Current Affairs

­

Financial Education Missing Piece in Social Work

Social workers assist people with a myriad of complex topics like housing, public benefits and health care. Would adding financial education be too much to ask of an already strained profession? Or might it be an essential piece that has been underestimated all along?

The Spring 2018 edition of NEFE Digest explores the concept of including financial education training for social workers. It draws from a research report produced at the George Warren Brown School of Social Work at Washington University in St. Louis: Faculty Perspectives on Financial Capability and Asset Building in Social Work Education.

On any given day, a social worker could be helping someone find treatment for opioid addiction, placing a child in foster care, or leading crisis management after a natural disaster. While these might not seem to have much in common at first glance, there is a financial component underlying just about every situation a social worker might face.

At its core, financial education is about more than spending guidelines and credit scores. It’s about making informed decisions that will benefit one’s life now and in the future. Regardless of whether the challenge is getting affordable housing, finding employment or caring for the elderly — basic financial skills and understanding are critical to making the best choices. Training social workers to educate their communities about debt management, spending guidelines, opportunity cost and other personal finance concepts could improve decision making and outcomes in just about every area.

By |July 16th, 2018|Current Affairs|

Merits of Wedding Insurance

merits of wedding insuranceHave you ever thought about the merits of wedding insurance? According to a survey by TheKnot.com the average cost for a U.S. wedding is now more than $35,000. That’s also about the average price paid for a new car, according to 2018 figures from Kelley Blue Book. And few would argue the merits of car insurance.

What if storms shut down a major airport, causing you to postpone the wedding? Or, what if that adorable ring-bearer drops the diamond-studded bands off the pier at your beach ceremony? Wedding insurance is a type of special event insurance (also called one-day insurance) that covers injuries and venue damages. It can also cover loss or damage of things like photos, attire, gifts and rings, as well as deposits in case of cancellation.

Before you buy insurance, check with your vendors to see what sort of coverage they have for their services and facilities. You wouldn’t want to pay for overlapping coverage if, for example, the reception hall has liability coverage for accidents. Ask for copies of any vendor policies, and then sit down with your insurance professional to determine where you may benefit from additional coverage.

By |May 7th, 2018|Current Affairs, Insurance|

Successful Investors Keep Seatbelts Fastened

Successful Investors Keep Seatbelts FastenedLooking back two years, U.S. stocks have risen more than 30 percent. There have been occasional dips along the way, though the rise has been pretty much non-stop. The first week of February 2018 jolted investors back to reality, as stocks fell more than 10 percent in a short period of time. The numbers themselves sounded scary. The Dow Jones Industrial Average fell 1,800 points in a few days; it was easy to forget the drop was from record heights of 26,000. Since then, markets have recovered more than half of that unnerving slide.

Successful Investors Keep Seatbelts Fastened

It’s a challenge to remain calm during a substantial market decline for some investors. Once again, we have witnessed how important it is to block out “The sky is falling!” media warnings. Emotional reactions are likely to be detrimental for investors. The fact is volatility is a normal part of investing. It is always there. It’s interesting to note that we most often see the term “volatility” used when markets fall, and yet markets are “volatile” on the upswing, too, as we have seen for a good stretch of time.

Investors are well-advised to “stay in their seats with seatbelts fastened” when things get bumpy. Intra-year market declines are common, according to academic research by Dimensional Fund Advisors (DFA). Looking back to 1979, DFA found that about half the years experienced declines at some point of more than 10 percent. Despite those significant drops, calendar year returns finished positive 32 of 37 years.

The DFA study also determined that trying to avoid short-term losses through market timing is apt to hinder long-term performance. A substantial piece of long-term stock returns comes from just a handful of up days. An investor attempting to time the market is all too likely to be on the sidelines on strongly positive days. Through the period of 1990 to 2017, missing out on only the five best days cut returns by a full one-third.

As the markets jump and jolt, try to remain seated and relaxed. Better yet, get up and do something you enjoy. Go for a walk or out to a movie, and let the markets do what they will from day to day knowing that you have a long-term plan.

By |April 16th, 2018|Current Affairs, Investing|

Understanding RMDs

Patrick Eng writes about the importance of understanding RMDs.When investors with retirement accounts turn 70 ½ years old, they should be aware of the required minimum distribution (RMD) rules regarding the type of retirement accounts they possess. Understanding RMDs will help you avoid high penalties from the IRS. Here are some things to keep in mind.

The IRS requires that account holders of traditional IRA, SEP IRA, Simple IRA and company-defined contribution plans [401(k), 403(b) and 457] withdraw a certain minimum amount from their accounts each year. (Roth IRAs do not have an RMD.) If you continue working past 70 ½ years, many defined contribution plans will allow you to put off taking the RMD until you retire; but for all non-Roth IRAs, you have to start taking RMDs by April 1 of the year following the year in which you turn 70 ½, even if you are still working.

This is an annual requirement until the account is drawn to zero or until the account holder dies, in which case the assets can be placed into an Inherited IRA for a beneficiary or distributed to heirs in another way. A penalty of 50 percent is levied by the IRS on the amount not withdrawn. For example, if your RMD is $10,000 and you do not make your withdrawal, you will owe the IRS $5,000 in penalties and must still take your required distribution.

The IRS does not allow tax-deferred accounts to grow indefinitely without having to pay taxes on the money. Investments in a tax-deferred retirement account have been sheltered from taxes since their initial contribution and throughout the accumulation and investment period. Thus, the IRS places a time limit on this tax deferral and mandates withdrawals through the RMD.

Most financial institutions have a process to help their clients take care of their RMDs, but ultimately the responsibility lies with the account holder. It can be an expensive oversight if not taken care of in a timely manner. If you are approaching the age for RMDs, talk with your advisor.

By |February 27th, 2018|Current Affairs, Retirement|