May 2012

Newlyweds

Couples’ Rifts Increase With Age

Newlyweds beware: The longer you are married, the more you will argue about money.

U.S. married couples argue an average of three times per month about their joint finances. But once couples hit their mid-40s, these spats increase to four times per month, according to a telephone survey of a nationally representative sample of 1,005 adults by the American Institute of CPAs.

“The stakes are higher” for older couples with more money in savings, said Kelley Long, a member of the Institute’s financial literacy commission. She said middle-aged couples also argue fiercely about steep financial obligations, such as how to pay for the children’s college.

What does all this emotional “baggage” have to do with newlywed bliss? …
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Boomers May Stop Work Because They Can

Baby boomers who’ve left the labor force in their pre-retirement years are in better financial shape than they once were.

The wealth of non-working Americans between ages 55 and 61 increased from $83,000 in 1992 to $98,000 in 2008, according to new research from the Urban Institute in Washington.  (Comparisons are in constant dollars.)

Potential explanations for this trend range from greater U.S. inequality that launched more boomers into the top wealth tier to a rise in the numbers of married men who don’t work – but have wives who do.

Barbara Butrica, a senior research associate at the Urban Institute, said her study did not look into the “why” for the emerging group of voluntary non-workers who are approaching traditional retirement ages, married and single men in particular.  One possibility, she said, is that “they are leaving the labor force because they can afford to.” …Learn More

Wanna Live Forever, Huh?

Mark Wexler (right), director of the documentary “How to Live Forever,” with fitness celebrity Jack Lalanne.

Immortality hasn’t been this hot since Ponce de Leon searched for the fountain of youth in 16th Century Florida.

The evidence: Captain Jack Sparrow (a.k.a. Johnny Depp) searched high and low for it in “Pirates of the Caribbean” Part IV last summer. Meanwhile, U.S. beaches were littered with the polka dot cover of “Super Sweet Sad Love Story” about a dystopian Manhattan, where longevity had to be earned. Mark Wexler’s documentary, “How to Live Forever,” was a bizarre-funny send up of baby boomers’ search for their fountains of youth. And time – not money – was the currency in the Justin Timberlake vehicle, “In Time.” Another Twilight vampire movie on the way…

This spring, Jane Fonda is promoting her new book, “Prime Time,” about what she calls the “third act” of life as more Americans are increasingly healthy into their 70s, 80s, even 90s. Not to put a damper on things, but can we afford our third act if we’re not Jane Fonda?

Noting the 30-year increase in U.S. longevity over the 20th century, she said it is ushering in a lifestyle “revolution.” But an index produced by the Center for Retirement Research, which funds this blog, indicates that we won’t have enough income to afford it. This regularly updated retirement index shows that nearly half of U.S. households with boomers in their early 50s are “at risk” of not having enough money for retirement.

Are you ready for your glorious third act? Or will it be more like the explorer’s quest? Pure myth.
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New Financial Tools Backed by Research

The Center for Retirement Research at Boston College has created a prototype personal finance website with tools and information on topics ranging from how to reduce spending or refinance a mortgage to the best way to draw down savings during retirement.

The website offers a comprehensive set of tools backed by impartial academic research – not sales pitches.  Individuals can use each calculator, “Learn More” lesson, or “How To” guide individually or as the building blocks for an overall financial plan, which they can construct in a step-by-step process that begins on the homepage.

The website, also called Squared Away, was created by the Financial Security Project (FSP), a financial education initiative of the Center.  It was funded (also like this blog) by the Social Security Administration.

The Center plans to distribute the site through various organizations, such as credit counselors, financial planners, employers, credit unions, and non-profits involved in helping low-income people build up their savings.

The website is still in the “beta” phase and will be improved over the coming months.  We invite readers to try out the tools and comment on them by clicking “Learn More” below.  All comments – good and bad – are welcome.Learn More

Cold Cash: Cash in a freezer

Americans Put Cold Cash on Ice

More than one in four Americans revealed that they put their “mad money” in the freezer.

The freezer strategy was more popular than socks and mattresses, according to a Marist College survey last month of more than 1,000 people.

More people with college degrees chose the freezer than did non-college graduates. But the second most popular hiding place – socks at 19 percent – was particularly popular in the Northeast where people own a lot of socks. Third was the proverbial mattress, and more men than women went this route. Wisely, 17 percent knew of “no good place” in the house to hide their mad money.

Several years ago, I put my credit card in a plastic deli container, filled it with water, and froze it. Just once, I was thinking, it’d be nice to get an American Express bill that didn’t break the $500 barrier. (My barrier is higher now.)

I didn’t admit this to anyone at the time, but maybe it’s alright to talk about our quirky financial habits. Apparently, many of us have them.

Unfortunately, Marist did not ask how much this mad money amounts to. Presumably we’re not talking about thousands. Are we? Squared Away readers, where do you put your mad money, if you have any?Learn More

Photo: woman

Financial Perils of the Single Woman

Being a single woman is serious stuff – financially that is.

One website recently published a humorous list of the advantages of being a single woman today.  “You don’t have to be worried about not getting a special gift from Him on your special day because there is no Him.”  Or: “There is no argument about where or when to go on vacation.”  Toilet seats were also mentioned.

This may not amuse 30-something women with serious concerns about whether they’ll marry and have children.  But face it: single women of all ages have more difficult money issues than their married friends.  When two incomes are coming into the household, a couple shares the rent or mortgage.  Fixed expenses can add up over a single woman’s life or during long bouts after, say, divorce.

“Single women are far more at risk,” said Wendy Weiss, a former financial adviser who writes a blog on her website, Hot Flash Financial.  “If we make 77 cents on every dollar [men earn], men have 23 percent more discretionary income, and that’s usually the amount we advisers recommend you put away,” she said.  Women also live longer and need more money to get through retirement, she said.

Prior to retirement, the rule of thumb is that single people need well more than half, possibly as much as 70 percent, of a childless couple’s combined income to afford the same lifestyle.  It is higher for the poor (whose fixed expenses consume more of their total income) and for single mothers (for obvious reasons). …Learn More

Mysterious Math Fuels Financial Markets

The stock market is on a downward jag, reminding us that financial events and products not in our control often determine our well-being. Thriller writer Robert Harris calls the markets an “alien force that slips human control.”

In today’s featured video, a California entrepreneur discusses how complex math, beyond our ability to comprehend, increasingly shapes the financial markets. He’s referring to various developments on Wall Street: the rise of computerized trading; Wall Street firms hiring math and engineering PhDs to design investing strategies; and institutional investors that use formulas to break multibillion-dollar stock trades into smaller transactions to evade detection by their competitors.

These are accomplished using “algorithms,” which are a bit like formulas but are far more complex mathematical progressions. Nobody really understands it, including narrator, Kevin Slavin, an independent tech consultant. And that’s the point.

He explains the mysteries of Wall Street’s “black box” in an simplified and elegant way that will wow viewers as he educates them.

“We’re writing these things we can no longer read,” Slavin said. “We’ve lost the sense of what’s actually happening in this world that we’ve made.” He adds, we are “only starting to make our way” to understanding it.Learn More

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