Welcome to the February 2014 issue of $avings Account$, a monthly publication of the American Savings Education Council (ASEC)! On the first Tuesday of each month we plan to share with you information about the latest research and updates on new (and old but relevant) tools, as well as keep you up to date on various events, conferences, and symposiums relevant to ASEC's Mission: to make saving and retirement planning a priority for all Americans.
If you've got something to share - an event announcement, a product update, new research - please email me at email@example.com, and we'll be happy to pass it along in our next issue!
The Spring 2014 ASEC Partners' Meeting
will be held on Wednesday, April 9, 2014.
From 8:30 a.m. - 12:15 p.m.
At The Barbara Jordan Conference Center - Kaiser Family Foundation
1330 G Street NW (between 13th and 14th Streets) | Washington, DC 20005
Please Mark Your Calendars!
Why Wait? Register Today and Save Your Seat at:
Please feel free to share this invitation with a friend or colleague!
Last issue we asked readers if they preferred saving money to spending it, and a third said that they did, indeed, prefer saving. However, the rest of the respondents said that they preferred spending...though only after saving!
However, looking back at the recent holiday period, half of the respondents said they had spent more than they had planned, while a third spent what they had planned, and the rest - less than planned.
Thanks to everyone who participated in our survey!
This week's survey question: "What is the most important thing you ever learned about saving?" Share your insights and experience - weigh in on our survey - your response is anonymous. Respond to this week's survey HERE.
Action Plans - Practical Tips About Saving
Think you can't afford to save? Low- and moderate-income retirement savers might be eligible for a special tax credit for saving! Actual experience shows that in 2011, saver's credits were claimed on nearly 6.4 million returns and averaged $215 for joint filers, $166 for heads of household, and $128 for single filers. http://www.choosetosave.org/tips/SA13CREDITCHECK.pdf
When you're a bit strapped for cash, it may be tempting to think about dipping into your retirement account. Taxes and penalties generally discourage people from taking an outright withdrawal, but a growing number of retirement programs offer temporary access to those funds through what is called a participant loan. However, before you do, you might want to consider the potential costs. http://www.choosetosave.org/tips/SA6BORROWFROMYOURSELF.pdf
America Saves Week is February 24, 2014 - March 1, 2014.
America Saves Week is an annual opportunity for organizations to promote good savings behavior and a chance for individuals to assess their own saving status. Sign up by clicking here.
News You Can Use
For individuals in the EBRI/ICI database during January, the average account balance slipped 0.8 percent for participants ages 25-34 with one to four years of tenure (and consistent participation since 2011), while the average account balance fell 1.2 percent for participants ages 55-64 with 20-29 years of tenure. On a monthly basis, EBRI produces estimates of the cumulative changes in 401(k) account balances - both as a result of contributions and investment returns - for several combinations of participant age and tenure. http://www.ebri.org/pdf/Jan%202014%20monthly%20deltas%20with%202011%20baseline.pdf
In the coming year, 25 percent of employers say they are very likely to provide some assistance to employees to help with budgeting and ensure that employees' paychecks cover expected expenditures while still leaving some money for savings, according to a new report from Aon Hewitt. Fewer than half provide online third-party investment advisory services to individuals, about a third (35 percent) facilitate the interaction of participants with third-party advisors through the phone, and less than a quarter (23 percent) allow for face-to-face meetings with professional advisors. http://www.aon.com/attachments/human-capital-consulting/2014_Hot-Topics-Retirement_Highlights_vFinal.pdf
About three-quarters of all taxpayers (145.6 million) were eligible to contribute to an individual retirement account (IRA) for 2010. According to the IRS, of the 3.5 million taxpayers who made IRA contributions, 62 percent were age 50 or older. For 2010, the end-of-year fair market value of IRAs reported by approximately 54.4 million taxpayers was roughly $5 trillion. http://www.irs.gov/uac/Newsroom/Fall-2013-Statistics-of-Income-Bulletin-Now-Available
The Pension Benefit Guaranty Corporation (PBGC) notes that across the country, there are more than 31,000 people who haven't claimed pension benefits they are owed. The nation's private pension insurer notes that those unclaimed pensions are now north of $280 million, with individual benefits ranging from 12 cents to almost $1 million. As for the states with the most missing pension participants and money to be claimed. http://www.pbgc.gov/about/who-we-are/retirement-matters/post/2014/01/08/Our-New-Years-Resolution-Connect-Retirees-with-More-Than-$280-Million-in-Unclaimed-Pensions.aspx
While most 401(k) plan participants are able to take a loan from their 401(k) account, relatively few do - and this has been a consistent pattern that has held for nearly two decades. According to an analysis released by the Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI), 87 percent of participants in the 2012 EBRI/ICI 401(k) database were in plans offering loans at year-end 2012, and only one in five (21 percent) of those eligible for the loans had one outstanding. http://www.ebri.org/pdf/FF.264.K-loans.16Jan142.pdf
A national study from CareerBuilder notes that many long-term unemployed said they are relying on their significant other, personal savings or family members to help out with expenses: 39 percent from their spouse/partner, 31 percent from savings, and 12 percent from side jobs. While three in 10 long-term unemployed said they haven't had any interviews since they lost their jobs (30 percent), the same number (30 percent) said they have had five or more interviews; 14 percent have had 10 or more. One in 10 has turned down a job while unemployed. http://www.careerbuilder.com/share/aboutus/pressreleasesdetail.aspx?sd=1%2f23%2f2014&siteid=cbpr&sc_cmp1=cb_pr800_&id=pr800&ed=12%2f31%2f2014
Slightly more than half (53 percent) of Hispanic Americans say that saving for retirement is an important financial priority compared with 62 percent of the general population, according to the Hispanic American Financial Experience, a new study released by Prudential Financial. According to the study, more than twice as many Hispanic Americans as the general population (15 percent compared with 6 percent) say that supporting elderly family members is a financial priority, and 31 percent of Hispanics place importance on funding education for children or grandchildren, compared with just 18 percent of the general population. When it comes to considering financial products or services, Hispanic Americans cite trust of providers as the major barrier. http://news.prudential.com/article_display.cfm?article_id=6759
While Millennials may be doing well with their day-to-day money management compared with Generation X, 28 percent do not have a handle on their cash flow, and over half (52 percent) do not have an emergency fund, according to Financial Finesse. Regarding debt management, 42 percent regularly carry a balance on their credit cards, and 31 percent are unaware of the interest rates they are being charged. Only 29 percent of Millennials report having run a retirement projection, the lowest among all the generations studied. They are also the least likely to contribute to a retirement plan. http://www.financialfinesse.com/wp-content/uploads/2014/01/Financial_Finesse_Generational_Research_2013_1.13.14.pdf
It's All Academic
Does greater inequality lead to more household borrowing? One suggested hypothesis for the dramatic rise in household borrowing that preceded the financial crisis is that low-income households increased their demand for credit to finance higher consumption expenditures in order to "keep up" with higher-income households. Using household level data on debt accumulation during 2001-2012, this paper shows that low-income households in high-inequality regions accumulated less debt relative to income than their counterparts in lower-inequality regions, which negates the hypothesis. http://papers.nber.org/papers/W19850?utm_campaign=ntw&utm_medium=email&utm_source=ntw
As part of its mission, the Choose to Save® program develops user-friendly multimedia materials to help individuals plan and save for their financial future, including free public service announcements (PSAs) using humor, powerful images, and compelling information to encourage viewers (and listeners) to take charge of their financial future. Each month we'll feature one of the PSA videos from www.choosetosave.org.
Feel free to use these in YOUR education campaigns!
Diversification. It's a pretty big word, but easy to understand, especially when it comes to structuring your investment portfolio. http://www.choosetosave.org/psaplayer/spotsets/eggsinonebasket30.html
ASEC Partner Updates
AARP recently launched its newest retirement decision tool, the Health Care Costs Calculator. This new tool helps individuals estimate how much they will need for out-of-pocket health care expenses in retirement. It also suggests ways to manage health care costs and provides links to important financial and health resources. Visit www.aarp.org/healthcostscalc.
If you are considering rolling over money from an employer plan into an IRA - or if you have been in contact with a financial professional to do so - follow these tips from FINRA to decide whether an IRA rollover is right for you. http://www.finra.org/Investors/ProtectYourself/InvestorAlerts/RetirementAccounts/P436001
Please consider becoming a partner of ASEC. Find out MORE at http://www.choosetosave.org/asec/index.cfm?fa=join
If you'd like to submit materials for posting on www.choosetosave.org, see http://www.choosetosave.org/resources/index.cfm?fa=materials
Valentine's Day is right around the corner (named after a priest named Valentine, who was later named a saint). February 14 is the date on which Valentine came to an untimely end - but do you know what his crime was? And how he met that end? http://www.history.com/this-day-in-history/st-valentine-beheaded