June 2012

Edited Volume of Research – and More

Resources that may interest Squared Away readers keep coming over the transom. Check out new federal guidelines on what to ask a financial adviser or broker, an edited volume of academic research on financial literacy and behavior, iPhone investment apps, or a summer financial thriller.

On Interviewing Financial Advisers:
Is hiring a financial adviser or broker daunting? How do you know you can trust him or her? These are complex issues, but the U.S. Department of Labor has just released a list of questions that provide a good start to your search. And click here for more such questions, based on research by Boston University law professor Tamar Frankel.

On Financial Behavior Research:
Douglas Lamdin, an economics professor at the University of Maryland Baltimore County, compiled an edited volume of research papers about financial education and behavior, “Consumer Knowledge and Financial Decisions.” The table of contents sorts issues by age groups, starting with “Cognitive Development and Children’s Understanding of Personal Finance” and ending with “Financial Preparedness for Long-Term care Needs in Old Age.” …Learn More

Employers Try New 401(k) Strategy

Employees apathetic about their 401(k)s are not saving enough. Some employers are bringing in reinforcements to push, cajole, or entice them.

Employers and employees share the blame for the low rate of retirement savings nationwide, consultants say, but the common practice of employers handing their new workers a 401(k) sign-up form and investment materials from the mutual fund manager clearly isn’t working. A few employers are trying a different tack.

One such initiative, by the Foundation for Financial Wellness in Colorado, trains and certifies CPAs, estate planning attorneys and financial advisers to educate its clients’ employees. NASA was the foundation’s first client, and they now include hospitals, city governments, oil companies, unions and churches, said Brent Hines, founder.

The foundation’s educators “are unbiased and don’t have a dog in the fight,” Hines said. “We’re not the 401(k) provider, and we don’t have the bias of wanting to put more money into your 401(k) or invest in a product.”

Separately, a program to educate credit union employees is expanding from four pilot states to an additional six and Washington, DC. And the American Nurses Association recently teamed up with a non-profit to train 10 nurses in five initial states to run workshops; to date, more than 700 nurses have gone through the financial workshops.Learn More

Set Priorities to Limit Travel Spending

The world seems like a small place for young adults, thanks to college internships abroad, the Web, and some boomer parents who took their children to Paris as effortlessly as 1950s parents hit the road in a Chevrolet.

While surveys have predicted that Americans plan to spend more on their 2012 vacations than they did last summer, that may not apply to young globetrotters on a budget.

In this 2010 video, Matt Gross, a free-lance travel writer for The New York Times, provides great advice that never gets stale for young adults with far-flung travel horizons. Gross’s tips amount to more than money savers – he puts forth a travel-spending philosophy:
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Is 62 Dead (as a Retirement Age)?

Life expectancy rises. Wages stagnate. Retirement accounts shrink. Guaranteed monthly pensions are an endangered species.

The average U.S. age for men retiring from work has gradually increased to 64. Yet age 62 continues to be held out as the popular standard, perhaps because that’s Americans’ marker for Social Security eligibility.

Is retirement at age 62 destined be a casualty of dovetailing medical, financial, economic and even political trends? Many baby boomers are already postponing retirement into their mid- or even late 60s. One study found that claiming Social Security at 62 is becoming less popular, a trend that is expected to continue despite the hardships of the Great Recession.

“I don’t think it’s dead, but its health has eroded,” Chuck Miller, a Chicago communications consultant who specializes in retirement, said about age-62 retirement in this country.

Wisconsin’s failed recall election for Governor Scott Walker suggested growing U.S. voters’ disdain for generous pensions and early retirement ages, even as Europeans protest government proposals to raise public employees’ retirement ages. Rhode Island has already raised its employee retirement age to 67, from 62 previously. And voters in San Jose just approved measures to scale back public worker pensions that included an increase in the retirement age.

Squared Away readers, where do you stand? Have you or will you retire at age 62? Tell us about your situation or your theories!Learn More

Progress Stalls for Young Adults

The promise of America is progress, but that progress stalled for the youngest generation: U.S. workers under age 45 earned dramatically less than workers who were that same age a decade ago, the Federal Reserve Board’s latest survey shows.

For Americans 35 through 44, the median household income – the income that falls in the middle of all earners – was $53,900 in 2010. That’s 14 percent less income than in 2001 when households in the 35-44 age bracket were earning $63,000, according to the Fed’s Survey of Consumer Finances released Monday. For young adults in the under-35 age bracket, median income fell to $35,100 in 2010, from $40,900 for that group in 2001.

The median income also declined, by nearly 9 percent, for Americans in their peak earning years, 45 through 54, to $61,000 in 2010 from $66,800 in 2001. [Incomes for all years are in current dollars.]

The sharp decline in real incomes, especially for young adults, occurred in a decade bracketed by the high-tech bubble of early 2000 and the jobless recovery of 2010 from the financial crisis. Without further analysis, it’s difficult to pinpoint precise explanations for the patterns. But the reasons vary depending on the age bracket being analyzed.

For the youngest workers, incomes may be lower if many are extending their college educations – high school and college graduates face the lowest level of employment ever recorded.
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Couple Reach Across Financial Divide

Meet Shannan Schmitt, 40: She cannot resist $200 Via Spiga pumps, hickory hardwood floors, or the fancy soaps and gourmet goodies at the farmers market where she likes shopping with her toddler son.

Meet her husband, Randy Nauman, 36. His penny-pinching ways are dictated by the numbers and his bachelor’s degree in finance. Her Internet shopping drives him to distraction.

“Opposites attract,” said their financial coach, Kelley Long.

Married five years, the Cincinnati couple’s willingness to discuss their finances publicly, for this article, is rare. But their marital discord over money is not: A recent survey found that the typical American couple argues about money three times a week, and past academic research has found that the more couples argue about money the greater is their risk of divorce.

Nauman said money “is the biggest issue,” and he worries it may be severe enough to jeopardize their marriage. “It leads into other stressful situations and arguments that don’t need to happen,” he said.

But Long, who owns KCL Financial Coaching in Chicago (formerly Cincinnati), said Schmitt and Nauman are like other couples who marry at a later age. “It’s harder to combine your finances if you’ve already had a chance to establish your financial habits” before getting married, she said.Learn More

Enough to Make You Dizzy


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Some of Michael Najjar’s images transport people to the precarious heights of the Andes mountain range in Argentina. Others focus attention on the severe cliffs over which a mountain can slide.

Using photographs taken during his climb to the summit of Mount Aconcagua, Najjar used the computer to manipulate the images of surrounding mountain ranges to track the paths of the world’s stock market indexes over the past three decades.

Inspired by his ongoing interest in technology, he attempted to evoke the impact of algorithmic trading on stocks and options trading, which carves out some market peaks and valleys. “I wanted to do something extremely physical to rematerialize what has become invisible,” Najjar said in a recent telephone interview from his Berlin studio.

Before Squared Away reveals which photograph the artist himself believes depicts Europe’s precarious financial and economic situation, click here to make your own decision. …Learn More

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