The Women’s Institute for a Secure Retirement works to provide low and moderate income women (aged 18 to 65) with basic financial information aimed at helping them take financial control over their lives and to increase awareness of the structural barriers that prevent women’s adequate participation in the nation’s retirement systems.
Half a century ago, President Lyndon Johnson signed the nation’s first formal recognition of Latino/Latina culture, history, and contributions by declaring Hispanic Heritage Week in the United States. Twenty years later, President Ronald Reagan reaffirmed the importance of this celebration by expanding it to a full month, from September 15th through October 15th. Today, nearly 59 million people in the U.S. – over 18% of the total population – are of Hispanic origin.
As we honor the extraordinary cultural and historic contributions of Latinos/Latinas, however, it’s important to acknowledge the many social and economic barriers that exist – particularly Latinas. For example:
* Nearly one in three (30.9%) Latinas works in service occupations, which traditionally are lower paid;
* A Latina worker earns just 53 cents for every dollar earned by a White man
* Roughly two-thirds (65%) of Latinas work for employers that don’t sponsor retirement savings plans
* Just one in five Latinas is covered by a private pension
* Almost three-fifths (58%) of Latinas have no retirement income from savings and assets.
The result? Nearly one in five (19.8%) of Latinas aged 65 and over lives in poverty.
And, because Latinas age 65+ have longer life expectancies than the majority of the U.S. population, they are likely to experience worse poverty, for a longer period, than most other Americans. Retirement planning is important for all of us, and it is especially essential for Latinas.
The Latina Savings Project
That is why WISER is collaborating with MANA—A National Latina Organization on the Latina Savers Project. With funding from the AARP Foundation, the demonstration project is designed to support low- and moderate-income Latinas in developing a habit of saving for retirement through education and hands-on access to savings accounts. WISER and MANA are partnering with community-based Latina organizations in Baytown, Texas; Albuquerque, New Mexico; and Topeka, Kansas, with plans to expand to other communities.
The project helps participants open savings accounts and begin to contribute what they can afford, with added opportunities for matched savings contributions. The project also provides culturally-specific workshops that focus on the importance of saving and offer practical advice about how to get started.
The goal of the project is to help improve the long-term financial security for its participants. Ideally, a successful outcome will help jump-start other efforts to increase Latinas’ retirement savings. More information about the project will be available soon at www.wiserwomen.org.
Did you become eligible for Medicare Part A on or after March 1, 2013? Did you keep your Affordable Care Act (ACA) health coverage instead of enrolling in Medicare Part B and then discover there were penalties for keeping that coverage?
You have until September 30, 2018 under a special program which lets Medicare Part A beneficiaries sign up for Medicare Part B without late enrollment penalties.
Who is eligible?
Medicare beneficiaries who were covered by a qualified health insurance plan and who are not enrolled in Medicare Part B are eligible. Perhaps you turned down Medicare Part B coverage or dropped it because you thought ACA qualified health coverage was more affordable. If so, what you did not realize is that you would lose the benefits of ACA coverage because of your Medicare eligibility. And, you will face Part B higher coverage costs for life.
What does the special relief provide
It provides a special enrollment period that allows individuals to enroll in Medicare Part B without facing lifelong enrollment penalties. This ends September 30, 2018
If individuals have Part B coverage now but are paying late enrollment penalties, special relief would end the penalties.
Apply for special equitable relief to enroll in Medicare Part B and/or to eliminate your Part B enrollment penalties.
Call the Social Security Administration (SSA) at 800-772-1213 or go to www.ssa.gov to find a local Social Security office that you can visit in person
Once at the office or on the phone with a representative, request special “equitable relief” to enroll in Part B and/or eliminate your Part B penalties.
At a recent Women’s Institute for a Secure Retirement (WISER) roundtable addressing strategies, choices and decisions for women’s retirement income, important new data was presented that highlights the challenges faced by women in preserving their 401(k) savings when changing jobs – particularly for women with balances less than $5,000.
Compiled by Retirement Clearinghouse (RCH) and presented to the WISER roundtable by RCH EVP Tom Johnson, the data indicates that women with small 401(k) balances cash out much more frequently than their male counterparts. However, as women’s 401(k) balances grow, they become more likely than men to preserve their retirement savings.
These behaviors, along with the results of the Auto Portability Simulation, suggest that a program of retirement savings portability could incubate women’s small 401(k) balances, allowing them to more effectively grow their savings to higher balance levels, where more virtuous behaviors prevail.
An infographic summarizing the statistics is available for download at this link.
Women’s Cashout Leakage By-the-Numbers
Using a multi-disciplinary approach that incorporated industry research on cashout leakage, women’s representation in defined contribution plans, participant turnover rates, the Auto Portability Simulation, the EBRI/ICI 401(k) database and the EBRI Retirement Security Projection Model®, the results provide a model of women participants’ post-separation job-changing and cashout behaviors.
Based on Vanguard research, women collectively represent about 40% of all defined contribution plan participants.
Each year, an estimated 5.9 million women participants will change jobs.
Of these 5.9 million women job-changers, approximately 2.4 million, or 41% will cash out $28 billion in retirement savings, paying taxes and penalties.
2.1 million, or 36% will have balances less than $5,000. Of these, 1.5 million – a whopping 71% — will cash out $2.6 billion in savings.
Over a generation, 104 million women will cash out almost $800 billion in retirement savings, in today’s dollars.
Drawing upon a 2015 survey by Boston Research Technologies, the RCH data also revealed that, at sub-$5,000 levels, women of all ages tended to cash out at much higher-levels than their male counterparts, as indicated in the graph below.
Chart 1 – Women’s Odds of Cashing Out Small Balances Source: Actionable Insights for America’s Mobile Work Force, Boston Research Technologies (2015)
The Promise of Portability
A more promising data point was revealed in a 2011 study by Aon Hewitt, indicating that women – at higher balance levels – were more likely than their male counterparts to preserve their retirement savings from job-to-job. This finding seems to mirror other research (ex. – The $10,000 Hurdle, Northern Trust, 2017) suggesting that efforts to move participants’ balances to higher thresholds can act as an effective deterrent to cash outs.
In preserving and incubating women’s small 401(k) balances, auto portability delivers.
Incorporating the results of the Auto Portability Simulation, the RCH figures show that, on an annual basis, auto portability would preserve the savings of 1 million women participants. Over a generation, 42 million women would preserve their retirement savings, worth about $365 billion in today’s dollars.
While the systemic results of auto portability are impressive, its effect at an individual level is equally impactful.
The RCH analysis depicts the individual impact of preserving 1-3 $5,000 balances over the course of a career. As the figure shows below, preserving just one $5,000 balance at age 25 can result in $70,000 in retirement savings, whereas three $5,000 balances preserved over the course of a career could result in an additional $123,600 in retirement savings.
Figure 1 – Value of Preserving $5,000 Source: Retirement Clearinghouse
Taken together, the new data presented at the WISER roundtable demonstrate that by reducing cashouts, consolidating balances and achieving higher balance levels, women could benefit disproportionately from the widespread adoption of auto portability.
Tom Hawkins is vice president of sales and marketing with Retirement Clearinghouse, and oversees all key operational aspects of this area, including RCH’s web presence, digital marketing and plan sponsor proposals. In other roles for RCH, Hawkins has performed product development, helped lead the company’s re-branding, evaluated and organized industry data and makes significant contributions to RCH thought leadership positions.
Every May, WISER is pleased to partner with organizations across the country for Older American’s Month, led by the Administration on Aging, part of the Administration for Community Living. The 2018 theme, Engage at Every Age, emphasizes that you are never too old (or young) to take part in activities that can enrich your physical, mental, and emotional well-being. It also celebrates the many ways in which older adults make a difference in our communities.
Here at WISER, we believe wholeheartedly in the message of Older Americans’ Month—that no matter your age, you have unique benefits to offer to society, your loved ones and yourself. Even if you are no longer working, there are ways to stay engaged with the world around you. Doing so keeps you connected to others and keeps you alert—which is a good thing for your finances. The more isolated you are, the more susceptible you can become to financial scammers, who are likely to prey on older Americans.
For those who aren’t quite ready for more advanced money topics, WISER created a storybook called Sonja Meets Her Future Self. The book is available for free download or can be ordered directly from WISER. In the story, a young girl named Sonja travels forward in time and meets future versions of herself. Along the way she learns about the importance of saving and what it means to be retired. This booklet provides a multi-generational look at retirement planning and the valuable lesson of save, spend and give.
In addition to teaching others about financial lessons, another great way to stay engaged is through volunteer work. Doing so can keep you busy during retirement and is often an activity that is free of cost. Websites like volunteermatch are a great starting point. Your local library is another great resource to find community groups that will keep you engaged.
WISER believes that financial security is tied to better physical, mental and emotional well-being. Stay engaged during Older Americans Month (and year-round) with our resources.
WISER is pleased to share this message from the Social Security Administration in celebration of National Social Security Month.
In April, we celebrate National Social Security Month, and highlight our agency’s mission and purpose. We’re with you throughout life’s journey — from birth, to marriage, and into retirement — and we’re always searching for ways to give you easy and secure access to everything we offer.
We are constantly expanding our online services to give you freedom and control in how you wish to conduct business with us. Our online services help you plan for the future and keep you in control of your benefits. You can go online to:
March was Women’s History Month, but at WISER, we’re dedicated to promoting women’s financial security every month of the year. One benefit that is particularly important for women to understand, because it is key to financial security in retirement, is Social Security. It is never too early to start understanding Social Security benefits for both you and your loved ones. The more you learn now, the better prepared you will be in the future.
Social Security is especially important for women because they are more dependent on it than men. More men than women receive income from retirement plans and pensions: 4 out of 10 men, compared to 2 out of 10 women. As long as women continue the work patterns that involve part-time work and moving in and out of the paid labor force to provide family care, the benefits they receive from retirement plans or employer pensions will be lower than men’s. And, Social Security, which is portable from job to job and is cost-of-living adjusted at retirement, will remain the mainstay of retirement income for women.
Different people become eligible to receive Social Security payments at different times. As a worker, you must work and pay Social Security taxes for at least 10 years (40 quarters), and be at least 62 years old. As a spouse or divorced spouse, you must be at least 62 years old. If you are divorced, you must have been married to your ex-spouse for at least 10 years and currently be unmarried. As a widow, you must be at least 60 years old (unless you are disabled in which case you can claim your benefit as early as age 50). If you are divorced, you can claim the survivors benefit if you were married at least 10 years and are currently unmarried (unless you remarried after age 60).
However, when you actually receive benefits also depends on when you were born. You may receive full benefits at “full retirement age.” Full retirement age is increasing gradually until it reaches age 67 for those who were born 1960 or later. Find a chart that lists your birth year and when you can receive full benefits on WISER’s fact sheet, Social Security: What Every Woman Needs to Know. The fact sheet includes answers to many other Social Security questions you may have, including how to estimate what your benefits will be and how you will be taxed on your benefits.
Because Social Security is so important for retirement, there are many organizations and resources beyond WISER dedicated to helping you understand and make the most out of it. Visit WISER’s Social Security resource page to learn more and for useful links, including to the Social Security Administration booklet, What Every Woman Should Know. The page is also a great place to check for recent news on Social Security, such as the Cost of Living Adjustment (COLA) for 2018. Each year, the Social Security Administration may increase benefits to help seniors with changes to the cost of living due to inflation and other factors. In 2018, monthly Social Security and Supplemental Security Income (SSI) benefits will increase 2.0%.
America Saves Week (February 26 – March 3, 2017) is an annual opportunity for individuals to assess their savings and take financial action. Each year, WISER and other organizations across the country encourage savers – or potential savers –to set a goal, make a plan, and save automatically.
At WISER, it’s almost like every week is America Saves Week– we’ve made it our mission to encourage women to be financially independent and prioritize saving for their long-term future. But on this week in particular, organizations across the country emphasize the importance of financial planning. We share ideas and support and encourage each other– an event that mirrors something that’s important for you to do, in your own financial life: talk about savings with your friends. Although it can be sometimes seen as impolite or taboo, talking about money, and more specifically long-term saving, can help you achieve your financial goals. Here’s why:
1. It holds you accountable.
There’s nothing like outside observation to help us accomplish our goals, no matter what they may be. When we’re only accountable to ourselves, it’s easy to let things slip or not try as hard, but when someone else is in on the plan, the pressure is on! Tell your friends about the specific goals you have this month when it comes to saving– say, cooking dinner at home more than going out in order to save cash. Post pictures on social media of your meals! The positive encouragement from friends will motivate you, and when making the decision in the future about whether to eat at home or at a restaurant, eating at home will seem even more appealing. Talking to your friends about your savings goals will hold you accountable, too, because it will mean that there will be someone to remind you of your plan when you’re thinking of abandoning it.
2. You friends may give you great ideas.
People often don’t talk about their savings goals, so you never know who similarly may be taking smart steps towards their retirement like you. If you share your goals with others, you may learn that they too are on the same path, and can offer you great advice on how to get there.
3. It helps others.
In the same way that you may not know that your friends and family are taking smart steps toward saving, you also may not know how others in your life are struggling with their finances. If you talk to them about the steps you are taking to save– and why it is important to do so– it may motivate them to move forward in a similar way in their own lives. Sometimes all it takes is a little extra encouragement to get the ball rolling!
There are many other reasons why it’s a great idea to talk about your savings goals with your friends and family. America Saves Week, in particular, is an opportunity for individuals to assess their own saving status. WISER is proud to be a partner in this annual campaign. Take the America Saves Pledge and join the #ImSavingForSweepstakes that asks savers to inspire friends and family to save by sharing their goal or savings story on social media. You could win up to $750 toward that goal.
Visit America Saves for more savings tips and information, and check out WISER’s resources to help you save and plan for a more financially secure future.
At the turn of every New Year, the internet is filled with lists of resolutions—ones that will help you get in shape, or improve your mood, or strengthen your relationships. Our favorite lists offer resolutions to help you get (or keep) your savings on track. The start of the year is a great time to set financial resolutions, and numerous websites offered great lists of financial goals for 2018. But much harder than setting the goals is actually keeping them. The former only takes a moment, the latter takes dedication and commitment, day after day, week after week. Commitment to resolutions tends to fade a few weeks into the year—people stop going to the gym, stop eating healthy, and, unfortunately, stop saving like they promised they would. Here’s our advice on not just the financial resolutions you should make, but how to keep them.
Keep track of your progress.
Many goals are unquantifiable, making it hard to know whether your efforts are worthwhile. That can prove to be an obstacle, but luckily, financial goals are easy to keep track of. Seeing the dollars rise in your account is a motivation to keep going. Downloading an app that tracks your savings can make this simple and will do all the calculations for you. Many banks and retirement plans offer them. Check out WISER’s blog post, “Save or spend? How apps can help you stay on track,” for a review of what’s available.
If a goal is proving too difficult, reassess it, rather than dropping it all together.
There is no shortage of recommendations for how much you should be saving. This financial new year’s resolutions list, for example, suggests that people save 15% of their gross incomes. If you make $60,000 a year that would be a savings goal of $750 per month. The percentage you should aim to save depends on a number of variables including your age and financial stability, but many people may find these goals hard to meet. WISER’s Seven Life-Defining Financial Decisions booklet offers advice on how to set the right goal for yourself. If you can’t save 15%, don’t get discouraged. Instead of keeping the number too high and continuously failing to meet it, try readjusting your goal until you reach a level that is doable and appropriate. This will likely stop you from throwing away the goal completely.
Work on one goal per month, rather than all of them at once.
Many use the start of a year as a time to set goals, but why not the start of the month? Rather than loading yourself up with ten new financial tasks all at once, try adding in one new goal per month, so that by the time the month is over and it’s time to add a new goal, the first has already become a habit. January is a great time to create a budget or review the one you have, and the start of each new month would offer a chance to reassess that budget and your spending and savings habits. WISER’s Budget worksheet is a great resource to help get you thinking about your monthly income and expenses. In February, make a commitment to prioritize your debts—meaning analyzing all the debt you have, and figuring out what is the priority to pay off, based off which has the highest interest rate. Continuing setting a new financial goal each month and watch your financial confidence grow!
Ask for help.
Finally, remember that although many see finances as something that is private, talking to family and friends about your goals can be extremely helpful. Finding a buddy who is also trying to save, or who can offer advice, will make it much more likely that you reach your goals.
November is National Family Caregivers Month—an annual event celebrated by WISER and partner organizations of family caregivers across the country. It’s a time to raise awareness of family caregiver issues, celebrate their efforts and increase support. This month’s theme “Caregiving Around the Clock” emphasizes that caregiving is a 24 hours a day, 7 days a week job.
Caregiving is a consuming role—physically, mentally and financially—yet many who take on the work don’t identify with the job or fully realize the toll it takes. Often, it comes on unexpectedly, and sometimes the responsibilities may be shared. For example, caring for an elderly parent might be divided between siblings or a paid worker. Still, even if you are doing the actual work of caregiving part-time or just a few hours a week, the effort affects every part of your life. It becomes something you have to think about and plan for around the clock.
The financial challenges of caregiving often come as a surprise to caregivers, as the day-to-day costs can really add up. Many smart retirement planners who believe that they have everything properly planned for are still often unprepared for the financial shock that caregiving for a family member can bring. Even if the role of caregiver comes unexpectedly, there are ways to keep your retirement savings on track while caring for others.
Create, and stick to, a household budget.
Caregiving can affect your daily and long term spending in unexpected ways. That’s why it’s important to create and follow a budget. If you already have one, adjust it to consider your new expenditures. You may also have a lower income if you decide to stop working or reduce your hours. While you’re at it, have financial conversations with the person you’re providing care for, too. It’s easy for costs to balloon, and when mental and physical capacities diminish, the elderly can also be at an increased risk for being victimized by financial scammers.
Try to avoid leaving your job.
It can be tempting (or in some cases a necessity) to run to a loved one’s side when they need care. Doing so, though, can be extremely harmful to your finances. Leaving your job will mean losing compensation and benefits, and maybe skills and contacts. If at all possible, try to exhaust all other options before leaving your job or see if you can at least work reduced hours instead of quitting entirely. If you have a retirement plan or pension through your employer, try to work at least as long as needed to be fully vested in your company’s retirement plan. If you are cutting back on hours, see if there is a minimum number of hours you can work to get reduced benefits.
Be smart about the financial support you provide your loved ones
Don’t drain your savings to help the person you are caring for financially. Usually, the major expense for older adults is health care. Drug plans run through Medicare and private companies may help cover the rising costs of medicine. Low-income seniors may also be eligible to receive help paying their premiums or for additional uncovered medical costs. Information about getting help paying for Medicare costs is available at Medicare.gov. The Eldercare Locator, a public service of the U.S. Administration on Aging is also a great resource for connecting with trusted resources in your community that can help with caregiving and other services for older adults and their families. Visit eldercare.gov or call 1-800-677-1116.
For more information and resources for managing your finances while caregiving, download WISER’s publication: Financial Steps for Caregivers. Included in the booklet is a budget worksheet that includes categories for caregiving costs.