2016 Personal Finance Year in Review

https://learn.extension.org/events/2815

This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, and the Office of Family Readiness Policy, U.S. Department of Defense under Award Numbers 2010-48869-20685, 2012-48755-20306, and 2014-48770-22587.

Barbara O’Neill, Ph.D., CFP®, Rutgers Cooperative Extension oneill@aesop.rutgers.edu

An Eclectic Collection of Personal Finance Topics

This webinar may be the only in-depth annual review conducted anywhere of personal finance related research, events, trends, legislation, and resources.

Webinar Objectives Present a 2016 “Financial Year in Review”

• Key findings from 2016 personal finance research studies

• Key findings from 2016 government data

• Key 2016 financial events and trends and products

• Key government legislation/policies affecting personal finances

• New or revised financial education resources in 2016

• Preview of expected 2017 personal finance changes

• Key take-aways of 2016 events for financial practitioners

Q1: What Do You Think Was the MOST

Significant Personal Finance Event of 2016?

Key Findings From 2016 Personal

Finance Studies (Academic)

Propensity to Plan: A Key to Health and Wealth (3/16)

• Respondents reporting frequent planning behavior had higher health behavior scores

• Respondents reporting frequent planning behavior had higher financial behavior scores

• Respondents who had higher health behavior scores had higher financial behavior scores

https://www.onefpa.org/journal/Pages/MAR16-Propensity-to-Plan-A-Key-to-Health-and-Wealth.aspx

Retirement Age and Life Expectancy

• Retiring after age 65 may help people live longer • Risk of dying (any cause) was 11% lower for a one-

year delay from age 65 to 66 • Risk of dying fell further for people who retired

between age 66 and 72 • Even people who retired for health reasons had

lower risk of dying • Postponing retirement may delay natural age-related

declines in functioning http://jech.bmj.com/content/early/2016/03/21/jech-2015-207097.short?g=w_jech_ahead_tab (Wu et al.)

Home Equity as a Retirement Income Strategy

• Pfau (4/16) study of use of reverse mortgages to supplement portfolio withdrawals

• Opening line of credit at start of retirement and then delaying its use until the portfolio is depleted creates the most downside protection

• Key take-aways: – Open RM line of credit at earliest possible age and leave

it unused as long as possible – Lenders or government could eliminate this strategy – RMs are not just something to use as a last resort

https://www.onefpa.org/journal/Pages/APR16-Incorporating-Home-Equity-into-a-Retirement-Income-Strategy.aspx

Retirement Portfolio Math • Isrealsen (1/16): A portfolio of 65% stocks and 35%

bonds/cash has historically had a 98% chance of lasting 35 years

– Assumes a 4% withdrawal rate and a 3% COLA increase

• Retirees with portfolio balances equal to 12 times their final working year salary can replace 60% of their wages with a 5% withdrawal rate

http://www.aaii.com/journal/article/the-mathematics-of-retirement-portfolios

“Safe” Retirement Spending • “Feel Free” Retirement Spending Strategy (4/16):

Spending level where you have little worry about depleting savings

• Person’s age ÷ 20 • Age 60: 60 ÷20 = 3% of savings • Age 70: 70 ÷ 20 = 3.5% of savings • Age 80: 80 ÷ 20 = 4% of savings http://www.investmentnews.com/article/20160622/FR

EE/160629965/this-simple-retirement-spending-strategy-takes-on-the-4-rule

Retirement Spending “Guardrails”

• Klinger (2016) studied retirement portfolio “failures” (i.e., running out of money)

• Asset returns alone were not a good early warning sign of failure

• Withdrawal rate ratio was a good indicator of future portfolio failure

• Applying a guardrail to a retirement strategy could help ensure a financially successful retirement

https://www.onefpa.org/journal/Pages/OCT16-Guardrails-to-Prevent-Potential-Retirement-Portfolio-Failure.aspx

Personal Traits of Savers • Age- Willingness to save decreases until age 60 and flattens

• Economic Hardship in Early Life- Increases savings

• Savings Behavior in Youth- Increases savings

• Interest in Financial News- Increases savings

• Household Administration- Running a “tight” household

• A Sense of Control- More willing to set aside money now for future spending

• Optimism Regarding the Economy- More willing to postpone current consumption

http://www.aaii.com/journal/article/what-personal-traits-do-savers-share.mobile

Impulsiveness and Saving

• Research by Newcomb (7/16)

• When people focus on the future, they tend to be less impulsive, regardless of their level of financial literacy

• High levels of impulsiveness and materialism were associated with poor financial decision-making

• The strongest predictor of good financial decisions was not financial literacy but focus on the future

http://www.apa.org/news/press/releases/2016/08/save-money.aspx

Key Findings From 2016 Personal

Finance Studies (Non-Academic)

“4% Rule” Withdrawal or Annuities?

• TIAA Institute Study (5/16): compared systematic withdrawals to annuitizing

• Conclusion: Do both! – Put half of savings into variable annuity

– Get additional income from withdrawals from stock and bond portfolio

• Combination approach provided the best mixture of both income and ending wealth

https://www.tiaainstitute.org/public/institute/research/lifetime-income/achieving-retirement-income-security

2016 EBRI Retirement Confidence Survey (RCS)

• 69% of workers (or their spouse) had saved for retirement

• Considerable gap between workers’ expectations and retirees’ experience about leaving workforce

• 48% of workers (or spouse) had calculated retirement savings need

• 54% of workers had < $25,000 saved (excluding value of home and DB pension) – Includes 26% who have < $1,000

https://www.ebri.org/pdf/surveys/rcs/2016/EBRI_IB_422.Mar16.RCS.pdf

Millennial Retirement Planning • AICPA Study (3/16): Millennials have 2 major

obstacles to saving for retirement – Student loan debt – Pessimism and scars from the 2008 financial crisis

• Only half had started to save for retirement • Half fear losing their savings in retirement • Reassure millennials that time is on their side

– Time to invest – Time diversification

https://www.aicpa.org/press/pressreleases/2016/pages/saving-is-a-top-priority-for-millennials.aspx Journal of Financial Planning, September 2016, p. 14.

America Saves Week Survey • 2016 survey: 49% of 1,004 respondents save at

least 5% of income

• 43% save automatically outside of work

• 40% report good or excellent progress in “meeting their savings needs”

• Those with “a savings plan with specific goals” save more successfully than those without a plan

http://www.americasavesweek.org/less-than-half-of-u-s-households-report-good-savings-progress-according-to-9th-annual-america-saves-week-survey/

Financial Fragility Associated Press poll (5/16)

• 75% of people in households making <$50,000/year would have difficulty coming up with $1,000 to cover an unexpected bill

• 67% of people in households making $50,000 to $100,000/year would have difficulty

• 38% of people in households making >$100,000/year would have difficulty

http://bigstory.ap.org/article/965e48ed609245539ed315f83e01b6a2

Cost of Child Care New America study (9/16)

• Full-time care in a center for a child age 4 or under costs > average in-state college tuition

– Child care center: $9,589

– Average college tuition: $9,410

• One-fifth of families use a “patchwork” approach

http://www.fa-mag.com/news/finding-good--affordable-childcare-tough-in-any-u-s--state-29212.html

http://www.wsj.com/articles/soaring-child-care-costs-squeeze-families-1467415411

FINRAIEF National Financial Capability Study (NFCS)

• 2015 findings released in Summer 2016 • Continuation of some positive trends in 2015 from

2012 study (e.g., less difficulty paying bills) • Percentage of Americans with health insurance

increased from 78% in 2012 to 87% in 2015 • 34% of 27,564 respondents probably or certainly

could not come up with $2,000 for unexpected needs • Half of respondents do not have an emergency fund

of three months expenses http://www.usfinancialcapability.org/downloads/NFCS_2015_Report_Natl_Findings.pdf

Identity Theft Aftermath • Identity Theft Resource Center report: Identity Theft”

The Aftermath 2016 • 150 million Social Security numbers exposed in

breaches in 2015 • Takeovers of credit cards down (due to chips?) but

new account fraud and unauthorized use of debit cards, bank accounts, and PayPal increased

• Nearly half of tax fraud victims were forced to borrow money or apply for government assistance when they did not receive refunds

http://www.idtheftcenter.org/images/page-docs/AftermathFinal_2016.pdf

Key Findings From 2015 Government

Data

Spending Patterns of Older Adults

• U.S. Bureau of Labor Statistics Study (3/16): Spending patterns do not change significantly in many categories until a person reaches age 75

• Spending drops significantly after age 75 • Clothing, transportation, entertainment decline • Health expenditures increased beyond age 64

– $4,958 in age 55-64 group – $5,956 in age 65-74 group – $5,708 in age 75+ group

http://www.bls.gov/opub/btn/volume-5/spending-patterns-of-older-americans.htm

Credit Card Debt May 2016 Credit Card Debt Statistics:

• Average American household debt: $5,700

– Households with and without revolving balances

• Average for balance-carrying households: $16,048

– Remember, many households are carrying much more

• 38.1% of all households carry some sort of credit card debt (Census and Federal Reserve data)

https://www.valuepenguin.com/average-credit-card-debt

Baby Boomer Debt 2/16 Federal Reserve Bank of NY data

• Unprecedented debt loads for older Americans

• Average 65-year old borrower has 47% more mortgage debt and 29% more auto debt than 65-year olds in 2003

• Student loan debt among 65-year olds is a growing category

http://www.wsj.com/articles/new-york-fed-finds-large-increase-in-debts-held-by-those-over-age-50-1455289257

Median Income Increase 9/16 Census Bureau report

• First gain in household income since 2007

• Largest annual gain since Census Bureau began releasing data in 1967

• Median household income in 2015 was $56,516, up 5.2% ($2,798) from a year earlier after inflation

• 2015 official poverty rate: 13.5% vs. 14.8% in 2014

http://www.wsj.com/articles/u-s-household-incomes-surged-5-2-in-2015-ending-slide-1473776295

Household Net Worth Increase • Collective record of $89.1 trillion for all U.S.

households (Federal Reserve data)

• Generally driven by strong stock market and rising home values and increased bank deposits

• More than 3 million households remain underwater on mortgages

http://www.wsj.com/articles/u-s-household-wealth-rises-to-record-1474042043

“A Tale of Two Americas” • National averages indicate recovery from the Great

Recession

• National statistics do not reflect the experience of many people

• Income and assets of upper 10% of households are skewing data used to measure economic health

• “Hollowing out” of mid-level positions in workforce http://bigstory.ap.org/article/6594cedbfa2140f3a766862ae7ef13c0/memphis-and-around-us-economic-averages-miss-big-picture

Financial Fragility May 2016 Federal Reserve Board study: • 46% of adults said they either could not cover an

emergency expense costing $400 or would cover it by selling something or borrowing something

• 31% of non-retired respondents had no retirement

savings or pension

http://www.federalreserve.gov/2015-report-economic-well-being-us-households-201605.pdf

Upper Middle Class Makes Gains • Upper middle class is larger and richer than it has

ever been

– 29.4% of population in 2014

– 12.9% of population in 1979

• Study definition: household earnings of $100k to $350k for family of three

http://www.wsj.com/articles/upper-middle-class-sees-big-gains-research-finds-1466554177

Q2: Any Other Interesting 2016

Financial Surveys That You Remember?

Key 2016 Financial Events and Trends

and Products

High-Deductible Health Insurance Plans

• In 2016, FOR THE FIRST TIME EVER, more than half of workers- 51%- have a deductible of more than $1,000 for a plan covering a single person (vs. 46% in 2015)

• In 2017, 84% of large employers will offer high-deductible plans – 35% of large employers will offer ONLY high-

deductible plans (Kaiser/HRET survey) http://www.wsj.com/articles/employers-shift-higher-health-care-costs-to-workers-1476194147

Pullback on Employer Workplace Wellness Benefits

• Decline in workplace wellness benefits designed to cut employee health costs

• Examples include – Onsite flu shots – 24-hour nurse hotlines – Health coaching – Insurance premium discounts

• Measuring ROI for wellness programs is difficult http://www.wsj.com/articles/employers-cut-down-on-wellness-benefits-1466395262

Percentage of Uninsured Americans at Historic Low

• 2016 Survey: 8.8% of respondents lack health insurance (versus 16% in 2010)

• Translates to 27.3 million people

• 15.9% of 25 to 34 year olds were uninsured

• 8.1% of 45 to 64 year olds were uninsured

• Around 40% of those under 65 were in a high-deductible plan (versus 25.3% in 2010)

http://www.wsj.com/articles/percentage-of-uninsured-historically-low-1473220802

ACA Targeting Young Adults • Big push to sign up uninsured young adults < age 35

• Using Twitter and Twitch (video game platform)

• Young adults help offset costs of older, sicker people

• Open enrollment: 11/1/16-1/31/17

• < 30% of those with coverage were age 18-34 (2016)

• Concern: Enrollment stagnation could lead more insurers to drop out

http://www.wsj.com/articles/obama-administration-to-appeal-to-young-adults-to-sign-up-for-health-insurance-1474984080

ACA Health Plan Choices Shrink • Kaiser Foundation estimate: There could be just one

option for coverage in 31% of counties in 2017 (vs. 7% of counties in 2016)

• Many insurers are losing money on ACA health plans

• Humana and Aetna have withdrawn from market

• Remaining insurers seeing sharp premium increases

http://www.wsj.com/articles/health-insurers-pullback-threatens-to-create-monopolies-1472408338

ACA Tax Penalties • Called a “shared responsibility payment” by the IRS

– In effect, an extra tax

– Substantially higher than 2014 amount

• Taxpayers owe the GREATER OF a flat assessment or a percentage of income

• 2016 flat assessment penalty is $695 per adult ($347.50 per child) with a maximum of $2,085 per household

• 2016 percentage of income penalty is 2.5% of household income, up to national average cost of a Bronze plan

https://www.healthcare.gov/fees/fee-for-not-being-covered/

Decline in Long Term Care (LTC) Insurance Purchases

• Americans bought 105,000 LTC policies in 2015 (vs. 750,000 in 2000); 3.2 million boomers turned 65

• 70% of people turning 65 in 2016 will need some type of LTC at some point in their lives

• 8 hours of daily care costs about $44,000

• A year of nursing home care costs $91,000

http://www.fa-mag.com/news/americans-need-long-term-health-planning---will-they-get-it-29081.html

Older Working Women • Since 12/07, the share older working women (age

65+) has grown while the percentage of every other category of U.S. worker- by age and gender has declined or is flat

• 1 in 7 women work past 65 vs. 1 in 12 in 1992

• Projected to be 1 in 5 women by 2024

• Find job rewarding and/or financial need

http://www.wsj.com/articles/older-women-reshape-u-s-job-market-1456192536

Oldest Baby Boomers Turned 70 • 2.5 million living baby boomers (of 3.4 million born in

1946) hit the “Big 70” milestone in 2016 • Can expect about 15 more years of life • Increase in age 70+ people working; will be ¼ of

people age 70 to 74 by 2024 • Beginning of required minimum distributions: first

RMD in 2016 or 2017 • Never before have so many 70-year olds owed

money on their house http://www.aarp.org/politics-society/history/info-2016/baby-boomers-turning-70.html

Bank Overdraft Fees

• 1/16 Article: http://money.cnn.com/2016/01/14/investing/atm-overdraft-fees/

• Typical overdraft fee is $34

• CFPB Study: majority of overdrafts are made on transactions of $24 or less

• CFPB Study: If someone borrowed $24 for three days and paid an overdraft fee of $34, the APR would be 17,000%

Wells Fargo Scandal • Wells Fargo fined $185 million for creating fake bank

and credit card accounts. • Culture of unrealistically high sales targets • >5,000 employees let go; CEO Stumpf stepped down • Unwanted credit cards, fake PIN numbers, etc. • Transfers to fake accounts often triggered overdraft

fees when original account balance ran low • Take-Away: Check your credit report! http://money.cnn.com/2016/09/30/pf/fake-bank-accounts/

ACH Upgrades • Automated Clearinghouse Network (ACH) for

electronic fund transfers ($42 trillion annually)

• 9/16: Big step toward real-time money movements

• Businesses can hold onto cash until day that workers get paid instead of a few days later

http://www.wsj.com/articles/same-day-paycheck-deposits-finally-arrive40-years-later-1474668954

“Quiet Catastrophe” Report • Smaller % of men age 25-54 are working today than near the

end of the great depression!

• If labor force participation was as high today as 2000, 10 million more Americans would have jobs

• Get by on government benefits and support by others

• Spend 5.5 hours a day watching TV and movies

• Nicholas Eberstadt monograph: Men Without Work: America’s Invisible Crisis:

https://www.washingtonpost.com/opinions/americas-quiet-catastrophe-millions-of-idle-men/2016/10/05/cd01b750-8a57-11e6-bff0-d53f592f176e_story.html?utm_term=.ca77bf920858

Millennials Living at Home • For first time in modern era, living with parents edges

out all other living arrangements for 18- to 34-year-olds (5/16 Pew Research Center Report)

• Just under a third (32.1%) of millennials live at home (almost half in NJ)

• Impact on parents’ retirement savings, home downsizing plans, etc.

http://www.pewsocialtrends.org/2016/05/24/for-first-time-in-modern-era-living-with-parents-edges-out-other-living-arrangements-for-18-to-34-year-olds/

Student Loan Debt • Share of borrowers defaulting on student loans has

fallen modestly but remains high

• Just over 11% of 5.2 million students who left school in FY 2013 have defaulted

– Default = go > 360 days without making a payment after leaving school

• More students are finding jobs and increased use of income-driven repayment plans that reduce payments

http://www.wsj.com/articles/fewer-students-are-defaulting-on-loans-after-leaving-college-1475083308

Free FICO Credit Scores • 2013- Discover was first major card issuer to give

customers free access to FICO scores

• 2016- Most big banks now provide credit score access to customers.

• An estimated 100 million Americans now have access to their credit score

– Through their credit card or bank

• Does not impact credit score because people are not actively applying for new credit

http://www.usnews.com/news/business/articles/2016-03-09/banks-now-giving-customers-access-to-credit-scores-for-free

Tax Fraud Scams • Explosion of fake e-mails and calls purporting to

come from IRS

• Some ask victims to pay a balance tied to the Affordable Care Act (ACA)

• Some ask for payment with a prepaid debit card

• The IRS never initiates contact by e-mail or phone

http://www.wsj.com/articles/the-new-irs-email-scam-coming-to-your-inbox-1475143202

Tax ID Theft Cut in Half • Unprecedented public-private crackdown

• Tax preparation firms and IRS shared information

• Prevented millions of dollars in fraudulent refunds

• Tax identity theft dropped 50% during first nine months of the year

• More new safeguards planned for 2017

http://www.usatoday.com/story/money/2016/11/03/irs-says-2016-crackdown-helped-slow-identity-theft-tax-refund-fraud/93234624/

Predatory Installment Loans • CFPB crackdown on payday loans has led to

increase in predatory installment loans (“filling a void”)

• Installment loans are not in CFPB payday loan proposals

• Often carry triple digit APRs, but have longer repayment periods, e.g., 6-12 months

• May be for a few thousand dollars, paid in a series of installments vs. in a lump sum

• Customers still struggle to repay debt (balance declines very slowly)

http://www.wsj.com/articles/a-payday-loan-alternative-gains-ground-1470603307

40th Birthday of First Index Fund • 9/76- Vanguard 500 Index Fund opened (Jack Bogle)

with $11.3 million on assets • Today: 20 million investor clients, including many

“Bogleheads”: https://www.bogleheads.org/ • > $3 trillion in passively managed assets

http://www.wsj.com/articles/jack-bogle-the-undisputed-champion-of-the-long-run-1472855372 https://gcalhoun.files.wordpress.com/2016/09/16-09-01-wsj-happy-birthday-to-the-index-fund.pdf

U.S. Homeownership Rate • 7/16 Census Bureau Report- % of U.S. households

that own homes matched lowest level in 51 years (1965, when the U.S. Census began tracking)

• Just 62.9% of households owned a home

• Peak of 69.2% in 2004

• Reasons include: rising property prices, high rents, stagnant pay, student loan debt

http://bigstory.ap.org/article/7874336198a5405f8bfaa2673a56dffe/us-homeownership-rate-629-percent-matches-51-year-low

New Respectability for Reverse Mortgages

• Repackaged with 2013 consumer protections – Homeowners can’t take all of their equity at once

– Protections for non-borrowing spouse (can remain in home if certain conditions are met)

• Empirical research: No longer just a “last resort” – Can extend life of savings; line of credit can help portfolio

recover after market downturns

– Can delay taking Social Security benefits until age 70

http://www.wsj.com/articles/new-math-on-reverse-mortgages-1458525888

Q3: Any Other Interesting 2016 Financial Events,

Trends, or Products?

Key Government Legislation and

Policies Affecting Personal Finances

IRS Waivers on 60-Day Rollover Deadline for Retirement Plans • 2016 IRS clarification of acceptable reasons for

waivers of 10% penalty and ordinary income tax • Reasons include

– Financial institution and postal errors

– Misplaced distribution checks never received

– Severe damage to principal residence

– Death or serious illness in family

– Incarceration of taxpayer

https://www.irs.gov/pub/irs-drop/rp-16-47.pdf

DoL Final Fiduciary Rule “Covered investment advice is defined as a recommendation to a plan, plan fiduciary, plan participant and beneficiary or IRA owner for a fee or other compensation, direct or indirect, as to the advisability of buying, holding, selling or exchanging securities or other investment property, including recommendations as to the investment of securities or other property after the securities or other property are rolled over, transferred or distributed from a plan or IRA”

https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/dol-final-rule-to-address-conflicts-of-interest

DoL Fiduciary Rule Implications

• Aimed at eliminating exorbitant fees and commissions

• Financial advisors who provide guidance on retirement plan assets are required to recommend what is in the best interests of their client

• Compensation paid to advisors must be “reasonable”

• Expect adjustments in retirement services market procedures (takes effect in April 2017)

http://www.investmentnews.com/article/20160509/FEATURE/160509939/the-dol-fiduciary-rule-will-forever-change-financial-advice-and-the

Changes to Social Security Claiming Strategies

• Beginning May 2016, married couples are no longer able to file for- and then suspend- receiving benefits for the purpose of making their spouse eligible to take spousal benefits

• Age 62 by 12/31/15 (born 1953 or earlier)- restricted application for spousal benefits only still allowed at full retirement age (FRA)

• Still have one-time right to withdraw application for benefits within 12 months after benefits begin

https://www.onefpa.org/journal/Pages/JUN16-Redo-Strategies-When-Can-You-Redo-a-Prior-Social-Security-Claiming-Decision.aspx

New FAFSA Timeline • Free Application for Federal Student Aid (FAFSA) • Can file as early as October 1 instead of next year • Can use actual income tax data instead of estimated

data from returns not yet filed • May get earlier financial aid offers from colleges • Take-aways:

– Submit FAFSA as early as possible – Realize capital gains on assets before January 1 of

student’s sophomore year of HS to avoid having money count as income

• http://www.kiplinger.com/article/college/T042-C000-S002-new-strategies-to-get-more-financial-aid.html

2016 Military Topic: Military Lending Act (MLA)

• Military Lending Act (MLA) Final Rule changes in effect 10/3/16

• Extends MLA protections, including 36% Military Annual Percentage Rate (MAPR) cap, to a wider range of credit products, including credit cards.

• Modifies MAPR to include fees for credit-related ancillary products sold in connection with the credit transaction, finance charges associated with consumer credit, and certain application and participation fees.

• Provides a safe harbor for creditors ascertaining whether a consumer is covered by the final rule's protections.

• Modifies existing prohibition on rolling over, renewing or refinancing consumer credit.

• Subjects creditors to civil liability and administrative enforcement for MLA violations.

https://www.fdic.gov/news/news/financial/2015/fil15037.html

2016 Military Topic: Blended Retirement System (BRS)

• Authorized by the National Defense Authorization Act (2016).

• Three Pillars:

1. Retirement pay or pension

2. Automatic contributions, plus matching contributions, to TSP

3. Continuation pay at mid-career point

Breaking the BRS Down • 1% automatic DoD contribution to TSP after 60 days of service regardless

of SM’s contribution; 2 YOS vesting

• Up to 5% base pay match for TSP deposits through 26 YOS

• Serve 20 years, get 40% of highest 36 months of average base pay

• One-time continuation bonus paid out at 12 years to SMs who serve 4 more years: 2.5x monthly base pay (military has discretion to increase amount for skills, retention)

• Anyone with < 12 years of service as of 12/31/17 is eligible to sign up for the BRS

• Opt-in period is calendar year 2018

• SMs who joined before 1/1/06 will be grandfathered in current system

http://www.defense.gov/News/Article/Article/655705/dod-plans-benefit-revision-with-blended-retirement

2016 Military Topic: Military Family Lifestyle Survey

(Blue Star Families) • Third annual survey in 2016

• Increases understanding of unique needs and challenges of military families

• Almost 7,000 respondents in 2015

• 2016 findings released in December 2016

https://bluestarfam.org/2016/04/blue-star-families-launches-2016-annual-military-family-lifestyle-survey/

DMDC Surveys • DoD Defense Manpower Data Center (DMDC)

• Methodology vs. Blue Star Families studies: http://download.militaryonesource.mil/12038/MOS/Surveys/ADSS_MFLS_Comparison_9_7_2016.pdf

• 2016 Active Duty Spouse Survey Results (7/16): http://www.militaryonesource.mil/footer?content_id=293017

Q4: Any Other Interesting 2016

Financial Legislation or Policies?

New or Revised Financial Education Resources in 2016

Annual Limits Relating to Financial Planning

http://www.cffpinfo.com/annual-limits/

Next Gen Personal Finance • Significant changes to several units

– Created new Types of Credit unit – Revamp of Managing Credit unit revamp

• New Products: – Question of the Day – Data Crunches – Interactive Library – Forms and Statements (Coming Soon!)

• New Lessons: Entrepreneurship, Identity Theft and Philanthropy • Expanded NGPF Assessment Bank with Pre and Post-Tests and 10

Questions Per Lesson • Launched Professional Development opportunities

– NGPF Summer Institute – Professional Learning Community – Q&A Forum

• Had 52 guests on the NGPF Podcast, including Barbara O'Neill!

NEFE SAM (Smart About Money): http://www.smartaboutmoney.org/

• Three courses (Emergency Fund, Transportation, Housing) were added • Five Money Basics courses were added on basic concepts such as:

credit/debt, employment, insurance, investing, and spending/saving. • Comprehensive worksheets have been added. • Typical questions (and answers) were added to a section called Common

Money Questions. • The site is now mobile responsive and can be viewed on smartphones

and tablets.

NEFE Evaluation Toolkit: http://toolkit.nefe.org/

The Evaluation Toolkit Manual was revised by the Claremont Evaluation Center. The Financial Education Evaluation Manual helps financial educators understand the purpose and goals of evaluation and provides a basic overview of the evaluation process.

CashCourse: https://www.cashcourse.org/

New CashCourse content for 2016:

• 5 CashCourse coursework modules translated to Spanish • New Budget Wizard student budgeting tool • 7 new articles on insurance, contributed by the NAIC

NEFE White Paper on Financial Education Evaluation

Perspectives on Evaluation in Financial Education: Landscape, Issues, and Studies 10 sections about different audiences and topics for financial education http://toolkit.nefe.org/Portals/0/NEFE%20Evaluation%20White%20Paper%20October%202016.pdf?ver=2016-10-31-154554-707

CFPB

http://www.consumerfinance.gov/adult-financial-education/

Jump$tart Coalition Making the Case for Financial Literacy 2016: http://jumpstart.org/assets/files/Making_the_Case_2016_UpdateMay2016.pdf

eXtension Student Loan Fact Sheet Series

• College Savings Options • Paying for Education and Training Beyond High School • Types of Student Loans • Student Loans: Responsible Borrowing • Determining Your Student Loan Servicer and Loan Balance • Choosing a Federal Student Loan Repayment Plan • Federal Student Loan Consolidation and Forgiveness • Recovering from Student Loan Default • Student Loans: Later Life Impacts • Student Loan Legislation: Changes You Need to Know

http://articles.extension.org/pages/72895/student-loans

Rutgers Cooperative Extension High School Lesson Plans

• Risks and Benefits of Entrepreneurship (85k PDF) • Compound Interest: Your Best Friend or Worst Enemy (106k PDF) • Know the Score: Credit Score Modeling and Impacts (360k PDF) • The Impact of Inflation (128k PDF) • Monetary Transaction Tools (572k PDF) • Civic Financial Responsibility (511k PDF) • Insuring and Protecting Property Insurance (112k PDF) • Comparing Insurance How Health Insurance Works (973k PDF) • Values, Goals, and Financial Decisions (252k PDF) • Spending Plan/Budget: Your Financial Road Map (112k PDF) • Interest: The Cost of Borrowing Money (126k PDF)

http://njaes.rutgers.edu/money/

Road to Financial Wellness Pit Stop Video (Phroogal)

• https://njaes.rutgers.edu/money/road-to-financial-wellness.asp

Q5: Any Other New Financial Education

Resources Developed in 2016?

Preview of Expected 2017 Personal

Finance Changes

Social Security Social Security Feature 2017 2016

Maximum Taxable Earnings $127,200 $118,500

Quarter of Coverage $1,300 $1,260

Earnings Limit (for benefits < FRA) $16,920 $15,720

Maximum Social Security Benefit $2,687 $2,639

0.3% COLA for Social Security beneficiaries in 2017 https://www.ssa.gov/news/press/factsheets/colafacts2017.pdf

Health Savings Accounts HSA Feature 2017 2016

Contribution Limit Self-Only: $3,400 (+ $50) Family: $6,750

Self-only: $3,350 Family: SAME

Catch-Up Contribution $1,000 SAME

High Deductible Health Plan (HDHP) Minimum Deductibles

Self-Only: $1,300 Family: $2,600

Self-Only: SAME Family: SAME

2017 Retirement Savings Plan Contribution Limits

• Increases in income phase-outs for IRA savers

• Increases in AGI limits for the saver’s credit

• Increase in overall defined contribution plan limit: up to $54,000 (from $53,000 in 2016)

• SAME 401(k)/403(b)/TSP maximum contribution limit of $18,000 for 2017

• Same $6,000 maximum catch-up limit http://www.forbes.com/sites/ashleaebeling/2016/10/27/irs-announces-2017-retirement-plans-contributions-limits-for-401ks-and-more/#6d21270556e2

Inflation-Adjusted Limits to Take Effect in 2017

• Standard deduction for singles up $50 to $6,350

• Standard deduction for couples up $100 to $12,700

• Standard deduction for heads of household up $50 to $9,350

• Maximum EITC of $6,318 (3+ qualifying children)

• Estate tax exclusion amount will rise to $5,490,000 from $5,450,000 in 2016

https://www.irs.gov/uac/newsroom/in-2017-some-tax-benefits-increase-slightly-due-to-inflation-adjustments-others-are-unchanged

Key Take-Aways • Researchers continue to tweak “safe” withdrawal rates

• Personal traits are related to financial behaviors

• Many Americans are unprepared financially for retirement

• Many American households are “financially fragile”

• High deductible insurance policies are now the norm

• Fewer men age 25-54 and more older women are working

• The Military Lending Act (MLA) and Blended Retirement System (BRS) are key 2016 military personal finance events

Comments? Questions?

oneill@aesop.rutgers.edu @moneytalk1 on Twitter

Have a wonderful holiday season and a great new year!