Category: Financial wellbeing

What if I Live to be 100?

Barb Wollan

When you reach your 60’s, as I have, you start taking a serious look at whether you are financially ready for retirement. As I talk with people about my own tentative plans, I frequently mention this concern: “What if I live to be 100?” Usually, people laugh.

I thought about that last week as I scanned a research report released last summer: “How Well Do Retirees Assess the Risks they Face in Retirement?” published by the Center for Retirement Research at Boston College. The research identified five major risks faced by retirees:

  • Longevity Risk – risk of outliving your money
  • Market Risk – market volatility
  • Health Risk – unusually high medical or long-term care costs
  • Family Risk – divorce, death of spouse, or needs of other family members
  • Policy Risk – mostly related to changes in Social Security

The research results suggest that people are NOT very good at recognizing which risks pose the greatest threat to their retirement wellbeing. Objectively speaking, the greatest risks are (in order): 1) longevity; 2) health; and 3) market. But when people are surveyed, they focus their primary attention on market risk – the risks of ups and downs in the economy during their retirement, with longevity risk second.

The moral of the story?  Don’t laugh at me when I ask “What if I live to be 100?”

Seriously: the report makes clear that the average person does not pay enough attention to longevity risk. To build a financially secure retirement, we need to be prepared for the possibility that we might live a long time. For those of us whose entire retirement income, apart from Social Security, is held in 401ks, IRAs, and other similar accounts: we need to be prepared to stretch that money for 30 or more years. Even for those of us who have IPERS or some other guaranteed lifelong pension: we need to consider the impact inflation will have on that income over 30 years or longer.

Longevity Illustrator. Several years ago I discovered this tool created by the Society of Actuaries. It shows us the statistical probability of living to different ages. As a female in my early 60s, it tells me I have a 45% chance of living to age 90, a 23% chance of living to age 95, and an 8% chance of living to 100. Yes, the odds of living to 100 are fairly small but there is almost a 50-50 chance I’ll live to 90. That means I need to be prepared to live at least to 90 or 95. And if I want to play it safe, maybe 100!

I’d encourage you to check out the longevity illustrator for yourself, and consider the information as you review your retirement plans!

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Managing Your Finances Amid Recession Concerns

Ryan Stuart

Economists, policymakers, and news outlets are all at-odds over the U.S. economy heading toward a recession in 2023. For those paying close attention, the same debate took place prior to 2022; however, the economy mostly stayed its course, and recent economic data is pointing to the same…for now. Unfortunately, we have no way of knowing what the future holds, but there are still steps we can take to manage our finances during periods of uncertainty.

The first step in easing recession concerns is to review your current spending habits. It is very difficult to follow a financial plan, while simultaneously preparing for a potential economic downturn, if you have no idea where your money is going. But the good news…there are plenty of free tools out there to help! Utah State University’s PowerPay, the Ohio Public Employees Retirement System’s 50-20-30 Rule Calculator, and the Economic Policy Institute’s Family Budget Calculator are great for analyzing your spending in different ways.

The purpose of this exercise is not only to see where your money is going, but also to free up dollars toward your other goal: building emergency savings for the short and medium-term future. We often think of using emergency savings for an immediate, one-and-done expense; however, a recession can be much more than that for some households. That is why many financial professionals recommend having 3, 6, or even 12 months’ worth of expenses saved, depending on your situation.

On the long-term side of things, having a diversified retirement portfolio, sticking to your asset allocation, and rebalancing when necessary are all key strategies for reducing recession stress. The U.S. Securities and Exchange Commission’s Investor.gov website provides a Beginner’s Guide to Asset Allocation, Diversification, and Rebalancing (PDF format). This free publication explains the value of these strategies and how they can be utilized to benefit your savings goals.

If all else fails, please know that Iowa State University Extension and Outreach is here to help!

Ryan Stuart

Ryan is a Human Sciences Specialist in Family Wellbeing and an Accredited Financial Counselor®. He focuses on educating and empowering all Iowans to independently make positive financial decisions throughout their life course.

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From Thanksgiving to just Giving

Barb Wollan

I have been excited about Giving Tuesday ever since it was created several years ago. Why? Not because I’ve adopted it as the day when I do all my giving, and not because I have an organization that receives extra giving. I’m excited because Giving Tuesday draws attention to one of the three core uses of our money — the one that gets the least attention.

The core ways in which we use our money are: Spend, Save, and Share. Financial educators (like me) don’t talk about “Sharing” nearly as much as we talk about the other two, and yet we should – it’s important. There is debate whether we humans are inherently altruistic, or whether it is something we learn. None-the-less, people who choose to give typically report that they gain some type of psychological benefit or reward when they give, regardless of whether they can give a lot or a little. It “feels good” to give.

It feels even better to give when we know that our gift is appreciated and/or that it makes a difference. When we give gifts to loved ones, we (hopefully) can see that the gift is appreciated. When we give to organizations or causes, it’s not always so easy to tell. When giving to a local organization whose work you know well, you may see evidence of their good work in your community; you may even know some of their board members personally. With large national organizations, you might want to check them out before giving: tools like CharityNavigator.org or the Better Business Bureau’s Wise Giving Alliance (Give.org) can help.

You can also do your own research by checking out the organization’s website to find annual reports of their projects and their impact; you may even be able to check financial statements to see what portion of their funds goes for administration rather than direct service. Another useful step might be a web search for the organization along with a word such as “review” or “complaints” or “scams.”

I am one who finds that it “feels good” to give. I can say that it feels even better to give when I know the organization I’m giving to is using my money wisely. For more information, check out this news item from the Iowa Attorney General.

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Being Thankful

Barb Wollan

Thanksgiving – this season when we pause to be grateful – can become so much more than a day in which we gather with loved ones to enjoy each other’s company and share a wonderful feast. If we take it further, thanksgiving, or gratitude, can become an underlying attitude that helps us see our options and opportunities all year ‘round. That can have a big impact on our finances.

Feeling gratitude causes us to focus on what we have, rather than what we don’t have. As we deal with our finances and try to make choices about the best uses of our money, being mindful of and grateful for what we already have makes it easier to:

  • Say “no” to impulse or unnecessary purchases
  • Set money aside for future needs (including college, retirement, or other long-term goals)
  • Build an emergency fund
  • Give to worthwhile charities

Pausing and reflecting with gratitude on our possessions, and on the people and experiences in our lives, makes it easier to be satisfied.  Being satisfied makes it easier to put our money toward important uses rather than being distracted by spending opportunities with only short-lived value.

Gratitude helps us see ways in which we have more than a “bare minimum” existence – having freedom to choose how to use our money is definitely something to be grateful for. That includes small freedoms, like being able to add ice cream to our grocery cart, and bigger freedoms, like the ability to travel to see loved ones, or to provide music lessons for our child.

If you’re interested in taking your gratitude to a next level by sharing your abundance with causes important to you, stay tuned for next week’s post related to “Giving Tuesday.”

Note: freedom of choice is an essential element of financial well-being – learn more about financial wellbeing here or take the financial wellbeing quiz.

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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“Forgive My Student Loan? But I just paid it off!”

Barb Wollan
Graphic from https:studentaid.gov

The announcement by President Biden last month about the new plan to forgive up to $10,000 (or $20,000, in some cases) of student loan debt has been great news for many Americans, but there may be people who are groaning instead of celebrating. If you are one of those people, I may have good news for you!

Here’s the kind of scenario that may have people groaning:
Jane Doe owed $5,500 on her student loans as of March 1, 2020. Even when the COVID-related “student loan pause” kicked in March 13, 2020, she kept making payments of $215/month, because her income stayed steady and she just wanted to be done with the loan. She made her final payment a month ago and celebrated being out of debt!

But then – on August 24 came the announcement that she would be eligible to have up to $10,000 in student loans cancelled! GROAN…. “Oh if only I hadn’t made those payments – I would have been out of debt anyway, and I could’ve saved that $215/month!”

Here’s the good news: Jane Doe can apply to her loan servicer for a refund of the payments she made voluntarily during the student loan pause! And THEN she can apply for up to $10,000 of loan cancellation. In some cases the refund may occur automatically. Note: she will only be eligible for $5,500 loan cancellation because that’s what her balance was when the pandemic hit. The debt cancellation is “up to” $10,000, but if your loan balance is less than $10,000, the cancellation is limited by the amount of your debt.

Did you continue to make payments on your student loans during the student loan pause (administrative forbearance) that began March 13, 2020?  You can apply to get those payments refunded to you, and if you’re eligible for student loan cancellation, you may WISH to request a refund if those payments brought your loan balance below $10,000. Contact your loan servicer to start that process.

THEN, stay tuned for information on how to apply for the debt cancellation. The government expects the application to open in early October. To verify that you are eligible for the loan cancellation AND to minimize administrative glitches, check step one and follow step two provided by Federal Student Aid.

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Some Things Never Change

Brenda Schmitt

I have three grown children: each with two kids of their own. They once shared (with an eyeroll) how they always knew when mom was learning a new parenting curriculum because I would implement the strategies and techniques on them. It is now a privilege and a joy to watch my kids as parents and occasionally I will see one of those strategies from their past emerge in their home.

I really liked those parenting programs and the lessons that they reinforced in my kids (showing love while setting limits, using natural consequences, Savings/Spending/Credit, etc.). But as you would expect, there is now an app for SOME of that.  One that caught my eye allows a parent to pay their child an allowance or for extra chores. The money accumulates on a debit card which they can use to purchase the things they want or need.

The latest app being used with a couple of my grandkids is quite amazing. It teaches the Time Value of Money, Smart Spending through Rewards and the power of delayed gratification using Savings Goals.  The free version allows you to assign points to chores the child can earn and points for rewards the child can save for. For example…if a child wants a sleep over, the child will need to earn 1000 points.  Cleaning the toy room (a weekly chore) may be worth 5 points while emptying the dishwasher (a daily chore) may be worth only 1 point. The points can be assigned a dollar value as well.  So, if the child wants a $5 stuffed animal and it takes 10 points to equal $1, the child will need 50 points to buy the stuffed animal….I think there is also a math lesson in there.

What keeps it interesting is the fact that no two kids are alike, so what works for one child may not work for the next. I see that with my grandkids: one is highly motivated by rewards and has a long list of wants, while the other just loves to help and has no wish list.

By searching for “Child Chore Apps” on the web, you will find lists of apps that could be useful to parents trying to raise responsible young people and provide kids an opportunity to experience, practice and apply life skills, including money management.

Brenda Schmitt

A Iowa State University Extension and Outreach Family Finance Field Specialist helping North Central Iowans make the most of their money.

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VA Benefits Update and Resources

Ryan Stuart

While the Inflation Reduction Act is currently being signed into law, another (very) recently passed bill also has the potential to impact millions of Americans – the Sergeant First Class Heath Robinson Honoring our Promise to Address Comprehensive Toxics – or PACT Act. This bipartisan-supported legislation seeks to expand VA healthcare and disability benefits for Veterans, who served over a period of several decades, and were exposed to a variety of hazardous toxins such as those emitted by burn pits, the use of Agent Orange, and radiation emitted from nuclear weapon testing. This is a long-awaited result for Gulf War/post-9/11 and Vietnam-era Veterans.

The Department of Veteran Affairs created a new webpage, a PACT Act FAQ handout, and a Survivor Benefit handout to help spread the word; Veterans are also encouraged to use the excellent Veteran service resources that already exist:

  1. County Veterans Offices – every county in the state of Iowa has a designated Veteran Service Officer who can assist with VA Healthcare enrollment, disability claims, and many other issues.
  2. VA Resource Webpage – this Dept. of Veteran Affairs webpage is dedicated to providing support on all VA-related topics, including an email subscription request link.
  3. Military OneSource – many Veterans who are serving the remainder of their contract on Inactive Ready Reserve (IRR) are still eligible for the many confidential, non-medical support services they received on active duty or active reserve status.
  4. Iowa State University Extension and Outreach – programs such as Powerful Tools for Caregivers, Volunteer Income Tax Assistance (VITA), and 1:1 Financial Consultations are all available to Veterans, regardless of status.

Ryan Stuart is a U.S. Navy Veteran and previously served as a Personal Financial Counselor for the Iowa Army National Guard. You can schedule an appointment with him to discuss the Thrift Savings Plan, Blended Retirement System, VA Benefits, and more!

Ryan Stuart

Ryan is a Human Sciences Specialist in Family Wellbeing and an Accredited Financial Counselor®. He focuses on educating and empowering all Iowans to independently make positive financial decisions throughout their life course.

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Surprise Lawsuit? Get help!

Barb Wollan

Financial stress is high these days, thanks to inflation. Imagine adding to that a notice of a lawsuit seeking you to pay a bill of $10,000 or more that is owed by your relative to a nursing home! That would be enough to tip stress levels over the edge!

Unfortunately that scenario has been increasingly common for siblings, nieces or nephews, children or grandchildren or other relatives and friends of individuals living in long term care facilities, according to a recent article in Kaiser Health News, a reputable source of information on health policy issues.

If this should happen to you, don’t panic! There are steps you can take, and help is available. Seek information. Ask for documentation of the debt, AND ask for documentation of why the facility sees you as liable for the debt. And get help – you do not need to deal with this kind of nightmare on your own.

This is a good time to offer a couple of key reminders:

  1. Never pay debts belonging to someone else without exploring whether you are actually liable to pay the debt. As I wrote earlier this summer, you may not even be responsible to pay debts owed by your spouse after he/she dies.
  2. Be careful what you sign. In some cases, nursing homes have produced a document signed by the child (or sibling, niece or other person) in which they actually did accept responsibility for payment. 
    How could this happen? When a person is admitted to a long-term care facility, there is a mountain of paperwork. Amidst all that paper there could be a form by which the signer agrees to pay any unpaid bills. Be sure to read documents before signing them.
    Note: federal regulations prohibit facilities from requiring such forms before admitting a patient.
    Even if you did unknowingly sign such a document, it may be possible to fight back on the grounds that you did not knowingly accept that responsibility.

According to Kaiser Health News, in many cases lawsuits demanding payment are based on fraudulent grounds. Respondents should be sure to consult an attorney. In Iowa, the Legal Hotline for Older Iowans is a resource available to everyone over age 60, regardless of income; contact them at 800-992-8161.

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Financial Independence? Or Interdependence?

Barb Wollan

It’s my turn to write a financial blog post the week of Independence Day, and the obvious topic is to write about Financial Independence – which, for the average person, equates to retirement – the time when you have accumulated enough assets so that you can live on those assets rather than working. 

But when I think about it, I’m not convinced there IS such a thing as financial independence. I’m getting pretty close to a point where I might have enough assets to retire, but will that make me independent? I’ll still want to drive on roads that are paid for by my community, or county, or some other larger group of people. I’ll still want to use electricity, but I can’t pay for the electric grid on my own… I need everyone else to pay in too, or the whole system will fall apart.  

If I ever had a fire, I’d be grateful that the Red Cross showed up to help; likewise I’m grateful for the volunteers who make community beautification happen, and those whose volunteer work supports my public library, and those whose time and talents make community theater productions possible. An even less tangible example: my neighbors who have beautiful flower gardens that add beauty to my life. You get the point: even if we have more money than we need for ourselves, we still depend on others. And others depend on us. 

We value our independence as Americans. But I suggest perhaps we should give just as much attention to the importance of our INTER-dependence.  It’s worth remembering to appreciate all the services, amenities and intangible benefits we gain from being part of a larger community. It’s also worth supporting them. We support them financially in several ways: with our shopping (have you ever willingly paid a higher price in order to shop local?); with our tax payments; and/or with our charitable gifts. We may also support them with our time and skills, and just by being a good neighbor. That INTER-dependence is essential to keeping our communities and our country strong.  

Nearly all of us have had times when, if someone was “keeping score,” it would be clear that we RECEIVED more than we GAVE to this interdependent system. The nearly-universal example is when we were students in K-12 schools or at a college or university, especially if we received grants or scholarships. Many of us may encounter similar situations as we age. And certainly, when we have a serious crisis (like that home fire I mentioned above), we will likely receive more than we give or deserve.  

Thankfully, there’s no need to “keep score.” Instead, we’re better off simply celebrating the give and take that is central to the wellbeing of our communities and of our nation.  What INTER-dependence will you celebrate this week? 

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Death of a Spouse: Finances amid grief

Barb Wollan

Nearly 1.5 million Americans faced the death of a their spouse in 2019 – that figure likely increased dramatically in 2020 and 2021 due to COVID-19. The majority of those surviving spouses faced genuine financial challenges, while also dealing with grief and loss. For those who were over age 60 (about 1.2 million in 2019), recently widowed older adults face higher poverty rates, greater housing cost burdens, as well as other critical financial challenges. 

A new guide, “Help for Surviving Spouses,” available from the Consumer Financial Protection Bureau, alerts newly-widowed individuals to key steps that will help them find a new financial equilibrium. The 24-page guide provides user-friendly information, checklists, and places to make notes, serving as the all-purpose workbook that can get the new widow(er) through the financial tasks and adjustments that are needed.

The first weeks and months after a death are often overwhelming, with grief making it difficult to stay organized or even remember what needs to be done. Having a workbook can help individuals keep track of what has been done and what remains to be done. If you know a new widow(er) or frequently come in contact with people in this situation, consider printing the workbook for them; if you can, offer to help them get started.

Dealing with a deceased spouse’s debts. One key tip for surviving spouses is to be cautious about paying debts belonging to your loved one. In many cases, survivors are not legally responsible for debts belonging solely to a deceased individual. Learn more, and consider seeking professional guidance if you are unsure. Even if you feel a moral obligation to pay the debt, consider first how that will impact your financial situation going forward. If paying that debt leaves you in a financially precarious situation, it may not actually be “the right thing to do.”

Another reason for caution, with debt collection and all other mail, phone calls, and emails, is that families of newly-deceased individuals can be easy targets for fraud. Before even considering any debt, ask for evidence to prove it is a legitimate debt that has not already been paid.

Take advantage of available resources. When one spouse dies, household income typically drops; as a result the surviving spouse may be newly-eligible for various forms of assistance that can make a real difference in their financial well-being.

  • In Iowa, Lifelong Links, a resource provided by the Iowa Department on Aging and the Area Agencies on Aging, is an excellent first stop for those who want to learn about available options. You can search online or call 866-468-7887; if you call, you will be connected with representatives in your part of the state.
  • BenefitsCheckUp.org is a nationwide search tool that can also help you screen for resources that could be of help to you; it is provided by the National Council on Aging.

Source: Consumer Financial Protection Bureau, which also provides more data about recently widowed adults.

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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