Posts Tagged "young adults"

Summer Suggestions

Some suggestions for late-summer fun include an independent movie about a woman earning a very good living on a not-so-friendly Wall Street. But first, here are two practical financial guides, one for grown-ups and one for kids.

  • Harris (Hershey) Rosen, who is 83, put serious thought into how to leave household financial information in good order for his wife should he die – and put his thoughts together in his homegrown “My Family Record Book.” This book “is not a money-making proposition,” he said. Rosen suggests husbands and wives make this important task a joint project.

    As the former owner of a candy company that made those lollipops packaged in strips of cellophane, Rosen learned to sweat details. His “Family Record Book” records the nuts and bolts of things like mapping where files are located in the house, planning the logistics of downsizing to a smaller home, and making lists for everything that’s important to you – doctors, the home-maintenance schedule, birth dates of friends and loved ones.

    “The purpose of the book is to motivate people to commit all the information in his or her head to writing,” he said.

  • Susan and Michael Beacham are pros when giving financial information and advice to children and young people. I just came across their award-winning “O.M.G. Official Money Guide for Teenagers,” published in 2014, which merges personal finance and colorful graphics, while finding ways to get inside teens’ heads.

    For example, it points out that “when you deposit a check, it may take several days” to clear and advises on how to handle “awkward money moments” with friends. A credit card is like a snowball, which “starts out fairly small” but “can get out of control.” If only they’d listen!

  • Movies about money – “The Big Short,” “The Wolf on Wall Street,” “The Smartest Guys in the Room,” “Glengarry Glen Ross,” “American Psycho,” “Bonfire of the Vanities,” “Trading Places,” and, of course, “Wall Street” – are about men. Until now. …Learn More

Social Security Replaces Less for Couples

Source: U.S. Social Security Administration poster, 1954.

When Social Security was created in the 1930s, wives were mainly full-time homemakers, with their pension benefits based on their breadwinner husbands’ earnings.

But wives went to work in droves after Social Security’s passage. Today, women make up nearly half of the U.S. labor force.  Yet the program’s design remains the same, with the result being a steady decline in married couples’ replacement rates – the percentage of the combined earnings of two working spouses that Social Security replaces when both retire.

A study by the Center for Retirement Research found that the replacement rate for couples has declined from 50 percent for married couples born in the early 1930s to around 45 percent for the oldest baby boomer couples, and it will fall to just 39 percent for Generation X couples when they eventually retire.

A declining replacement rate is an important consideration for working couples as they plan for retirement.

The simple explanation for the declining replacement rate is that household earnings are much higher when both spouses are working, but their Social Security pension benefits do not increase proportionally. The reason is that even if a wife doesn’t work, she still receives a spousal benefit equal to half of her husband’s benefit.  The more a working wife earns, the lower the couple’s replacement rate. …Learn More

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Social Security Credits for Moms?

Dramatic changes in the U.S. family structure over several decades – more divorce, single motherhood, and unmarried couples – could have a big impact on the financial security of baby boomer women as they march into retirement – and on future retirees.

A review of studies on Social Security spousal and survivor benefits by the Center for Retirement Research, which sponsors this blog, examines the difficulty of providing retirement security for the growing ranks of women and mothers who do not fit the traditional family mold.

Social Security’s benefits were designed for the typical family when the pension program was enacted in the 1930s, a family portrayed at the time by Henry Barbour and his wife, Fanny, in the popular radio soap opera, “One Man’s Family.” A spouse, usually the wife, is guaranteed half of her husband’s full retirement age benefit under the program when she reaches her full retirement age – whether she works or not.  When her husband dies, her survivor benefit equals his pension benefit.

Figure: Rise of the Single Mother

But women who marry and become divorced within 10 years are not eligible for these benefits.  Nor, of course, are single working women, who receive benefits based solely on their own work histories.  Increasing numbers of women reaching retirement age today either were in short-term marriages or never married and won’t receive a spousal or survivor benefit. The problem is that most of these women are mothers. …Learn More

Inner-City Teen Interns Are Better Off

High school students who participated in Boston’s summer jobs program in 2015 work on a public beautification and landscaping project.

It’s a spring rite in Boston.  The mayor’s office and private and non-profit employers hustle to get ready for a program employing more than 10,000 inner-city teens for the summer.

A new study of the summer 2015 participants shows that the high school students made remarkable strides, compared with the kids who applied but were not accepted for the limited number of slots available in the program.  New York and Chicago have similar, large programs.

The Boston teens, who are mostly either black or Hispanic and from low-income neighborhoods, improved their job readiness, from showing up on time to developing their resume-writing skills, and also boosted their confidence and sense of identity. Perhaps most important, the program increased aspirations, particularly among black males.

Two out of three participants have single parents, and one in three is from immigrant families who do not speak English.  While college-bound children of wealthy parents may choose summer camp over a summer job, being idle in the summer can be a big disadvantage for inner-city kids.

“These kids just have less opportunities to develop [job] skills just by growing up in the neighborhoods they do,” said Alicia Modestino, the Federal Reserve Bank of Boston researcher who studied the program.  “Fewer people in their lives have a job. They’re living in a neighborhood with fewer job opportunities.”  Further, single parents in low-income households often work nights or have multiple jobs and are too pressed for time to help their children develop these skills.

The jobs in Boston’s program are primarily either with private-sector employers – some of the top-tier internships are with major corporations – or with non-profit organizations such as local YMCAs, Sociedad Latina, the Boys and Girls Clubs of Dorchester, and the New England Aquarium. A requirement of the summer program – one of the nation’s oldest – is that each high school student attends sessions in which they learn to write resumes, practice job interviews, and answer questions properly on online applications.

Modestino was surprised that the strongest results in the study came in the category of “social engagement.” For example, her study found a sharp increase in the share of participants reporting they felt they “had a lot to contribute.” …

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Parents, Start Student Loan Homework!

Here’s a reminder that parents should start their homework this summer to minimize college loan repayments over the long haul. A few basic decisions can add or subtract thousands of dollars.

A little help came last week, when the interest rates on all federal student loans were reduced. Despite the declines, the rates for the PLUS loans available to parents remain much higher than the loans available to their offspring – taking out a PLUS loan will nearly double the interest paid on $50,000 over 20 years, compared with an undergraduate Stafford loan.

This is an argument for having prospective students take out the loans, rather than the parents.  As for paying them back, financial advisers tend to agree that young adults with decades of work ahead of them can share in that responsibility at a time their parents are facing retirement.  This complex family decision depends on myriad factors, including how much income the graduate can expect to earn after college and how comfortable the parents are.

There are one-time, upfront fees on federal student loans, and they are also much higher for parent PLUS loans: 4.272 percent of the loan’s principal amount versus 1.068 percent for Stafford loans for undergraduates – these fees will go up for loans disbursed after Oct. 1.

The Institute for College Access & Success has put together an excellent cheat sheet explaining the federal loan options, who qualifies for various types of loans, and the costs of each.  To see this sheet, click here.

Below is the institute’s summary of the new loan rates, effective July 1: …Learn More

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Find Best Job Market with Online Tool

This online tool for exploring urban job markets is very cool.

It could be a big help for high school and college graduates looking for work, especially those willing to migrate to a new city and trying to figure where to go. What’s unique about it is that it ranks the nation’s large, mid-sized, and small cities based on the user’s personal preferences.

To use the tool, created by the American Institute for Economic Research (AIER), the job hunter decides how high to rank the importance – from 5 (most important) to 1 (not important) – of nine different aspects of the job market and lifestyle in their ideal city: low unemployment, high average earnings, high labor force participation, public transportation, highly educated peers, low rent, high diversity, plentiful bars and restaurants, and many arts and entertainment options.

To test it, I selected a 5 for low unemployment and high labor force participation and a 1 for everything else (the bar scene, public transit, diversity etc.).  Cities like Minneapolis, Denver, Salt Lake City, and Austin came up as the best cities, when these two job-market criteria were most important.

AIER also compares different cities in a report, which is available here.

Of course, other things are important when relocating. But the tool forces job hunters to balance their priorities – a strong job market or a good bar scene?  To play around with AIER’s gadget, click here.Learn More

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Quiz: Financial Well-being or Unease?

What does it mean to have a sense of financial well-being? Or what does it mean to have its opposite, financial uneasiness?

Based on in-depth interviews with dozens of people in focus groups, the federal Consumer Financial Protection Bureau has developed a financial well-being quiz. The quiz is the agency’s attempt to quantify a very subjective concept so that researchers can measure it and integrate this measure into their research, said Genevieve Melford, a senior research analyst for the CFPB.

“It’s about creating a tool that allows meaningful research and effective interventions that might help people,” she said.

We think regular people can also gain personal insight by taking a short version of the CFPB’s quiz on this blog. After taking the quiz, write down your score, and return to the blog to learn what it means.

Button linking to quiz
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