Welcome to the April 2014 issue of $avings Account$, a monthly publication of the American Savings Education Council (ASEC)!
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!
Last issue we asked readers, "Do you expect to get an income tax refund this year - and if so, what will you do with it?" Turns out most of the survey respondents (83 percent) DO expect to get a refund, and the majority (66 percent) plan to save it, while the rest have it targeted to reduce debt.
Thanks to everyone who participated in our survey!
This month's question: What do you think is the biggest impediment to making good financial decisions?
Respond to this week's survey at https://www.surveymonkey.com/s/2014springASECtopics
Share your insights and experience - weigh in on our survey - your response is anonymous.
Action Plans - Practical Tips About Saving
Employer-provided retirement plans, such as 401(k)s, 403(b)s, and 457(b)s, as well as individual retirement accounts (IRAs), are subject to Internal Revenue Service (IRS) rules that require withdrawals be made from those accounts once you reach a specific age. If you don't follow those rules, the penalties on your savings can be significant. http://www.choosetosave.org/tips/SA14RMDREQUIREMENTS.pdf
Saving for college - particularly if the enrollment date is years away - can be complicated, since you don't really know how much it's going to cost. Cost can be driven by a number of factors: whether the institution is public or private, which state it is in (and whether you are a resident of that state), and each school has different policies (and costs) about things like meal plans, student vehicles, and even how the dorms are furnished. Is a 529 plan a good place to start? http://www.choosetosave.org/tips/SA5COLLEGESAVINGS.pdf
National Retirement Planning Week is April 7-11, 2014
Promotes activities that will demonstrate that it is possible to "Retire On Your Terms" if comprehensive retirement plans are properly developed and managed, sponsored by the Insured Retirement Institute. www.retireonyourownterms.org
Money Smart Week is April 5-12, 2014
A series of free classes and activities designed to help consumers better manage their personal finances, sponsored by the Chicago Federal Reserve Bank. http://www.moneysmartweek.org/
Teach a Child to Save Day is April 11, 2014
A national campaign that raises awareness about the important role that banks and bankers play in helping young people develop lifelong savings habits, sponsored by the American Bankers Association Education Foundation. http://www.aba.com/Engagement/pages/teachchildrentosave.aspx
National Credit Education Week is April 20-26, 2014
Seeks to educate consumers about budgeting, using credit wisely and protecting their access to credit in order to ensure success in their personal financial goals, sponsored by ACA International. www.acainternational.org
Check out other upcoming events for your financial education campaign(s) at http://www.ebri.org/pdf/sfyf.pdf
News You Can Use
For individuals in the EBRI/ICI database during March, the average account balance rose 2.0 percent for participants ages 25-34 with one to four years of tenure (and consistent participation since 2011), while the average account balance ended the month 0.7 percent higher 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/March%202014%20monthly%20deltas%20with%202011%20baseline.pdf
The FINRA Investor Education Foundation's new study, The Financial Capability of Young Adults - A Generational View, reveals that millennials display low levels of financial literacy, engage in problematic financial behaviors and express concerns about their debt. Low levels of financial literacy hamper most millennials, with only 24 percent of millennials able to answer four or five questions on a five-question financial literacy quiz correctly. And among young millennials - those 18 to 26 - only 18 percent were able to answer four or five questions correctly. http://www.finra.org/web/groups/sai/@sai/documents/sai_original_content/p457507.pdf
Almost two-thirds of workers (64 percent) in the 2014 Retirement Confidence Survey (RCS) report that they and/or their spouse have saved money for retirement. This level has slowly dropped since 2009, in which 75 percent reported having saved. However, nearly 8 in 10 of those working full time have saved for retirement. http://www.ebri.org/pdf/surveys/rcs/2014/RCS14.FS-6.Prep-Ret.Final.pdf
According to the Financial Tradeoffs Study by Ameriprise Financial, the top three expenses that respondents have consciously cut down on are eating out (64 percent say they have consciously spent less on this), entertainment (59 percent) and clothing/shoes (57 percent). Respondents say they're saving, on average, up to $185 per month by scaling back in these three areas. However, a portion of respondents have experienced even bigger savings while reducing spending on big-ticket items like housing or rent (24 percent), college education for their family (25 percent) and vacations (49 percent). These people say they've saved up to $475 on average per month. http://newsroom.ameriprise.com/images/20018/FINALFinancialTradeoffResearchReport.pdf
According to a recent survey by AARP, nearly 1 in 5 Americans who use the internet, or as many as 34.1 million people, engage in at least seven of the 15 behaviors, or experience life events, that may put them at increased risk of being victimized by online fraud. The key risk factors to becoming a victim of online fraud include: http://www.aarp.org/content/dam/aarp/research/surveys_statistics/econ/2014/Caught-In-The-Scammer%E2%80%99s-Net-Risk-Factors-That-May-Lead-to-Becoming-an-Internet-Fraud-Victim-AARP-Survey%20-of-American-Adults-Age-18-and-Older-AARP-res-econ.pdf
The Internal Revenue Service has reminded taxpayers who turned 70 and a half during 2013 that, in most cases, they must start receiving required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and workplace retirement plans by Tuesday, April 1, 2014. The April 1 deadline applies to owners of traditional IRAs but not Roth IRAs. Normally, it also applies to participants in various workplace retirement plans, including 401(k), 403(b) and 457 plans. http://www.irs.gov/pub/irs-news/IR-14-038.pdf
More Americans spent less time in the last year planning for an IRA investment for their retirement years than choosing a restaurant, flat screen TV or tablet, according to an annual survey by TIAA-CREF. The survey reveals that the number of Americans who would consider an IRA as part of their retirement strategy has fallen sharply since 2013. Fewer than half (47 percent) of those not contributing say they would consider an IRA, down from 57 percent in 2013. https://www.tiaa-cref.org/public/about/press/about_us/releases/articles/pressrelease495.html
Total U.S. retirement assets were $23.0 trillion as of December 31, 2013, up 5.0 percent from $21.9 trillion on September 30, 2013, and up 15.6 percent from year-end 2012, according to the Investment Company Institute (ICI). Americans held $5.9 trillion in all employer-based DC retirement plans on December 31, 2013, of which $4.2 trillion was held in 401(k) plans. Those figures are up from $5.6 trillion and $4.0 trillion, respectively, as of September 30, 2013. http://www.ici.org/research/stats/retirement/ret_13_q4
While U.S. workers are more satisfied with their financial situation now compared with five years ago, their retirement confidence still remains below levels prior to the financial crisis, according to a new survey by Towers Watson. The survey also found that workers are especially worried about the affordability of health care in retirement, and significant numbers have been forced to cut back on spending and plan to delay retirement. Participants in DB plans are 35 percent more likely to be satisfied with their finances than those with only a DC plan, and healthy workers are twice as likely to be content as those in poor health. http://www.towerswatson.com/en/Press/2014/03/more-us-workers-satisfied-with-finances-confident-about-retirement
Nine out of 10 investors (91 percent) say they want to see an increase in the amount that people can save in a tax deferred retirement account, and most (78 percent) do not support the idea of increasing tax penalties on investors who withdraw money from their accounts before retirement age, according to the Wells Fargo/Gallup Investor and Retirement Optimism Index. A majority of investors (57 percent) also believe the existing retirement vehicles, including the 401(k) and IRA, provide enough options to Americans versus 40 percent who think more choices are needed. However, this gap widens among those with access to a 401(k)-type plan. https://www.wellsfargo.com/press/2014/20140312_investor-optimism-q1
About a quarter (24 percent) of respondents in a new Financial Engines survey who have yet to claim their Social Security benefits - the majority of whom are working full time (62 percent) or part time (14 percent) - view the decision to retire (to stop working altogether) and the decision of when to claim Social Security as either the same decision or as decisions so closely related that it's hard for them to separate one from the other, though half (51 percent) see these as separate but related decisions. Asked what factors would influence their decision to delay claiming benefits, more than half (54 percent) of non-claimants say that having to work longer to afford the delay would have a great deal of influence. http://corp.financialengines.com/employer/FE_ClaimingSocialSecurity_March2014.pdf
It's All Academic
Adults who took a high school personal finance class don't do any better on a test of investment knowledge than those who didn't take such a class, a new study found. And while college classes on personal finance do seem to help improve adults' knowledge of investment topics, neither high school nor college classes spurred students to save more of their money, researchers found. Those who saved more than average tended to have personal financial experiences, such as owning stock, as well as a higher income. http://researchnews.osu.edu/archive/finclass.htm
A new research paper notes that elderly individuals exhibit wide disparities in their sources of income, and for those in the bottom half of the income distribution, Social Security is the most important source of support; program changes would directly affect their well-being. The author notes that the trend from private sector defined benefit to defined contribution pension plans has shifted a greater share of the responsibility for retirement security to individuals, and made that security more dependent on choices they make, while a "significant subset of the population is unlikely to be able to sustain their standard of living in retirement without higher pre-retirement saving." http://www.nber.org/papers/w19930
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!
Wouldn't it be nice if you could turn $20 into $75,000? It can be done, and you don't have to be a magician. http://www.choosetosave.org/psaplayer/spotsets/themagicofcompound30.html
ASEC Partner Updates
WISER's Spring Forum, "Expanding Savings & Retirement Opportunities: A Dialogue Among Generations," will be held on April 2. http://www.wiserwomen.org/index.php?id=762
AARP is hosting a number of free, hour-long webinars, including "Are You Ready to Start Your Small Business?" (April 3 at 2 p.m. ET), and "What You Need to Know About Fraud" (April 10 at 7 p.m. ET), where experts answer questions about and help show how to detect and avoid fraud, with a particular focus on identity theft. www.aarp.org/MoneyWebinars
The Jump$tart Communications Committee has developed a new communications toolkit to help communicate throughout Financial Literacy Month (April). The kit includes a sample press release (with some new findings on family conversations about money) that you can customize and use, suggested tweets and posts, using hashtag #FLM2014 for financial literacy month and #FLHillDay2014 for Financial Literacy Day on Capitol Hill, a generic "Stand Up for Financial Literacy" downloadable graphic, and an article aimed at helping parents make the most of this month to raise financial literacy levels at home. http://www.jumpstart.org/financial-literacy-month.html
The 2014 IFIE-IOSCO Global Investor Education Conference's professional network of leading experts and key leaders worldwide offers a chance to share best practices and case studies, and learn about new research and implementation case studies and tools to strengthen financial education, financial capability and investor literacy/education resources in your jurisdiction. The event will take place May 21-23 in Washington, DC, and is hosted by FINRA and co-sponsored by the CFA Institute. http://www.cvent.com/events/applying-theory-to-action-implementing-fc-ie-best-practices-lessons-learned/agenda-76f26096cf3f48cd993d8ed331a3536b.aspx
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
The History Channel notes that on this day in 1700, English pranksters begin popularizing the annual tradition of April Fools' Day by playing practical jokes on each other. However, this day, also called All Fools' Day, has been celebrated for several centuries by different cultures; its exact origins remain a mystery. http://www.history.com/this-day-in-history/april-fools-tradition-popularized
Here are the Top 100 April Fool's Day Hoaxes of All Time - as judged by notoriety, creativity - and number of people duped. http://www.museumofhoaxes.com/hoax/aprilfool/index