Divorce Impacts Women Harder In Retirement/by Sonny Dothard
A new study has revealed that divorce impacts women harder than their former spouses. The study also shares that the later in life women get divorced, the longer they postponed their retirement and showed that many women are forced to join the workforce again. Women also feel the brunt of the financial consequences like retaining the family home by sacrificing the retirement savings which is often a big mistake.
Increasing Divorce Rates Hitting Women Retirement
As per the National Center for Family & Marriage Research conducted by the Bowling Green State University, the divorce rates for people over 50 have doubled from 1990 to 2010. This can be a core reason behind why one in five Americans are still working even after crossing the 65-year mark. It is also the reason behind reducing rates of women retirement as they often need to get back into the workforce.
Why Divorce Impacts Women Harder: The New Study
As per the study conducted by Boston College Economist Claudia Olivetti and Mathematical Policy Research’s Dana Rotz, the later a woman gets a divorce, the longer she would be working full time in life. The survey data was collected by interviewing over 56,000 women. It found that women who got a divorce before 30 were in better position than women who got a divorce in their 50s. There was a ten percentage point gap between the latter working full time from ages 50 to 74 as compared to the former.
Rotz and Olivetti wrote that divorce often has long-running implications for older women’s work, marital and retirement decisions. Women who were born in the 1950s are 19 points more likely to work full time after crossing the 50-year mark as compared to women who were born in the 1920s. The researchers say that the 11 percent difference is explained by the changes in the marital status.
Divorce has financial consequences like legal fees, court costs, splitting the assets in two, maintaining two rents, two electricity bills, etc. Women often make the mistake of giving up their retirement assets to get money to maintain a home post-divorce, especially if they have children. Expert financial planners believe that this puts women way behind in the retirement savings and overall has a severe impact on women retirement. So they should try to avoid taking this drastic step in the future.
Are Women Better at Post-Divorce Financial Planning Than Men?/by Sonny Dothard
When a couple is in love and living a blissful life, they don’t often pay attention to post-divorce financial planning or estate planning together. Many couples think that talking about finances and the stake of each of them in the joint finances or estate is unromantic and they don’t discuss it much. This approach is not correct. Every couple must ensure that they have their finances in the right order and both have knowledge of family finances in case their marriage falls apart in the future.
Survey on Post-Divorce Financial Planning
New Personal Financial Planning (PFP) Trends Survey of CPA financial planners conducted by the AICPA has recently highlighted that 75.6 percent or three in four retirement age divorcees need to develop a better understanding of how to manage their personal finances. The people who are wondering why good financial planning education is needed for people nearing retirement should note that the divorce rate for Americans who have crossed the age mark of 50 has doubled since the year 1990.
Divorce Deteriorates Spending Habits of Older Couples
The survey has also unveiled the fact that when an elderly couple go through a divorce, 25.7 percent of women and 24.9 percent of men go through a stage where their spending habits deteriorate. This is the only common thing between the sexes because there is a huge difference in how men and women approach their finances when they are preparing for retirement or handling their finances post-divorce.
CPA Financial Planners say Women Adopt Positive Financial Behavior Post Divorce
Several CPA financial planners have stated that women are more likely to adopt positive financial behaviors post-divorce as compared to the male clients. Around 40. 2 percent women even sought a job while just 20.6 percent men did the same.
Women Stress on Increasing Retirement Savings Post Divorce
About 41.3 percent of women worked towards increasing the retirement savings post a divorce while only 16.4 percent of men made the retirement secure. Around 42.3 percent women improved their spending habits as compared to 11.7 percent of men. Women were also seen seeking financial advice post a divorce. Around 60.4 percent women went for it while just 4.4 percent men did the same.
Tracy Stewart, CPA/PFS who serves as the member of the AICPA’s Personal Financial Planning Executive Committee has stated that when couples get divorced later in life, they realize that there was only one partner who kept a hold on all finances and did all the bad or good financial planning. In the Boomer age couples, the responsibility is handled by males.
Such a scenario leads to one person having exact information on everything related to the finances, including the retirement savings while the other has bare minimum information. Stewart says that it is vital for couples who get divorced later in life to take a long view when making financial decisions and dividing the assets.
Points to Remember
In the survey, the financial planners were asked what steps the couples nearing retirement should take so that they can be financially secure post a divorce and have a steady retirement income. About 75.6 percent of the financial planners advised that people should understand how to manage their personal finances. About 73 percent urged that each couple should understand the long-term consequences of any divorce settlement while 56.9 stressed on understanding the tax implications of any divorce settlement.
Key Elements of a Financial Plan
Stewart says that when happily married couples make a financial decision, they rarely consider what will happen to their good financial planning efforts of the present in case they went for a divorce in the future. The sad truth is that the process of dividing assets is very complex as compared to saving or investing. The good thing is that CPS planners have a strong understanding of tax planning and they can often ensure that the divorce is settled in a tax-efficient manner.
Stewart also stated that divorce is a complex financial event that often involves calculating child support or spousal support, understanding pensions & investments and deciding what to do with the house a couple shared. In order to do good financial planning, both parties should understand what they have.
Approximately 51.2 percent of CPA financial planners think that people should regularly update their wills or trusts if they want to do financially well post a divorce. Around 50.7 percent CPA planners think that increasing saving for retirement is crucial while 42.8 percent thought that decreasing the spending is vital. About 36.1 percent also cited that establishing a pre-nuptial agreement is a good step in preparing the clients financially for a divorce.
Open Communication on Finances
Stewart also suggests that couples should hold open and regular communications about good financial planning, estate planning, retirement savings and all other aspects of their financial life so that they can get on the same page about their approach to spending and saving.
Increased Retirement Benefits Savings Lead to Lower Medicaid Spending/by Admin(2)
A new study has revealed the fact that increased retirement benefits savings lead to lower Medicaid spending. If a state is offering assistance to employees in boosting their retirement savings, it is indirectly contributing towards reducing the Medicaid spending. The study included several assumptions. Though it’s a fact that many states are offering programs to boost the retirement benefits savings, experts say that the other states should also consider initiating such programs by doing a cost-benefit analysis.
Study Says Increased Retirement Benefits Savings Lead to Lower Medical Spending
The study that says increased retirement benefits savings lead to lower Medicaid spending was conducted by Segal Consulting. It carried out a review of all 50 states and the District of Columbia to get estimates on the impact of expanded retirement benefits savings by individuals who are not a member of any retirement plan on the future Medicaid expenditures.
The Result of the Study
The analysis performed by Segal Consulting shows that there is a positive correlation between increased retirement savings and reduced Medicaid spending as more retirement savings remove a percentage of the currently vulnerable households from poverty rolls at the time they retire. The study also highlighted that every state saw an estimated reduction in the Medicaid expenses of the state that were a result of increased retirement benefits savings especially in the first 10 years of the plan.
The study that highlights increased retirement benefits savings lead to lower Medicaid spending also offered some startling figures. It found out that fifteen states would succeed in saving more than $100 million each and the total projected savings were around $5 billion. The amount of savings ranged from $11 million in Mississippi to $604 million in California. It is pertinent to add here that California recently became the eighth state that had enacted a retirement program for the private sector workers.
The study that found out increased retirement benefits savings lead to lower Medicaid spending was able to get the said results on the basis of the assumption that the programs would incur savings that start at 1 percent per year reduction in spending for workers who are currently 64 years old or older than that, grading up to 5 percent for the ones who were currently aged 60. The researchers did not assume that the Medicaid access would be eliminated. Instead, they mentioned that it would be delayed.
With these kinds of assumptions, it is not a surprise that the researchers described the impact over time as exponential. The researchers also noted that they did not take into account the different state eligibility nuances for Medicaid eligibility.
Segal as a Consultant for States Considering a State Retirement Plan
The paper that says increased retirement benefits savings lead to lower Medicaid spending was something of a promotion for the firm’s eligibility to serve as a Consultant to states that are considering the option of establishing a state-run retirement program. Segal Consulting can also help these states in creating as well as executing an RFP for providing the said services.
A flaw in the report that said increased retirement benefits savings lead to lower Medicaid spending is that it did not mention the fact that the same benefits (likely more than those) could be reaped by ensuring the expansion of retirement coverage generally through the existent employment-based savings system.
Already Enacted Programs
There are several states that have already enacted similar programs. It includes Oregon, Massachusetts, Illinois, Maryland, and Connecticut. Similarly, New Jersey and Washington State have launched small plan marketplaces to help people start saving more for retirement. It is also a known fact that around half of the states in the US are considering measures that will close the retirement coverage gap. Unfortunately, none of these programs have become operational till date. Only Oregon has made some progress as it has pledged to open the program for enrollment by July this year.
Opinion of an Expert
Cathie Eitelberg, who currently serves as the Senior Vice President and the Director of Public Sector Consulting at Segal, has expressed her opinion on the results of the study that mentions increased retirement benefits savings lead to lower Medicaid spending. She stated that the study clearly shows that the states could realize meaningful savings on the Medicaid spending when a good retirement savings plan is available to all the private sector workers.
She also added that a majority of jurisdictions still need to consider this option. It’s time that they should at least start evaluating the feasibility of such a program from a cost/benefit perspective.
We also agree that if it has been proved that increased retirement benefits savings lead to lower Medicaid spending, all the state governments need to start considering the launch of a state-run retirement benefits savings plan soon.
Americans are Finally Saving More towards Retirement Benefits/by Sonny Dothard
A study has recently revealed that the retirement benefits savings of the Americans are actually getting better at the present. The study results also show that people are saving more than they did 5 years ago. Experts say that more savings are a good sign because it implies that Americans are earning more. Generation X people and Millennials are saving more than the baby boomers and silent generation.
Survey Results regarding Retirement Benefits Savings
The survey was conducted by Bankrate.com some time back but these results were revealed recently. The survey states that 21 percent of Americans have confessed to saving more towards the retirement benefits. They say that their savings were high last year. The level of the savings is highest in the last 5 years. About 17 percent Americans said that they are saving less money towards retirement than they were doing the past year.
The Previous Results
This kind of survey was first conducted five years back. At that time, the people saving more towards retirement benefits were outnumbered by people saving less by about 2 to 1 ratio. At that time, just 15 percent of Americans were saving more than the previous year. In 2011, 6 percent people said that they are not saving for retirement at all. Unfortunately, this number has not lowered by much in the last five years as 5 percent Americans are still not saving any money for retirement.
The Experts’ Opinion
The Chief Financial Analyst at Bankrate.com, Greg McBride has recently stated that the survey result show that more working Americans are saving towards retirement and the number of Americans not saving is less indicates something vital. It indicates that the economy is improving and people are getting good jobs and earning more. The more they earn, the more they save so the savings have gone up too.
This revelation made by McBride is true as the economy is consistently adding jobs month by month. Even the wage growth has now reached the highest level since the Great Recession. These factors have also boosted the consumer confidence.
McBride also pointed out that more Americans are now giving a priority to their retirement savings as compared to the past.
Who’s best at Retirement Savings?
The Bankrate survey found that the Millennials and the Generation X people were boosting their retirement benefits savings more than the people belonging to the silent generation and the younger baby boomers.
Baby Boomers and Millennials Equally Use Technology for Retirement Benefits Savings/by Admin(2)
The use of apps and tools to manage retirement benefits savings is almost equal among Millennials and baby boomers. This was revealed in a recent survey. It also highlighted that the Millennials were far ahead of baby boomers when it comes to using technology to manage health & well-being and their finances. Millennials were also more focused on tracking their heath, diet and sleep via apps as compared to the baby boomers.
The Survey on Using Apps for Retirement Benefits Savings
The survey was conducted by leading global advisory, brokerage, and solutions company, Willis Towers Watson. It had about 5100 respondents who were U.S. employees. It found out that about two-thirds of Millennials and 66 percent of baby boomers agreed that the mobile apps and tools are vital to keeping track of the retirement benefits savings. About 6 in 10 Millennials (59 percent) also confessed that they use such tools to calculate when they will be able to retire and how much income they can expect after retirement. Around 54 percent baby boomers also feel this way.
Management of Personal Finances
Millennials prefer to manage their personal finances via mobile apps too. About 71 percent accepted it. They use it to pay bills and monitor bank accounts. About 44 percent of baby boomers manage personal finances via mobile apps. Over 57 percent Millennials also confessed that they use price comparison websites to shop for best deals and consider it to be vital as compared to just 42 percent of baby boomers. About 41 percent Millennials also use budgeting tools to monitor their household spending as compared to 18 percent baby boomers. Around 25 percent of Millennials give importance to finance advice websites while just 14 percent baby boomers do it.
Health and Well Being
The survey highlighted that about 33 percent Millennials make use of wearable devices that monitor their health when compared to just 24 percent baby boomers. The survey also discovered that 35 percent of Millennials think that apps that track diet are vital as compared to just 16 percent of baby boomers. About 27 percent of Millennials value apps that monitor sleep habits as compared to just 14 percent of baby boomers.
After studying the patterns highlighted by the survey, it can be seen that only retirement benefits management is the vital thing that has made the baby boomers adopt more technology as they are not much into technology for managing their health, well-being or personal finances.
About 31% Americans have no Retirement Benefits Savings Again/by Sonny Dothard
A recent report has found out several interesting facts related to the financial situations of the Americans. The report says that a substantial number of Americans have no retirement benefits. Te report also reveals that educated Americans who have no loan liabilities are doing slightly better. The report also highlighted the financial concerns of Americans and got a gauge of their ability to pay up for emergencies.
No Retirement Benefits Savings
The Federal Reserve report on the economic well-being of U.S. households in 2015 was released on Wednesday. In the study, about 31% Americans admitted that they have no retirement benefits at all. These people were non-retired. This percentage was the same in the 2014 study as well.
Some of the respondents said that they were living comfortably or doing okay. A few even admitted that they were expecting an income growth in the future.
The Socio-Economic Difference
The study also exposed the fact that respondents who had lower levels of income, who were single parents, who were racial and ethnic minorities and the ones who had a student loan to pay off were facing some level of difficulty getting by financially. People who belong to the higher socio-economic circumstances had a greater degree of advancement.
The report also found out that the people who had a bachelor’s degree or higher were more financially comfortable while compared to the previous year. If one of these respondents stated that he was financially worse off, 2 such respondents said that they were doing better. People who have just a high school degree or those who even lack that had mixed opinion on the matter. About half said that they were better off and half said that they were worse.
When asked about accumulating $400 for an emergency expense, 47% said they would use cash or money from their savings or checking account. About 29% said that they would use a credit card and pay it in the next statement, 17% said that they would use the credit card and pay it in installments while 13% would need to borrow it.
The Financial Concern
The respondents who make less than $40,000 annually are more worried about rent, gas and other regular bills. On the other hand, the people who earned more than $40,000 annually were more concerned about retirement benefits and education expenses.
Majority of American Workers have less than $100,000 Retirement Benefits Savings/by Admin(2)
A new survey has revealed that majority of American workers have less than $100,000 retirement benefits savings. It includes baby boomers and Millennials as well. Another thing revealed by the report is that many of the American workers have already withdrawn money from the retirement savings or they intend to do so. The report also suggests two major solutions to this problem.
Survey Says Majority of American Workers have less than $100,000 Retirement Benefits Savings
The survey that says the majority of American workers have less than $100,000 retirement benefits savings was done by a financial services company PWC. It was entitled as the Employee Financial Wellness Survey. It stated that 51 percent of all the American workers have less than $100,000 retirement benefits savings. It also highlights that 77 percent of the people who have $100,000 retirement benefits savings are Millennials and 50 percent of them are baby boomers.
The survey stating the majority of American workers have less than $100,000 retirement benefits savings also uncovered the fact that about 25 percent of baby boomers have already taken money out of the retirement savings to meet the non-retirement expenses. About 36 percent of the respondents think that they would need to take out money from the retirement savings in the future.
One thing that the baby boomers do to get over the fact that majority of American workers have less than $100,000 retirement benefits savings is to work longer. In reality, about 52 percent of the baby boomers who are cash-strapped have accepted that they plan to work longer, says the PWC survey.
Another solution is to try for debt reduction. About 23 percent of the baby boomers who are planning to delay their retirement have mentioned that debt is a main reason for the delay. About 46 percent of baby boomers have also accepted that they constantly carry a balance on the credit cards they own. Around one-third of those even have faced trouble in making the minimum payments. The baby boomers must reduce the number of debts by not being a victim of the debt trap in which debt takes the power of compounding and turns it against a person to create a situation in which the money owed by a person keeps on growing until that person takes intentional steps to pay it back.
These solutions seem apt for resolving the situation in which majority of American workers have less than $100,000 retirement benefits savings.
Financial Planning Advice to Boost Retirement Benefits in 2017/by Sonny Dothard
A retirement planning organization has recently shared some useful financial planning advice to boost retirement benefits in 2017. This advice would help people to make a New Year resolution to increase their retirement savings this financial year. The advice is divided into various parts to ensure better grasp and understanding.
What is the Financial Planning Advice to Boost Retirement Benefits in 2017?
The first bit financial planning advice to boost retirement benefits in 2017 shared by Pentegra, a top provider of fiduciary outsourcing solutions and retirement plans is that everyone should start saving for retirement as early as possible. A recent study from Money rates says that people who start saving towards retirement in their 20s are 66 percent more likely to retire before they reach 60 years of age as compared to those who start savings after reaching their 30s.
Enroll in an Employer Sponsored Plan
The second bit of financial planning advice to boost retirement benefits in 2017 is to always take the advantage of employer sponsored plans like a 401(k) as they are vital. If one is not sure about the amount of money that needs to be contributed towards the 401(k) for better results, one should take the assistance of a skilled financial advisor.
Create a Budget
Another useful advice is that people should analyze the fixed and variable expenses of the current time to create a realistic budget. They should also evaluate the finances to determine the debt to income ratio and start paying off the debt with highest interest rate first. Then the future spending should be anticipated to ensure one has enough income to cover all the expenses. Being prepared for the unknown is also highly recommended.
Remember the Investment Risks
Though no one likes to opt for high risk investments but it is a fact that all the investments carry some risks. One should keep the inflation risk in mind as well. People should create an appropriate asset mix as per their age, time horizon to retirement, situation and never put all the eggs in a single basket.
Include the Partner
The most vital financial planning advice to boost retirement benefits in 2017 is to ensure that one should include his or her partner in the financial planning for retirement so that there is no excess dependency on one person’s retirement income. Joint savings are a better route.
100 CEO’s Have More Retirement Benefits than 41 Percent of America/by Sonny Dothard
A new study has revealed 100 CEO’s have more retirement benefits than 41 percent of America. This harsh truth reiterates the fact the rich are becoming richer while the poor are becoming poor over time. Some Americans have got no retirement savings at all while some can expect about a hundred bucks every month. In contrast, the CEO’s can have a check of $250,000 per month until they live.
Study Proves 100 CEO’s Have Got More Retirement Benefits than 41 Percent of America
The study that says 100 CEO’s have more retirement benefits than 41 percent of America was conducted by the Institute for Policy Studies. It spells that a disaster for Americans trying to save enough to retire is taking place right now.
The title of the study was A Tale of Two Retirements and it found that in the year 2015, just 100 CEO’s had retirement funds that were worth 4.7 billion. This number is equivalent to the entire retirement benefits savings of the 41 percent of American families that are least wealthy. It is also equal to the retirement benefits savings of about 116 million people.
A Magic Number
The magic number mentioned in the study that says 100 CEO’s have got more retirement benefits than 41 percent of America was 4.7 billion. It is also equal to the total retirement benefits savings of bottom 44 percent of the working class families that are white. It is also equal to the savings of bottom 59 percent of the African-American families and bottom 75 percent of the working class Latino families.
It is also a fact that the top 100 CEO’s can draw a check of $250,000 per month until their death while an average American who has a 401(k) plan can get only $101 post-retirement as a monthly income. About 37 percent of the Americans have nil saved for retirement. About 66 percent of Latino families and 51 percent of African-American families have also got nothing stashed for retirement.
The study that highlights that 100 CEO’s have got more retirement benefits than 41 percent of America also mentioned that Millennials who are younger than the age of 40 have saved 7 percent less for retirement as compared to the similarly aged baby boomers. The median income for women who are more than 65 is 45 percent lower than the men in the same age group.
Single People Are Not Prepared for Retirement/by Sonny Dothard
It has been proven again and again that Americans are not prepared for retirement. But a new report has highlighted that single people are not prepared for retirement as they barely have any savings. Some of them have no savings while the others have got only a small amount. Women particularly need to save more for retirement as compared to men. The experts also shared an opinion on how much you must save for retirement.
What Proves that Single People Are Not Prepared For Retirement?
A report crafted by Economic Policy Institute (EPI) has proven that single people are not prepared for retirement. The report says that a lot of people who are over 56 to 61 years of age and are single have no retirement savings at all.
The report further states that about 43 percent of single men and about 42 percent of single women have some retirement savings. This number is far below the people who are married and have retirement savings. As per the report, 65 percent of married couples have retirement account savings.
The EPI report also highlights the fact that single people who have some retirement savings have not stashed away a particularly good amount. The average of savings done by single people comes down to just $30,000. In contrast, the married couples have more than double saved towards retirement. Their average savings for retirement comes around $78,000.
Women are More Vulnerable
The report also points out to the fact that most people need to set aside a better amount towards retirement. It states that women are particularly more vulnerable as compared to men because they tend to live longer and they have a great chance to outlive their savings.
As per the experts working for a retirement plan providing company, Fidelity Investments, single people are not prepared for retirement or the Americans, in general, must have ten times their final salary in savings if they wish to be financially ready to retire at the age of 67. Doing so would ensure that a person has a comfortable retirement and does not outlive the savings stashed for retirement. Outliving the money one has saved for retirement can be the worst nightmare of most people and it would be wise to avoid it by ensuring that a person follows expert advice with regard to retirement savings.
Americans’ Retirement Savings May Not Improve in 2017/by Sonny Dothard
A new survey has found out that Americans’ retirement savings may not improve in 2017 as most of the savers don’t intend to increase the contribution amount next year. Many people failed to save enough for retirement in 2016 due to reasons like increasing health care expenses. Some Americans also admit that they haven’t even started to save towards retirement benefits.
Survey Says Americans’ Retirement Savings May Not Improve in 2017
The survey that says Americans’ retirement savings may not improve in 2017 was conducted by NerdWallet, a website dedicated to personal finance. It found that only 29 percent of the respondents were confident of the fact that they have made enough savings this year. About one in three respondents admitted that they haven’t been saving for retirement at all.
The Reasons for Lack of Retirement Benefits Savings
The main reason behind why Americans haven’t got much retirement benefits savings is that other financial obligations are considered to be more important. The financial obligations include health care bills and expenses that were highlighted by 35 percent respondents to lack of emergency savings. It was also highlighted by 35 percent of respondents. Lack of retirement savings is a concern for 28 percent respondents while credit card debt was highlighted by 27 percent respondents. The last one is a serious concern because a NerdWallet’s analysis has unearthed the fact that credit card debt now averages at $16,060. It has increased by 11% in the last decade only.
Kyle Ramsay who serves as CFA, Head of Investing and Retirement for NerdWallet has stated that every dollar that Americans have to put away for health care, debt and other vital expenses is a dollar that is not saved for retirement. He added that the struggle to keep up with the competing financial priorities is a part of the reason why Americans of all age groups are falling behind in the retirement savings goals.
Why Americans’ retirement savings may not improve in 2017?
The survey results clarify the reason on why Americans’ retirement savings may not improve in 2017. It mentions that about 70 percent of people who are saving for retirement, only 32 percent are planning to increase the contributions to the workplace retirement accounts. The survey also highlighted that 43 percent of Millennials are not saving at all for retirement and it applies to 30 percent of respondents in all age groups.
Retirement is the top financial planning goal of Americans: Survey/by Sonny Dothard
A new survey has revealed that retirement is the top financial planning goal of Americans. Many Americans also think that investing today is more complicated. Many pre-retirees say that they are not doing enough for retirement and some of them don’t think that they will be able to retire. Some retirees also admit that the future generations would have a lot of problem regarding retirement planning.
Survey says retirement is the top financial planning goal of Americans
The survey that states that retirement is the top financial planning goal of Americans was done by Prudential Investments. It revealed that retirement is the top priority for Americans. But when it comes to being prepared to retire, most Americans give themselves a C.
Stuart Parker, who serves as the President of Prudential Investments stated that developing an understanding of the hurdles that keep people from a secure financial future is vital for helping people meet their goals. He added that the research reinforces the fact that people need to seek financial advice and the investment community should give advisers the best solutions and tools that are available.
Views on Investment
According to the survey, about 66 percent of Americans admitted that investment decisions are complex as well as confusing. They also said that it’s more complicated for them when compared to their parents. About 64 percent of the respondents said that they are overwhelmed by the available choices and 42 percent had no idea about how their investments are allocated. Around 43 percent said that they barely have knowledge about the products they have opted to invest in.
About 74 percent of the pre-retirees think that they need to do more to be prepared for retirement and about 40 percent of them do not have any idea on what they should do. About 24 percent state that they would need at least $1 million to fund the retirement and about 54 percent of the pre-retirees have less than $150,000 in retirement savings.
About 20 percent of the pre-retirees also think that they won’t be able to retire at any time while 35 percent say that they won’t be able to save enough. About 75 percent of the retirees opine that the generations that follow them would have a more difficult time while saving for retirement. Seeing this level of uncertainty, it is not hard to agree that retirement is the top financial planning goal of Americans because it should be.
Career Breaks Responsible for Less Retirement Benefits Savings of Women/by Sonny Dothard
A new research has suggested that women who take career breaks have less money saved up towards retirement benefits savings. Experts think that women should take the career breaks earlier in the career to avoid having very less retirement income. Some experts also recommend that women who are planning to take a career break should save up extra during the beginning of their career so that the career break doesn’t ruin their retirement savings.
Women need more Retirement Benefits
The Financial Finesse’s annual Gender Gap in Financial Wellness report shows that though the financial wellness gap between men and women have come down to 8.9 percent in 2015, women still need to save more for retirement. It says that women should have better retirement benefits than men because they live longer, their health care costs are higher and they very likely have earning gaps in the career.
The Founder and CEO of Financial Finesse, Liz Davidson believes that women need to close up about 28 percent gap in additional retirement benefits savings because they live longer. This gap is identified for a typical 25 year old. The gap will increase when a career break is added to the mix.
The researchers of the report state that women are still more likely to become stay-at-home mothers or caregivers for a sick family member. So they need to save more money if they wish to sustain the same level of spending when they reach the age of 65. The compound interest plays a key role here.
Research has also stated that women who take breaks in the early stages of their career could have to deal with a retirement benefits savings shortfall of about $1.3 million dollars. To avoid that, an average 25 year old woman should save about 25 percent of her income. Another benefit of saving more money earlier is that women can choose to save less when they are at a later stage of their careers.
The Research has also proved that women who are younger than 30 are lagging behind in the retirement benefits savings. Only 16 percent of such women are at a stage where they can meet their retirement saving goals. About one-third of such women are living beyond their means and nearly one-fifth of them are not saving enough money to get the full amount of the matching contributions of the employers.
Survey says Student Loans are a Financial Planning Threat as they Impact Retirement Savings/by Admin(2)
A new survey has highlighted that rising amounts of student loans and the time taken to get rid of them is taking a toll on the retirement savings of Americans. People with a student loan to pay often need to save less towards retirement which is a financial planning threat. It was recommended that the HR of companies should help the employees in this situation by hosting workshops that assist in better management of finances.
The Survey on Student Loans as a Threat to Good Financial Planning and Retirement Savings
The survey that states that student loans are impacting the financial planning abilities and the retirement savings of Americans was conducted by a renowned benefit consulting firm known as Aon Hewitt. It found out that the employees who have student loans that need years to be paid off can make people feel the strain even in their retirement years.
This survey was conducted on over 2,000 U.S. workers. It found that about 28 percent of the respondents had an outstanding student loan at the moment. It’s not the workers of the younger generations that are impacted. About 44 percent of the Millennials, 26 percent of respondents from the Generation X and about 13 percent of respondents from the baby boomers’ age group have a student loan debt. It is being estimated that about half must pay $3000 per year as a payback.
The Low Savings
It was also made clear by the survey that about 71 percent of respondents who had a student loan to deal with saved less money on a retirement plan provided by the employer. In contrast, respondents who had no student debts, about 77 percent saved more towards the employer-provided retirement plans.
About 51 percent of the Americans who had a student loan just contributed 5 percent of the total pay to the plan. Aon Hewitt says that saving less than 6 percent of pay towards the retirement savings can hinder retirement readiness as most workers miss out on the full matching contributions by the company.
Aon Hewitt also said that the HR of a company can help people in better financial planning by offering workshops. People should also be given advice on participating in retirement savings plans. Some employers already offer benefits that are designed in a way that helps employees to pay the student loans quickly.
Americans Don’t Have the Details of Their Own Retirement Benefits/by Sonny Dothard
In a survey, more than 50 percent of the Americans have confessed that they are sleeping soundly because they think that they have enough retirement benefits savings. But they are not amply prepared because some of them don’t know how much they have saved and some haven’t calculated the money they will need. Some haven’t saved enough and some have not saved at all. Experts suggest some solutions for the situation.
Feeling Good about Retirement Benefits Savings
The survey results were revealed by a financial services company TIAA. In the results, it was stated that 58 percent of American adults can sleep easily at night because they are feeling pretty good about their retirement benefits. They think that they have enough benefits to support themselves with a regular stream of income during their golden years.
The survey also revealed that many Americans have no idea on details regarding their retirement benefits savings. About 46 percent stated that they do not have any idea on the amount of money they have saved for retirement. The survey also exposed the fact that 65 percent of people have got no idea about how much money they will have to live on. Just 35 percent have calculated the amount of money they will have in the golden years each month.
The results of the survey also stated that 41 percent of the respondents were saving less than 10 percent of their income for retirement. This level is far below the one recommended by experts. 28 percent of respondents stated that that have no retirement savings at all.
A financial expert, Neil Krishnaswamy has offered some simple ideas that can help people to get an idea on the details of their retirement benefits planning and enhance it too. Krishnaswamy is currently serving as a financial planner with a Frisco, Texas-based company, Exencial Wealth Advisors and he was not involved in the survey. He has mentioned just four simple steps that can help people.
The first solution suggested by the expert is that people must always keep a track of the exact amount of their retirement benefits savings. The second bit of advice is to calculate the retirement income. The third step is to understand the savings rate and the last step is to save more money. It’s not necessary to increase the savings drastically like from 8 percent to 13 percent in one go. One can go slow and increase the savings by one percent at a time.
Over Half of Washingtonians Anxious About Retirement Benefits/by Sonny Dothard
A new survey has highlighted the fact that more than half of the people living in Washington are anxious about their retirement benefits and financial security. To help the situation, a campaign has been organized which will help people to learn the better methods of saving. The campaign would also encourage the people of Washington to increase the amounts of their retirement benefits savings.
Financial Security and Retirement Benefits are a Major Worry
The survey was conducted by AARP. It highlighted that about 55 percent of people in Washington have confessed to being worried about their retirement benefits and their financial security post retirement. There are many groups that got concerned about the survey results and they have decided to initiate a campaign to help people save more and be less anxious.
The campaign that is supposed to help people of Washington to save more is organized by BECU, AARP and the FINRA Investor Education Foundation. This campaign is called the MoneySmarts campaign. It was launched at the Museum of Flight in Seattle. It will go to the road across Washington too.
People Haven’t Recovered from Recession
The financial editor for NBC’s Today show and the AARP financial ambassador Jean Chatzky recently stated that people are yet to recover from the recent economic recession. She said that the markets have already done so. She stated that the S&P and Dow are up 180 that is more than 200 percent in some cases. They hit the bottom in the year 2009. But people have been sitting on the sidelines and hence they have not capitalized on that.
Chatzky further stated that about two-thirds of people still need to recover from the great recession. It is pertinent to add that she was the keynote speaker at the kickoff of the MoneySmarts campaign.
The survey also highlighted that almost half of the adults living in Washington have saved less than $25000 for their retirement benefits savings. It also discovered that two-thirds of Washington people have even not calculated how much money they need for retirement. Chatzky said that Fidelity Investments recommends that people should save 10 times their annual income if they plan to retire at 67. She suggested methods like putting off taking social security, starting saving earlier and retiring a little later are some simple ways to achieve the number that may seem gigantic but isn’t so.
California Governor Approves State-Run Retirement Benefits Plan for Private Sector Workers/by Admin(2)
The governor of California has recently signed the program known as Secure Choice which allows numerous private sector workers in the state to participate in a state-run retirement benefits program. This program is created to ensure that people of the state don’t depend only on social security benefits during the post-retirement years.
The Approval on State-Run Retirement Benefits Plan
The legislation regarding state-run retirement benefits plan was signed by Governor Jerry Brown on Thursday, September 29, 2016. This legislation allowed about 7 million people to be automatically enrolled in a retirement savings account. This legislation was initiated with the aim of ensuring the growing fears of being financially unprepared to retire could be addressed properly.
People who haven’t heard of this program might want to know that this program automatically enrolls people who do not have access to an employer-sponsored plan. Most of these people work in lower-wage positions. The employers are now bound to enroll such workers in the new program and deduct money from their paycheck. The workers are allowed to opt out of the program or decide the rate of savings. People can also carry the account from job to job.
Many players of the financial services industry lobbied Brown for vetoing the legislation by saying that it is built on shaky financial assumptions. They also said that this legislation may create overwhelming political pressure on the taxpayers to bail it out in case it hits hard times.
In the year 2012, the lawmakers of California voted to study the idea of creating a publicly run retirement plan to help the private-sector workers. About $1 million were spent on the research and refinement of the proposal as the sheer size of the state is too much. California is a home to 12 percent of the U.S. population. Only when the financial analysts and lawyers said that the program was most likely to be viable, the legislature decided to implement the plan. The decision to implement was taken earlier this year.
The state-run retirement benefits program is known as Secure Choice. It will be overseen by a board that will have the authority to make investment options related decisions. The board will also have the power to make decisions with regard to the default savings rate. It will also decide upon the benefit payouts in retirement.
The Bad News Regarding Retirement Benefits of Baby Boomers/by Matt Pierce
We recently reported how Baby Boomers are meeting the retirement challenges nicely. Unfortunately, all is not as good as it seems. There are some negative findings in the 17th Annual Transamerica Retirement Survey of Workers. These findings state that baby boomers might not be able to work for as long as they wish. It also highlights that baby boomers have low savings, menial backup plans and minimal knowledge of social security.
Why Baby Boomers Won’t Increase their Retirement Benefits by Working Longer?
Many baby boomers expected to increase their retirement benefits savings by working for a few years after retirement but this may not be possible. The reasons may vary from declining health to lack of job opportunities, says the 2016 Retirement Confidence Survey.
Employers are not Aging Friendly
About 47 percent baby boomers accepted in the TCRS survey that their employers may allow them to work past retirement as they are aging-friendly. The rest of them think that they might not be able to keep the job post retirement. About 29 percent admitted that their employers have made flexible transition arrangements.
About 42 percent baby boomers said that their retirement savings are not enough or too low. The median amount they think they need is about $500,000. But when the 4 percent rule is used as a reality check, the annual income would be just $20,000 per year which is not enough to cover the expenses even when the social security income is added to it.
Lack of Financial Counseling and SS Knowledge
It is believed that financial counseling might help in increasing the savings but only 12 percent baby boomers admit that their employers provide any finance related counseling. About 19 percent of baby boomers accepted that they know a great deal about social security and 34 percent expected social security to be the primary source of income post retirement.
Only 25 percent of baby boomers have a backup plan in place if they are unable to work until they plan. About 26 percent said that they have only less than $5,000 to take care of a financial setback such as a medical emergency, unemployment, etc. Lack of a backup plan means that more than 28 percent have taken a loan, opted for early distribution or made a hardship withdrawal from IRA or their retirement benefits savings.
Retirement Benefits Savings Hit by Lack of Communication Among Couples/by Admin(2)
A new survey has found that there is a massive lack of communication among American couples when it comes to retirement benefits savings. Many couples have no retirement savings at all. Those who do don’t talk to their partner about how much they have saved up and where. 401(k) is still the preferred way of saving for retirement. Many of the Americans don’t even share details of brokerage accounts decisions with their partners.
No Retirement Benefits Savings at all
The survey was conducted online by Harris Poll on behalf of NerdWallet. It included over 1800 Americans who were married or living with a partner. The survey found out that one in three Americans has got no retirement benefits savings. Neither they nor their partner have any money stashed for retirement.
No Idea of the Amount
About 36 percent of the Americans say that their partner is saving up for retirement. But when inquired on the amount, about one in five said that they have no idea on the amount their partner is saving for retirement. About 21 percent admitted that they don’t even have a general sense of the total value of the retirement account of their partner.
The survey found out that the preferred method of retirement benefits savings is still a workplace retirement plan like the 401(k). About 39% of Americans who are in a relationship trust it. The second most preferred savings method was a bank savings account as 31% respondents used it for saving towards retirement.
It was also highlighted that most respondents used bank savings account for stashing their long-term retirement funds as compared to IRA even despite the availability of investments with higher potential returns and absence of tax breaks. About 31 percent preferred bank account and 25 percent preferred IRA.
No Happy Ever After
Lack of savings, failure to share the financial specifics with their partners and overly relying on conservative investments are a few threats to the American couple’s dreams of a happy ever after retirement, found the survey.
About 14 percent of the respondents of the survey who have been saving towards retirement via retirement benefits accounts also accepted that they have a brokerage account. Out of these nearly 43 percent accepted that they do not consult on trading decisions on their brokerage account with their partner at all.
Federal Employees Allowed to Donate Their Leaves to Louisiana Flood Victims/by Sonny Dothard
The flood victims of Louisiana who work as federal employees have finally got some good news. President Obama has directed the OPM to begin a leave transfer program so that federal workers who have unused leaves can donate them to those employees who are hit hard by the floods and can’t manage to resume work for some time especially in cases of death of a loved one or severe injury.
The Directive regarding Federal Employees’ Leaves
The historic flooding in Louisiana has shocked the entire country and President Obama seems to be finding different ways to help those who are the worst impacted. He released a presidential memorandum just a few days back. In this memorandum, he has directed the Office of Personnel Management to create a new emergency leave transfer program.
The Emergency Leave Transfer Program
As per the newly established emergency leave transfer program, the federal workers who are working in the executive and judicial branches would get the opportunity to donate their unused annual leaves. They would be eligible to donating the leaves only to employees working in the same agencies who are a victim of the ongoing historic flooding in Louisiana. The victim of the floods would get the leaves donated to them only after their agencies judge the situation and accept that the floods have hit them hard.
The statement made in Obama’s presidential memorandum says that the federal government has mobilized several resources to offer support to Louisiana so that the state can deal with the situation and recover from the disaster. It also said that while federal agencies and departments rally their capabilities to lend a hand in these efforts, several of the federal employees are impacted by the floods and they are faced with overwhelming personal losses too.
The damage done by the floods is quite extraordinary. The White House has stated that over 70, 000 people have already registered for FEMA assistance. It is pertinent to add here that the flooding that happened last month also destroyed or damaged over 40, 000 homes.
Apart from helping the federal employees affected by the floods, Obama has also initiated steps for helping the common people of the area. He has agreed to boost the share of the costs for public assistance projects by the federal government from 75% to 90%.