and/or services to select.
The Charles Schwab Corporation provides a full range of brokerage, banking and financial advisory services through its operating subsidiaries.
Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC), offers investment services and products, including Schwab brokerage accounts.
Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides deposit and lending services and products.
2014 The Charles Schwab Corporation. All rights reserved. (0614-3466) ADP80835-00

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WorldMags.net
Next months question: Whats the next big-ticket purchase you plan
to make? To cast your vote, go to facebook.com/moneymagazine.

FIRST

THE STATS

MONEY READERS WEIGH IN

More
than 15

11 to 15

49%

Do Your Travel
Plans Stack Up?

POLL:

HOW MANY
VACATION DAYS
DO YOU PLAN
TO TAKE
THIS YEAR?

11%
PEOPLE WHO
WORK WHILE
ON SUMMER
VACATION

54%

MOST POPULAR WARM-WEATHER GETAWAYS:

TOP DOMESTIC DESTINATIONS
THIS SUMMER

1. Myrtle Beach, S.C.

2. Las Vegas
3. New York City
4. Destin, Fla.
5. Ocean City, Md.

AVERAGE
NUMBER
OF UNUSED
VACATION
DAYS

17%

Zero
to 4

37%

VS.

BEACH/OCEAN

5 to 10

CITY

NATIONAL PARK

AVERAGE EXPECTED DAILY HOTEL RATE THIS SUMMER

$116.44
PEOPLE WHO EXPECT TO
SPEND MORE ON TRAVEL
THIS YEAR THAN LAST

23%

UP 4%
FROM
2013

LAKE

RESORT

DONT BLAME THE BOSS:

According to a survey
from travel booking
website expedia.com,
only 8% of workers say
their bosses dont want
them to take advantage
of all their vacation days.

EXPECTED TRAVEL BUDGET

FOR A ONE-WEEK VACATION

MINIMUM LEGALLY
GUARANTEED PAID
VACATION DAYS

$2,871 $2,907
$2,122

0
20

UNITED
STATES

33%
Millennials Gen X Boomers

TRAVELING TIGHTWADS: A full 91% of vacationers told

American Express theyre looking to cut the cost of their
summer getaways this year. The most popular method?
Piling in the car: 44% of travelers said theyd opt to
drive rather than fly.

note:

Online poll conducted in May: 7,507 responses. sources : Center for Economic and
Policy Research, Destination Analysts, Expedia.com, Harris Interactive, STR, TripAdvisor

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J U LY 2 0 1 4

m o n e y. c o m

EUROPEAN
UNION

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P R O P ST Y L I N G B Y K E I K O TA N A K A

SINCE THE GREAT RECESSION, ination has

been unusually low, inching along at well
below the 3% historical average. And over
the past 12 months, the consumer price index
has clocked in at a ho-hum 2.1%. But you are
not the U.S. economy, and the costs of being
you havent stagnated.
In some cases, thats a good thing. If youre
in the market for a new TV or computer, for
instance, youll pay dramatically less than you
would have ve years ago (see next page). Yet
during the same period, prices of many of the
Photograph by ja s o n

J U LY 2 0 1 4

h in dl ey

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m o n e y. c o m

27

Plan

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PERSONAL
INFL ATION

ASK THE
EXPERT

biggest and most common expenses

families pay, from child care and
health care to key grocery items,
have shot up. Meanwhile, in real
terms, salaries are stuck in molasses, so consumers have roughly the
same income as they did before
Lehman Brothers collapsed. Use
these moves to keep price increases
from eroding your paycheck.

HOME

THE NEW
RETIREMENT

use pretax dollars to pay for up to

$5,000 of child-care bills, says J.J.
Burns, a Melville, N.Y., nancial
planner. That saves you up to $1,400
in the 28% bracket. Your company
doesnt ofer the FSA, or your costs
exceed the limit? Claim the childcare tax credit on your 1040 for up
to $3,000 in bills for one kid, $6,000
for two. A married couple ling
jointly with adjusted gross income
(AGI) over $43,000 can write of
20% of bills up to these amounts.
As for college, saving via your
states 529 plan may put money
back in your pocket, says Savingforcollege.com founder Joseph
Hurley; check money.us/1kyrGSY
to see if thats true for you. Contributions grow tax-free and are fully
or partly deductible in 34 states
and D.C. (withdrawals are tax-free
in every state). Plus, once your child
is in school, you may qualify for the
American Opportunity Tax Credit
on tuition and fees worth as much

COSTS OF RAISING JUNIOR

Strategy: Let Uncle Sam help.
Diapers, summer camp, and
orthodontia may be budget killers.
But the biggest strain on parents
comes from two expenses: child
care (up from an average $87 a
week in 1985, adjusted for ination,
to $148 now) and college (tuition
and fees for state schools: up 27%
in real terms since 2008).
Tax breaks can help you reduce
those costs. Got children under 13?
Sign up at work for a dependentcare exible spending account to

HEALTH

COLLEGE

as $2,500 and a deduction of up to

$2,500 on student-loan interest.

EVERYDAY EXPENSES
Strategy: Find a cheaper sub.
If youre going to grill hamburgers
this Fourth of July, plan on
spending a lot more than usual.
Likewise, if youre driving to watch
the reworks or melting butter for
corn on the cob: The prices of car
insurance, butter, milk, and eggs
have all risen at double or triple the
CPI. For gas, make that sevenfold.
Solution? Substitute a lower-cost
item or supplier that can ll the
same need. Trade T-bones for
chicken breaststhe price of which
has tracked ination the past ve
years. Reach for a glass of wine
(down 2% over the past ve years)
instead of a bottle of beer (up 9%).
Then take the strategy wider.
Carpool to work or use public
transit to save on gas. And shop
around for a cheaper auto insurer.

HEALTH CARE COSTS

Whats Cheaperand Whats Not

Over the past five years, some appliances and manufactured goods
have become a lot cheaper. Food and energy, not so much.
PRICE CHANGE, 2009-14

Gas

69%

source:

28

Ground
beef

36%

Auto
insurance

23%

Bureau of Labor Statistics

m o n e y. c o m

CPI

11%

Toys

PCs/
computer
equipment

Televisions

-26%

-36%

-64%

Strategy: Comparison-shop.
Workers contributions to health
care premiums have climbed 26% in
real terms since 2008, based on data
from the Kaiser Family Foundation.
Prescription: Compare prices,
which vary widely even in-network
for doctors, services, and drugs. By
logging on to your insurers web tool
you can save thousands on MRI and
CT scans, specialists, and physical
therapy. See Same Procedure, So
Many Prices on page 34.
Also, to avoid big bills later, take
advantage of free preventive care
like physicals, which most plans
must now ofer, says Katy Votava,
president of Goodcare.com, a
health-plan consultancy. You cant
do much better than paying zero.

J U LY 2 0 1 4

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PERSONAL
INFLATION

ASK THE
EXPERT

THE NEW
RETIREMENT

HOME

HEALTH

INVESTING

How do I invest $50,000

for my son to get $1,000
a month in income for
the next 10 years?liz,

First, a reality
check: Making
$50,000 last over
10 years with a $1,000
withdrawal rate is a tall
order. Assuming a 4%
growth rate, you could
withdraw about $500 a
month, says Albuquerque
planner Brian Cochran.
With interest rates so
low, your best path to
that kind of return is
a barbell strategyin
which you divide the
money between volatile
growth investments
and Steady Eddie cash.
Cochran recommends
putting $30,000 in a
money market account
and the rest in a lowcost, growth-oriented
asset-allocation mutual
fund, such as Vanguard
LifeStrategy Growth Fund
(VASGX), which has
returned nearly 14%
a year over the past
ve years. Your son can
start drawing from the
money market, and after
about four years begin
systematically cashing
out of the growth fund.

andrea b.,

This barbell portfolio offers the best chance at a

4% annual returnwhile hedging some of the risk.

60%
Cash

Invested

Location withheld

10-YEAR
ANNUALIZED
RETURN: 3.8%
WORST
ONE-YEAR
RETURN:
17.2%

source: Morningstar, based on Vanguard LifeStrategy Growth Fund.

RETIREMENT

How should I manage my

personal investments
knowing that I have a government
pension? john clark, La Verne, Calif.

You dont need

to consider the
pension in your
overall asset allocation,
says Princeton, N.J.,
planner Howard Hook.
But it may afect how
you invest the rest of
your savings: A pension
can allow you to tilt your
portfolio slightly more
to stocks, at least initially,
since part of your income
is guaranteed. As time
goes on, however, you

may need to rely more on

personal investments
since many pensions
dont have a cost-of-living
adjustment, and if
they do, it is usually less
than the actual rate of
ination, says Hook. As
you start depending more
on savings to cover costs,
shift back to the typical
stock allocation for
someone at your life stage
(subtract your age from
110 for the percentage).

Yes, its best to

use the savings
sooner rather
than later, says Raymond
Loewe, an adviser with
United Planners Financial
Services. Given that your
time horizon is short
and the stock market
has had a good run, its
best to realize those taxfree gains now. Plus,
spending down the 529
early could improve
your odds for nancial
aid in future years, albeit slightly. Every $100
used can be worth $6 in
aid, says Loewe. One caveat: The IRS wont let
you snag an education
tax credit and take the
529 tax break for the
same expenses. So to
get the full $2,500
American Opportunity
credit, for example,
youll want to pay at
least $4,000 with other
money, says Joe Hurleyof
Savingforcollege.com.

By Sarah Max

J U LY 2 0 1 4

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COLLEGE

I have
enough
in my daughters
529 to pay her full
tuition for freshman year. Should I?

Zachary, La.

40%

COLLEGE

m o n e y. c o m

29

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PERSONAL
INFLATION

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EXPERT

HOME

THE NEW
RETIREMENT

HEALTH

COLLEGE

Greening Up the Grass

BROWN PATCHES AND WEEDS GETTING YOU DOWN THIS SUMMER? TO KEEP YOUR TURF
LUSH AND THICK, TRY SOME OF THESE COST-EFFECTIVE TACTICS. by Josh Garskof
DOES IT FEEL LIKE the grass really
is greener in other peoples yards?
Summers heat and low rainfall are
tough on turf, so neighbors sporting lush lawns this time of year
probably have better species of
grass, higher-quality topsoil, and
automatic irrigation. You, too, can
have all thatfor perhaps $10,000
or morewith a complete lawn
replacement. Or you can try more
afordable approaches to keeping
your existing grass verdant.

mower for a tune-up ($75 to $200),

which includes blade sharpening.

DO NOT FEED THE PLANTS

When a lawn turns brown, its not
deadits just gone dormant to save
energy for cooler, wetter times.
You may be tempted to apply
fertilizer and weed control, but if
not done right, those chemicals can
burn a heat-stressed lawn, says
Oregon State University horticulture professor Alec Kowalewski.

irrigation, a $2,000 to $4,000 expense for which there really isnt

a good low-cost workaround. To
maximize your investment, ask the
installer to arrange sprinkler heads
into zones based on the quirks of
your property so that shady, sunny,
poorly drained, and sloped areas
can get programmed for their own
watering needs. Opt for a rain sensor too (around $150), which will
override sprinklers when Mother
Nature provides irrigation for free.

MOW SMARTER

WATER ON SCHEDULE

AERATE IN AUTUMN

Taller grass holds more moisture

and stays greener than short
grass, says Mark Schmidt, principal scientist at John Deere. Plus,
it shades the soil, helping to keep
the roots wet. Set your mower
deck to three inches (or as high as
it will go). Also, inspect the grass
right after mowing. Jagged tears
indicate that the blade is dull, and
these wounds sap moisture from
the plants. Get a replacement
blade for $10 to $40 or take your

Dragging around the hose and

sprinklers to hydrate parched grass
may do more harm than good.
Coming in and out of dormancy
can kill the lawn, says John Stier,
a playing-eld consultant to several National Football League
teams. So dont water unless
youre going to be superconsistent
about watering all season long.
Thats probably not realistic with
manual eforts, so either let nature
take its course or go for automatic

Whether or not you irrigate, think

of lawn restoration as a multiseason project. In the fall, plan to
aeratecutting hundreds of holes
to loosen the soiland top with
compost and a mix of grass seed
bred for your climate ($500 to
$1,000 to hire out the job). Repeat
for several seasons, and youll
gradually improve the soil and
grass type, making your lawn more
drought-resistant, and yours the
greener side of the fence.

30

m o n e y. c o m

Illustration by ja s on

J U LY 2 0 1 4

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s c hn e id er

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PERSONAL
INFLATION

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EXPERT

THE NEW
RETIREMENT

HOME

Your Long Term

Just Got Longer
YOU MAY BE STICKING AROUND FOR MORE YEARS THAN
YOU IMAGINED. TIME TO REVISE YOUR RETIREMENT PLANS.

by Penelope
Wang
WHEN IT COMES TO retirement
planning, you have to make a lot
of educated guesseshow much
income youll need, what your
portfolio will earn. But the most
crucial unknown is how long youll
live, and how many years you have
to stretch out your savings.
Lifespans have been steadily
increasing, thanks primarily to
better health care and nutrition.
The Society of Actuaries, which
creates mortality tables for
pension funds and nancial
services rms, recently announced
plans to revise its numbers
extending the average lifespan for
a 65-year-old to 88, vs. 86 in 2002.
Some demographic groups
have beneted more than others.
Those with college degrees, for
example, typically live two to three
years longer than average, says
Jay Olshansky, professor of public
health at the University of Illinois.
Educated Americans tend to have
more wealth and better access to
health care, he says.
Your own lifespan will depend
on more than a college degree. Your

32

m o n e y. c o m

family history, how often you exercise, and whether you smoke all
come into play. For an estimate, try
the calculator at livingto100 .com.
Even if you arent headed for the
century mark, you need to make
your money last as long as you do.
These moves can help:
Aim far, within reason. If
youre healthy and have long-lived
parents, gure on living longer than
average. That may seem daunting
once you click on a retirement
calculatorgetting to 95 with a
90% likelihood of maintaining your

Who Lives Longer?

More school, which often means a
higher income, pays off in the end.
LIFESPAN AT 65 BY EDUCATION LEVEL
High school

84

87

Women
note:

College

84

81

Men

Data are 2008. High school education indicated

by 12 years of schooling; college by 16+ years. sources :
Jay Olshansky, University of Illinois; MacArthur
Foundation Research Network on an Aging Society

HEALTH

COLLEGE

income requires serious saving.

Dont let that discourage you.
Achieving a 90% success rate often
means passing unspent wealth to
heirs, says Michael Kitces, director
of planning research at Pinnacle
Advisory Group. In the event you
fall short, cutting back modestly
may not be a hardship since seniors
tend to spend less as they age. Be
conservative about your longevity,
but dont overdo it, says Kitces.
Cover the basics. Putting some
of your portfolio in an immediate
annuity will give you a regular
stream of payments throughout
your lifetime. Many advisers
suggest using them, along with
Social Security, to cover your
essential expenses. Recently
a 65-year-old man could purchase
a $100,000 annuity paying 6.6%,
according to ImmediateAnnuities
.com. Those rates, while low
historically, outshine bond yields.
It makes sense to buy now if you
need an annuity, says Joe Tomlinson, a nancial adviser in Greenville, Maine. If you hang on to your
cash and wait for a rate hike, youll
be earning zero percent, so you
probably wont come out ahead.
Take a walk. When you stay
healthy and active, studies show,
youre far more likely to avoid
expensive medical problems, not
to mention long-term-care costs.
As a recent article in JAMA found,
people in their seventies and eighties who exercised regularly, including walking and weight training,
were 18% less likely to sufer physical inrmities and nearly 30% less
likely to become permanently disabled. A t old age not only saves
money. Its more fun too.
Editor-at-large Penelope Wang tweets
about retirement at @PennyWriter.

J U LY 2 0 1 4

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COLLEGE

machine his practice owns). When

comparing costs, conrm that the
price includes a pro to read the
scan. Check that the facility is
ACR-accredited, says Keigley, and
make sure your doctor will accept
the results.

SPECIALISTS

Same Procedure,
So Many Prices
THE COST OF GETTING CARE IS ALL OVER THE MAP. TO SAVE,
LEARN HOW TO PRICE SHOP. by Amanda Gengler
YOU KNOW THAT visiting doctors
and hospitals outside your insurers
network is pricey. What might
surprise you is how big a bill you
could face even when you stay in
network. In a recent analysis of 93
types of services and procedures,
Change Healthcare, a company
that tracks medical claims, found
that in-network prices for the same
service often vary by 300% and can
difer by as much as 750%.
Picking the higher-price option
can cost you: Youll typically owe
full fare until you meet your
deductible, and then usually a
percentage of the bill. Most people
assume if you go in-network everyone is paid the same, so the nancial implication for you will be the
same, says Douglas Ghertner,
CEO at Change Healthcare. But
that is absolutely not the case.

34

m o n e y. c o m

Your insurer or employer probably has a web tool that lists what
youll pay for certain services at
local providers, factoring in your
deductible and co-insurance. Use it.
For these types of care in particular,
the swings in insurers negotiated
in-network rates are wideand you
may have time to shop around.

IMAGING

$511 to $2,815 for an MRI

$307 to $2,747 for CT scan
Imaging bills typically run two to
three times higher at hospitals than
at freestanding radiology centers,
according to health insurer Cigna.
At hospitals, says Brian Keigley,
founder of price-comparison rm
New Choice Health, radiology is
often subsidizing other service
lines. Ask your doctor for options
other than the hospital (or the MRI

$67 to $207 per visit

When you need a specialist such as
a cardiologist or neurologist, you
frequently end up seeing whomever
your primary-care doctor recommends. But you ought to know
whats behind the suggestion. Often
he or she will refer you within the
same health system, says Christine
Riedl of health insurer Aetna. Ask
your doctor how crucial it is to see
this specialist vs. another MD, and
get a few additional names. For
common specialties, your plans
pricing tool most likely factors in
quality metrics by practice, so you
can see if the one charging less
meets those standards.

PHYSICAL THERAPY

$620 or $2,280 for 10 sessions

Hospital facilities often negotiate
higher prices with insurers than
standalone PT practices do, says
Justin Moore of the American
Physical Therapy Association. If
your doctor suggests a therapist,
nd out if he or she specializes in
your condition. Check on how
many visits youll need, the cost
per visit (some pricing tools do
not include PT), and what youll
owe (conrm that with your
insurer). Ask what signs will
indicate progress, such as being
able to walk down a hallway in
X amount of time. Says Moore:
Being able to spell that out is an
indication of the quality of care.

Illustration by m ik ey

J U LY 2 0 1 4

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burt o n

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PERSONAL
INFLATION

ASK THE
EXPERT

THE NEW
RETIREMENT

HOME

What to Ask at
Career Services
A COLLEGES PLACEMENT OFFICE IS NOW ONE OF THE
MOST IMPORTANT STOPS ON THE TOUR. by Kim Clark
students with alumni, as well as an
expert in technology and social
media (like LinkedIn).
What services are ofered?
Employers prefer to recruit at
campuses where students come to
interviews prepared and book

Hire Ed
These schools offered the best
combination of staffing and services, a MONEY analysis found.

PUBLIC COLLEGES

UNDERGRADS PER
CAREER SERVICES STAFFER

PRIVATE COLLEGES

WITH LOAN-BURDENED students and

parents increasingly demanding
that a BA lead to a J-O-B, colleges
are beeng up their placement
services. This year, for the rst
time since the nancial crisis, the
typical career ofcewhich has
struggled with caseloads of about
1,500 undergrads per stafer
enjoyed a boost in operating budget instead of a cut, the National
Association of Colleges and Employers (NACE) reports. Were
about to experience the golden era
of career services, says Thomas
Devlin, director of UC Berkeleys
career center.
To ensure that gold enriches
your kids job search, look for
colleges with good answers to the
following questions. Just be sure to
temper sales spiels with feedback
from students and alumni, plus data
from sources like Payscale.com.
How is the ofce stafed? The
best career ofces have caseloads
of fewer than 1,100 undergrads per
counselor, allowing at least one
staf hour per student per year.
Expertise matters too. Its a bad
signal if a school doesnt have
someone dedicated to encouraging
employers to recruit, says Andy
Chan, vice president of career
development at Wake Forest. Each
ofce should also have a person
who specializes in connecting

sources :

The University of
Texas at Austin

334

The University of
Michigan

384

The University of
Virginia

500

AVERAGE FOR
PUBLIC COLLEGES:

1,802

The University of
Chicago

125

Wake Forest
University (N.C.)

133

Babson College
(Mass.)

176

AVERAGE FOR
PRIVATE COLLEGES:

876

HEALTH

COLLEGE

meetings only for jobs theyd

actually consider, says Dan Black,
president of NACE and Americas
director of recruiting at professional services rm EY. So conrm
that the school works with students one-on-one to narrow their
career focus and coaches them
for interviews, he says. And ask if
there are formal ways of networking with alums, like shadowing or
mentoring; if academic departments also work on career skills;
and what help is ofered to grads,
whether its simply job listings (eh)
or counseling (better).
When does career prep begin?
Studies show that the sooner
students start working on career
preparedness, the better they do
in the job market. Ideally, the
college will be equipped to work
with students during their rst or
second year. Since underclassmen
tend to steer clear of career services,
though, some schools are experimenting with ways to motivate
younguns to think about vocations.
Willamette University, in Salem,
Ore., for example, requires freshmen to create a rsum before
registering for sophomore classes.
Are internships a priority?
On-campus recruiting by prestigious employers is denitely a good
sign, but few undergrads get jobs
that way, says Bob Orndorf, associate director of employer relations
at Penn State. Meanwhile, at least
24% of internships lead to job
ofers, NACE reports. Employers
are looking for recruits with relevant experience, Orndorf says.
So nd out how the school helps
arrange internships and what
percentage of students get them.
The more students doing paid
internships, especially, the better.

Petersons and MONEY research

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35

Read the story behind our performance.

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100% of T. Rowe Price Retirement Funds beat their 5-year Lipper average as of 3/31/14.*

T. Rowe Price Retirement Funds are

low cost so your investment goes further.

How smarter research helps us fnd opportunity.

A few times a year, T. Rowe Price media and telecom analysts get together with college students
and have pizza. Not because our analysts are interested in pizza consumption, but because theyre
always on the lookout for new media and technology habits of early adopters. Our analysts
pizza get-togethers help us nd insights into technology trends that are ahead of the curve,
leading to better investing decisions. That dedication to more thoroughly researching investment
opportunities is just one reason 100% of our Retirement Funds beat their 5-year Lipper average.
Past performance cannot guarantee future results.
Visit our website to learn more about our funds and determine whether they are right for you.

troweprice.com/retirementfunds | 1.866.632.8854
Request a prospectus or summary prospectus; each includes investment objectives, risks, fees, expenses, and
other information that you should read and consider carefully before investing.
The principal value of the Retirement Funds is not guaranteed at any time, including at or after the target date, which is the approximate
year an investor plans to retire (assumed to be age 65) and likely stop making new investments in the fund. If an investor plans to retire
signifcantly earlier or later than age 65, the funds may not be an appropriate investment even if the investor is retiring on or near the target
date. The funds allocations among a broad range of underlying T. Rowe Price stock and bond funds will change over time. The funds
emphasize potential capital appreciation during the early phases of retirement asset accumulation, balance the need for appreciation with
the need for income as retirement approaches, and focus on supporting an income stream over a long-term postretirement withdrawal
horizon. The funds are not designed for a lump-sum redemption at the target date and do not guarantee a particular level of income. The
funds maintain a substantial allocation to equities both prior to and after the target date, which can result in greater volatility over shorter
time horizons. *Based on cumulative total return, 12 of 12, 12 of 12, 12 of 12, 9 of 9, and 2 of 3 (67%) of the Retirement Funds for individual investors outperformed their Lipper average for
the 1-, 3-, 5-, and 10-year and since-inception periods ended 3/31/14, respectively. The Retirement 2010, 2020, 2030, 2040, and Income Funds began operations on 9/30/02; the 2005, 2015,
2025, and 2035 Funds began operations on 2/29/04; the 2045 Fund began operations on 5/31/05; and the 2050 and 2055 Funds began operations on 12/31/06. (Source for data: Lipper Inc.)
T. Rowe Price Investment Services, Inc., Distributor.
RDFT082165

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P R O P ST Y L I N G B Y K E I K O TA N A K A

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A Not-SoPeachy Bull

Photograph by ja s o n

FROM A CERTAIN ANGLE the stock market sure looks

sweet. Both the S&P 500 index and the Dow
Jones industrial average are setting new record
highs seemingly on a daily basis. The number of
winning stocks also continues to swamp the
losers, historically a sign of strength for equities.
Yet if you look at the market from a slightly
diferent vantage point, youll start to see
blemishes. During one stretch from early March
to mid-May, for instance, the Russell 2000 index
of small-company stocks slid more than 9%, while
the fastest-growing companies in that part of the
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m o n e y. c o m

37

Invest

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THE BULL MARKET | THE SKEPTICAL INVESTOR | ETF X-RAY

market slumped nearly 13%. Plus,

among the worst performers were
last years biggest darlings:
biotech and social media stocks.
Were in a stealth correction,
says Craig Johnson, managing
director at Piper Jafray. He thinks
the damage could bleed into blue
chips as well. Why? In the past,
when small stocks signicantly
lagged large-caps, theres been a
broad sellofwith typical losses
of 12% for the S&P 500. Plus,
a pullback is overdue. A stock
market correctiondened as
a loss of 10% to 20%occurs on
average every 26 months, according to InvesTech Research. Were
now at month 32 and counting.
Markets like this can be tricky
because its difcult to tell how
much defense to play. For instance,
while Johnson cautions of the
possibility of a near-term slide
in the broad market, he expects
the S&P 500 to end this year 8%
above its early June level.
History ofers you clues to the
key dos and donts:

DONT ASSUME A CORRECTION

WILL LEAD TO A BEAR
Small-stock weakness led to major
pullbacks for the broad market
in 2011, 1999, 1998, 1997, 1996,
and 1994. None of those years,
though, witnessed full-edged
bear markets, dened as a 20%
or more decline in stock prices.
The case for the bull market
to continue remains surprisingly
rm, given how far we are in this
expansion, says James Stack,
president of InvesTech Research.
Among positive economic signs:
rising consumer condence and
manufacturing, combined with a
still-stimulative Federal Reserve.

38

m o n e y. c o m

SEEK A SMOOTHER RIDE

DONT BUY THE SMALL-CAP DIP

The market has been about as

steady as its been since before the
global nancial crisis. So whats
the point of tilting toward lowvolatility stocks, shares of companies that bounce up and down less
than the broad market?
Well, AllianceBernstein took a
look at global stock performance
since 1989, comparing the broad
market against the slice of stocks
with below-average rockiness. In
months when the broad market
lost value, low vol outpaced the
rest of the market 83% of the time.
This strategy has been popular
lately, so the stocks arent all
cheap. Go with low-cost ETFs with
portfolios sporting relatively
attractive valuations, such as
PowerShares S&P 500 Low Volatility
(SPLV) and iShares MSCI All Country
World Minimum Volatility (ACWV).

While small-company stocks have

been beaten down, they remain
expensive. Small-cap shares have
historically traded at about the
same price/earnings ratio as the
S&P 500, based on ve years of
median prots. Today theyre 35%
more expensive.
Also, when blue chips falter,
small-caps tend to fall more.
This late in the bull, Id be taking
prots in small-caps and focusing
more on large-cap stocks, which
represent better value, says Doug
Ramsey, chief investment ofcer
of the Leuthold Group.

Aging Bull
In the last year of a rally, market
leadership changes. These
sectors typically grow
34%
27%

Energy

Health care

23%

Tech

while these areas tend to slow

8%
2%
Telecom
note:

Financials

-1%

Utilities

S&P 500 sector returns in the last year of bulls

since 1972. sources: Ned Davis Research, InvesTech

FOCUS ON LATE-STAGE WINNERS

I dont know if were in the
seventh inning, the eighth, or the
ninth, says Ramsey. But I do
know its one of thoseand late
stages of bulls are diferent. In
the nal 12 months of past bull
markets, for instance, energy,
tech, and health care stocks have
typically thrived (see chart).
For exposure to these sectors,
InvesTech recommends ConocoPhillips (COP), Qualcomm (QCOM), and
Express Scripts (ESRX). If you prefer
a mutual fund, MONEY 50 pick
Primecap Odyssey Growth (POGRX)
has 70% of its stock portfolio
invested in health care and
technology, double the S&Ps
exposure. Sound Shore (SSHFX),
another MONEY 50 pick, also
has a bigger-than-average exposure to these three key areas.
What if this isnt the bulls nal
year? No problem: Over the past
three years, Sound Shore has
delivered 115% of the S&P 500s
gains in periods when the market
is up, according to Morningstar.
So either way, you win.

J U LY 2 0 1 4

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WorldMags.net
This
label sealed the deal
on our new home.
NAME :

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Efcient, comfortable,
and ENERGY STAR certied

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More than $550 off their

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EPAs blue ENERGY STAR label on the Gallos new home means a lot. It means their home was
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THE BULL MARKET | THE SKEPTICAL INVESTOR | ETF X-RAY

Mergers Are
Back. Uh-oh
WITH LOTS OF CASH ON HAND, CORPORATIONS ARE
DOING MORE DEALSAND SHAREHOLDERS MAY LOSE.

by Paul J.
Lim
FOR YEARS investors have implored
companies to deploy their record
stashes of cash. When companies
sit on past prots, the thinking
goes, they miss out on the chance
to boost future growth. Well,
businesses have nally started to
put their money to work. With help
from rising stock values, theyve
kicked of a big round of mergers
and acquisitions. Apples recent
$3 billion purchase of Beats Music
is just one of the headline grabbers.
File this M&A boom under Be
careful what you wish for. Deals
weaken most companies. A study
by KPMG looked at transactions

40

m o n e y. c o m

made in the late 1990s and 2000s

and estimated that from twothirds to 80% failed to improve
the companys prospects. Here
are three reasons to be skeptical
when companies go shopping:
They often buy for the wrong
reasons. Surveys of corporate
managers show that two of the
biggest factors driving M&A
now are the abundance of cash
and cheap credit.
Thats akin to a family deciding
to buy another car just because
theres extra money in the
checking account, says Greg
Schultz of Asset Allocation
Advisors in Walnut Creek, Calif.
Good business opportunities
should be the reason to pull the
trigger, not easy access to cash.

Illustration by tay l or

CEOs are terrible market

timers. History shows that
corporate buyers are like amateur
investorsthey wait until after
trends develop to make a move, at
which point theyre forced to pay up.
The last two peak years for
deals were 2000 and 2006; total
acquisitions were valued at well
over $1 trillion in both years,
according to Richard Peterson,
director of global markets
intelligence at S&P Capital IQ.
In both cases, the price/earnings
ratio for the S&P 500, based on
10 years of averaged prots, was
well above 25. Thats expensive
and suggests that lots of honchos
overpaid for their prizes.
Yet when the markets P/E
ratio fell to a cheap 13 in 2009,
deal activity sank to around
$700 billion. Today deal activity
is again above the $1 trillion mark,
andwouldnt you know it?the
markets P/E is again above 25.
M&A wastes money that could
go to dividends. Between 2009
and 2013, U.S. corporations raised
M&A activity by more than
$430 billion. At the same time,
dividend payouts were boosted by
a much more modest $115 billion.
Yet dividends are good news for
shareholders. Ned Davis Research
nds that over the past 30 years,
companies that consistently
boosted payouts returned 10.4%
annually, vs. 9.4% for steady
dividend payers and 1.5% for
nonpayers. If you own stock in
a serial acquirer, the smart move
now may be to shift assets into
a fund, like SPDR S&P Dividend ETF
(SDY), focused on companies with
growing payouts.
Assistant managing editor Paul J. Lim is
the author of three books on investing.

ca l le ry

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Are Tax Free Municipal

Bonds Right for You?
Please call 1-800-316-1837
for your free Bond Guide.
The Main Advantages of Municipal Bonds
Investors are attracted to municipal bonds for three
reasons, safety of principal, regular predictable
income and the tax-free benets. Together, these three
elements can make a compelling case for including
tax-free municipal bonds in your portfolio.

Potential Safety of Principal

Many investors, particularly those nearing retirement
or in retirement, are concerned about protecting
their principal. In March of 2012, Moodys published
research that showed that rated investment grade
municipal bonds had an average cumulative default
rate of just 0.08% between 1970 and 2011.* Tat
means while there is some risk of principal loss,
investing in rated investment-grade municipal bonds
can be a cornerstone for safety of your principal.

Potential Regular Predictable Income

Municipal bonds typically pay interest every six
months unless they get called or default. Tat means
that you can count on a regular, predictable income
stream. Because most bonds have call options,
which means you get your principal back before

the maturity date, subsequent municipal bonds you

purchase can earn more or less interest than the called
bond. According to Moodys 2012 research,* default
rates are historically low for the rated investmentgrade bonds favored by Hennion & Walsh.

Potential Triple Tax-Free Income

Income from municipal bonds is not subject to federal
income tax and, depending on where you live, may also
be exempt from state and local taxes. Triple tax-free can
be a big attraction for many investors in this time of
looming tax increases.

About Hennion & Walsh

Since 1990 Hennion & Walsh has specialized in
investment grade tax-free municipal bonds. Te
company supervises over $2 billion in assets in over
15,000 accounts, providing individual investors with
institutional quality service and personal attention.

What To Do Now
Call 1-800-316-1837 and request our Bond Guide,
written by the experts at Hennion & Walsh. It will
give you a clear and easy overview of the risks and
benets of tax-free municipal bonds.

Dear Investor,
We urge you to call and get your free Bond Guide. Having taxfree municipal bonds as part of your portfolio can help get your
investments back on track and put you on a path to achieving
your investment goals. Getting your no-obligation guide could
be the smartest investment decision youll make.
Sincerely,

FREE Bond Guide

Without Cost or Obligation

CALL 1-800-316-1837
(for fastest service, call between 8 a.m. and 6 p.m.)

Hennion & Walsh, Bond Guide Oer

2001 Route 46, Waterview Plaza
Parsippany, NJ 07054

2013 Hennion and Walsh. Securities oered through Hennion & Walsh Inc. Member of FINRA, SIPC. Investing in bonds involves risk
including possible loss of principal. Income may be subject to state, local or federal alternative minimum tax. When interest rates rise, bond prices
fall, and when interest rates fall, prices rise. *Source: Moodys Investor Service, March 7, 2012 U.S. Municipal Bond Defaults and Recoveries,
1970-2011. Past performance is no guarantee of future results.

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THE BULL MARKET | THE SKEPTICAL INVESTOR | ETF X-RAY

X-Ray: SPDR Gold Shares

CAN GOLDAND THIS ONCE-GIANT FUND THAT TRACKS ITSHINE AGAIN? by Paul J. Lim
It used to be tricky for U.S. retail investors to buy gold. In 2004, SPDR Gold Shares changed that. The exchangetraded fund holds the precious metal directly (stored in London vaults) and tracks its price. By 2012, after nervous
investors had stocked up on gold in the years after the nancial crisis, the fund was the second-biggest ETF in the
world, with more than $70 billion in assets at its peak. Now investors have backed of on gold, and the fund has
fallen 24% since the start of 2013. But despite the drop, gold and SPDR Gold Shares still dont look like buys.

Deflated Prices

What, Me Worry?

Relative Value

As the annualized pace of inflation

has sunk, so have gold prices.

Gold is considered a fear asset

at a time of relative market calm.

Even if you think gold is a good deal,

gold-related stocks look cheaper.

GOLD PRICES VS. INFLATION

Gold

CHANGE SINCE SEPTEMBER 2011

FIVE-YEAR ANNUALIZED GAINS

Change in growth of CPI

5.7%

0%

33%
30%

9.1%
68%

60%

Actual gold

1/12

1/13

1/14

Golds value as an ination hedge

is arguable. A London Business
School study found that the metal
has gained 1% a year in real terms, vs.
more than 5% for stocks. But when
ination is in the news, investors
act as if gold is the cure. Right now,
though some prices are up (see page
27), broad ination is low.
True, it could are up. Fed ofcials,
though, say theyll start raising
interest rates if ination tops 2%
(the gauge they use is at 1.4%). That
would tamp down prices. Gold also
falls when the U.S. dollar rises. If the
Fed hikes rates while Europes central
bank keeps cutting, the dollar is
likely to strengthen vs. the euro.
This lends credence to the sellof in
gold, says Ashraf Laidi, chief global
strategist for City Index.

Gold prices

Fear index

While gold prices are negatively

correlated with the dollar, they tend
to move in lockstep with the level of
anxiety in the nancial markets. Its
a fear commodity, says New York
City nancial adviser Lewis Altfest.
Its no surprise, then, that the two
most recent spikes in gold prices
during the inationary late 1970s and
then more recently in the 2000s,
amid the mortgage crisiscoincide
with troubled times for equities.
Lately, however, the major gauges
of panic simply arent registering.
The CBOE Volatility Index, which
measures traders expectation of
market rockiness, is as low as its
been since before the nancial crisis.
Meanwhile, a survey of investment
advisers found more than 62% are
bullish, a level not seen since 2007.

Gold-related
stocks

The contrarian in you may be

thinking: Isnt this bullishness and
relative calm a sign of a market top?
Wouldnt now actually be a good
time to buy a beaten-down gold ETF?
Perhaps. But value-minded
investors note that shares in
gold-mining companies have sunk
more than gold prices. Moreover,
many mining stocks ofer a dividend,
paying you to wait for a rebound,
says Altfest. SPDR Gold Shares
doesnt hold such stocks, and its
ownership of bullion leads to another
disadvantage: The IRS considers
actual gold a collectible. For those
in the 28% bracket, that means
paying 28% on long-term gains, not
the normal 15%. So even if gold gets
back its luster, SPDR Gold Shares
will shine a little less.
notes:

Ination is year-over-year change in consumer price

index. Fear based on CBOE Volatility Index. source: Bloomberg

42

m o n e y. c o m

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What Your Annuity Salesman

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Doesnt Want You To Know

What You Might Not Know About Annuities

Could Come Back To Haunt You
Before you put your hard-earned money into an annuity, or if you already own one,
please call 1-800-695-5929 for a special report, Annuity Insights: Nine Questions
Every Annuity Investor Should Ask. Written with Money readers in mind, it could help
save you hundreds of thousands of dollars and untold fnancial heartache.
Te vast majority of annuities are really complicated insurance policies that make
it very difcult to fully understand the implications and unintended consequences.
And once you buy into an annuity, it can be a very difcult and potentially very costly
investment decision to reverse. Tats why it is vital you look before you leap and
ensure that you have your eyes wide open before you purchase an annuity. And if
you already own an annuity, this free report is just as valuable as it can help you sort
out the good, the bad and the ugly aspects of annuities.

What Youll Learn From Tis Free Report

Te diferent types of annuities and the advantages and disadvantages of each
Why annuities can be complex to understand
What you need to ask an annuity salesman when evaluating his product
Te infation risk, tax implications, estate planning considerations and typical
annuity fees

Dont Be Lulled By Te Soothing Sound Of Guaranteed Income

Sure, guaranteed income, free from market volatility, has a lot of appeal, especially
for people approaching or in retirement. But that guarantee can cost you big in
commissions, fees, surrender charges, taxes and other costs. Plus, locking in a
guaranteed income stream that doesnt take into account infation can seriously erode
the value of your cash fow. In our report, well show you how buying or staying in the
wrong annuity could literally cost you hundreds of thousands of dollars in fees and
lost opportunities.

Stuck In An Annuity?
Because people ofen regret their annuity decision, Fisher Investments has helped
many investors extract themselves from annuities. In fact, if you have a portfolio of
$500,000 or more, we may rebate some or all of your annuity surrender penalties.
Rebates average over $13,000.* Please call for details and to see if you might qualify.

If you own an annuity or if

someone is trying to sell you
one, I urge you to call for
your free report. Annuities
can lock you into low returns,
complicate your tax situation,
tie up your wealth and hit you
with high fees. If you have an
annuity, my team can help you
decide if it is right for you. And
if it isnt, we might be able to
help you get out of it and even
help you ofset some of the
annuity surrender fees.*
Tis free report could save
you from making one of the
biggest investment mistakes
of your life. And for owners
of annuities, the free analysis
could be a life saver.

Ken Fisher

About Fisher Investments

Fisher Investments is a money management frm serving successful individuals as well
as large institutional investors. With over $54 billion** in assets under management
and with a track record of over 25 years in bull and bear markets, Fisher Investments
uses its proprietary research to manage money for prudent investors.

CEO and Co-Chief Investment

Ofcer, Fisher Investments
Forbes Portfolio Strategy
columnist for 29 years
Author of 10 fnancial
books, including four
New York Times bestsellers

Please hurry! Tis ofer contains time-sensitive information.

Call today for your FREE report!

1-800-695-5929 Ext. A612
2014 Fisher Investments. 5525 NW Fisher Creek Drive, Camas, WA 98607.
Investments in securities involve the risk of loss. *Rebates are for investors who
liquidate an annuity with surrender penalties and fund a Private Client Group
account. Average rebates from August 2011 to September 2013 were $13,227.
Terms and conditions apply. See www.AnnuityAssist.com/Terms-and-Conditions
for further information. **As of 3/31/2014.

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WorldMags.net

COVER STORY

Illustration by na m e

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here

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The

one
t
e
n
m
e
r
Reti
move
t
e
G
t
s
u
M
u
o
Y
right
BY IAN SALISBURY + PHOTOGRAPHS BY GREGORY REID

>>> HOW TO INVEST A SIZABLE 401(k) WHEN YOU LEAVE YOUR JOB MAY BE THE
BIGGEST FINANCIAL DECISION YOULL EVER FACE. LOTS OF PROS WILL BE QUICK
TO OFFER ADVICE. TO MAKE SURE YOUR MONEY LASTS, YOU NEED TO KNOW
WHATS BEHIND THE PITCHES AND DEVELOP A PLAN THAT SUITS YOUR GAME.

Plus:How to invest before a rollover.

J U LY 2 0 1 4

45

m o n e y. c o m

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COVER STORY

THE
TEE-UP

46

m o n e y. c o m

J U LY 2 0 1 4

YOUR
BEST SHOT

THE AVERAGE 401(k) balance

for workers 60 or older
making $100,000 or more a
year stood at $414,000 at
the end of 2013, reports
benefits consultant Aon
Hewitt. Deciding what to do
with that moneydo you
stay or do you go?may be
the most important nancial call youll ever make. If
you get it wrong, its extraordinarily difficult to
recover, says Barbara
Roper, director of investor
protection at the Consumer
Federation of America.
Your 401(k) provider is
uniquely positioned to help.
The firm knows your age,
how much money you have,
and how you like to invest.
And it hears from payroll
that youve left your job.
That would trigger an
alert for outreach, says Sophie Schmitt, an analyst at
Aite Group, an investment
industry researcher. Its a
no-brainer. You get a letter
or you get a call. The soft
sell might sound like this letter from Fidelity: Im ready
to answer any questions you
might have about your retirement savings options
and possible next steps.
That inside track can
pay off. Schwab says it
achieves a 50% retention
rate for IRA rollovers on its
main 401(k) platform. Other leading plan providers,

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including Vanguard and

Fidelity, dont report their
gures, but Alison Borland,
vice president of retirement solutions and strategies at Aon Hewitt, believes
their rates are similar. The
providers make it seem like
a natural step, she says. It
feels like a place to trust.
Plan providers point out
that they play a vital role as
retirees face the difficult
task of converting savings to
income. Investors are coming to us at a point that
is incredibly emotionally
charged, says John Sweeney, executive vice president
of retirement and investing
strategies at Fidelity. They
are asking us for this help.
Borland says companies
dont always take such a
rosy view of plan providers
reaching out. Some come
to us because it makes
them uncomfortable, she
says. They want plan providers to help participants,
not sell them things.

WHY YOURE A CATCH

Your 401(k) provider has a
strong incentive to bring you
in-house. IRAs, which require less bookkeeping, are
far more lucrative than
workplace plans. In 401(k)s,
Wall Street rms earn about
20 in prots on every dollar
of investment and administrative fees they collect, says

P R O P ST Y L I N G B Y B R I A N B Y R N E F O R S E T I N I C E

INANCIAL SERVICES companies

usually seek out new clients.
Last year the brokerage
Charles Schwab said it was
walking away from some,
namely several 401(k) plans
covering more than 300,000
workers, with a total of $25 billion saved.
As Steve Anderson, Schwabs executive
vice president of retirement plan services,
explained in a webcast for Wall Street investors in February, the problem was that employers were making it too tough for Schwab
to pitch individual retirement accounts to
retiring or departing workers. What we look
for [is] to communicate openly with their
employees, to be able to have education meetings that would be Schwab branded, to be
able to have rollover conversations, he said,
according to a transcript of the call.
This keen interest in rollover conversations is understandableand widely
shared. Americans have amassed $5.9 trillion in 401(k)s and similar plans. Now baby
boomers are starting to hit the exits, fueling
a rollover boom (see the graphic at right).
For fund companies, Wall Street brokers,
insurers, and nancial advisers, snagging a
piece of that transfer can be lucrative, especially since IRAs are twice as protable to
run as 401(k)s are. Rollovers are the biggest
moneymaker in the retirement business,
says Michael Kozemchak, managing director
of IIC, a consultant to retirement plans.
But if the IRA market is a multitrilliondollar opportunity for the industry, its
fraught with risks for you. You could pick the
wrong product, pay too much in fees, or needlessly give up a standout 401(k)all of which
could add up to a less comfortable retirement. Heres what you need to know to stay
on course, from the pitches youre bound to
hear to the best moves you should make.

staying with us is
the natural thing
focus on the
fees youll pay

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ROLLOVERS: THE
RIGHT APPROACH

THE ROLLOVERS WILL KEEP ROLLING

Retiring baby boomers are behind a rush into IRAs.
NEW IRA ROLLOVERS (BILLIONS)
$500
$400
$300
$200
$100
2009

12

15

18

note: 2012 to 2018 are estimated. sources: Investment Company Institute, Cerulli Associates

Peter Demmer, chief executive of Sterling Resources, a

consultant to plan providers.
IRA prots are roughly double that. Its twice the pay
for half the work, he says.
Having your 401(k) provider weigh in on a rollover
opens you up to potential
hazards. For starters, you
cant trust everything you
hear. Last year the Government Accountability Ofce,
Congresss nonpartisan in-

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vestigative arm, had an undercover investigator call 30

plan administrators while
posing as a worker looking
for advice on an old 401(k).
Often the message was
firmly pro-IRA. A third of
reps suggested a rollover for
the caller, the GAO reported, without specific
knowledge of his financial
circumstances. Some cast
doubts on his ability to stay
in an old planyou almost
always can as long as your
401(k) is worth more than
$5,000. About a third suggested he couldnt roll over
into a new employers plan,
another common option.
Regulators took note.
Both FINRA, the brokerage
industrys self-regulatory
body, and the Securities and
Exchange Commission said
rollovers would be a priority
when they examined nancial rms for 2014. And the
Labor Department has said
that it will renew its eforts
to make sure those advocating a rollover are duciaries, meaning their advice
would have to be in your
best interest, vs. simply
suitablebut not until
next year. That effort has
been stalled in no small part
because of industry lobbying. (As long as youre in a
401(k), your investments are
overseen by a duciary.)

THE FEE TRAP

The key problem you could
face when you switch to an
IRA is higher fees. In many
401(k)s you enjoy especially
low costs: In plans with
more than $1 billion in assets, expenses average
0.35% of assets a year, according to nancial informa-

WorldMags.net
tion company BrightScope.
For plans with $50 million to
$200 million, its 0.63% on
average. Compare that with
retail funds outside of plans,
where the average expense
ratio is 1.3%, according to
Morningstar.
A steep price hike isnt
inevitable, of course. Fidelity
Freedom Income Fund, a
post-retirement target-date
fund, charges 0.49% in an
IRA, barely more than the
0.44% youd pay for the fund
within a 401(k). On a $10,000
investment, thats another
$5 a year. Going from Vang u a r d s i n s t i t u t i o n a l
S&P 500 index fund to a
retail version only raises
your expenses from 0.02%
to 0.05%.
What can really cost you,
however, is adding premium services. Fidelity and
Schwab market ongoing investment advice. Vanguard
recently launched a pilot
program to do the same. At
Schwab youll pay as much
as 0.9% of your assets on top

of fund fees. Fidelitys Portfolio Advisory Service (PAS),

highlighted at the companys rollover website, charges as much as 1.19% a year,
plus the costs of underlying
investments, which Fidelity
estimates run 0.5% to 0.77%,
depending on your stock
and bond mix. Ten percent
of the money that rolls out of
Fidelity 401(k)s goes into
this advice program, the
company reports.
The Fidelity phone and
branch reps have an incentive to get you to sign up for
advice. When you open a
Fidelity IRA and put the
money in cash, the rep receives a payment equal to
0.06% of your balance, according to Fidelity. When
you pick a target-date fund,
that bonus jumps to 0.08%.
For PAS, annuities, or a referral to an adviser, it is
0.12%. Fidelity says the different payouts are tied to
complexity, not to how lucrative the products are.
When I start to get into

HOW TO MAXIMIZE YOUR

401(k) BEFORE A ROLLOVER
To get the most out of your retirement savings, put
the right amount in and take the right steps at all stages
of life. + By Pat Regnier, Susie Poppick, and Kara Brandeisky

LOST RETIREMENT SAVINGS

What a typical 401(k) cash out of
$14,300 amounts to in 30 years:

$6O,OOO

MILLENNIALS

+ START SMALL,

THEN AUTO-ESCALATE: Less than half

of workers ages 22
to 32 are saving for
retirement, despite
how painless it can
be. Socking away
3% of a $50,000
salary ($1,500 before taxes) costs
you less than $22 a
week in take-home
pay. Then take
baby steps by autoescalating your
savings by one

percentage point a
year. In plans with
auto-enroll and a
1% auto-escalate
feature, nine in 10
participants are
able to safely generate 60% of their
age-64 income, adjusted for inflation,
according to EBRI.
+TAKE THE EASY

WAY OUT: More than

two in five millennials in retirement
plans arent familiar
with their invest-

ment options. No
problem: Just go
with a target-date
fund, which automatically adjusts
your portfolio to be
less risky as you
age. The worstperforming targetdate investors at
Vanguard earned
11.8% annually over
the past five years,
far outpacing the
worst DIYers, who
gained just 2.1%.
+ ROLL OVER AS YOU

GO: Twentysomethings typically

spend 1.3 years at
each job. And Fidelity
says nearly half cash
out 401(k)s when
leaving. That triggers income taxes
and a 10% penalty,
depleting the amount
that can compound.
The box shows what
that really costs you.

A GUIDE TO GOING IT ALONE

As a new retiree, start with these model mixes. With pension or
annuity income, you can be aggressive. If not, throttle back.
Stocks

Bonds

Cash and other

MODERATE

8%

AGGRESSIVE

45%

6%

62%

47%

32%

Annualized 10-year return: 7.8%

Worst since 2004: 22% (2008)

Annualized 10-year return: 8.2%

Worst since 2004: 30% (2008)

note: For 2015 retirees. source: Morningstar

48

m o n e y. c o m

+ KEEP THE BOTTOM

LINE TOP OF MIND:

A funny thing about

investing: The more
you save and the
bigger your balance, the more fees
you have to pay in
dollar terms. So
now that your account has some serious money, shifting to lower-cost
options such as an
index fund is an
easy way to save
big (see chart). If

J U LY 2 0 1 4

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HOW FEES REALLY ADD UP

Total costs over 25 years of
$100,000 earning 7% annually:
Fund charging 1.2%
0.3% fund

$141,400

$39,275

GEN XERS
you have $100,000
saved by 40 and
underlying returns
average 7%, the
savings by 65 of

switching from a
1.2%-fee fund to
0.3% is $102,000
nearly a whole
second nest egg.

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ROLLOVERS: THE
RIGHT APPROACH

TWEAKING TARGETS
Being in the wrong target-date fund can
mean having far too much in stocks.
Stocks

43%

57%

Bonds and cash

34%

T. Rowe
2015 Fund

27%

66%
2020 Fund

73%
2025 Fund

BABY BOOMERS

+ SAVE IN BURSTS:

Neither saving nor

spending runs along
a smooth path. For
example, you may
have to pare back
savings while paying the kids college
bills. The good news
is that after 50 is
when people should
be able to save the
most, as their kids
are moving out,
theyve paid off the
mortgage, and they
should be in the
highest earnings
years of their lives,
says economist
Wade Pfau. Starting
at 50, you can also
make extra 401(k)

+ SHOOT FOR 17%:

How much you need

to save depends on
how much you already have. But 17%
is a good mental
anchor. Thats the
number Wade Pfau
of the American
College of Financial
Services came up
with for folks starting from scratch
at 35, with a 60%
stock/40% bond
portfolio, to safely
fund a typical re-

contributions of up
to $5,500, on top of
the normal $17,500.
+ PREP FOR THE

SPEND-DOWN
PHASE: Once you

retire, youll have to

spend out of your
nest egg regardless
of market conditions. Even if stocks
do well on average,
a bad run early on
can deplete your
portfolio. So start

taking a couple percent of equities off

the table every year
in the five or 10
years leading up to
retirement, says
financial adviser
Michael Kitces.
+ READJUST YOUR

TARGET: According
to polls, Americans
expect to retire
around 66. But the
actual age of retirement is 62. Things
happen: You may run
into health issues or
be forced into early
retirement. Now
many 401(k) savers use target-date
funds. As you gain
more visibility on
your own retirement date, adjust
the target-date
fund you use. As
the chart shows,
it can make a big
difference.

After age 50 is really when

people should be able to
save the most.
WADE PFAU, ECONOMIST

tirement goal. You

might be okay saving less if the markets go your way,
but Pfaus number
is what it takes to
get there even with
poor returns. Thats
far more than the
average 401(k)
contribution of
around 6% to 7%.
But take a deep
breath. That number includes the
contributions from
your employer.

+ RESIST THE URGE

TO BORROW: About
22% of participants
between 35 and
54 in plans run by
Vanguard have borrowed from their
retirement accounts. Compared
with other forms
of debt, a 401(k)
loan isnt the worst.
But the amount
that you borrow
is money thats
not compounding
tax-deferred.

financial planning, I am
spending more time with
you. We think its appropriate, says Sweeney.
Maybe, but adding a
thick layer of annual fees to
your IRA can cut the chances
that your money will last
(see the graphic on page 50).

BEST MOVES
Stay put. If you work for
a Fortune 500 employer,
chances are the investments in your 401(k) are as
cheap as anything you
could buy elsewhere, or
cheaper. When you switch
jobs, another option is to
move your retirement cash
to your new 401(k). Some
companies have discouraged rollovers due to onerous paperwork, but in April
the Treasury Department
simplied the process.
Ditch loyalty. At a small
employer especially, your
plan may be loaded with
costly annuities or high-fee
actively managed funds. In
that case you can save by
switching to an IRA and
investing in index funds. It
may seem more convenient
to stick with your 401(k)
provider, but competitors
are equally eager to win
your business and can help
with a direct rollover. That
will let you avoid getting a
check in the mailpossibly
with income taxes withheldthat you then have to
deposit in an IRA.
Take advice if you need
it. Managing your retirement investments and calculating withdrawals arent as
easy as lling in a box to save

10% of your paycheck was.

Advice can pay of. In a recent study Vanguard found
that 401(k) investment-management programs can improve performance by about
one percentage point a year
by optimizing the mix of
stocks and bonds. If assetallocation help is all youre
after, buy a target-date fund
with low fees and an allocation that suits your appetite
for risk (see the model portfolios at left).
Roughly half of 401(k)s
ofer over-the-phone investment advice, Aon Hewitt
reports. One of the most
popular providers is from
Financial Engines. Available
even after you retire, its Income+ service helps you
gure out how much you can
spend and recommends a
stock and bond mix for 0.6%
a year on top of fund fees.
Shop locally. As long as
you have at least $250,000
to investa typical minimumsee what a local nancial planner charges.
That face-to-face help may
be less or no more than
what youd pay for a fund
investment advice program. Within the next 12 to
18 months Vanguards new
Personal Advisor Services,
which costs 0.3% plus costs
of underlying investments,
will be widely available.
Pay for advice once. If all
you need is guidance at the
starting gate, you can hire
an adviser by the hour
instead of spending 1% to
2% a year. You might pay
$800 to $1,500 for a onetime plan.

notes: Cash-out growth assumes a 5% annual return. Fee calculations are based on total costs, including

forgone gains. sources: Morningstar, T. Rowe Price, SEC, MONEY research

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WorldMags.net
THE
TEE-UP

YOUR
BEST SHOT

you need the steady hand

of a professional
if you want an adviser,
learn how to vet one

MORE THAN 300,000 U.S. professionals call themselves

nancial advisers, according to industry researcher
Cerulli Associates. That
universe covers everyone
from Wall Street brokers
and bank and insurance
reps to independent money
managers. What kind you
hire could have a big impact
on just how your IRA is
invested.
Many advisers work with
wealthy investors, and in
dollar terms they dominate
the market, grabbing 70%
of rollover assets, Cerulli
reports. If plan providers
know all about your 401(k),
advisers have their own
edge: They know you. A full
83% of the rollover dollars
advisers capture come from
existing clients.
Here, too, the incentive
to bring your 401(k) inhouse is strong: Once your
savings are in an IRA, an
adviser can earn 1% or
more a year managing
those funds or take an
upfront commission of as
much as 6%. For many
advisersjust like savers
an IRA is likely to be the
biggest lump-sum contribution they ever see, says
Jason Roberts, chief execu-

50

tive of the Pension Resource

Institute, a consulting
company that helps advisers and others with
compliance issues.

FINDING THAT IN
To be in line to get rollover
dollars, some advisers, or
the firms that manage
them, are taking a page
from the Fidelity and
Schwab playbook: Run the
401(k) in the rst place.
Since acquiring Merrill
Lynch during the nancial
crisis, Bank of America has
been building up its 401(k)
business. In 2013 the bank
signed up 750 new plans,
vs. 263 new ones in 2012.
We love the retirement
business, said Andy Sieg,
head of Global Wealth and
Retirement Solutions, in a
February presentation to
Wall Street. The plans, Sieg
noted, are a feeder engine
for core wealth-management relationships at Merrill Lynch and U.S. Trust, as
individuals have needs outside of the plan or roll-out
of retirement plans.
When mom-and-pop advisers dont have an in, they
have to carve one out. David
Royer, a former financial
adviser, teaches a $1,295

course titled Keys

to the IRA Kingdom that promises
to help advisers
learn the tax rules
so that they can
capture the exploding 401(k) rollover market. Advisers have an
important role, he
says, since confused investors who fall afoul of IRS
rules could face needless
tax bills. Mistakes are
costly and often irreversible, Royer warns. If you
have chest pains, you go to
the doctor. You dont go to
the pharmacy and say, Give
me a bottle of nitro.

to leave the Thrift Savings

Plan, the federal governments standout, ultra-lowcost equivalent of a 401(k).
The emails, which
warned of keeping all of
your eggs in one basket,
could have been construed
to suggest that an event like
2013s debt crisis put plan
assets at risk. A reasonable
person could have read
them that way, he says.
The SECs approach,
Goodman says, will be to
focus on pros with unusually high batting averages
in terms of winning rollovers. Choosing to roll over
is a complicated decision
involving costs, investments, and tax rules, Goodman notes, and the many
nuances involved need to be
clearly presented.

OUT OF BOUNDS?
Several regulators, including the SEC, are taking a
closer look at how advisers
market rollovers. Kevin
Goodman, the SEC ofcial
who oversees broker-dealer
examinations, says an inquiry started in part because SEC employees were
getting emails urging them

BEST MOVES
Grill your adviser.
When your existing nancial adviser suggests a rollover, ask why. Some income
strategies, such as building
a ladder with individual

WHY COSTS MATTER

Over time, paying 1% a year for investment management on top
of fund fees could erode your savings more quickly.
CHANCES YOUR MONEY WILL LAST UNTIL AGE ...
Average annual expenses

0.9%

1.9%

100%
80%
60%
40%
20%
0%
75

80

85

90

95

notes: Assumes retirement at 65; annual returns of 6%; ination of 2.5%; initial withdrawals of 4%

m o n e y. c o m

J U LY 2 0 1 4

of portfolio, increased annually with ination. sources: Morningstar and PriceMetrix

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WorldMags.net

ROLLOVERS: THE
RIGHT APPROACH

bonds, are difcult or impossible to execute within

a plan. If the rollover recommendation is merely to
help you pick funds, think
twice. They should be able
to do that from looking at
your 401(k) statement,
says Wade Pfau, professor
of retirement income at the
American College of Financial Services. Plus, your
adviser should at least consider annuities for you. If
your adviser rejects them

out of hand, thats a bad

sign, says Pfau.
Know whom youre talking to The trickiest part
of hiring an adviser if you
dont already have one may
be guring out whom youre
working with. In a bank
branch, brokerage, or insurance ofce, you may meet an
adviser who operates solely
on commissions. Registered
investment advisers, found
at nancial planning practices as well as Wall Street

rms, charge 0.5% to 1.5% a

year of your assets.
... and his biases. While
commission advisers must
recommend products that
are suitable, based on
factors like your age and
risk tolerance, beyond that
they are largely free to pitch
whatever provides them the
fattest payouts. Advisers
who levy a fee dont have the

same incentive to sell you a

particular product, and by
law they must act in your
best interest. But even
those pros have conflicts.
They cant charge a fee on
whats in your 401(k) or
an annuity, giving them a
reason to put you in an IRA.
Avoid commissions. In
todays world of supercheap index funds and
ETFs, the case for paying a
high upfront commission is
hard to make, especially
since commission advisers
often sell expensive actively
managed funds. A possible
exception: You want an
annuity (see next section).
Determine the advisers
style. Seek out someone
who works with others like
yousimilar-size portfolios, say, and similar goals.
Adviser Mark Atherton of
Reston, Va., suggests asking whether the planner
favors an active or a passive investing approach
and whether other services such as estate planning
are ofered.
Do a background check.
When an adviser charges a
fee, his rm should be registered with the SEC or his
state securities regulator.
Before you meet, ask for his
Form ADV Part II Brochure, which outlines the
services provided, investment strategy, and fees.
Plus, put any advisers
name into FINRAs BrokerCheck at nra.org. This will
tell you about any disclosure events, from felony
convictions to disputes
with customers.

Part 1 of a two-part series on the business of rollover IRAs

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WorldMags.net
THE
TEE-UP

YOUR
BEST SHOT

theres a way to grow and

protect your money
to lock in income, buy a
plain-vanilla annuity

AS YOU HEAD into retirement,

you need lasting income
that keeps up with rising
costs, just when safety
seems paramount.
Enter the insurance industrys favorite silver bullet: a variable annuity that
pairs an income guarantee
with the potential for appreciation. Grow your income without worrying
about downturns, a VA
pitch from Prudential goes.
The money you put in,
invested in stock and bond
funds, builds until you start
collecting checks, after
which time your withdraw-

als are guaranteed not to

fall below a certain level.
Today for a 65-year-old
those levels are typically
4.5% to 5% of your balance
when you start taking money out. With a guaranteed
investment returna common featureyour balance
could be higher for the purposes of calculating withdrawals (but not for cashing
out). The problem is, you
could pay well above 2% a
year in investment and other fees for an annuity with
those perks, and the guarantees have gotten considerably less generous since

HOW ANNUITIES CAN HELP

Investing a portion of your portfolio in an immediate annuity can
boost the probability that your money wont run out.
CHANCES YOUR MONEY WILL LAST UNTIL AGE
All in stocks and bonds

25% in an annuity, 75% in stocks and bonds

100%

80%

60%

40%
66

70

75

80

85

90

95

notes: Assumes a 4% initial withdrawal, adjusted for ination; annual returns on a balanced

100

portfolio of 6%; ination of 2.5%; payout on an immediate annuity of 6.65%. source: Morningstar

52

m o n e y. c o m

J U LY 2 0 1 4

the financial crisis

forced insurers to
make good on them.
Investors nevertheless poured
$141 billion into
variable annuities
last year, with more
than three-fourths
of that sum going
into annuities with
such guarantees.

A BETTER SALES TOOL

VA sales dwarf those of a
far simpler, cheaper, and,
for most people, better alternative. With a traditional
single-premium immediate
annuity, you pay a lump sum
to get a lifetime income but
give up access to the money.
Thats a tough sell for advisers. To say were going to
give you a check every
month for the rest of your
life and thats itits a hard
discussion, says Jeremy
Alexander, president of
industry researcher Beacon
and a former financial
planner.
Its also not as lucrative
a proposition. Sales commissions on variable annuities run as high as 6%, according to the Aite Group.
Payouts on xed annuities
typically top out at 4%. Advisers pay attention to the
products that maximize
their pay, says Aite analyst
Todd Eyler.
Insurance companies
can potentially make out
better by selling VAs too.
Most U.S. insurers dont
break out the diference between what they earn and
what they expect to pay

outwhats known as the

spread. Jackson National,
the largest seller of individual annuities by assets,
however, is owned by a
company in the U.K., where
insurers disclose more.
Based on the numbers
Jackson does release,
Morningstar analyst Vincent Lui estimates that
Jacksons spread on variable products is 3.8%, vs.
1.5% on xed ones. (Jackson
declined to comment.)

BEST MOVES

Keep it simple. To help

ensure that your money
lasts, opt for a low-cost immediate annuity that, along
with Social Security and
any pension, will cover xed
retirement costs. You can
price them at immediateannuities.com. Today a 65year-old New York man can
lock in $591 in monthly income for $100,000. You can
then invest the remainder
of your portfolio in low-cost
mutual funds or ETFs. Academic research shows that
pairing a xed annuity with
stocks can top a VA.
Shop on price. If, on the
other hand, youre sold on
the notion of guaranteed
income with a chance for
growth, aim to pay no more
than 1.5% of assets a year for
a VA, says David Blanchett,
head of retirement research
at Morningstar Investment
Management. Once fees top
2.5%, youre likely to be paying more than the income
promise is worth. Start at
low-cost providers such as
Vanguard and Ameritas.

FEEDBACK: ian.salisbury@moneymail.com

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WorldMags.net

ROLLOVERS: THE
RIGHT APPROACH

THE
TEE-UP

YOUR
BEST SHOT

do it yourself with our

no-transaction-fee funds
pay a few bucks now to
save over the long term

WHILE ADVISERS and 401(k)

providers aim their pitches
at savers looking for help,
discount brokers target the
do-it-yourself crowd with a
broad menu of investments
and a promise of good value.
At Schwab you get access
to thousands of mutual
funds with no loads and no
transaction fees. TD Ameritrade touts hundreds of notransaction-fee (NTF) funds
from leading fund families.
While you may not pay a
penny to roll your money
into select mutual funds in
your IRA at a discount brokerage, the upfront fee of
$17 to $76 that you save is
the least of your total costs
over time. Dont get sucked
in by the free trades, says
financial adviser Robert
Schmansky. They usually
make that back.

NOT FREE FOR ALL

While discount brokerages
let you shop for nothing,
they do charge fund companies to be on the free-fund
menu. Earning a spot on
Schwabs OneSource list
typically costs 0.4% of
whats invested, according
to disclosures on Schwabs
website.
Fidelitys discount-brokerage arm charges 0.35%
to 0.4%, company documents show. At TD Ameri-

trade its 0.4%, according to

Investment News. We are
encouraging investors to
pick the right fund, says
Lule Demmissie, managing
director of investment
products and retirement at
Ameritrade. We have to
cover the economics.
These business deals
create a mishmash of bargains and overpriced options. Schwab, Fidelity, and
Vanguard, for instance, ofer
their low-cost total stock
market index funds for free
at their own sites.
But once you venture
further aeld, both in terms
of investment choices and
where you shop, costs add
up (see the table below for
how that plays out in certain
alternative asset classes).
Thats because the fund

companies have to
make back the money
they fork over to the
discounters, so it
doesnt pay for funds
with low expense ratios to buy into the
supermarkets. It
shapes the platform
in a broad context,
says independent
fund industry consultant Geoff Bobroff. Your
cheaper funds are not available in all the categories.
In addition, as a matter
of policy, Vanguard and
Dodge & Cox dont pay the
fees that would let you buy
their funds for free. So
youll almost never nd two
of the best-performing fund
families oferings on a nofee slate.
Instead, what youll often
see are funds with high annual expenses. For example,
the most popular emergingmarkets fund is Vanguards
$62 billion Emerging Markets Stock Index Fund,
which has a razor-thin expense ratio of 0.15%. On the
other hand, Ameritrades
cheapest fee-free emergingmarkets option costs 1.15%.

BEST MOVES
Buy ETFs instead. Major
b ro ke rage s a l s o o f fe r
commission-free trades on
certain exchange-traded
funds. While similar
promotional deals are in
place as with mutual funds,
the ultracompetitive nature
of the ETF market today
means these funds are
more likely to be as cheap
as any youll nd shopping
outside the supermarket.
Exploit a loophole.
Some discount rms give
you a break on systematic
purchases, such as automatic monthly investments. At Ameritrade they
are free, even if the fund
you want to buy isnt on the
no-transaction-fee list. At
Scottrade those kinds of
trades are just $2.
Pay now, save later. The
fee to buy whatever fund
you want ranges from $17 at
Scottrade to $50 at Ameritrade to $76 at Schwab.
Thats a small price to pay
for lower annual expenses
over time. Notes Schmansky: If I am going to hold on
to the fund, its going to pay
of quickly.

FEE-FREE DOESNT MEAN LOW FEE

Discount brokerages tout their lineups of commission-free mutual funds. That doesnt always
translate to a bargain, though. Often the no-transaction-fee funds with the lowest annual expenses
are actively managed funds, which are pricier than a low-cost index fund you could buy on your own.
FUND
CATEGORY

BROKERAGE

CHEAPEST FREE FUND

EXPENSES

S&P 500
index

Scottrade

DWS Equity 500

Index Fund

0.31%

Fidelity Spartan
500 Index Fund

0.05%

Emerging
markets

Ameritrade

Parametric Emerging
Markets Core

1.15%

Vanguard Emerging
Markets Stock Index Fund

0.15%

U.S. REITs

Ameritrade

T. Rowe Price Real

Estate

0.79%

Vanguard REIT
Index Fund

0.10%

note: Expenses are percent of assets. sources: The brokerages

WorldMags.net

CHEAPEST IN CLASS

EXPENSES

WorldMags.net

By DANIEL BORTZ,
JOAN CAPLIN,
RYAN DEROUSSEAU,
SRIVIDYA
KALYANARAMAN,
ANTONIA MASSA,
and DONNA ROSATO

54

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J U LY 2 0 1 4

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WorldMags.net

Heroes,
States
*

THROUGHOUT THE U.S., PEOPLE ARE MAKING EXTRAORDINARY EFFORTS

TO IMPROVE THE PERSONAL FINANCES OF OTHERS. MEET SOME OF THOSE
UNSUNG MONEY HEROES ON THIS CROSS-COUNTRY GOODWILL TOUR.

AND WASHINGTON, D.C.

The West

The Northeast

WorldMags.net

The Midwest

The South

WorldMags.net

WHAT DOES IT TAKE TO

be a MONEY hero? Hard

work, a little nancial
savvy, and a lot of desire to
help others. We started
giving a shout-out to folks
who t that bill in 2012, and

The
West
Advising small-business owners, fighting the spread of
payday loans, fundraising for wounded service members

this month MONEY is

on a mission of its own:
proving that heroes are
everywhere, doing creative
and extraordinary work.
We sought out a hero
from each state and the

BILL GROSS
47, Anchorage, Alaska
HELP FOR BELEAGUERED
FARMERS // This UPS pilot
founded Farm Rescue in 2005
to plant and harvest crops for farmers hit by
illness, injury, or natural disaster. The nonprot has assisted more than 280 families.

MICHAEL-LOGAN
JORDAN
15, Kailua, Hawaii
FUNDRAISING // Jordan,
diagnosed with juvenile
rheumatoid arthritis at age 3, has raised
$100,000 for various causes, including
Toys for Tots and Wounded Warriors.

District of Columbia,
taking nominations from
past honorees, leaders
of nonprot groups,
community-service coordinators at for-prot rms,

BARBARA & LYN BIDSTRUP

Both 77, Idaho Falls, Idaho

NATIVE AMERICANS FINANCIAL LITERACY // A member

of the Chemehuevi tribe,
Esquerra created a weeklong camp and an
immersive game to teach local high-schoolers
business skills and money management.

SMALL-BUSINESS ADVICE //
The couple, who formerly ran
a plumbing company, have
provided free counseling to more than 850
small-business owners through the Service
Corps of Retired Executives (SCORE).

result: more heroism than

MARNE DUNN

DENNIS TRUDELL

can possibly t in the pages

43, El Dorado Hills, California

67, Fairview, Montana

that follow. So whenever

youre in need of a little
inspiration, check out
money.com/heroes to learn
more about these and
other heroes. To nominate
one, drop us a line at
heroes@moneymail.com.

56

m o n e y. c o m

J U LY 2 0 1 4

DIGITAL LITERACY FOR

HOMELESS WOMEN // Dunn,
an Intel employee, teaches
computer skills through Womens Empowerment in Sacramento, enabling clients to get
jobs and further their education.

OIL AND MINERAL RIGHTS //

For more than 30 years this
rancher has helped local landowners and rights holders understand what
to expect when companies want to drill on
their landand how to negotiate a good deal.

BETH BRYANT

MIRIAM LIRA-HICKERSON

58, Denver, Colorado

40, Las Vegas, Nevada

ESTATE PLANNING FOR NONTRADITIONAL FAMILIES //

This attorneys advocacy for
lesbian, gay, bisexual, and transgender
people led to a state law giving unmarried
couples equal rights in estate planning.

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CONSUMER PROTECTION //
After arriving from Mexico in
2006, Lira-Hickerson started
up an advocacy rm helping needy clients in
disputes with landlords and lenders. She now
works in consumer education for the state.

P H OTO G R A P H B Y J O H N K E AT L E Y; WA R D R O B E ST Y L I N G B Y A L E X I S ST E I N M E N

and you, our readers. The

LEVI ESQUERRA
45, Glendale, Arizona

50 HEROES // 50 STATES

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Crunch Numbers,
Help Families
JILL MCGOVERN
34, Seattle, Washington
Program manager, Microsoft
FREE TAX PREPARATION // McGovern
had been volunteering for a year
in various opportunities when
she tried free tax prep for lowincome families. It clicked. Over
the past ve years McGovern
has recruited 30 of her coworkers to join her in the United
Way center she persuaded her
employer to fund. While sitting
behind computers and doing
numbers might not appeal to
some people, she says, it does
to Microsoft employees. One
victory: getting a recent immigrant a $1,500 refund after a
for-prot preparer had quoted
a $400 fee for the same service.
McGoverns group has prepared
2,733 tax returns, resulting in
$3.6 million in refunds.

GLENYS CARL

ART SUTHERLAND

70, Santa Fe, New Mexico

77, Sandy, Utah

FREE HOME HEALTH CARE //

Carl launched Coming Home
Connection in 2006 to help
low-income households attend to disabled, ill,
or elderly family members. Last year volunteers
provided 20,000 hours of service to 187 families.

CAROL LEVINE
74, Portland, Oregon
MENTAL HEALTH FOR VETERANS //
Through this psychotherapists
Returning Veterans Project, begun
in 2005, volunteer therapists have counseled
more than 550 vets and their loved ones.

ANTI-PREDATORY LENDING //
Sutherland, a retired aerospace
engineer, successfully lobbied for
local limits on the number of payday lenders, as
well as for a new state law capping interest charges.

NEAL STELTING
36, Pinedale, Wyoming
HORSES FOR CHILDREN // In 2011,
Stelting began a program that provides free equine-assisted therapy
to kids with disabilities or behavioral disorders so
that local families wouldnt have to pay or drive
long distances for the sessions.

FEEDBACK: letters@moneymail.com

Online Extras

Visit Money.com for more of our

MONEY Heroes coverage:
THEIR STORIES Read fuller proles of
our heroes and the work that they do,
and watch a video about heroes in
Sandy Hook, Conn. (see page 58).
THEIR ADVICE Heroes share their ideas
about protecting your money, teaching kids nance, and more.
MORE HEROES Senior editor George
Mannes asks people in New York City
to nominate their own money heroes.

J U LY 2 0 1 4

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m o n e y. c o m

57

50 HEROES // 50 STATES

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CHRISTOPHER KUI

The
Northeast
Repairing houses after a disaster, getting benefits
for veterans, turning grease into fuel

LEONARD BRENNAN

JULIANA EADES

61, Portland, Maine

61, Canterbury, New Hampshire

AFFORDABLE HOME LOANS // The
New Hampshire Community Loan
Fund, run by Eades since 1984,
has nanced more than 100 cooperatives, secur
ing lowcost housing for lowincome families.

ANNIKA GRASSO
8, Chalfont, Pennsylvania
FUNDRAISING // When a girl she
knew of needed money for a ser
vice dog to sense her seizures,
this secondgrader earned $600 in a bake sale
the last step in amassing the necessary $13,000.

JOHN PERINO
16, Westerly, Rhode Island
HOME-HEATING ASSISTANCE //
Turn Grease Into Fuel, which
Perino founded, collects 4,000
gallons of used cooking oil monthly to convert
to biofuel. Over six years TGIF has donated
$120,000 worth of fuel to 290 needy families.

KAREN KING

MICHAEL PASQUALE

MARTHA ROBERTSON

55, Monson, Massachusetts

43, Newton, New Jersey

56, Peru, Vermont

DISASTER RELIEF // After a tor

nado damaged 175 area homes
in 2011, King, a real estate agent,
organized volunteers to repair houses and guide
homeowners through the insurance claim process.

VETERANS RIGHTS // This

attorney donates more than
500 hours annually to represent
soldiers discharged with injuries, helping them
secure benets from the Department of Defense.

Friends and Neighbors

Help Out After a Tragedy
ROB and DEBORA ACCOMANDO
REBEKAH HARRIMAN-STITES
48, 42, and 36, Sandy Hook, Connecticut
Cofounders, My Sandy Hook Family Fund
SUPPORT FOR VICTIMS // Within days of the killing of
26 adults and children at Sandy Hook Elementary
School, these locals vowed to raise money for
grieving families; bills had to be paid, says Rob,
but you couldnt go back to work after this.
They recruited about 30 neighbors to coordinate
aid and scores more to do chores. The fund has
turned over $1.8 million to the victims families.

58

COMMUNITY DEVELOPMENT // Kui

leads Asian Americans for Equality,
which builds afordable housing
(over 700 units so far) and lends to immigrant,
minority, and womenowned companies.

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J U LY 2 0 1 4

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FUNDRAISING FOR HEATING //

Born as a 12person skiathon
that raised $10,000 in 2001,
Robertsons annual Ski for Heat has collected
$300,000 for nancially strapped households.

P H OTO G R A P H B Y J E S S E B U R K E ; H A I R A N D M A K E U P B Y S U S A N D O N O G H U E ( S A N DY H O O K ) . P H OTO G R A P H B Y C O L I N B L O U N T ( S M O L E K )

FREE DENTAL CARE // Over more

than 30 years, Brennan has done
major dental work for about 30
elderly or disabled patients each yearsaving
them hundreds and often thousands of dollars.

54, New York, New York

WorldMags.net

The
Midwest
Teaching immigrants, assisting cancer
patients, lending interest-free to students

SYLVIA RUDEK
65, Mount Prospect, Illinois
PROTECTION FOR THE INFIRM //
Outraged that a court-appointed
guardian stole $78,000 from
Rudeks aunt, she now heads up the National
Association to Stop Guardian Abuse.

LISA ORR & LINDA HICKS

48 and 52, Indianapolis, Indiana
TEACHING FINANCIAL SAVVY //
Orr, a corporate controller, and
Hicks, a chemical engineer, are
longtime Girls Inc. volunteers; they lead classes
on nancial literacy, college prep, and careers.

MARTHA JO ENNIS
81, Marion, Iowa
SCAM PROTECTION // After losing
her lifes savings to a charming,
churchgoing adviser who ran a
Ponzi scheme, the former schoolteacher aids
her state regulator in publicizing the risk of fraud.

C. CLYDE JONES
91, Manhattan, Kansas
FINANCIAL EDUCATION // The
founding dean of Kansas State

Universitys business school works 20 hours

a week at Shepherds Crossing, a local ministry
that ofers budget and employment counseling.

MOLLY MACDONALD
63, Beverly Hills, Michigan
FINANCIAL SUPPORT FOR
PATIENTS // Since 2007, the
Pink Fund, launched by cancer
survivor MacDonald, has paid out over
$600,000 to cover nonmedical bills for women
undergoing treatment for breast cancer.

SANDRA OLSON
52, Woodbury, Minnesota
EDUCATING REFUGEES // For 11
years Olson has taught nancial
basics to immigrants from Bhutan,
Ethiopia, and other countrieshow to open a
bank account, say, or research purchases online.

FAITH SANDLER
53, St. Louis, Missouri
STUDENT AID // Sandler has
spent a quarter-century
runningand expandingthe
Scholarship Foundation of St. Louis, which makes
more than $3.6 million in interest-free loans to
low-income college students annually.

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Advice for Fellow

Service Members
KYLE SMOLEK
27, Minot, North Dakota
Combat systems ofcer, U.S. Air Force
GUIDANCE FOR FELLOW SERVICE
MEMBERS // Educated about the

familys nances from an early

age by his father, a pharmacist,
Smolek was alarmed to overhear fellow service members
discuss stocks guaranteed
to double in a few weeks or 9%
interest rates on student loans
when rates for active-duty members are capped at 6%. Four
years ago he initiated regular
information sessions on nance
at Minot Air Force Base; he has
helped educate hundreds of
military families on budgeting,
debt, retirement investing, and
more. He does one-on-one counseling too, either in person or,
when deployedas he is now in
Guamvia Skype and FaceTime.

WorldMags.net
The Midwest (continued)
ROB RHODES
46, Lincoln, Nebraska
FREE HEALTH CARE //
This physician launched a
monthly health clinic in
2003 to provide care for impoverished
neighbors. Now, with the help of more
than 650 volunteers, his Clinic With a
Heart sees about 3,000 patients annually.

NANCY SLEZAK

The
South
Teaching homeowners how to budget, training adults with
disabilities for work, repairing homes for the elderly

49, Springboro, Ohio

FINANCIAL LITERACY // A
27-year banking industry
veteran, this community relations manager at GE Capital Retail Finance
volunteers 20 days a year teaching everything
from banking basics to scam protection.

HENRIETTA MANN
80, Weatherford, Oklahoma
NATIVE AMERICAN
EDUCATION // Mann, a
retired professor, founded
the Cheyenne and Arapaho Tribal College
in 2006, designed to provide low-cost
education and career training for Native
Americans from 17 tribes.

MICHELLE KURTZ

JIM ROLLINS

55, Daphne, Alabama

67, Hindsville, Arkansas

HOMEOWNERS INSURANCE //
When rates more than tripled
after two hurricanes, Kurtz
began gathering support in 2006 for greater
disclosure of insurers costs. She got that with
a 2012 law; now she ghts for lower premiums.

ROBIN SALVERSON
39, Lemmon, South Dakota
BUSINESS SMARTS FOR
FARM FAMILIES // Through
a national efort called
Annies Project, Salverson teaches women
involved in agriculture about accounting,
marketing, and estate planning. The
six-hour course is taught at 24 locations
throughout the state.

RONALD SMITH
71, Madison, Wisconsin
FINANCIAL EDUCATION //
An adjunct professor, Smith
in 2002 launched an annual
personal nance seminar for University
of Wisconsins graduating students. He
counsels students one-on-one too, and
answers alumnis questions years later.

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FINANCIAL EDUCATION // Superintendent of the 20,500-student

Springdale school district,
Rollins has spearheaded nancial education
through creative curriculumssuch as analyzing the economics of a four-day rodeo.

50 HEROES // 50 STATES

P H OTO G R A P H B Y A U D R A M E LTO N ; WA R D R O B E ST Y L I N G B Y E L A I N E H A R R I S O N

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WILLIAM FOLMAR

KAREN LYNN

MONA NEGM

77, Millsboro, Delaware

53, Tucker, Georgia

72, Silver Spring, Maryland

AID FOR VETERANS // Six times

a month over the past 13 years,
this former Air Force master
sergeant has driven a van of veterans 185 miles
roundtrip to a Virginia VA hospital, giving them
a free ride to their free medical care.

JOB TRAINING FOR ADULTS WITH

DISABILITIES // WOW-In-Sync,
which Lynn founded in 1999,
teaches social and money skills to 175 adults
with autism and other developmental disabilities.

CORINNE CANNON
36, Washington, D.C.
FREE DIAPERS // On her own
babys rst birthday, Cannon
started the DC Diaper Bank in
2010. Low-income recipients not only get free
disposables but also are connected to social
service agencies for other nancial assistance.

ADVISING FIRST-TIME HOMEOWNERS // As part of her 30 monthly

hours of volunteering, this bank
executive teaches budgeting to families who
acquire a home through Habitat for Humanity.

JAY DAVIDSON

KAREN ROBISON

71, Louisville, Kentucky

53, Madison, Mississippi

LIFE SKILLS FOR ADDICTS // A

recovering alcoholic, Davidson in
1992 founded the Healing Place,
a six-month residential treatment program
including job prep, budgeting, and GED classes.
A year after completion, 52% are employed.

ECONOMIC UPLIFT // At the helm of

a local antipoverty organization for
eight years, Robison has beefed up
educational programs. In some cases, clients have
to take computer and nance classes to receive aid.

KATIE STAGLIANO

TONIA PENCE

TIFFANY HOMUTH
41, Marco Island, Florida

IMMIGRANTS RETIREMENT // Negm,

retired from AARP, leads a program
at the local Muslim community center that educates adults about investments, fraud
prevention, and Social Security benets.

53, Luling, Louisiana

HURRICANE RELIEF // After
Katrina struck in 2005, this
community organizer worked
with locals to win aid to cover lost homes and
earnings. In 2013, she helped 400 families receive their share of a $29 million recovery fund.

Money Lessons for

Middle-Schoolers

15, Summerville, South Carolina

HEALTHY EATING // In 2008, Stagliano
launched Katies Krops to help kids
grow vegetables for cash-strapped
families. It now has 75 gardens in 27 states.

RICHARD GYGI
68, Franklin, Tennessee
SOCIAL ENTERPRISE // ThriftSmart,
a Nashville store Gygi opened in 2005,
doubles as a community services
hub, with job training and other classes. Store profitsabout $30,000 monthlyfund local charities.

JOHNNY DEAS
40, Lewisville, Texas

ROY FRALIN
48, Morrisville, North Carolina
Vice president, Fidelity Investments
FINANCIAL EDUCATION // For four
years Fralin has taught money
skills for Citizen Schools, a nonprot that expands the learning
day for low-income middle-school
students. Starting at 3:45 p.m. on
Wednesdays, he spends up to
two hours with about 20 children,
covering subjects like the benets of investing at age 20 instead
of 50, making thoughtful money
choices, and proper job-interview
behavior. Fralin urges the kids to
share these lessons with their
parents, he says, because they
never had this opportunity.

HIP-HOP PERSONAL FINANCE // To

make money lessons fun, Deas set
them to music. Since 2007 he has
performed for more than 1,200 people at churches,
schools, and other venues.

KEN SEMPLE
86, Glen Allen, Virginia
INFORMATION FOR THE BLIND // For
13 years Semple has hosted weekly
audio broadcasts, reading aloud articles about Social Security, retirement planning, and
living independently for vision-impaired listeners.

DAYTON CARPENTER
65, Charleston, West Virginia
HOME REPAIR FOR THE ELDERLY //
Carpenter started the local chapter
of Rebuilding Together in 1996. Now
1,500 volunteers x up about 150 homes a year.

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S
R AT I O N
ILLUST INDLE
W
L
by PA U

ER
GENGL
A
D
N
A
By AM A BRANDEISKY

AR
w it h K

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NO MATTER WHAT TYPE OF CELLPHONE USER YOU ARE, MONEYS

GUIDE WILL DIAL UP A MOBILE
PLAN TO TREAT YOU RIGHT.
Havent shopped for phone service recently?
Youre in for a shock. In the past year plans have
changed more than in the previous five, says
Logan Abbott of comparison site Wirefly.com. So
forget choosing among the Big Four and their
handful of offerings: Todays market has a mob of
carriers and an option for every type of user.
Perhaps the biggest change is the shift away
from two-year service contracts. Now you can
choose a contract plan, with a discounted phone
and high monthly rates, or a cheaper option that
requires you to pay upfront for a new phone or bring
your own. (Phone compatibility varies.) We found
that noncontract plans came out on top in nine of
10 categories. Plus, the longer you keep your phone
on a noncontract option, the better the deal gets.
The rise of smaller carriers also looks like good
news. These firms have finally become a viable
option, with access to the newest phones and reliable coverage, thanks to arrangements that let
them use big companies nationwide networks.
The upshot? Theres probably a better, cheaper
plan than the one you have today. To help you find
it, MONEY parsed more than 75 options from a range
of carriers. We started by grouping plans into categories based on features such as talk, text, and
data packages. Next, we sorted each grouping by
price. Finally, we factored in phone choice, as well
as network quality and customer service scores
from Root Metrics and J.D. Power.
Turn the page to discover the plan that will best
fit your and your familys needs.

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WorldMags.net

METHODOLOGY

MONEY added up the

price of two years of
service, plus the cost of
a 16GB iPhone 5s for
each plan member for
all 75+ options. We used
the phone price ofered
by the carrier (full price
for noncontract plans
and subsidized prices
for contract options).
Family plans are for
four people. We consider up to 1GB of data per
person light use, 2GB to
3GB average, and 5GB
or more heavy.

INDIVIDUAL
PLANS

MONTHLY BILL

CRICKET BASIC

STRAIGHT TALK UNLIMITED

Sign up for auto bill pay, and this plan drops to

$35. Cricket, now owned by AT&T, ofers a range of
phones, and, like many noncontract options, lets you
bring your own. Go over your data limit? The carrier
will slow your service rather than charge you extra.
GLITCH: Cricket taps into AT&Ts network, but its
data speed is slower than that of the larger carrier.

This plan is just $41.25 a month if you pay for a year

upfront. Straight Talk uses all four big carriers; the
network youll use depends on your phone and area,
says Dennis Bournique of PrepaidPhoneNews.com.
GLITCH: Like most low-cost carriers, Straight Talk
may not allow you to tap into another providers
network if you venture out of its service area.

$40*

$100*

$45

$140

$1,610*

$5,000*

$1,730

$5,952

Yes

Yes

Yes

Yes

MINUTES

Unlimited

Unlimited

Unlimited

Unlimited

TEXTS

Unlimited

Unlimited

Unlimited

Unlimited

DATA

500MB

500MB per person

3GB

3GB per person

DATA OVERAGE?

Speed slows

Speed slows

Speed slows

Speed slows

NETWORK

AT&T 4G LTE

AT&T 4G LTE

Multiple 4G LTE

T-Mobile 4G LTE

COMMENT

Smartphone options
start at $50

Includes the option

to pay of new
phones over time

Sold at
Wal-Mart and online.

Will pay your

termination fee if
you switch carriers

TWO-YEAR COST WITH PHONES

CAN YOU BRING A PHONE?

FAMILY
PLANS

CRICKET BASIC

T-MOBILE SIMPLE CHOICE 3GB

For a family that doesnt use that much data,

Crickets price is a head-turnerespecially when
you consider that it includes taxes and fees. The
carriers use of AT&Ts cell towers gives it greater
reach than many providers in this price range.
GLITCH: Unlike the majority of family options, you
cannot add tablets or other devices to this plan.

At this price point, its a duel between Cricket

and T-Mobile, and for those who seek faster data
speeds, T-Mobile wins out. Does someone in your
clan have a tablet? You can add it, and 1.2 GB of
data to use with the device, free through 2014.
GLITCH: This network is fast in many metro areas,
but it isnt as broad as those of Verizon and AT&T.

FEEDBACK: letters@moneymail.com

note: Phone compatibility varies. Check your device with the carrier.

WorldMags.net

B E ST C E L L P L A N S

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KNOW
YOUR
NETWORK

METRO PCS UNLIMITED

VERIZON MORE EVERYTHING

Want a ton of data for a rock-bottom price?

This afordable ofering from T-Mobile-owned
Metro PCS is one of the few true unlimited
plans still available today. Their data isnt
throttled at all, and it is fast, says Bournique.
GLITCH: The carrier doesnt sell iPhones, but
does ofer the popular Samsung Galaxy S 5.

The only contract plan in our guide, this More

Everything option costs the same as AT&Ts
competitive plan (and less than other high-end
Verizon options). Given the choice, we recommend the speed and reliability of Verizons widespread 4G LTE coverage for heavy phone users.
GLITCH: Watch those hefty overage fees.

$60*

$180

$120

$210

$2,089**

$6,912

$3,080

$7,640

Yes

Yes

No

Yes

Unlimited

Unlimited

Unlimited

Unlimited

Unlimited

Unlimited

Unlimited

Unlimited

Unlimited

5GB per person

6GB

20GB shared

None

Speed slows

$15 per GB

$15 per GB

T-Mobile 4G LTE

T-Mobile 4G LTE

Verizon 4G LTE

AT&T 4G LTE

Top customer service

marks from J.D. Power

T-Mobiles
network speed has
improved recently

iPhone 5s is $200

Option to pay of
phones over two
years vs. upfront

T-MOBILE SIMPLE CHOICE 5GB

AT&T MOBILE SHARE VALUE

Finding a competitively priced plan that combines a boatload of data with a fast network
isnt easy. Simple Choice, however, is a good
pick, particularly in cities, where T-Mobile is at
its fastest. The plan also includes a perk for international travelers: free data when abroad.
GLITCH: T-Mobile can be patchy in rural areas.

Though similar in price and features to Verizons

noncontract plan, AT&T noses ahead because
more phones are compatible with its network.
Also, note that AT&T bested its big rival in
J.D. Powers wireless customer care survey.
GLITCH: Yes, its $40 more than youd pay with
T-Mobile, but AT&T has wider coverage.

* Includes taxes and fees for service. ** Calculated for a $649 Galaxy S 5 rather than an iPhone; includes taxes and fees.

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Suffering from cell service acronym overload?

Heres whats important:
All four major carriers
now offer 4G LTE, which
is up to four times as fast
as 3G. Today the real
question is just how
widespread this 4G LTE
coverage is, since areas
that dont have the service will kick users down
to pokier 3G. In general,
Verizon and AT&T have
the best reach. However,
everyone has gotten
better in the last six to
12 months, says Bill
Moore, president of
service-rating firm Root
Metrics.
Small carriers typically buy access to the
major companies networks. The downside
here, says Mike Dano of
cell news publication
Fierce Wireless, is that
the big firms usually
prioritize their own
users, so the little guys
customers may have to
contend with less coverage or slower data
speeds.
Of course, what really
matters to you is how a
given carrier performs
in your area. Enter your
address at Rootmetrics
.com to see detailed local
coverage maps.

m o n e y. c o m

65

B E ST C E L L P L A N S

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AT&T NEXT 12
Insist on having the latest phone? Try
AT&T. Next costs the same as a similar Verizon plan, but AT&T wins, since
its the leader in getting the hottest
devices, says CNET writer Maggie
Reardon. On this plan you lease your

MONTHLY BILL

phone over 20 months and must

return it if you upgrade sooner.
GLITCH: If you havent yet paid 60% of
the old phones value, you must pony
up the remainder to trade up to a new
model. Still, thats cheaper than
buying two phones at retail price.

$98

$60

$2,340

$2,740

No

Yes

MINUTES

Unlimited

1,200 shared

TEXT

Unlimited

5,000

DATA

2GB

1GB shared

$15 per GB

25 per MB

NETWORK

AT&T 4G LTE

AT&T 4G LTE

COMMENT

Only AT&T has the

Amazon phone

Sold at Sears
and online

TWO-YEAR COST WITH PHONES

CAN YOU BRING A PHONE?

DATA OVERAGE?

CONSUMER CELLULAR
1,200 MINUTES/1GB
This Consumer Cellular option
is dramatically cheaper than
competitive plans, making it a
great pick for couples who dont
spend a ton of time on their
phones. The carrier also has a
reputation for good customer
service. A bonus: Consumer
Cellular recently added new
phones, including the iPhone,
to its device lineup.
GLITCH: This is one of the few
plans that still caps talk minutes and text messages, though
you can pay to add more.

66

m o n e y. c o m

J U LY 2 0 1 4

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WorldMags.net

GoToMeeting is dependable, easy to use and works on a Mac, PC, smartphone or tablet.
Your next meeting, close at hand.

Try it free for 30 days.

gotomeeting.com

2014 Copyright Citrix Systems, Inc. All rights reserved. GoToMeeting is a trademark of Citrix Systems, Inc., or a subsidiary thereof, and is or may
be registered in the U.S. Patent and Trademark Ofce and other countries. All other trademarks are the property of their respective owners.

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LEANING ON
EACH OTHER
Were in this purgatory
of waiting, says Carrie
Zampich, with her
husband, Dan, of their
struggle to conceive.
Our lives are on hold.

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ONE FAMILYS MONEY

waiting
for

,ooo
and counting

$55

BY DONNA ROSATO
PHOTOGRAPHS BY CORAL VON ZUMWALT

CARRIE AND DAN ZAMPICH HAVE BEEN STRUGGLING WITH

INFERTILITY FOR FIVE YEARS. THEIR DEBT IS MOUNTING AND
THE BIOLOGICAL CLOCK IS TICKING, BUT THE COUPLE REMAIN
HOPEFUL AS THEY PURSUE COSTLY TREATMENT WHILE
TRYING TO LIMIT THE FINANCIAL DAMAGE.
J U LY 2 0 1 4

69

m o n e y. c o m

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CARRIE AND DAN ZAMPICH went to the fertility clinic almost

on a whim. The Atlanta couple, then 36 and 41, had been
trying unsuccessfully to get pregnant for nine months, so
when Carrie spotted a billboard for the center on her drive
home from work one day, she gured it would be a good idea
for the two of them to get checked out. The specialists blunt
diagnosis stunned them: Dan had a congenital condition
that blocked the release of his sperm, and the couple had
less than a 1% chance of having a baby naturally.
The doctor recommended a procedure to extract Dans
sperm, followed by in vitro fertilization (IVF) to try to create
an embryo Carrie could carry to term. The Zampiches
agreed on the spot and were whisked off to the clinics
business office to make the arrangements. Thats when
they received their second shock. The procedures would
cost $18,000, they were told, plus another $2,000 for
medicationsand their health insurance wouldnt cover
any of it. When the Zampiches replied that they didnt have
the money, the business manager handed them an application for a medical loanat an interest rate of 25%. They
walked out. Says Carrie: We couldnt aford it.
That moment marked the beginning of the couples long
struggle to have a baby, which has taken an enormous emotional, physical, and nancial toll on their lives. Over the
past 4 years, Carrie, a media promotions specialist, and
Dan, a graphic designer, have seen seven specialists and

70

m o n e y. c o m

J U LY 2 0 1 4

undergone 11 medical procedures costing more than

$80,000; of that total, $55,000 has come from their pockets.
Stretched thin by medical bills, the couple have struggled
to pay for treatment: Theyve borrowed against Carries
401(k) plan, maxed out their credit cards, taken donations
from family and friends, and routinely worked side jobs for
extra cash. We arent ready to give up, but if we do, says
Carrie, it will be because of money, no other reason.
Like the Zampiches, about one in ve couples in the U.S.
has difculty conceiving (one in three if the woman is older
than 35). Yet only about 25% of health plans provide coverage for infertility treatment, according to Resolve: the National Infertility Association. Even plans that ofer fertility
benets often exclude medication and other related expenses and cap the amount covered or limit the number of
IVF cycles allowed (two to four is common). Considering
that couples often do three or four cycles before conceiving,
at an average cost of $12,600 for each, insurance can run
out fast. Couples who have coverage typically end up spending only about $2,100 less than couples who dont, according
to a recent study by James F. Smith, a urologist and a director at the Center for Reproductive Health at the University
of California at San Francisco. The high costs are a signicant burden on household nances, says Smith, and play
a major role in fertility treatment decision-making.
Financial considerations have certainly driven many of
the treatment choices that Carrie, now 41, and Dan, 46, have
made. But rather than saving them money, the decision
early on to pursue lower-cost options that possibly had less
chance of success may wind up costing them more in the
long run. Meanwhile, they are deeply in debt, including
$43,000 on high-interest credit cards, which has forced
them to put on hold other goals, such as buying a house and
saving for retirement, despite their $126,000 combined annual income. We dont go out because we need to save
money; we dont shop because we need to save money, says
Carrie. Our lives are being held captive by this quest.

going abroad for baby

When the Zampiches were rst told how costly fertility
treatment would be, the timing could hardly have been
worse. Nine months earlier theyd tapped all their savings
and charged another $10,000 to pay for their wedding.
Shortly after, Carrie was laid of. Though she was rehired
a few months later, the bout of unemployment meant theyd
been unable to pay of the credit cards or replenish their
savings. So adding $20,000 to their debts to pay the fertility
clinics fees seemed out of the question.
Instead they went home and Googled low-cost IVF. Carries search turned up an Atlanta company called My IVF
Alternative, which arranges trips to the Czech Republic,

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ONE FAMILYS MONEY

DAILY REGIMEN

WA R D R O B E ST Y L I N G B Y B R A N D O N B R A N S F O R D ;
G R O O M I N G B Y STA C E Y C O K E R

Progesterone shots and

hormone pills become
routine during Carrie and
Dans IVF cyclestheyve
been through four, without
success. Weve done this
so many times, its no big
deal anymore, says Carrie.

where in vitro treatment costs substantially less than in the

U.S. Carrie contacted several clinics to compare pricing, but
the Czech program turned out to be the most afordable:
$3,500 for the entire bill. She contacted several couples whod
posted about their success stories on the company website,
all of whom conrmed positive experiences that had resulted
in conception. She and Dan decided to move forward with
the program, not considering that online testimonials provided by the company might not be entirely representative.
In addition to the program fee, the Zampiches needed
money for plane tickets and hotels. At her friends encouragement, Carrie began blogging about their experience and
set up a personal crowdfunding website at GoFundMe.com
for friends reading the blog who wanted to contribute. That
brought in $3,000. At Christmas, Carries parents and her
two sisters, brother, and their spouses surprised the couple
by forgoing gifts for one another and instead giving the cash
they saved on presents$2,000 in allto the Zampiches
for their trip. Every box we opened had money, says Car-

rie. One of Carries sisters and a friend donated their miles

for the plane tickets. On their second anniversary, in March
2011, they were on a plane to the Czech Republic.
We thought it would be one and done, says Dan. Then
Carrie didnt get pregnant. It shook me to the core, says
Carrie. I couldnt go 12 hours without crying.

trying some of everything

Looking to nd out why the IVF didnt work, Carrie went
to her gynecologist when they returned from the Czech
Republic. The exam turned up a polyp on her uterus that
could make it harder to conceive. Hopeful that removing it
would boost the chance of pregnancy, Carrie had surgery
in May 2011. Because it was a medical issue, not an infertility

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J U LY 2 0 1 4

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treatment, the couples insurance paid for all but
about $700, which Carrie put on a credit card.
NO RELIEF YET
Then the Zampiches returned to the clinic that
The bills pile up, but
the Zampiches are
rst diagnosed Dans problem. They asked whether
trying to work their
there were any lower-cost options they could pursue,
way out of debt.
such as being part of a clinical trial. No luck. The
center had just nished an IVF trial ofering free care
to participants and didnt have another one scheduled. And the couples income was too high for them
to qualify for one of the grants that the facility ofered
to help defray costs. One other option, they were told,
was articial insemination, which would cost just
$2,000 and ofer them a one-in-three chance of conceiving. The catch: Theyd need to use donor sperm.
Dan was initially reluctant. We felt so desperate
because with our ages, time was running out, says
Carrie. It was a miserable time for us. The strain
sent the couple to marriage counseling, which led
Dan to have a change of heart. He realized, he says,
I wanted to be a dad more than anything.
To pay for the procedure and get rid of their remaining wedding debt, Carrie took out a $16,000
loan from her 401(k), using $10,000 to pay of their
credit cards and $6,000 for three rounds of articial
insemination over several months in 2011. None,
though, resulted in a pregnancy.
The next step, they decided, was for Dan to have
surgery to correct his blockage. Then they could try
to conceive naturally. They hadnt considered the
operation earlier because the doctor theyd originally consulted had said it could take up to two years
after surgery for the problem to resolve completelytime
Nine months after the surgery, however, Carrie still
the Zampiches felt that they just didnt have. Now, though,
hadnt gotten pregnant. Says Dan: It felt like we just wasted
fresh out of money and other low-cost options, the couple
so much time and so much money.
decided to go ahead. Their health insurance from Dans
employer wouldnt cover the operation, but Carries work
plan would, so they switched during open enrollment.
Just days before the operation, however, Dans urologist
refused to submit a claim to the insurer, saying the procedure
By the fall of 2012 the Zampiches decided to try IVF again,
was elective, not medically necessary. That meant the Zamthe procedure theyd originally been told ofered them the
piches would have to pay the $1,800 bill out of pocket. For
best chance of conceiving a baby. Working with a list of cenCarrie, whod put on 40 pounds during the couples struggle
ters recommended by her ob/gyn and searching Google again
to conceive, the stress proved too much; her blood pressure
for low-cost IVF, Carrie this time researched success rates
shot up, and she had to be hospitalized. In the end, though,
as well as pricing. She found a well-regarded clinic in Authey moved forward with the operation. Very few doctors
gusta, 2 hours away, that charged half as much as the cendo the procedure in our area, so we felt like we had no choice,
ters shed contacted in Atlanta. They did their second IVF
says Carrie. She charged the surgery on her American Exround in November 2012, putting the $8,000 bill on two credit
press card, planning to pay of the balance when the bill came
cards. A friend gave them $3,000 to pay for the hormone
due. But she and Dan came up short. Her dad stepped in,
meds Carrie needed to take prior to in vitro to stimulate egg
signing over his Social Security check to cover it.
production and control ovulation. Still, no pregnancy.
Reluctant to take on any more debt or accept money from
friends and family, Carrie contacted the human resources
m o n e y. c o m J U LY 2 0 1 4
department at her company to lobby for infertility coverage.

back to square one

72

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ONE FAMILYS MONEY

INFERTILITYS HIGH TOLL

Insurance has covered less than a third

of the Zampiches treatment, forcing the
couple to borrow heavily to pay the bills.
TREATMENT COSTS

AMOUNT

In vitro fertilization (U.S.)

Carries surgery
Doctor co-pays
Medications
Inseminations
Egg donor
In vitro (Czech Republic)
Travel, Czech Republic
(hotels, meals, fees)
Egg freezing, storage
Dans surgery

$25,600
$11,300
$10,000
$8,900

TOTAL

$8,000
$6,000
$4,300
$3,200
$3,000
$1,800
$82,100

TREATMENT FINANCING

AMOUNT

Credit cards
Health insurance
401(k) loans
Donations

$32,000
$26,100
$13,000
$11,000

TOTAL

$82,100

Much to her surprise, her employer had another plan that

did provide fertility benets. She had just missed the enrollment window but was advised to write a letter to the insurer,
and she was accepted into the plan. The news was both reassuring and upsetting. Thrilled that she had coverage, Carrie
was also angry that she hadnt discovered this option sooner.
The plan would cover the entire bill for IVF except for the
medications needed to stimulate hormone production.
To help defray those costs, the Zampiches got creative.
They applied for scholarship assistance with the drug manufacturers but were turned down because their income was
too high. Undaunted, they began paying cash for the meds
in exchange for discounts of 15% to 30% at pharmacies that
specialize in fertility treatments. They also turned to the infertility black market, buying leftover medications from
women who donated through online support groups, which
let the couple pay as much as 80% less than retail prices.
Their third round of IVF in early 2013 didnt result in
pregnancy. But their fourth try last November, at a new
clinic closer to home that a friend recommended, nally
did. The joy didnt last long: Just seven weeks into her term,
Carrie had a miscarriage. Devastated, Dan said that was

the rst time he thought about giving up: I felt like I could
come to grips with not having children. But Carrie didnt.
It was our lowest point, admits Carrie, who still wanted
to keep trying. I want to know we did everything we could,
even if it means going bankrupt.

a new approach
In January the Zampiches went back to their fertility specialist, who told them bluntly that Carries age, then 40, was
becoming more of an adverse factor. He put their chances
of having a baby with her older eggs at only about 9%. If
they used donor eggs from a younger woman, however, the
chance of conceiving shot up to 64%. Both Carrie and Dan
were willing. We cant just keep rolling the dice, says Carrie. I get to carry the baby. Thats enough for me.
The process, which theyll undergo this summer, involves
trying to create an embryo through in vitro using the donors
egg and Dans sperm; if successful, the embryo will then be
implanted in Carrie, allowing her to see the pregnancy
through. Health insurance wont cover the $15,000 cost of
the egg donor, but it will cover the IVF. The couple did get
into their clinics scholarship program, so they are paying
$5,000, which they once again charged on credit cards. That
brought their total infertility-related debt to $45,000, including $32,000 in credit card balances.
The strain on their resources has left the Zampiches living
paycheck to paycheck and occasionally charging expenses
unrelated to infertility. Since they dont have an emergency
fund, unexpected bills have been problematic. Among them:
$275 to replace Dans windshield after a tree limb fell on his
car; a $1,300 vet bill when their dog Minnie fell on a tree
branch that went through her shoulder; and $450 when their
other dog, Mylo, was bitten by a snake. As a result, they have
another $11,000 in credit card charges on top of the IVF.
To keep up with their debt payments$600 a month
goes to the 401(k) loans and $1,300 to credit cardsthe
Zampiches spend much of their spare time doing side jobs.
Carrie babysits for friends and family, plus does freelance
marketing work. Dan takes on graphic design projects for
small businesses and earns about $100 a month dog sitting.
All told, the extra work brings in about $1,000 a month.
The couple say they dont mind using so much of their
free time working. Practically everyone we know has kids,
and their lives revolve around their kids, their activities,
their school vacations, says Carrie. Thats hard to be
around sometimes. Things that used to make them happy
often trigger sadness now. Carrie says she no longer attends when children of her family and friends are in Easter

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WorldMags.net
and Christmas shows. The pageants kill me, she says.
While they are open about their struggles, they get
weary of well-meaning advice from friends. Everyone
has an opinion, says Dan. A ash point is when people
ask if theyve considered adopting. I have to bite my
tongue, says Carrie. Of course we have considered it.
Its very costly too and not something we are ready to
do now. In addition to wanting to experience pregnancy,
she says, we want to try to have a child that shares one
or both of our DNA. But if thats not in the cards, so be
it, and we will go the adoption route.
For now theyre focused on their latest attempt at
pregnancyand getting out of the hole theyve dug for
themselves. One thing they know: The nancial strain
wont go away if they nally do have a baby, considering
the cost of pregnancy, diapers, child care, camp, and,
one day, college. Admits Carrie: We have created a nancial mess and really need help.

the advice
To get that help, MONEY turned
could result in higher costs for the
to Lee Baker, a nancial planner in
insurance company.
Atlanta, and Davina Fankhauser,
Fankhauser recommends that Carpresident of Fertility Within Reach,
rie and Dan write to the insurance
which helps couples navigate incompany asking for a higher dollar cap
surance benets. Both Baker and
on coverage or to be allowed up to two
Fankhauser struggled with infertilmore rounds of IVF. The letter should
ity for years before becoming parlay out the fact that they are using doents, so they bring their experinor eggs, which increases the odds of
ences along with their expertise.
success, and that if coverage is inTheir suggestions:
creased, they would consider a single
Press for more coverage. So far,
embryo transfer this time. Knowing
Carries insurance has paid $15,500
they would have enough to cover fufor treatments, but her infertility
ture IVFs if the next one doesnt work
coverage is capped at $20,000. Afgives them less pressure to transfer
SECOND JOBS
To earn extra money to pay for treatment,
ter the next IVF cycle, they will
multiple eggs, says Fankhauser.
Dan moonlights as a dog walker, while Carrie
have just $4,500 leftnot enough
Appeal for reimbursement. Treatbabysits for her friends children.
for another round if needed.
ment for the same condition may be
The Zampiches have one
covered by insurance if its characterstrong negotiating point that they may be able to leverage
ized as a medical problem but not covered if infertility is
into a higher maximum, says Fankhauser. She notes that
cited as the reason for care, says Fankhauser (see the sidecouples who feel nancial pressure often opt to have mulbar at right for more). She believes the Zampiches have a
tiple embryos implanted to increase the chances that a
good case to show that Dans surgery to remove the blockage
single IVF cycle will result in pregnancy. Indeed, thats the
should have been covered because he was being treated for
plan for Carrie and Dan. Transferring several embryos at
a congenital condition. Fankhauser recommends writing a
once, however, raises the likelihood of multiple births, a
separate letter to the insurer requesting an appeal; if dehigher-risk pregnancy, and medical complications, which
nied, the couple should le an external appeal with Georgias
state department of insurance. She says 80% of the people
she works with get their denials overturned using one of
m o n e y. c o m J U LY 2 0 1 4
these two methods.

74

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ONE FAMILYS MONEY

charge $2,000 worth of presents on her Best Buy card. I

get a lot of joy giving gifts,
but I know I need to be more
These three steps can substantially lower the
realistic about spending,
out-of-pocket bills for infertility treatment.
Carrie admits.
MAKE THE RIGHT MATCH
have to be your own
Get priorities straight.
The most effective way
advocate. Read your
The
couples No. 1 goal, says
to minimize infertility
policy carefully, then talk
Baker,
must be to build an
costs is to maximize your
to your HR department
emergency fund that would
chance of success from
and carrier to make sure
cover at least six months
the first attempt, says
you understand whats
worth of their expenses. CurMindy Berkson, a Chicago
covered, whats excluded,
infertility consultant who
and whether treatment
rently they have no money set
advises couples on costs
costs are capped. If the
aside. Once Carries car loan
and treatment. Dont
plan youre in doesnt
is paid off later this month,
choose a clinic based only
provide infertility benefits,
the planner suggests redion its published success
there may be another plan
recting the nearly $400 in
rates, she says; a facility
at your company that
monthly payments into a disthat accepts patients with
does (though youll need
crete account earmarked as
harder-to-treat issues
to wait until enrollment
their rainy-day fund. Dan is
will have lower overall
season to make a switch).
up for a raise soon and should
success rates but may be
GET THE RIGHT CODING
apportion part of that extra
better equipped to treat
Many insurers wont pay
cash toward their emergency
your problem. The better
for infertility treatment,
question is, What are my
fund as well. Also critical:
Melt the plastic. The Zamsince its deemed medichances of success with
boosting contributions to
piches owe $43,000 on 13 credit
cally unnecessary, but
my specific diagnosis?
their skimpy retirement accards at rates ranging from
they will cover treatment
says Berkson. A helpful
counts (only $24,000 invested
18% to 25%. Ouch. Baker urges
of an underlying condition,
resource: The Society for
so far).
the couple to earmark an adsuch as endometriosis,
Assisted Reproductive
that may be at the root of
The Zampiches also need
ditional $700 a month to payTechnology (sart.org) lists
the inability to conceive,
to
budget
with an eye to future
ing down this debt, on top of
clinics experience with
notes Fankhauser. Talk
costs,
says
Baker. If and when
the $1,300 they pay now, which
particular procedures.
with your doctor about the
they become parents, they will
is barely more than the cards
CHECK YOUR COVERAGE
diagnostic code that will
have child-care bills (both
minimums. Baker advises putDont leave it up to the
be submitted to your carCarrie and Dan plan to conting the extra money toward
clinics business office to
rier. If your claim is denied
tinue working) and will need
their lowest-balance, highestdetermine if your plan will
for a procedure that you
life and disability insurance.
rate cards rstve have balcover your treatment.
believe should be covered,
That would add at least $1,700
ances under $1,000 but rates of
The clinic wont push,
file an appeal with your
to their monthly budget.
20% to 25%. At that rate, those
says Davina Fankhauser,
insurer. Still no success?
Carrie and Dan say theyd
balances will be erased by
founder of Fertility Within
File an external appeal
Reach, an infertility
with your states departbe only too happy to be in a
years end. Once Carries 401(k)
benefits specialist. You
ment of insurance.
position where theyre budloan is paid of next June, the
geting for a baby. And for the
$600 now deducted from Carfirst time in a long time,
ries paycheck for repayment
theyre hopeful that may be the case soon. I see a light at
can also go toward the credit cards, Baker adds.
the end of the tunnel, says Carrie. I keep telling myself
Be stingier. To help identify places the Zampiches can
one day it will all be worth it.
cut back to free up the money for debt repayment, Baker
had them write down their monthly spending and expenses. He identied nearly $1,000 a month going to disFOR MORE, GO TO MONEY.COM
cretionary itemsmostly spending on entertainment
Find additional resources for couples dealing with infertility. PLUS: Watch the
Zampiches discuss the nancial and emotional costs of their quest for a baby.
(Dan occasionally splurges on concerts and tech gadgets)
and gifts for other people. Thats too much fun and too
much generosity for their budget, Baker says. Case in
J U LY 2 0 1 4 m o n e y. c o m
point: Last Christmas, Carrie let one of her siblings

WRESTLING DOWN THE COSTS

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THE NUMBERS

STOCKS
& FUNDS

BIGGEST MUTUAL FUNDS BY CATEGORY

CATEGORY

TOTAL RETURN
ONE
YEAR

THREE
YEARS1

EXPENSES
(AS % OF
ASSETS)

LARGE-CAP STOCKS

Stock Prices and

Valuations Rise
THE S&P 500 set a record high in the four weeks ended
June 4, led by tech and health care stocks. As a result,
though, the markets price/earnings ratio inched up,
nearing a one-year high. Small-company stocks, by
contrast, were mostly left behind, gaining just 0.3%.

S&P 500 RATIOS

2.4%
2.3

18.0
17.0

ONEYEAR
RANGE

0.67%
0.70
0.61
0.52
0.62

20.6
16.9
23.2
24.5
23.4

14.9
11.1
14.5
14.4
14.6

0.80
0.82
0.07
0.10
0.10

22.4
17.0
22.1
19.6
22.3

14.8
13.6
13.8
N.A.
14.7

0.10
0.96
0.34
0.10
0.24

15.0
14.8
20.1
17.0
15.1

11.9
12.6
10.6
11.2
10.3

0.18
0.61
0.77
0.58
0.34

26.3
17.3
16.9
18.8
17.4

10.0
5.3
7.1
6.8
5.4

0.64
0.22
0.74
0.84
0.14

13.5
5.1
6.1
8.4
7.5

5.0
1.0
1.8
0.8
0.0

1.06
1.25
0.15
1.09
1.51

1.4
1.3
0.7
0.9
0.2

2.6
2.3
0.6
2.0
2.7

0.45
0.61
0.80
0.85
0.76

2.1
2.1
2.3
4.2
2.2

3.1
3.2
2.4
4.5
3.5

0.12
0.10
0.10
0.43
0.60

7.2
7.1
11.3
7.3
8.1

7.1
8.3
7.9
7.7
8.4

0.66
0.13
0.73
0.72
0.81

3.0
0.0
0.0
1.5
0.7

4.7
0.0
0.0
1.8
1.0

0.12
0.42
0.16
0.12
0.12

SMALL-CAP

Vanguard Small-Cap Index (vsmax)

T. Rowe Price Small-Cap Value (prsvx)
Vanguard Explorer (vexrx)
Vanguard Small-Cap Growth Index (vsgax)
Vanguard Small-Cap Index (naesx)

16.0

INTERNATIONAL

2.2
2.1
CURRENT

2.02

2.0

15.0

ONEYEAR
RANGE

INDEX

S&P 500
Nasdaq2
Russell 2000
Morgan Stanley EAFE
Dow Jones industrial average
Barclays U.S. aggregate bond index

ONE
YEAR

THREE
YEARS1

2.8%
3.1
0.3
1.4
1.8
0.3

20.7%
23.4
16.7
17.7
12.9
2.2

16.6%
15.9
13.5
7.9
14.2
3.3

4.0
4.0
3.6
2.9
2.5
2.1
1.8
1.8
1.5
0.9

23.9
27.3
24.8
19.5
26.7
16.0
13.6
5.9
19.8
18.7

16.7
22.1
12.0
21.4
17.1
16.0
16.0
11.7
10.0
13.5

SECTOR

Information technology
Health care
Basic materials
Consumer discretionary
Industrials
Financials
Consumer staples
Telecom services
Energy
Utilities
notes and sources :

Stock index data as of June 4 from Lipper, New York; 877-955-4773.

Sector returns from Bloomberg. Bond index data from Barclays. Monthly S&P 500 ratios are
from Standard & Poors. P/E ratios are based on previous four quarters of operating earnings.
Biggest funds ranked by total net assets. 1Annualized. 2Price change only.

m o n e y. c o m

EMERGING MARKETS

U.S. GOVERNMENT BONDS

TOTAL RETURN
ONE
MONTH

Dodge & Cox International Stock (dodfx)

Vanguard Total International Stock Index (vgtsx)
Harbor International (hainx)
American Funds EuroPacific Growth (aepgx)
Vanguard Total International Stock Index (vtiax)
American Funds New World (newfx)
T. Rowe Price Emerging Markets Stock (prmsx)
Vanguard Emerging Markets Stock Index (vemax)
Fidelity Emerging Markets (femkx)
Russell Emerging Markets (remsx)

1.9

BENCHMARKS

76

15.2%
15.2
15.8
17.2
16.1

MIDCAP

Fidelity Low-Priced Stock (flpsx)

Columbia Acorn (acrnx)
Fidelity Spartan Extended Market Index (fsevx)
Vanguard Mid-Cap Index (vimax)
Vanguard Extended Market Index (vexax)

Vanguard Wellington (vwenx)

American Funds American Balanced (abalx)
Oakmark Equity and Income (oakbx)
Fidelity Balanced (fbalx)
Vanguard STAR (vgstx)

DIVIDEND YIELD

19.0

17.8

23.1%
24.5
25.5
26.0
21.0

BALANCED

P/E

CURRENT

Fidelity Contrafund (fcntx)

American Funds Growth Fund of America (agthx)
American Funds Investment Co. of America (aivsx)
Dodge & Cox Stock (dodgx)
American Funds Wash. Mutual Investors (awshx)

Fidelity Government Income (fgovx)

American Funds U.S. Government Securities (amusx)
Sit U.S. Government Securities (sngvx)
MFS Government Securities (mfgsx)
J.P. Morgan Government Bond (oggax)

INVESTMENT-GRADE

Vanguard Total Bond Market II Index (vtbix)

Vanguard Total Bond Market Index (vbtlx)
Vanguard Short-Term Investment-Grade (vfsux)
Dodge & Cox Income (dodix)
T. Rowe Price New Income (prcix)

HIGH YIELD

American Funds American High-Income Trust (ahitx)

Vanguard High-Yield Corporate (vweax)
Fidelity Capital & Income (fagix)
Fidelity High Income (sphix)
Northern High Yield Fixed Income (nhfix)

TAX-EXEMPT

Vanguard Intermediate-Term Tax-Exempt (vwiux)

Fidelity Municipal Money Market (ftexx)
Vanguard Tax-Exempt Money Market (vmsxx)
Vanguard Limited-Term Tax-Exempt (vmlux)
Vanguard Short-Term Tax-Exempt (vwsux)

J U LY 2 0 1 4

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THE NUMBERS

MONEY 50

TOTAL RETURN

Funds Shrug at
Slow Economy

FUND (ticker)

ONE
MONTH

ONE
YEAR

THREE
YEARS 1

EXPENSES
(AS % OF
ASSETS)

PHONE
NUMBER
(800)

IN FACT, MOST EQUITY PORTFOLIOS IN THE

MONEY 50 REBOUND FROM A SPRING SLIDE.
DESPITE A REPORT showing the economy actually shrank
in the rst three months of the year, the vast majority
of portfolios on our recommended list of mutual and
exchange-traded funds gained ground in the four weeks
ended June 4. Funds that focus on large, stable companies
performed the best, with T. Rowe Price Blue Chip
Growth up 4.0%. Even some portfolios that bet on
smaller but fast-growing companies, though, such as
Primecap Aggressive Growth, posted strong gains.
In other news, one of the markets legendary value
managers, Brian Rogers, will step down from T. Rowe
Price Equity Income in October 2015, 30 years after he
began running the fund. He will remain as T. Rowe Prices
chairman and chief investment ofcer. TAYLOR TEPPER

HOW TO USE OUR RECOMMENDED LIST

Building-block funds: For broad exposure to core asset classes
Custom funds: Specialized investments that can tilt your strategy
One-decision funds: If you want stocks and bonds in one portfolio

TOTAL RETURN

FUND (ticker)

EXPENSES
(AS % OF
ASSETS)

PHONE
NUMBER
(800)

2.7% 20.6% 16.5%

2.5
20.7
16.3

0.09
0.09

435-4000
435-4000

2.1
0.1

20.1
19.6

14.6
16.1

0.15
0.17

474-2737
474-2737

1.4
1.8
1.0
3.5

17.7
15.2
18.8
4.3

7.8
5.3
4.8
1.9

0.20
0.22
0.40
0.33

544-8544
662-7447
662-7447
662-7447

2.4

11.1

11.4

0.24

662-7447

ONE
MONTH

ONE
YEAR

THREE
YEARS 1

BUILDING-BLOCK FUNDS
Large-Cap
Schwab S&P 500 Index (swppx)
Schwab Total Stock Market Index (swtsx)
Midcap/Small-Cap
iShares Core S&P Mid-Cap (ijh)
iShares Core S&P Small Cap (ijr)
Foreign
Fidelity Spartan International (fsiix)
Vanguard Total Intl. Stock (vgtsx)
Vanguard FTSE A/W ex-U.S. Small (vfsvx)
Vanguard Emerging Markets (veiex)
Specialty
Vanguard REIT Index Investor (vgsix)

NOTES: As of June 4, 2014. N.A.: Not available. Load funds are included for those

who prefer to use a broker. 1Annualized. 2Phone numbers are 866. 34.25% sales load.
SOURCES: Lipper, New York, 877-955-4773; the fund companies

J U LY 2 0 1 4

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m o n e y. c o m

77

WorldMags.net

MONEY
WELL SPENT

Do you have a purchase you consider Money Well Spent? Email us about it,
and what it means to you, at wellspent@moneymail.com.

Family Vacation
in a Box

by Brad Tuttle
Y GO-TO STRATEGY as a smart consumer is simple:

inaction. Unlike, say, folks who own 3-D TVs80%

of whom now say they regret the purchaseI rarely
wish I hadnt bought something. Thats easy when
you follow the gospel of doing, and buying, nothing.
Sometimes, though, sitting on your hands can get you into trouble. Like
when your wife asks about the roof cargo box that you were supposed to
buy, and that the family needs for a vacation in three days.
I could blame only myself. Wed talked about this purchase months
earlier, but the options had seemed chintzy (bound to fall of on the
highway), bulky (where the heck would we store the thing?), bizarrely
expensive ($1,500 for a hunk of plastic?), or all of the above. Plus, wed use

80

m o n e y. c o m

it only a couple of times a year.

Maybe the issue would resolve
itself, like the way I tell buddies
that Im debating buying a new tool
and poof!theres one available to
borrow. How this would happen for
the roof box, I hadnt a clue. That
didnt stop me from doing nothing.
Which is where things stood
days before my wife expected to
see one atop our Honda Pilot. I
resorted to my go-to response:
Ummm To which Jessica disgustedly left, bound for the local
ski shop to buy the box herself.
Sure enough, our Thule Force
XXL 626, plus roof rack and
Aeroblade load bars, cost way
more than it shouldnorth of
$1,000 with installation. Guess
what? I love the thing. Yes, we
use the box sparingly. Half-dozen
times a year tops. When we need
it, though, we really need it. Our
clan, already large enough to eld
a basketball team, recently
welcomed child No. 4. With the
Thule, our six-person family can
once again go almost anywhere
and do almost anything together.
I worried the box would be
dust-collecting clutter. Instead,
its come to represent freedom and
adventure. Not the adrenalized
kind in ads (were not going kitesurng anytime soon) but in the
real-world sense, like Finally, a
place to throw these beach chairs!
The Thule genuinely makes life
easier and more fun, which is rare
for any purchase, let alone some
stupid piece of plastic.
Brad Tuttle is a senior writer at Money.com.
He lives in western Massachusetts with
his wife, four sons, and roof box.

Illustration by

J U LY 2 0 1 4

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r . k ikuo joh n s on

WorldMags.net

Switch to the Venture card and earn unlimited double miles

on every purchase, every day. And use them to y on any airline,
anytime to New York or anywhere else for that matter. No
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Shouldnt you be able to use them how you want?

Redeem miles for travel on any airline based on actual ticket price at time of purchase. Offered by Capital One Bank (USA), N.A. 2014 Capital One.

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WorldMags.net

Over 56% of Americans have

no idea how much theyll need
to retire. Yet the answer can be
as simple as sitting down with your
Allstate Agent and making a plan.
Because the same person you
count on to protect everything in
the here and now also has some
pretty good ideas about the future.
Like setting a reasonable
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A good plan, and a good life,
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Start the conversation by calling
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Life Insurance
Retirement Savings
Mutual Funds
IRAs
Annuities
College Savings Plans

Source: 2014 Retirement Confdence Survey, EBRI.org. Allstate Life Insurance Company: Northbrook, IL. In New York, Allstate Life Insurance Company of New York: Hauppauge, NY. Securities offered by Personal
Financial Representatives through Allstate Financial Services, LLC (LSA Securities in LA and PA). Registered Broker-Dealer. Member FINRA, SIPC. Main Offce: 2920 South 84th Street, Lincoln, NE 68506. (877) 525-5727.
2014 Allstate Insurance Co.

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