The Lowdown on the Banking Crisis and What it Means for Retirees

May 15, 2023

In the midst of the Great Retirement, an excess of 2.6 million retirees left the workforce during the pandemic. “A lot of people had reasons to retire and the way markets evolved allowed them to,” says research economist Miguel Faria-E-Castro. While health and safety concerns were very real for many, others chose to leave early because of changing work environments or needing to become full time caregivers; others simply took advantage of rising asset values.

The pandemic isn’t solely to blame for the influx of retirees, though. The Employee Benefit Research Institute regularly finds that many Americans end up retiring earlier than planned. Whether you’ve already retired or intend to soon, it may be important to factor the recent banking crisis into your planning.

Understanding the Banking Crisis

In March 2023, the United States’ Silicon Valley Bank (SVB) suddenly collapsed, mainly in part due to a bank run, when their customers rushed to withdraw their funds over panic due to the bank’s loss of stocks. The failure of this California-based bank raised concerns for Americans about the financial health of their own assets, even though the Federal Reserve, Treasury department, and FDIC moved quickly to ensure that all depositors would have full access to their funds, a move meant to calm fears of a full market collapse. Financial experts believe that because of these unprecedented actions, the failure of SVB does not pose a threat to the financial market at this time.

While deposits of up to $250,000 are FDIC insured, many people are wondering if their 401(k) is protected, and the short answer is: It depends. If your 401(k) is uninsured and invested in “stocks, bonds, or mutual funds, you’re not covered against those investments losing value,” then your funds are not protected under the FDIC guarantee, according to finance professor Valentina Bruno. Retirement plans that the FDIC does cover include IRAs, Roth IRAs, SEP IRAs, and SIMPLE IRAs, up to $250,000, but if you had more than one of these (each valued at over $250,000) at the same banking institution, then only one of them would be insured. This is why it may be a good idea to spread your assets out over different institutions.

Planning for Retirement

If you haven’t retired yet, hopefully you’ve begun planning and saving already, because the earlier you start, the more time your money has to grow. If you’re offered a 401(k) retirement plan through employment, it’s important to take advantage and get enrolled. Even better, if the plan allows you to make contributions, do so and you’ll be rewarded with lower taxes at the end of the year. The biggest mistake people make, according to financial expert Jim Yih, is starting too late. “All my clients, no matter how much they have saved, say they wish they’d started earlier.” Yih’s first recommendation is to put away 10 percent of your gross income, starting as soon as you can.

Become the Expert of Your Retirement

While learning all about retirement plans may be intimidating, many financial advisors actually recommend becoming an expert of your own retirement options. If you are not offered a 401(k) through employment, there are other options, including an IRA, which is a plan that you would open yourself through a broker or other provider. Since there are many types of IRA accounts, the most common being a Traditional or Roth IRA, it’s important to learn about the different conditions of each account before deciding which is the best fit for you. Financial author Liz Weston encourages everyone “to consult a fee-only financial planner or accredited financial counselor if at all possible before retiring, simply because there are so many decisions that have to be made.”

No matter the kind of account you choose, the first step is to determine how much money you’ll need when you retire. Experts advise replacing 70 to 90% of your annual pre-retirement income through Social Security and savings. The next step is to determine what your financial goals are now, such as paying off a mortgage or other debts and saving for your childrens’ college tuition. Factoring in these financial boundaries help put retirement budgets into perspective. Yih warns that, “It’s almost impossible [to do it all] unless you have a big income, and even then, things don’t always work out,” so he tells people to choose two or three focal areas that are most important to them.

Exercising Financial Resilience

In order to increase financial resilience, one must learn to anticipate the unexpected. While 60% of families faced a financial emergency last year, one third faced two. If any of your retirement accounts were affected by the banking crisis, then you may have experienced an unexpected loss firsthand. It’s best to prepare for this and diversify your retirement plan. A good rule is to make sure 80% of your savings are invested in methods that have stood the test of time, while 20% of your funds are involved in higher-risk investments.

Live Your Best Retired Life

Thanks to Social Security, whatever your retirement accounts are, you can still plan on collecting something after the age of 65. This also means that if you were affected by the banking crisis and are 65 or older, then you can still count on these benefits. If you intend to retire earlier than 65, then you want to include this factor in your planning. For instance, how much money will you need to carry health insurance before you’re eligible for Medicaid at 65? Since “Social Security is guaranteed income that is adjusted for inflation,” Weston advises delaying Social Security benefits for as long as you can.

Consider part-time work, not just for the supplementary income it will provide, but for the purpose it will likely bring to your life. The lifestyle component of your retirement is as important as having enough money to retire. “The most successful retirees are not the ones with the most money. The busiest retirees are the most successful ones,” says Yih.

Planning for retirement and financial resilience can provide peace of mind and allow you to focus on what really matters. The resolve you’ll feel after tackling financial planning is priceless. Insureyouknow.org can help you store all of your financial information in one place so that your retirement planning remains organized. Plus, when everything is easy to assess, periodically reassessing your finances when circumstances change becomes painless and straightforward.

The 8 Best Places to Live & Retire

April 15, 2023

Imagine this: you’re sitting on a hammock at the beach with the sun on your face without any concern about getting back to work. You’ve entered your retirement, better known as the best phase of your life.

There are many high liveability indicators that help characterize the best place for retirement. Many of these factors include a prosperous economy to find work in case a retiree needs to reenter the workforce, mild weather, a relatively low crime rate, quality hospitals and assisted living facilities, and sufficient wellness opportunities that won’t have you missing the workforce.

There are several places around the United States that serve as ideal spots to retire that possess many of these factors when you say goodbye to the 9 to 5.

Top Places to Escape to for Retirement

According to U.S. News, the following locations have the most affordable housing options, low retiree taxes, and are ranked high for overall happiness and quality of health care.

1. Lancaster, Pennsylvania
2. Harrisburg, Pennsylvania
3. Pensacola, Florida
4. Tampa, Florida
5. York, Pennsylvania
6. Naples, Florida
7. Daytona Beach, Florida
8. Ann Arbor, Michigan

Lancaster, Pennsylvania

Lancaster is located near Philadelphia, Pennsylvania. In this city, there is plenty of Amish produce, local stores at the Lancaster Central Market, and a wide variety of cuisines and restaurants. It offers advanced health care for seniors and has high rates of happiness for its residents. Many of the residents also enjoy the diverse collection of cuisines and the art galleries and museums in the area including The Pennsylvania College of Art & Design and Franklin & Marshall College.

Harrisburg, Pennsylvania

Harrisburg is the state capital of Pennsylvania with the Susquehanna River and several hiking trails including the Appalachian Trail. This ideal location has large metro areas nearby for visiting and the housing costs are very affordable for the residents. Many retirees enjoy traveling to New York City, Washington, Philadelphia, and Baltimore for day trips along the coast.

Pensacola, Florida

Pensacola is located near the border of Florida and serves as an accessible beach retirement spot for retirees. It features low taxes, high desirability, and affordable housing. It also has a very convenient location for access to the Gulf of Mexico and Pensacola Bay and a warm desirable climate. This area also has a small military presence that encourages several military families to settle in the area.

Tampa, Florida

Tampa is a city with a combination of a beach and a metro for residents. Highlights of the city include many entertainment options including zoos, theme parks, and aquariums. Tampa also serves as a popular port spot for cruise ships for retirees to travel post-retirement. There are several active senior communities and neighborhoods in the area including Bayshore Beautiful, Bayshore Gardens, Beach Park, Oakford Park, and Sunset Park.

York, Pennsylvania

York is a city in Pennsylvania with preserved architecture from the 1700s that previously served as the nation’s capital. With a population of just under 500,000, it played an important role during the Revolutionary War and has a rich history for its residents. Retirees can enjoy a wide variety of places to explore in this city including galleries and theaters like the Agricultural and Industrial Museum and Colonial Complex, vendors at York’s Central Market, and parks and trails including Heritage Rail Trail County.

Naples, Florida

Naples is more expensive than other retirement spots in Florida but it allows for a high quality of life. Without an income tax for the state, retirees are able to keep more of their earnings if they obtain another job. Over half the existing population in the city is already over the age of 65. These residents are able to enjoy the warm weather, sunsets and beaches at the Naples Pier, several restaurants and shops, and private golf courses including the Hibiscus Golf Club and Naples Grande Golf Club.

Daytona Beach, Florida

Daytona Beach on the east coast of Florida has mild winter weather and is known for its prevalence of motor sports. Many retirees enjoy the low housing costs and views of the Atlantic Ocean. This area also has several 55-and-older communities already in place including Latitude Margaritaville which sells several single-family homes with resort-style amenities.

Ann Arbor, Michigan

Ann Arbor, a college town with the University of Michigan, has a vibrant economy and lifestyle with abundant health care options and job opportunities. Retirees enjoy a high quality of life with ample musical performances and sports events. Additionally, this area has one of the largest healthcare complexes in the world with high-quality treatment facilities through Michigan Medicine, which is especially appealing to retirees.

InsureYouKnow.org

After leaving the workforce, it is important to find the best place for retirement. At the places mentioned in this post, many retirees enjoy the widespread opportunities and high liveability indicators. At insureyouknow.org, you can track your savings to see which retirement location is the best fit for you and your future.

Planning for the Care of Your Adult Child on the Spectrum

April 1, 2023

Today marks the start of National Autism Awareness Month. For parents who have children with autism spectrum disorder (or ASD), it is imperative that they begin to plan for their future now. The CDC recently reported that approximately 1 in 36 children in the U.S. is diagnosed with ASD. Though it’s not something anyone wants to think about, every family should prepare for the day they are no longer around to care for their loved ones, especially those with disabilities. The most important part of designing a care plan is to utilize the help of professionals who specialize in the care of special needs. Since the process can be overwhelming,

“It’s essential to work with specialists in this type of planning,” said AndrewKomarow, founder of Planning Across the Spectrum in Connecticut. When working with a specialist, parents should let them know what they want for the child, so that a specialist can tell them what is right for their situation.

Financial Planning

For many, the most intimidating portion of planning for the care of a special needs child is likely the financial aspect. People with disabilities usually qualify for Government services, such as Social Security Income (SSI), Social Security Disability Insurance (SSDI) and Medicaid, but sometimes that may not be enough. Many government services have income limitations, so it’s very important to set up supplemental income, such as personal funds and life insurance, properly in order to avoid the disqualification of government aid. A special needs, or supplemental needs, trust will hold the assets of a person with disabilities without costing them their government benefits; another financial option is an ABLE account, that allows savings up to $100,000 without losing government benefits.

To find a planning specialist that is trained in the care of those with special needs, parents may check the websites of the National Elder Law Foundation and Academy of Special Needs Planners.

Housing

When it comes to housing, “It’s more important to look at the individual,” Komarow said. “What interests and supports do they need?” Parents should think beyond their child living in the family home or with other family members. It’s important to consider how independently functioning they are and which communities will best serve their needs. In other words, instead of parents thinking about where they would like to retire, they should be looking at areas that their child can thrive in after they pass away.

There is a trend toward more community-based living, Gordon Homes with WestPoint Financial in Indianapolis points out. “State-administered Medicaid HCBS waiver programs allow people with disabilities to live in a house or apartment,” he said. A planning specialist will know about options such as these and be able to direct parents toward a solution they can be comfortable with, and their children, if able to, should always be brought into this conversation.

Designating a Care Team

How independently functioning a child with ASD is will determine what kind of care team needs to be put in place. A trustee will help to manage the trust on behalf of the child. They should be someone who is responsible, cares about the child, and will outlive the parents. A guardian or conservator would make all of the decisions regarding an individual’s financial and personal affairs. With a power of attorney, both they and the individual will be able to make decisions together. If able, the child should always be included in the decision-making process, because they should feel just as comfortable as their parents are with the designated care team.

Compiling Information for Caregivers

Marianne Ehlert of Protected Tomorrows, who works with families of people on the autism spectrum to plan for adult living, knows that, “Usually, parents or guardians of a teen understand what that child needs.” It will be important to determine whether or not a child will have the skills they need as a young adult to function independently, such as managing finances, scheduling care appointments, managing personal hygiene, and maintaining the shopping, cooking, and cleaning at home. This will also help determine what sort of living conditions they will need. Will they live with family, alone with minimal support, or will they need to live at a full-time care facility? A statement or letter of wishes, though not a legally-binding document, will serve as a guide for those who will care for your child. It should include all of the child’s care instructions, including medical needs, financial benefits, residential arrangements, and even daily routines.

Planning While Your Child is Still Young

When planning happens early, parents can learn about beneficial programs that their child may be eligible for, oftentimes at their own school. A child’s education can actually be designed to support their plans for the future. Special Needs Planning expert Phillip Clark points out that many planning processes focus on the care of the child once the parents are gone, but planning should be focussed on the child thriving both in the future and now. In order to succeed in the future, children need support now that will help them achieve all of their goals. Families should envision what they want for their child and then determine what needs to be done in order to make that happen.

Not only can planning provide caregivers with priceless peace of mind, but it can also lead to the discovery of resources that will help children with ASD flourish now. Since the planning process can be long, Insureyouknow.org can help parents stay organized by storing all of their documents in one place, such as financial information, medical records, and detailed care instructions.

Jugging: The New Crime Trend

March 20, 2023

Everyone knows what it’s like to have your hands full. It takes special skills to juggle bags, briefcases, electronics, and to-go coffee containers all while trying to unlock your car door. It feels like a badge of honor is earned when you lug all those grocery bags inside in one trip. But all of these distractions can put you at risk of being the victim of a scary new crime trend called “jugging,” and gas station and c-store owners need to be aware of its dangers.

Jugging refers to a robbery that happens after a victim has withdrawn cash from a financial institution or ATM, and then is followed to a second location. It is a relatively new term that hasn’t caught on everywhere yet, but police departments across the United States, from Alabama to Hawaii, have started warning folks about the uptick in cases. Suspects tend to target certain demographics before choosing someone to follow. Women, the elderly, or people who seem to have their hands full are sought out for this type of crime.

“You go to a bank, you conduct business, you’re followed, and then you’re assaulted, or you lock your car and go into another business after the bank errand, and your car is broken into,” said Detective Matthew Judd, a detective in the robbery unit of the Austin Police Department (APD), in a recent press conference.

Avoid Becoming a Stat

On Saturday, Dec. 12, 2022, APD officers responded to a jugging case at a gas station located on East William Cannon Drive. The victim of the jugging had visited a bank and withdrawn cash before pulling over to refuel and purchase items inside. Three suspects followed him from the bank to the gas station, and violently robbed him while he was inside the store. They also assaulted the man who was working behind the counter when he tried to intervene and help the victim.

On Dec. 28, 2022, four people were arrested after a jugging incident at a Texaco on Cluck Creek Trail in Cedar Park. The victim had just withdrawn cash before stopping at the gas station, where they were attacked and robbed. Thanks to the victim’s descriptions of the attackers and their vehicles, police spotted them in Fayette County, where they were pulled over and arrested. Police believe these four suspects are connected to several other jugging incidents around Austin.

But it’s not just customers who are targeted. Gas station and c-store owners have been victims of juggings as well.

In 2018, a woman whose family owns a gas station and check cashing business in Houston was the victim of a violent jugging after she withdrew $75,000 in cash and took it back to her workplace. She was followed from the bank by two vehicles who were both monitoring her financial institution and working as a team. The men in the vehicles ambushed her once she was walking through the gas station parking lot. Her husband ran out to help her, but the assailants beat both victims and ran over the woman with their car. Both victims were hospitalized, and the suspects were arrested shortly after the robbery and charged with felony aggravated robbery with a deadly weapon.

The idea of jugging is scary, but officials have suggested many tips to keep it from happening to you:

Be aware of your surroundings

Police officers stress that simply being aware of your surroundings is the most important step you can take to preventing being the victim of a crime. If you see someone acting suspicious in or around a financial institution, either leave and come back at a later time, or tell a security guard. Make a mental note of anyone loitering near your bank or where you parked your car, as they may be scouting for potential victims. For example, if you enter a bank and see someone sitting in their car and they are still there when you exit and then follow you out of the parking lot, that’s a red flag.

If you think you’re being followed, get help

If a car pulls out of a parking lot after you, and you think they’re still trailing you after a while, drive to the nearest police or fire station or call 911. Do not drive home or stop anywhere. Try to get a good description of the vehicle and the person driving it, if you can.

“If they think you have cash, they’re going to follow you wherever you go,” said Sgt. Jennifer Taylor, who works in the APD robbery unit. “Our dispatch has been advised about the jugging problem. They are aware, and they should send an officer.”

Don’t be distracted

While you’re in the bank lobby or parking lot, stay off your phone and ditch your ear buds. Juggers tend to look for people they can take by surprise. Walk with your head up and make it obvious you are aware of your surroundings. Try to have your keys ready to unlock your car so you’re not digging through a bag or pockets looking for them – those few seconds are long enough for a jugger to catch you off guard.

Disguise your cash

Don’t make it obvious that you’re leaving the bank with cash. If you have a cash bag, put it in a different bag, like a briefcase or backpack. Even if you just have an envelope with bills in it, be sneaky. Slip it in an interior jacket pocket. Just make sure you do this before leaving the bank lobby.

Security is your friend

If you are withdrawing a large amount of money, ask your bank if they have a security guard who can safely escort you back to your car, or at least give the parking lot a once over. This should make anyone scouting out the parking lot nervous. Once you do pull out of the parking lot, keep glancing in your rearview mirror to ensure no one is following you.

Lock your doors as soon as you get back into the car

Press that lock button the second you’re sitting. Don’t wait to buckle your seatbelt or find what playlist you want to listen to – those are distractions, and a jugger just needs you to be distracted for a second to make their move. Your car door being locked will buy you time to drive off if someone tries opening it from the outside.

“Sometimes in these juggings, the suspect will just run up, open the passenger door, grab the bag, and leave,” says Taylor. “Lock your doors all the time, even if you’re inside.”

Don’t leave money unattended

Taylor says to not make any stops in between withdrawing cash and your last destination, as that’s usually when juggings occur. If you do need to make a stop after withdrawing cash, do not leave the money in your car unattended, even if your car doors are locked. Windows can be broken, and the center console is not a secret hiding spot.

Taylor encouraged people to follow these tips to stay safe.

“No amount of cash is worth your safety or enduring an assault,” she says.

InsureYouKnow.org

As you start thinking of safer banking practices, consider using less cash and use online baking more, use InsureYouKnow.org – an online information-safe, as a place to safely store details of your bank. This product gives you the ability to access documents, and files remotely – or from the comforts of your own home.

Meal Planning on a Budget Without Compromising Ingredients

March 1, 2023

Grocery prices are up 11.8% as of December 2022, while certain items, like eggs are up 138% according to the most recent Bureau of Labor Statistics data. With grocery prices soaring, many of us find ourselves pausing in the aisles, debating about whether or not we actually need something. “Meal planning is one way to edit down your shopping list to weekly essentials and save money,” said certified financial planner Ted Jenkin.

Here are five tips to keep your ingredients healthy, and your bottom line low:

1. Know your prices. Though making more than one stop can be more time consuming, it can save you a ton of money. Margaux Laskey of the NYT suggests visiting a couple of different stores to take advantage of sales. When you begin keeping track of prices, you may start by taking notes on your phone, but eventually, you’ll memorize them, knowing where to get your regular items at the best price. When in doubt, a quick internet search will tell you whether or not you’re being gouged; coffee is an excellent example of this.
2. Take an inventory of what you already have. Frozen meat, perishables, and pantry items are the first three things to check when making your list. For instance, if you already have a jar of marinara and a box of pasta, then you may only need to get ground beef for a fun spaghetti night.   
3. Always shop what’s on sale. BOGO (buy one get one) sales are great for pricier things like cheese and staples like cereal. “If you spot a good sale on your favorite, stock up!” emphasizes Laskey. She adds that cereal can also be used in cereal bars, pie crusts, and even as bread crumbs. Next, the produce and meat that’s on sale should be the items that help you decide what’s for dinner. Vegetables on sale will make excellent side dishes to almost any meat that’s also on sale.
4. Keep breakfast simple, and use last night’s leftovers for lunch the next day. Food will never go to waste if you plan on eating leftovers the next day for lunch. Plus, if you have some leftovers piling up in the fridge, plan on a leftover dinner night. For breakfast, stick to a simple rotation; cereal, oatmeal, and yogurt are all inexpensive and pair well with fresh fruit.
5. Give the pantry some love. You don’t need to buy fresh to incorporate produce into your diet. Salsa, marinara, canned veggies, apple sauce, fruit cups, and jams are examples of working produce into your diet without having to buy fresh. Dietitian Mike Gorski points out that with these items “you aren’t sacrificing nutritional value for convenience and reduced costs.” Canned seafood is another way to save; tuna (tuna salad), salmon (salmon cakes), and clams (linguini and clams) will almost always be less expensive than their fresh counterparts.

When in a Pinch, be Realistic

You may find that the store is out of something you need or it’s just really priced too high for your budget; let it go, and be flexible. Some nights, you may not feel well or just be too tired to cook, so have a pre-allocated takeout budget ready. Keep a drawer full of menus and coupons, and know your specials. Many locations have kids-eat-free nights, while grocery stores offer weekday specials too, such as $5 rotisserie chicken days. “Never underestimate the power of a rotisserie chicken,” said Vaughn Vreeland of NYT Cooking, who eats some for dinner, then shreds the remaining meat and uses it later in chicken salad and soup.

InsureYouKnow.org

If you are one of the 64% of Americans living paycheck to paycheck, creating a budget is imperative. There are several free resources online to help you plan and budget your monthly expenses as well as devise a meal plan for the week. At insureyouknow.org, we recommend that you track your monthly expenses at the grocery store and file receipts, important documents, and all of your family records.

Retiring Early: A Long Vacation or a Trap?

February 14, 2023

They say retirement is the start of your new life. No more 9 to 5 workdays, late nights, and missed holidays––retirement is just one never-ending vacation that you get to enjoy. However, there are certain obstacles a person may face if they decide to go down the road of early retirement.

The Covid-19 pandemic pushed many Americans to retire early as much of the job market closed down, causing individuals to lose their jobs. According to Bloomberg, more than 3 million Americans retired early because of the pandemic. This amount equals more than half the workers that are still missing from the labor force from before the pandemic.

This public-health crisis has caused many Americans to re-evaluate their life priorities, pushing them toward the solution of retirement. The Economist explains that 49.9% of Americans now expect to retire before the age of 62.

Many of these people are deciding to retire before accumulating the earnings they would need to live a comfortable life. “Almost two-thirds of people — between ages 57 and 66 — choose to retire early out of their own volition, despite having saved next to nothing,” said Laurence Kotlikoff, a contributor for CNBC. “And most of them are able-bodied, without disabilities that would prevent them from staying on the job.”

This growing trend towards early retirement has pros and several cons that will continue to affect these individuals throughout their lives.

What are the Pros?

After retiring, many people are given more freedom to explore new opportunities. These benefits can have a lasting effect on the body and mind of a person. They include the following:

An Increase in Health and Well-Being

Without a job to do every day, you are granted more time to improve your health through exercise, eating healthier foods, and taking time to work on your mental health without the constant stress of work. You can get more sleep and focus on improving the quality of your life while adopting healthier habits.

New Career Potential

Moving away from a high-stress job can allow you more part-time opportunities. Some people embark on new career ventures, try out a new job field, or work on a passion project, all on their own schedule.

More Time to Travel and Pursue New Passions

Without set timings, you can take spontaneous trips and visit new places. Many people take this additional time to enjoy new hobbies, volunteer in the community, and spend more time with their family and friends.

What are the Cons?

Despite the pros mentioned above, the current economy has caused several hurdles for those that decide to retire at a younger age. They include the following:

Smaller Social Security Benefits

If you decide to take Social Security earlier, you will have fewer benefits than you would at a later age. “If you were born in 1960 or later, for example, and you start taking benefits at age 62, the earliest age at which you’re eligible, your monthly benefits will be 30% less than if you wait until age 67,” said Greg Daugherty, a writer for Investopedia. This means losing potential benefits on a monthly basis.

Health Insurance

You become eligible for receiving Medicare at the age of 65, but until then, you have to find your own source of health insurance. With high premiums, this can be a difficult task compared to the benefits you received with your workplace plan.

Lack of Income

Leaving the job at an earlier age means spending more years without a constant source of income. If plans change or you run out of savings, then it won’t be as easy to enter back into the job market after being out of it for so long. Furthermore, the U.S. News states that potential tax penalties can occur if a person takes money out of their retirement account before 59 ½ years old.

Housing Expenses

Mortgage expenses, home maintenance costs, and property taxes pile up after retiring early. In fact, “44% percent of retired homeowners between ages 60 and 70 still carry a mortgage,” said John Waggoner from the AARP while crediting an American Financing survey. These extra charges can take up a huge chunk of your savings.

InsureYouKnow.org

It is important to weigh all the pros and cons of early retirement before you make a decision. It is essential to come up with a plan that allows you to retire at a time that is right for you while having enough savings to ensure you live a satisfied life. At insureyouknow.org, you can track your accumulated savings and create the most ideal retirement plan.

The Steep Reality of College Costs

January 13, 2023

There’s a saying that college costs an arm and a leg. However, this is far from true. In reality, it may cost as much as a starter house in a decent neighborhood plus a car or two.

The cost of college has been on the rise over the past two decades. According to the U.S. News recent data, tuition and fees at private national universities have increased by 134%. Out-of-state tuition and fees at public national universities have surged by 141%. Above all, in-state tuition and fees have risen by 175%.

The National Center for Education Statistics claims that in 1980, the cost for attending a four-year institution was $10,231 annually. However, between 2019-2020, the annual price soared to $28,775, indicating a 180% increase. According to Forbes, this reason behind this drastic increase includes recent changes in state and local funding due to shifts in market conditions and tax revenues, more maintenance costs for college-provided services, and the expansion of student-support resources.

What is Included in College Costs?

There are several expenses included in total college cost. Besides the initial tuition that institutions require for enrollment, many miscellaneous fees are required over the course of a college education.

Some of the main items included in the cost of college are below::

1. Tuition
2. Room and board
3. Books and school supplies
4. Equipment and room materials
5. Travel and expenses

The Dos for Affording College

Before you consider selling your home or taking out a hefty loan, there are several methods that families employ in order to better afford the rising cost of college. These methods include both long-term and short-term plans. They include the following:

Scholarships

Various organizations provide scholarships asfree aid for students. These scholarships can be offered at both the local and national level, ranging from small to large sums of money to help pay for tuition costs and fees.

These can be merit-based, academic, or athletic scholarships granted based on a student’s performance. The U.S. Department of Education awards close to $46 billion in scholarship money annually to help students cover costs.

Federal Grants

Yes, the government can give you money! The U.S. Department of Education awards federal grants to students based on their financial status. In order to qualify for these grants, students submit their Free Application for Federal Student Aid (FAFSA) to determine how much money is allotted for their college costs.

Federal Loans

The federal government distributes fixed interest rate loans to the public that are either subsidized or unsubsidized. Subsidized loans are permitted based on financial need where the government covers the interest acquired by a loan during the time a student is in school to six months after graduation. On the other hand, unsubsidized loans require a student to pay the gathered interest on a loan.

Work-Study

The Federal Work-Study Program offers part-time jobs to students to earn money towards their college expenses. These jobs can be either off-campus or on-campus and are required to pay students the federal minimum wage.

Advanced Placement and Dual-Enrollment Credits

Throughout high school, many students enroll in Advanced Placement (AP) or Dual-Enrollment classes to receive college credit. They may require many sleepless nights and endless amounts of homework, but earning prior credit for these courses helps students save college tuition costs.

College Savings

The most important method for reducing costs is creating a plan ahead of time to allocate money for college. A 529 college savings account, which is an investment account that provides tax benefits, can help cover educational expenses. Designing a plan ahead of time will help make college more affordable for students across the nation.

InsureYouKnow.org

As a parent, it is important to start coming up with solutions to make college more inexpensive for your children. Consider applying for federal loans and grants, having your student apply for scholarships and work-studies, and most importantly, have a plan ready for college savings and payments. At insureyouknow.org, you can track college costs and plan out potential methods for saving money on educational expenses.

Kick Your Health Benefits into High Gear

December 1, 2022

As open enrollment season kicks into high gear, millions of people will have an opportunity to choose their 2023 health benefits.

Employers’ Healthcare Costs

Employers’ healthcare costs are rising, with large companies forecasting up to an 8 percent increase for 2023. The main difference with previous years will be higher prescription drug costs, which will jump 10 percent, the highest in the past decade.

Many companies will try to limit the share they pass along to their workers, as benefits are seen as a key attraction and retention tool in a tight job market. 

Employees’ Healthcare Costs

For 2022, annual family premiums for employer-sponsored health insurance averaged $22,463, up slightly from $22,221 in 2021, according to the 2022 benchmark KFF Employer Health Benefits Survey. On average, workers contributed $6,106 toward the cost of family premiums, with employers paying the rest. The average premium for single coverage was $7,911 (up from $7,739 in 2021), with employees paying $1,327 annually, according to the survey. Nine percent of covered workers, including 21 percent of covered workers at small firms, are in a plan with a worker contribution of $12,000 or more for family coverage.

While premium data for 2023 generally won’t be available until after the new year begins, workers may see larger increases than in recent years.

Triple-Tax Advantaged HSAs

Some tools can help you manage your healthcare costs. More than three-quarters of large employers offer Health Savings Accounts (HSAs) that offer triple tax advantages: money contributed is pre-tax, it grows on a tax-free basis, and then can be withdrawn tax-free to pay for qualifying medical expenses now or in the future, all the way through retirement.

You can contribute to an HSA only if you’re enrolled in a qualifying high-deductible health plan. Average annual premiums for workers enrolled in HSA plans are lower than the overall average, but workers shoulder higher costs until they meet their deductible. 

Employees can contribute up to $3,850 to their HSA for individual coverage for 2023, up from $3,650 this year; for family coverage, workers can contribute up to $7,750, up from $7,300 this year, per an announcement by the Internal Revenue Service. Catch-up contributions for those 55 and over remain $1,000.    

Many HSAs give account holders the option to invest a portion of their money in the stock market. But fewer than 10 percent do so, as opposed to leaving their money just sitting in cash. If you can afford to pay your medical bills through your regular cash flow, your HSA funds will likely grow over time in the market and can be used in retirement to pay for a range of qualifying medical expenses.

HSAs  are portable and remain with the owner through plan and job changes. If you are no longer enrolled in a qualifying high-deductible health plan, you can no longer contribute to your account, but you can still tap it to pay qualifying medical costs. Flexible-spending accounts (FSAs), by contrast, are linked to a particular employer; unlike HSA funds, money in an FSA must be spent down or forfeited within a certain period.

Health Insurance Plans under the Affordable Care Act

Outside of the employer market, open enrollment began on November 1 on Healthcare.gov for individual and family health insurance plans under the Affordable Care Act. In most states, open enrollment ends on January 15, although you must enroll by December 15 if you want coverage to begin on January 1. The Inflation Reduction Act extended the enhanced premium subsidies for ACA enrollees through 2025; for many, that may offset the moderate average increases expected to premiums.

Impact of Rising Drug Costs

There are two main reasons drug costs are rising: First, pharmaceutical companies are introducing better, but more expensive drugs for several important conditions. In most years, total drug cost would be tempered by other brand name drugs that were being replaced by generics, but in 2023, there will be fewer of these than usual.

Second, pharmaceutical companies are raising the prices they charge to private health insurance plans because they anticipate having to lower the prices they charge to Medicare. The recent Inflation Reduction Act allows Medicare to negotiate drug prices for the first time. Currently, only 10 drugs are on the negotiation list, but these are widely used. The list will rise to 20 drugs in the future.

The “No Surprises” Act

The “No Surprises” Act that went into effect in January 2022 is having its intended effect of lowering surprise out-of-network charges to patients who get emergency care, non-emergency care from out-of-network providers at in-network facilities, and air ambulance services from out-of-network providers.

InsureYouKnow.org

After you determine your healthcare insurance coverage for 2023, file your decisions at insureyouknow.org. Keep aware of government mandates that can affect your healthcare expenses for prescription drugs, out-of-network charges, changes in Medicare, increases in premiums, and your HSA and FSA contributions and withdrawals.

The Everything Kids’ Money Book

November 15, 2022

You want your children to become financially stable adults. But how can you interest them in this important topic, and make it easy to learn about and fun, when they are in their formative years? Your answer is The Everything Kids’ Money Book by Brette Sember that visually depicts boys and girls undertaking some enterprise having to do with money such as having a lemonade stand, saving for a new bike, or collecting coins. Written with kids ages 7 to 11 in mind, the author promises to teach them about money—“Earn it, save it, and watch it grow.”

Hands-On Activities Covered

Would your child like to . . .

• Learn how to make money at jobs appropriate for their age?
• Track where a dollar bill has been before they got it? There’s a simple way to find out. 
• Learn how to make all their pennies shiny? It’s easy.
• Design their own dollar with someone’s face they like—Batman? Spiderman? The Incredibles?
• Do a magic trick with a dollar bill to impress their friends?
• Find out what fun things they can do for free? Grandpa and Grandma might know.
• Make a pizza garden?

Fun Money Facts Revealed

Would they like to know . . .

• Why they are called Piggy Banks, not Doggy banks, or something else?
• What is the name of the buffalo on the nickel and where did it live?
• What are dead dollars?
• What are some things money has been made from in the past?

Difficult Concepts Explained

As a New York Law Guardian, Brette Sember has many years of experience working with children. She has written more than 40 books on a variety of topics, such as law, health, food, travel, education, business, finance, parenting, adoption, and seniors. In The Everything Kids’ Money Book, she tackles subjects such as:

• Investments
• Budgets
• Saving money
• The cost of living
• Credit cards and debit cards
• Income tax
• Why borrowing money can lead to trouble
• Why lottery tickets are not a good investment
• Investments
• Budgets
• Saving money
• The cost of living
• Credit cards and debit cards
• Income tax
• Why borrowing money can lead to trouble
• Why lottery tickets are not a good investment

All these topics are covered in easy-to-understand language and unfamiliar terms are defined in the glossary. Answers to some of the questions posed and a page of resources are included at the back of the book. This section features books and websites with ideas kids will enjoy, more magic tricks to perform with money, how to start a small business, a website with money games, and how to collect coins.

Kids’ Money Book Promoted

MyBankTracker.com which “tracks thousands of banks to help you find the perfect match for your banking needs,” says this book is “more than simply a manual; The Everything Kids’ Money Book is a well-organized workbook that covers everything from money printing to compound interest.”

Investopedia.com which calls itself “The world’s leading source of financial content on the web,” echoes this opinion by saying the book, “Not only teaches kids how to save and earn their own money but also how to invest and earn interest.”

InsureYouKnow.org

If you decide to spend some bonding time discussing money concepts with your daughter or son, you may learn or relearn some basic financial truths. Keep a list of your kids’ moneymaking, spending, and savings plans at insureyouknow.org. You can measure their financial success on this portal and watch with them the ebb and flow of their profits and expenses.

Do You Realize How “Precious” a Child Is?

September 15, 2022

The cost of raising a child through high school has risen to $310,605 because of inflation that is running close to a four-decade high, according to an estimate by the Brookings Institution, a nonprofit public policy organization based in Washington, DC.  

In 2017—years before the pandemic and during an extended period of very low inflation—the U.S. Department of Agriculture (USDA) projected that the average total expenditures spent on a child from birth through age 17 would be $284,594. This estimate assumed an average inflation rate of 2.2 percent and did not include the expenses associated with sending a child to college or supporting them during their transition to adulthood. Since 2020, the inflation rate has skyrocketed— 8.5 percent as of July 2022—partly due to supply-chain issues and stimulus spending packages that put more cash into Americans’ pockets. The Federal Reserve has now raised interest rates substantially to control inflation.

The multiyear total is up $26,011, or more than 9 percent, from a calculation based on the inflation rate two years ago, before rapid price increases hit the economy, reports the Brookings Institution.

The new estimate crunches numbers for middle-income, married parents, and doesn’t include projections for single-parent households, or consider how race factors into cost challenges. 

Expenses

The estimate covers a range of expenses, including housing, education, food, clothing, healthcare, and childcare, and accounts for childhood milestones and activities—baby essentials, haircuts, sports equipment, extracurricular activities, and car insurance starting in the teen years, among other costs.

In 2019, the typical expenses to raise a child were estimated by the USDA as follows:

• Housing: 29%
• Food: 18%
• Childcare and Education: 16%
• Transportation: 15%
• Healthcare: 9%
• Miscellaneous (included Personal Care and Entertainment): 7%
• Clothing: 6%

Housing

Housing at 29 percent is the most significant expense associated with raising a child. The cost and type of housing vary widely by location. Other variables include mortgage or rent payments, property tax, home repairs and maintenance, insurance, utilities, and other miscellaneous housing costs.

Food

The cost of food is the second-largest expense, at 18 percent of the overall cost of raising a child. Over time, food prices have trended up, with food-at-home pricing increasing 12.1 percent and food-away-from-home pricing increasing by 7.7 percent from June 2021 to July 2022. The USDA expects rising costs for 2022, with increases as high as 10 percent and 7.5 percent, respectively.

Childcare and Education

Childcare and education expenses in 2019 accounted for 16 percent of the cost of raising a  child, and it continues to increase.

The widespread acceptance by employers of remote work and letting employees work from home part or full-time has eased the burden of childcare costs for many families, cutting the cost by as much as 30 percent for some workers.

Education is a major expense when it comes to raising children. When it comes to kindergarten through high school, parents can choose between public and private schools. For private schools, the Education Data Initiative estimated that tuition costs an average of $12,350 per year. Associated costs, like technology, textbooks, and back-to-school supplies, could bring that up to $16,050. For a child to be in private school from kindergarten through eighth grade, the estimated cost could be about $208,650. Additional expenses for extracurricular activities such as sports, the arts—music, theater, and yearbook—and other clubs also add up and are accompanied by fees for participation, equipment, and travel, which have also increased due to inflation.

Healthcare

The total cost of a health plan is set according to the number of people covered by it, as well as each person’s age and possibly their tobacco use. For example, a family of three, with two adults and a child, would pay a much higher monthly health insurance premium than an individual.

Strategies

Raising children is rewarding and fulfilling to many people. But it’s also become very expensive. By preparing mentally and implementing financial planning strategies, you can be well-equipped to raise your child to adulthood comfortably, even on a budget.

InsureYouKnow.org

If you are a parent, you are responsible for raising your child and providing food, clothing, shelter, and security. Consider getting insurance coverage—including life, short- and long-term disability, and health insurance to avoid putting your family at risk financially in the event of unexpected hardship. To cope with the rising costs of raising children, live within your means, save money wherever possible, and shop around for home and auto insurance each year for the best deals. At insureyouknow.org, you can track your expenses to raise a child and file insurance policies that cover your family’s financial and healthcare needs.