How the Wage Gap Hurts Women—in Retirement
DID YOU KNOW: Women’s retirement income is, on average, just 58% that of men’s? A new series of reports from Merrill Lynch explores some of the reasons—including the wage gap—for this disparity. Read "Women and Life-Defining Financial Decisions" and "Financial Security for the Caregiver" for insights that can help women prepare for a more secure retirement.
They’re the first two titles in a series of reports on women and money, co-authored by women’s retirement expert Anna Rappaport, a member of the board of the Women’s Institute for a Secure Retirement, and Nevenka Vrdoljak, a director in Bank of America Global Wealth and Investment Management’s CIO Office.
What’s their advice? Because women tend to live longer and often earn less, "every financial decision becomes important," says Rappaport. "Think about employee benefits. Start saving. Don’t go into credit card debt. Pay off college loans. Be conservative when you buy a house. Most of all, pay attention to the longer term—not just tomorrow."
What 250+ Vets Are Thankful For This Thanksgiving
CLARISSA BLACK HAD A SIMPLE IDEA: rescue a dog, help a veteran adjust to life back home. As the founder of the nonprofit Pets for Vets, Black has matched more than 250 veterans with rescue dogs since she founded the organization in 2009. Each animal is selected and trained with a specific veteran’s needs in mind.
For example, Black says, one veteran needed to feel like somebody had her back—literally. "I found her dog at the shelter, and we taught him a behavior called 'check my six.'" It’s an expression soldiers use to refer to their “6 o’clock position”—or what’s behind them, she explains. “When the dog hears that command, he knows to keep watch behind her."
What advice does Black have for others who want to make a difference by starting a nonprofit? "Have a good team in place and harness the power of social media," she says. "We’ve been very lucky to have veterans who are willing to share their success stories on social media. Sharing the impact you’ve had on one person—that’s what really touches people’s hearts and inspires them to donate or volunteer."
It's Getting Near That Dreaded Time of Year: Tax Season. These Resources Can Help.
ENJOY THE UPCOMING HOLIDAYS, because tax season will soon be upon us. And the December 31 deadline for making several key moves is just a little more than a month away.
Have you maxed out your 401(k) contributions for the year? Could it be time to sell some underperforming stocks and use those losses to help reduce your taxable income? For a handy refresher on some moves you can consider now, see "8 Year-End Tax Tips That Could Save You Money." If you're an entrepreneur, check out "5 End-of-Year Tax Tips for Small Business Owners."
Since it's also the giving season, you might want to take some time over the holidays to talk with your family about the charities you may want to donate to.
Be sure to discuss everything—including the ideas featured in the guide below—with your tax advisor before making any financial decisions.
Paying for Your Kids' Extracurricular Activities—It's Not Rocket Science
YOUR SON OR DAUGHTER wants to take horseback-riding lessons—or study piano. "Why not?" you think. Fast-forward a few years and you're shopping for show saddles. Or purchasing a Steinway. Of course, you want to give your kids every chance to learn and grow, but the cost of extracurricular activities can put a dent in your ability to save for their college. What's a parent to do?
"It's all part of the cost of raising a child. You just have to plan for them," says Richard Polimeni, director of Education Savings Programs at Bank of America Merrill Lynch. You could fund a trust under the Uniform Gifts/Transfer to Minors Act to help pay for extra educational expenses, like piano lessons, that a 529 College Savings Plan won't cover. But your best bet may be to simply start a savings account to earmark funds for such activities, he suggests. And don't forget that those extracurricular activities could give your kids an edge in college admissions—they might even help them obtain a scholarship.
Above, Richard and Alex Polimeni visit NASA's Control Center at Wallops Flight Facility, Wallops, VA.
Polimeni speaks from experience. His 16-year-old son Alex's passion for photographing space launches has gotten him a gig as a launch photographer with a leading spaceflight news organization. Combined, the photographic equipment and related expenses can run upwards of thousands of dollars a year. "I view it is an investment for his future, though," says Polimeni. Alex regularly publishes his photos and is already looking at colleges that specialize in careers in the space industry. "Besides, his mom and I get to see a lot of rocket launches."
For more insights on how to plan for your children's educational expenses—and what 529 College Savings Plans will and won't cover—read "The Basics Q&A: Saving for College" and "Help for Rising College Costs."
Photo of space launch: Alexander Polimeni/Spaceflight Now
Vote for… Me! How to Plan an Encore Career in Politics
NO MATTER WHO WINS THE ELECTION, one lasting effect may be that more Americans decide to take the energy they’ve poured into attending rallies and debating the role of government into a first or second career in politics.
If you’ve been inspired to run for office, there are plenty of opportunities, starting at the local level. “Retirees, in particular, may find that local politics offers a chance to stay engaged and give back to their communities,” says Cynthia Hutchins, director of Financial Gerontology for Bank of America Merrill Lynch. “Many Americans, as they reach traditional retirement age, say, ‘You know what? I don’t want to work in finance anymore. I don’t want to work in healthcare, but I’d love to apply some of what I learned to a non-profit or to government,” noted Nora Super, Chief of Programs & Services for the National Association of Area Agencies on Aging, speaking at the Museum of American Finance earlier this year.
Just remember that some local government positions may not pay much, or anything at all, Hutchins cautions. And consider how you’ll pay for your campaign. One retiree estimates that his first run for a seat in Vermont’s House of Representatives cost him $7,000 or $8,000.
“Be sure you have at least a year’s income to live on while you’re getting started in your new career. You may also need to return to school to acquire new skills,” says Hutchins. Read “An Encore Education for Your Encore Career” for tips on managing your finances during this—or any career switch. As for help funding your campaign, check out CrowdPac.com, described as “a Kickstarter for politics.”
What Makes People Vulnerable to Elder Fraud? New Research Provides Some Unexpected Clues.
THOMAS BLOMBERG FOUND MORE THAN HE BARGAINED FOR when he visited a Florida retirement community to conduct ground-breaking research on the causes of elder fraud this past summer. He came away with plenty of data. What he didn't expect was how deeply moved he'd be.
"Talking with the victims was emotionally charged," says Blomberg, dean of the College of Criminology & Criminal Justice at Florida State University. In particular, he recalls one man who confessed, with tears in his eyes, to losing $3,500 on the false promise of unlimited cruises. "It's not the money," the man said. "I just feel so stupid." That sense of embarrassment, says Blomberg, can cause people to isolate themselves from those who could help them avoid becoming a victim again.
Blomberg's research, conducted by Florida State University with support from Merrill Lynch, uncovered the most common perpetrators of fraud, as well as triggers that can make people susceptible. The findings have been used to identify strategies that friends, family—even financial advisors—can use to help protect those most vulnerable, says Michael Liersch, head of behavioral finance and goals-based consulting for Merrill Lynch Wealth Management.
For starters, Liersch recommends families hold regular meetings to discuss financial concerns and decision-making. It can also help to connect trusted financial professionals with those who are watching out for an elderly relative, he says. That way everyone can work together to help spot and prevent problems.
Retirement's Newest Challenge: Low Interest Rates
MAYBE THEY'VE LEARNED SOMETHING from watching their parents: 58% of today's 18- to 21-year-olds have already started saving up for the future, says the recently released Young Americans & Money Bank of America/USA Today Better Money Habits Report. Even better, more than a quarter of 22- to 26-year-olds have opened 401(k)s. That's the good news as we mark National Retirement Security Week.
With interest rates at historic lows, on the other hand, making that money go the distance is getting to be a challenge. "Those just starting out can look forward to rates slowly rising. But today's retirees are feeling the pinch of lower rates", says Karin Kimbrough, head of Macro and Economic Policy at Merrill Lynch Wealth Management. Watch "Are You Meeting Your Need for Investment Income" for some helpful suggestions.
For more retirement advice, tune in to our webcast, "Social Security, Medicare & More: Understanding Your Retirement Choices," on October 25 at 7 p.m. (ET). In addition to Kimbrough, panelists include Kirstin Hill, head of Personal Retirement Solutions at Bank of America Merrill Lynch, and financial journalist Philip Moeller, author of the recently released Get What's Yours for Medicare: Maximize Your Coverage, Minimize Your Costs and co-author of the best-selling Get What's Yours: The Secrets to Maxing Out Your Social Security. Merrill Lynch New England Division Executive Linda Houston moderates. Send us your toughest retirement questions—our panelists will address as many as they can.
Picking a College Major That Matters (and Pays)
HERE'S THE DEAL: YOU'RE A FRESHMAN or sophomore on campus, looking forward to exploring new skills and interests, and you're supposed to decide, right now, what you're going to do with the rest of your life. It's that high-stakes college quiz called, "Choosing a Major!" Ready or not, most colleges want you to select a main area of study.
Your choice will be easier if you answer a few basic questions first: What professions are most likely to have jobs waiting to be filled when you graduate? Will you be proud of that job? And will it pay a decent salary?
The following slides, which show the top 3 majors in each area, contain a surprise or two. For instance, why is there such a demand for operations research analysts? (Hint: think big data.) And have you ever considered a career as a cartographer? One thing the slides make clear: When it comes to job satisfaction, money isn't everything.
There's another concern at least as important as picking a major, and that's paying for it. For excellent tips on pulling off that trick, see Paying Off Student Loans and The Basics Q&A: Paying Off Grad School Debt.
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This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or financial instrument. Before acting on any information in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of issue.
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