Posts Tagged "young adults"

From Anxious Child to Finance Star

An interesting psychology powers this video in which the youngest daughter of a low-income, single mother explains how she migrated into the financial services industry – and then became the company president.

Mellody Hobson’s fascination with finance took hold as she watched her mother struggle with evictions, repossessed cars, and empty gas tanks. She once spent all her money on her daughters’ Easter dresses but then couldn’t pay the phone bill, Hobson recalls in the video above.

“I do not think it’s an accident I work in the financial industry,” she explains, “because as a child I was desperate to understand money – desperate.  I hated the fact that I felt this insecurity around money.”

Hobson is a celebrity in her industry. In other videos, she talks about being black, being a successful career woman, being financially savvy, and the trouble with credit cards.  Perhaps she’s all over YouTube, because she’s worth listening to.Learn More

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How Many Years Can You Do Your Job?

Physical power, fast reactions, steady hands, a crisp memory, and mental dexterity – these physical and mental abilities, taken for granted in youth, break down slowly but persistently over the years.

A unique combination of physical and mental skills help to determine whether each worker’s continued employment is more or less susceptible to aging. To better understand who can work longer and who can’t, researchers at the Center for Retirement Research developed a Susceptibility Index to rank 954 U.S. occupations.

Using the skills required for each occupation in the federal O*Net database, they ranked the occupations from 0 to 100 based on the risk that age-related decline will affect a worker’s ability to perform that particular job. The risk reflects the number and importance of the age-vulnerable abilities.

Click here to see where your job ranks.

Of course, individual workers experience aging in different ways, and some learn to compensate for declining skills.  But there are dramatic differences between occupations with very high and very low Susceptibility Indexes.

As one might expect, physically demanding blue-collar work suffers the adverse effects of aging: rock splitter in a quarry (90.3 Susceptibility Index), floor sander (91.0), steelworker (94.4), commercial diver (94.0), truck driver (96.4), and oil rigger (98.5).

Occupations with very low indexes are primarily white-collar: interior designer (5.8), lawyer (6.3), aerospace engineer (8.9), loan counselor (12.4), and radio announcer (14.8).

Where things get interesting is in the middle rankings. Mixed in with somewhat physically demanding jobs – personal care aide (52.7), warehouse order filler (53.7), baker (54.7), postal service clerk (56.3), and food server (58.2) – are white-collar desk or hospital jobs. These include private detective (44.8), surgeon (51.2), architectural drafter (52.8), anesthesiologist’s assistant (53.1), computer network architect (54.8), and critical care nurse (55.7).

After ranking the 900-plus occupations, the researchers concluded that “the notion that all white-collar workers can work longer or that all blue-collar workers cannot is too simplistic.” …Learn More

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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