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Women “Reactive,” Not Planning Finances

What motivates women to get to work on their personal finances? Change.

Emotions are also important motivators. But “the most compelling factor” spurring most of the women interviewed in a focus group to take action was a significant life change, Utah State University researchers write in the Journal of Financial Counseling and Planning.

Since April is financial literacy month, Squared Away is again making an appeal to women, who continue to make strides professionally, yet lag men in understanding how to manage their money.

“Major life changes like a premature death of a spouse or divorce are often the wake-up call to people to reassess their lives,” said Utah State researcher Jean Lown, who also teaches a workshop, Financial Planning for Women.

This tendency isn’t necessarily a good thing for women. Rather than being “reactive,” she said, women need to learn to plan ahead and prepare for the future.

For Megan Rowley, who conducted the focus group, the women’s stories hit home. While Rowley pursued her master’s and worked full-time at Utah State, her husband left a part-time job to complete his MBA. After they graduated, he found employment at a pipeline company in Salt Lake City, and she became a stay-at-home mother, said Rowley, who wants to become a financial counselor when her three young children are older. …Learn More

Jobless Boomers: How They Survive

Squared Away wrote about three unemployed baby boomers on Tuesday – an arts administrator, a corporate executive, and a social-services professional – who are having to scrounge for income to sustain themselves.

They are among the more than 1.5 million baby boomers caught in that painful limbo between a long and successful career and retirement – very possibly by default. All three want to get back into the labor force but may be forced to retire, because it’s more difficult for them to find employment than it is for younger workers.

While nearly half of unemployed adults between the ages of 25 and 49 were able to find work within seven months during and after the Great Recession, it took more than nine months for half of those over 50 to find a job, according to the Urban Institute, a Washington think tank. Many boomers may never find a job and will eventually retire.

“It’s different than being 35 or 45 and out of work,” said Kevin Milligan, an economics professor at the University of British Columbia. “We don’t necessarily expect these [older] people to go back to work.”

Milligan’s research last year determined that two-thirds or more of jobless Americans between ages 55 and 65 rely on their spouses for income. With only one spouse working, this creates hardships. These older households suddenly are able to save less in their 401(k)s. Milligan found that smaller numbers of boomers are also tapping their employer pensions or Social Security retirement benefits. …Learn More

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Unemployed Boomers Resist Retirement

Brisk sales of Linda Novak’s crocheted scarves and baby blankets have subsidized the 62-year-old’s Manhattan rent since her 2012 layoff. Boston resident Marcus Queen, 58, receives food stamps while trying to reignite his beloved career: helping city kids get a leg up. Joseph Imperiale, 66, wants to get back into the business world, so he doesn’t have to tap his retirement savings yet.

Nearly three years after the Great Recession officially ended, more than 900,000 baby boomers laid off several months or years ago are still pounding the pavement, unable to find employment in an economy that produced only 88,000 jobs in March. They simply are not ready to retire – financially or emotionally – but they often feel that unemployment is forcing them to do so prematurely.

It takes boomers longer to find employment than it does younger job seekers, creating financial challenges unique to their stage of life. They could begin collecting their Social Security benefits immediately upon becoming eligible, at age 62, but the largely irreversible decision to accept a reduced monthly check would haunt them throughout retirement. They can’t afford to put more money into their savings – in fact, if things get really rough, they may have to raid the 401(k) to pay the bills.

UJA-Federation of New York, a Jewish social services agency, is increasingly seeing older workers “who lost their jobs a while ago and have depleted all their assets, and they realize they’re really in trouble,” said Elisabeth Kostin, the planning manager for the agency’s programs for the unemployed. She added, “If someone becomes unemployed as they’re approaching retirement, their value and worth is also depleted.”

Novak, Queen and Imperiale agreed to share their stories about how they try to keep their spirits up and the doors open. …Learn More

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Webinar to Explain Social Security

In a webinar next Thursday, an official from the Social Security Administration will explain the fundamentals of calculating and claiming benefits.

Social Security represents the largest single financial resource for most baby boomers, so deciding when to file for benefits is their single biggest retirement decision.

The value today of that future stream of monthly checks – $287,200 for the typical household aged
55-64 – far exceeds the value of home equity or 401(k)s for most people, according to 2010 data from the Federal Reserve Board.  And it often exceeds the value of their traditional defined benefit pension plan – if they even have one.  The lower one’s income, the more Social Security matters too.

The webinar was organized by the National Retirement Planning Coalition for financial planners, who are not always familiar with all the rules for the program.  But anyone can participate, according to the coalition leader, the Insured Retirement Institute.  (Full disclosure: the Center for Retirement Research, which hosts this blog, is a coalition member).  Space is limited and going fast for the webinar, which will also be available online a few days after the webinar on this website.

To register for the April 11 webinar, click here.

The following topics, among others, will be covered in the webinar, including: … Learn More

Video: Why Stock Investors Defy Logic

The Standard & Poor’s 500 stock index has climbed steadily and surpassed its 2007 peak last week, and even sluggish European markets are showing signs of life as investors rush back in.

This interregnum between the collapse of global financial markets in 2008-09 and the next bubble – whenever and wherever that may occur – is a good time to reconsider investor behavior.

In this video, Ben Jacobsen, a finance professor at Massey University in New Zealand, discusses behavioral economics, market panics, and “strange” and inexplicable behavior.

“Most people,” Jacobsen concludes, “have a great difficulty assessing risk and what risk is.”

Check out another blog post about research confirming that people tend to rush in when the market is rising and pay dearly for stocks and then sell in a panic after experiencing large losses. Morningstar data also indicate that long-term investors have better returns if they buy and stay put.Learn More

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Store, Online Browsing Can Be Dangerous

Impulse purchases – new spring clothes or an expensive dinner out – can create a rush. But a few minutes of pleasure can blow a hole in the budget for a month. If it’s chronic, it can eat into savings for a down payment or retirement.

The reason for these rash decisions is obvious: see it, want it. But for people who want to better understand – and prevent – their impulse buys and remain on budget, FinCapDev, which is hosting an online competition for a financial literacy app, recently posted a reading list of three research papers that explain why we can’t resist buying stuff.

  • One study has confirmed that store browsers actually are vulnerable to impulsive purchases, because the act of browsing through a store’s merchandise produces positive feelings. “It is a state of high energy, full concentration, and pleasant engagement,” researchers wrote in a 1998 paper that is probably relevant to online browsing. Can you relate? …

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Long-Term Care Needs Sneak Up On Us

As I sat in an orthopedist’s office last week watching the doctor poke and prod my mother’s legs – an irritated nerve may be causing her severe pain – this thought struck me: long-term care is often an unspoken topic but one of enormous magnitude.

I’ve always taken for granted that my active mother, who plays a killer game of bridge, wouldn’t need much medical attention for another 15 years. I have evidence of this, I’d convince myself: her mother lived to age 92 and some uncles lived even longer. The pain makes it difficult for my mother to walk her dog, though she gamely hobbles through her day and even insists on league bowling on Wednesdays.

It’s so much easier to shove aside worries about long-term care for the elderly – our own or our parents’ – than it is to contemplate the financial and deeply emotional issues required to care for an aging parent. The video below tells a true story about what happens when the requirements of care slam us hard, as they often do.

Violet Garcia is a single mother of Filipino descent living in Kodiak, Alaska, which is situated on an enormous island south of Anchorage. The public school worker cares for her elderly mother, who can’t be left alone. Garcia aspires to send her middle son away to college soon, but that will create a problem on Sundays, when he takes care of his grandmother so his mother can run errands. …

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