Memorial Day Weekend Predicted to See Record High Number of Vacationers

National holidays, especially those that fall at the beginning or the end of a weekend, tend to lead to travel plans for a lot of Americans. The three- or four-day weekend is the perfect time for many vacationers to spend some time away from home with their family and friends. While holidays like Thanksgiving, Christmas, and New Year's usually lead to a lot of travel plans, many people prefer the shorter weekend trips over Veteran's Day or President's Day. According to Hugo Martin's L.A. Times article, the upcoming Memorial Day weekend is expected to break records in terms of the number of vacationers. 

According to experts, this phenomenon could be due in large part to falling gas prices. As the cost of gasoline goes down, it becomes cheaper to travel, which is encouraging for people who want to go on vacation. It's expected that the prices will stay low at around $3 per gallon, which is the cheapest they've been over Memorial Day weekend since 2009. Partially due to the low gas prices, most of the vacationers are expected to be driving. In fact, statistics show that around 2.52 million will be driving to their destinations, a 2.9% increase from last year.

Similarly, there is expected to be a 3.4% increase in the total number of vacationers, up to 3.03 million Southern Californians, according to the Auto Club of Southern California. This will be the sixth consecutive year where the number of travelers increased, potentially a sign of a strengthening economy, in which consumers feel secure enough to spend money on travel. Some of the top destinations for travelers include San Francisco, San Diego, and Las Vegas, as well as famous landmarks like the Grand Canyon and some national parks.

The biggest increase of all, however, is among the number of Californians choosing airplanes as their mode of transportation. Over this Memorial Day weekend, over 300,000 Californians are expected to fly on commercial airlines, which is a 6.2% increase from last year's numbers. Even with all of the recent issues with airlines, the growing numbers could indicate that people are traveling further, which means that they are taking more time off of work than just the three-day weekend. That could point to growing comfort with the state of the economy or better financial management on the part of consumers looking to go on vacation. 

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How to Make a Successful Retirement Plan

Even for those people who love what they do, retirement is one of those things that constantly stays in the back of everyone's mind. To determine when you'll be ready for retirement, there are a variety of factors that have to be weighed. What percentage of your income can you be comfortable living on? Do you plan to retire completely or try out a new career? These questions and more help to determine how long you would have to work before retiring. Dave Rowan's L.A. Times article sums up some of the major points made by financial planning expert Craig Israelson on the finances behind a successful retirement.

The first topic he mentions is known as the "4% Rule." According to this rule, it is possible to withdraw 4% of one's retirement savings from an investment portfolio each year without ever running out of money. Financial planners set the optimal amount at 4%, but some retirees have to withdraw less, while others who have saved for longer are able to withdraw more without running out. This concept, however, doesn't really help people in their 40s or 50s, who are planning for a retirement in the distant future. For those closer to retirement, the 4% Rule helps because it allows them to determine if they have enough money in savings to combine with other sources of retirement income and have enough money to cover a projected budget.

Israelson has a different method called "RAM" that allows younger people to plan for retirement far down the line. This method involves a lot more mathematical calculations but gives future retirees a way to calculate how financially stable they would be at each age. RAM, or retirement account multiple, calculates the probability that a retiree would never run out of money if they retired at 65, lived to 100, and withdrew half of their final yearly salary (the salary being earned at 65 based on inflation rate of 3%) as an addition to other retirement income like Social Security. Based on Israelson's calculations, a RAM value of 7 or higher means that the retiree is in good shape and will have over 70% likelihood of never running out of money if they live to 100 years old. A RAM value of 18 or higher means that the retiree will never run out of money, no matter how the economy changes.

The RAM is calculated as follows:

First, the retiree's final salary is calculated based on a 3% inflation rate.

Final Salary = Current Salary x (1.03)^(65 - Current Age)

Next, the total amount the retiree will have in savings is calculated based on an average value of 7% as the increase in the value of their retirement portfolio.

Final Retirement Savings = Current Savings x (1.07)^(65 - Current Age)

Finally, the RAM value is calculated using those two values.

Projected RAM = Final Retirement Savings / Final Salary

The more you are able to save now, the better off you will be in the long run. However, it depends on the person. Some people are comfortable with spending money now to enjoy a higher standard of living, even if it means they will have a RAM score closer to 7. Others look for any way to reduce expenditures today in order to get a RAM closer to 18, to ensure that they won't have to worry about their future finances. Additionally, the previous RAM calculations didn't include additions to the retirement portfolio. If someone were to continuously save and invest more money toward retirement, they would find their RAM value increasing, based on the following calculation:

Extra Retirement Savings = [(Current Salary + Final Salary) / 2] x (Savings Rate) x (65 - Current Age)

Of course, these calculations aren't perfect, since the economy is constantly fluctuating and many assumptions have to be made about future income and changes in saving patterns. However, it should be able to give savers a good look at how well off they will be in their retired years. The RAM is simply an approximation method, not an exact science, but it should give people a sense of whether they will retire successfully and how long they may have to wait to do so. 

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Berkshire Hathaway's Investment Boosts Apple Stocks

Warren Buffett, one of the richest men in the world, has been known to avoid investments in technology. So, it came as a huge surprise to many when it was revealed that his company, Berkshire Hathaway Inc., purchased 9.81 million shares of Apple stock in the first quarter. In his L.A. Times article, James Peltz described the reasoning behind Buffett's investment and how it affected Apple's shares and the stock market as a whole.

It is true that Buffett and his company generally avoid technology investments, mainly because Buffett admittedly doesn't understand technology enough to take the risk. However, they have made one exception in the past: Buffett's company owns a stake in IBM valued at $12.3 billion. Berkshire Hathaway's main investments are in companies like American Express, Coca-Cola, and Wells Fargo. Additionally, Berkshire owns dozens of companies such as See's Candies and Geico Insurance.

Likely because of Buffett's record of success in business and his company's large investment portfolio, Apple's stock prices rose 3.7% after the purchase was revealed on Monday. As of March 31, the end of the first quarter Berkshire Hathaway's stake in Apple was valued at $1.07 billion but is likely worth significantly less now due to declining Apple stocks. According to analysts, Berkshire likely made the purchase due to Apple's low prices in recent months. Apple's top-selling item and source of the majority of their revenue is their iPhone. The iPhone and other Apple devices had lower-than-expected sales this year, which was the main reason for lowered stock values.

Buffett has been quoted saying that the Apple purchase was made by one of his stock-picking lieutenants who did not consult Buffett before making the decision. However, Buffett seems optimistic that the stocks will regain their value and more in future months. Berkshire is always purchasing companies and shares and very rarely makes bad investments, which explains why so many normal people are suddenly investing in Apple, following Berkshire Hathaway's lead. Buffett, however, is known for his shrewd, long-term investments, and will likely drop the tech company, which he would usually avoid, when the investment gets back to its original value. Buffett doesn't understand tech companies, but some of his top advisors do. He may end up changing his stance in the future, though, if it turns out that the investment in Apple pays off as well as is expected.

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Millennials Better at Saving Than Previously Assumed

Millennials are often stereotyped as being bad with money. Many people view those 20-something-year-olds as frivolous spenders, more concerned with the here and now than with the future. However, according to recent research, Millennials don't actually deserve this classification. According to Jonnelle Marte's L.A. Times article, they are saving much more aggressively than in past years, and in some cases are saving more than their middle-aged counterparts.

In the study, "Millennials" were defined as consumers between the ages of 18 and 29, and the results blew away many assumptions previously made about their age group. About 62% of Millennials are saving more than 5% of their income for retirement, emergencies, or other future financial goals. This is a significant improvement from last year when only about 42% of Millennials put the same portion of their pay toward savings. Comparatively, it was found that about 50% of consumers between the ages of 30 and 49 were putting as much into savings.

Analysts believe that Millennials' interest in saving money for a rainy day may come from personal experience or what they saw family members go through. Many, especially those straight out of college, struggled to get a job during the recession. Others, even if unaffected themselves, watched as family members were hit by layoffs and saw how hard it was for parents or even grandparents to recover. Likely because of this, 40% of Millennials are putting their savings aside for an emergency, rather than for retirement or something else that would matter the most in the distant future. They know how hard it can be to survive if they unexpectedly lose their job, and as such, want to be sufficiently prepared.

How are Millennials able to save more money now than in previous years? Some are cutting their spending, realizing that instant gratification isn't worth potential financial struggles in the future. Others are getting better jobs or being promoted to better-paying positions in the recovering company, and therefore are earning more money and are more able to put some of it toward savings. Some went back to school when they found that they couldn't find work during the recession and are putting their degrees to use in getting jobs now.

Not all Millennials are choosing to put their money aside for emergencies. Many are saving in order to be able to afford big purchases in the near future. About 27% are saving for a future home, 26% are saving for a car, and 36% are saving to go on vacation. No matter what they are saving for, researchers agree that Millennials have come to understand the value of saving, often more than their older counterparts. When asked about their major goals, the majority chose "saving", while smaller, but still significant, portions chose "leading a healthy lifestyle" or "paying down debt." Saving money can have a positive impact on anyone's life, so it's a good thing that more individuals have come to realize the value of saving over spending.

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