January 15, 2019
Savings Tips Help Millennials Get Serious
This is young adults’ financial dilemma in a nutshell: you’re well aware you should be saving money, but you admit you’d rather spend it on the fun stuff.
Yes, paying the rent or student loans every month takes discipline. But it isn’t enough. Even more discipline must be summoned to save money, whether in an emergency fund or a retirement plan at work.
Tia Chambers, a financial coach in Indianapolis and certified financial education instructor (CFEI), has put some thought into how Millennials can overcome their high psychological hurdles to saving.
The 32-year-old lays out six doable steps on her website, Financially Fit & Fab, which she recently elaborated on during an interview.
Get in the right mindset. “It is the hardest part,” she said. “When I speak with clients, money is always personal, and it’s also emotional.” The best way to clear the emotional hurdles is to keep a specific, important goal in mind that continually motivates you, for example buying a house. Or create a detailed savings challenge, such as vowing to save $1 the first week, $2 the second week, $3 the third week, etc. This adds up to $1,378 at the end of the year, she said.
Cut expenses. Some cuts are no-brainers. Scrap cable for Hulu and Netflix subscriptions. Drop that gym membership you never use. The biggest challenge for young adults is saying no to friends who want to go out for dinner or drinks. Chambers suggests enlisting your friends to help – after all, they’re probably spending too much too. She and her friends have agreed to go out one weekend and save money the next weekend by hanging out at someone’s apartment. Another idea is happy hour once a week instead of twice. …Learn More
January 3, 2019
Here’s What Our Readers Liked in 2018
We’re kicking off 2019 with our periodic review of the most-read articles over the past year, based on the blog traffic tracked by Google Analytics.
Judging by the comments readers leave at the end of the blog posts, baby boomers are really diving into the nitty-gritty of preparing themselves mentally and financially for retirement. Financial advisers also frequently comment on Squared Away, and we hope some of our web traffic is because they’re sharing our blog with their clients.
Last year, Squared Away received recognition from other media. The Wall Street Journal recommended us to its readers for the blog’s “wonderful mix of topics.” The Los Angeles Times picked up our article, “Why Retirement Inequality is Rising.” MarketWatch published our posts about how pharmacists can help seniors reduce their prescription drug prices and about a Social Security reform to reduce elderly poverty.
The most popular blogs in 2018 fall into five categories:
The Big Picture
How Social Security Gets Fixed Matters
Future ‘Retirees’ Plan to Work
Just Half of Americans Enjoy Bull Market
Personality Influences Path to Retirement
How and When to Retire
Know About the 401(k) Surprise
How Retirees Can Negotiate Drug Prices
Work vs Save Options Quantified
What’s a Geriatric Care Manager Anyway?
Geriatric Help Eases Family Discord
Retirees Get a 401(k) Withdrawal Headache
Social Security Mistakes Can Be Costly …Learn More
December 20, 2018
Merry Christmas and Happy New Year!
Be safe during the holidays, whether you’re traveling across town or across the country to enjoy your family and friends.
We’re taking a break too at the Center for Retirement Research. This blog will return on Thursday Jan. 3 with a roundup of our readers’ favorite articles in 2018. …Learn More
November 13, 2018
Millennial Cities and Those Left Behind
Sumat Lam, a recent college graduate, was skeptical when his Silicon Valley employer transferred him to Austin, Texas. What he found was a high-tech mecca that defies the stereotypes of 10-gallon hats and Southern drawls.
Google, Apple and Amazon have established outposts in the “Silicon Hills” of Texas’ Hill Country. The young workers moving there are “bringing in their culture and influences from Boston and New York,” Lam told VOA News.
Taylor Hardy lives in Dayton, Ohio, but she might as well be living on a different planet.
This young nursing assistant can barely eke out a living. Her plight is shared by too many others in this former industrial hub that has been in a downward spiral that accelerated after plant closings by National Cash Register and General Motors during the last recession. The loss of high-quality blue-collar jobs contributes to Dayton’s 35 percent poverty rate – nearly three times the national rate.
Hardy, a single mother, and the boyfriend who lives with her, earn a total of $27,000 a year – she has $5 in her bank account. “I work all these hours, and I miss all the time with my kids to make … nothing,” she said in the PBS Frontline documentary “Left Behind America.”
The contrasting fortunes in these two cities – Austin versus Dayton – are playing out around the country. Young professionals are streaming into Millennial boomtowns from San Francisco to Boston, where growth seems almost unstoppable. But outside these hot spots are struggling Midwestern and Northeastern cities that have become deserts, devoid of opportunity for their young adult residents.
“Historically, many young American adults have left their hometowns to chase better opportunities,” said Kali McFadden, senior analyst at Magnify Money. “But not all millennials have the same work opportunities,” she said about her firm’s new city ranking of the employment available to young workers. …Learn More
October 16, 2018
Millennials Give Saving a Low Priority
Retirement clearly is not a priority for far too many young working adults.
Large minorities of the 22- to 37-year-olds who responded to a recent LendEdu survey said their retirement saving every month amounts to less than they spend on various categories of consumer goods. Nearly half of them report they spend more on dining out than on retirement saving. Almost one in three spend more on alcohol or new clothes, and one in four spend more on streaming services such as Netflix and Spotify. What that indicates is that a lot of them aren’t saving very much.
It might seem unfair that saving for retirement is such an urgent matter for someone not yet out of their 30s. After all, they aren’t earning very much yet, are managing household expenses for the first time, and might have a big student loan payment.
But the reality today is that Millennials were not lucky like some of their parents born into a world where they had a decent shot at a job with a pension. And a Social Security check alone is definitely not enough for a retiree to live on.
More and more employers are countering a reluctance to save by automatically signing workers up for the company retirement plan – nearly 50 percent of employers are doing this, compared with just 20 percent a decade ago, according to Vanguard’s client data. The idea behind automatic enrollment is that, just as inertia prevents people from signing up for a 401(k), inertia will keep them in the plan if the employer puts them there.
The strategy seems to be working: 92 percent of workers in their mid-20s to mid-30s whose employers have auto-enrollment are contributing part of their paychecks to their 401(k) plans, according to Vanguard. Contrast that to just 52 percent of workers in this age group whose employer plans are voluntary.
There’s nothing better than to be young and carefree, but the young adults who aren’t saving are already putting their well-being in old age at risk. …Learn More
September 20, 2018
US Fertility Falls in Midst of Recovery
When the economy is expanding and more people are working and earning more, they can afford to have more babies.
But that time-tested connection between the economy and fertility seems to be broken. During the recovery that followed the 2008-2009 recession and continues today, the U.S. fertility rate has dropped quite a bit.
Lower fertility is of interest to retirement experts because it has serious implications for our aging population. AARP’s Public Policy Institute predicts a decline in the number of family members and friends available in the future to care for the elderly. Fewer babies also mean fewer workers will be paying into Social Security, in the absence of an increase in immigration.
Of course, fertility rates in developed countries like the United States, Germany, and Japan are far below the post-World War II baby boom. But the very recent decline in this country is striking. The total fertility rate, the best measure of current fertility, is 1.76 births per woman. This is well below the rate of 2 births per woman a decade ago.
A study by researchers at the Center for Retirement Research at Boston College identified four structural changes that are pulling the birth rate down. …Learn More
September 18, 2018
Scam Alert: Student Debt ‘Relief’
Despite numerous state efforts to crack down on fly-by-night firms falsely claiming to reduce or eliminate young adults’ student loans, new firms keep popping up.
Their social media pitches and websites promise borrowers things the companies can’t possibly deliver on. They appeal to potential customers struggling to pay student loans with slogans like “Get Rid of Your Student Loans Today!” or “$17,500 in Up Front Forgiveness” – “100 percent guaranteed!”
In a high-stakes game of Whac-a-Mole, attorneys general in numerous states have repeatedly brought legal actions against these so-called “debt relief” companies in cases going back at least four years. Massachusetts resolved one case this past summer, and Pennsylvania filed a lawsuit last fall. Florida has aggressively pursued several debt relief companies recently. The Federal Trade Commission and the Consumer Financial Protection Bureau have also gotten involved.
Student loan borrowers “are desperate for help, which is how these companies are able to grab them,” said Betsy Mayotte, founder of the Institute of Student Loan Advisors, a Boston-area non-profit she founded to provide free help to people wrestling with college loan payments.
Mayotte described egregious fraud against a client who came to her organization and had been paying her student loans for years, whittling down the amount she owed to $5,000 – but it ballooned to $12,000 after she got involved with a debt-relief firm that took over her loan payments. The company put the loan into the federal government’s forbearance program, where it went unpaid while accruing interest for two years. After the forbearance period expired, the debt relief company neglected to resume the loan payments, despite continuing to collect its monthly fee. The customer defaulted on her debt unwittingly – but never got a notice because her contact information on the loans had been changed. … Learn More