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Thursday, January 21, 2021

COVID Fatigue: Expert Tips to Release Helplessness, Frustration, and Anxiety


I recently attended two programs about COVID-19, one by a large investment company about financial impacts and the second by a hospice educator at a local adult education center about social and emotional impacts. While the two programs were entirely different in their content, there was one thing they had in common.

Both programs stressed the importance of controlling what you can. With finances, this can be done by monitoring spending and diversifying investments. Controllable lifestyle actions include physical activity and grieving losses.

Below are my ten key take-aways from the two COVID-19 programs:


¨       COVID-19 Impacts Will Linger- The investment firm predicted that financial impacts from the pandemic may not be behind us until 4th quarter 2021. The speed of economic recovery will depend on the speed of vaccinations and herd immunity and “fear factors” (i.e., when people start to feel comfortable going out again).

¨       Long-Term Scarring is Evident- There will soon be millions of people out of work for more than one year as well as companies out of business, and empty offices impacting commercial real estate markets. Pandemics are local, as well as global, and recoveries will be different in different parts of the country.

¨       Unknown Risks are Part of Investing- Unforeseeable events are a fact of life. COVID-19 was a big one. Investment diversification is the best defense against unknown risks. Experts recommend holding some stock and “riding out” market downturns. If you are not in the equity market, you risk loss of purchasing power in bonds and cash assets.

¨       Many People Feel Helpless and Frustrated- COVID-19 upended Americans’ lives and schedules. Several class members said they felt like “hamsters on a treadmill,” on a continuous Merry-Go-Round, or that every day was “Groundhog Day,” the 1993 film where characters get trapped in an endless time loop. Know that you are not alone.

¨       Healing Starts by Identifying Losses- Class participants were asked to write down the number of losses they thought they experienced as a result of living with COVID-19. I wrote down 5. Then we were given a worksheet developed by Opus Peace with a list of 50 losses grouped into five categories (see below). When asked if their “number” increased after completing the worksheet, every hand in the class went up. We all lost more than we originally thought.


Physical Losses- Includes loss of physical health, energy, sound sleep, income, housing, and independence.

Professional Losses- Includes loss of teamwork among colleagues, social interaction, and personal space.

Mental Losses- Includes loss of brain capacity, routine, ability to make decisions, and a sense of normalcy.

Spiritual Losses- Includes loss of role in life, beliefs, innocence, spirit/vitality, and ability to feel gratitude.

Emotional Losses- Includes loss of self-esteem, stability/certainty, social interaction, and planned future.


¨       Americans Experienced a STUG- As a result of COVID-19, we all experienced a Sudden Temporary Upsurge in Grief (STUG). Research indicates that “those who grieve well, heal well” and that “you can’t heal what you don’t feel.”  According to Opus Peace, “hope begins when we grieve the losses we have experienced.”


¨       “Numbing” is a Frequent Response- People often try to “numb” themselves in stressful times. Numbing agents include shopping, alcohol and drugs, work-work-work, TV and video games, doing too much for others, stoicism, and staying busy. The problem with numbing agents is that people do not address their losses and grieve.

¨       Movement and Action are Powerful- There are ways to address fear, helplessness, chaos, and anger resulting from COVID-19 including singing, drawing, dancing, exercising, and writing. It is also OK to cry. Crying is healing. Don’t be a passive bystander and get squeezed out of your own life by the pandemic. Recognize good things that happen even if they are not what you planned. It is possible to experience peace and pain at the same time.

¨       Gratitude Helps People Heal- Research has shown that gratitude is powerful. It has been shown to improve physical and mental health, improve relationships, and even help people sleep better. One often-overlooked group of people to be grateful for is people who have lost their jobs. They have paid a terrible price to keep the rest of us safe.

¨       Words Matter- Poor word choices to use with family, friends, clients, and students include “just get over it,” “suck it up,” “it is what it is,” and “just stay positive” or to scold them for their anger or despair. A much more caring and effective approach is to say something like “tell me how you are hurting right now and how I can help?.”

Wednesday, January 13, 2021

Retirement in a Pandemic: Key Factors to Consider


One of the most significant transitions in a person’s later life is exiting a long-time career. For this, there is no “one size fits all” decision. A lot depends on someone’s goals (e.g., traveling), and lifestyle decisions (e.g., where to live and whether to continue working), as well as available resources such as savings, a pension, and employer-subsidized health insurance.

Other key factors to consider are health status and family responsibilities (e.g., caring for aging parents or grandchildren).

COVID-19 has added to the complexity of later life financial planning. It put many travel plans and experience goals on hold and caused some people to reconsider relocating far away from family and friends when it is difficult to get together.

Other issues that arose during the past year are potential home sellers’ reluctance to sell houses, downsize, and move during the pandemic and some people exiting the workforce sooner than planned due to layoffs and health concerns.

All of these factors have prompted many older workers to consider whether they should retire or continue to work longer (assuming they have a choice) to save more money and/or because their planned lifestyle (e.g., traveling and/or moving) is currently not in the cards, anyway, due to COVID-19. Below are nine general planning tips to consider:

¨       Define Your Future Lifestyle- Some people can live happily on half their pre-retirement income while others require 100% (or more!). For many people, 70% to 80% is a realistic income replacement percentage. Inflation will increase expenses over time, however, so an inflation rate (e.g., 3%) should be factored into retirement savings calculations.


¨       Learn “The 4% Rule”- A frequently cited guideline, based on a 1994 study, is to withdraw 4% of retirement savings (any amount) annually and adjust it for inflation so savings lasts about 30 years. Thus, it would take about $300,000 of savings for a $1,000 monthly withdrawal ($300,000 x .04 = $12,000/year). This rule assumes a portfolio with 50% stock.


¨       Tweak “The 4% Rule”- More recent research has suggested withdrawing a lower percentage of assets than 4% due to prolonged low yields on fixed-income securities. In addition, conservative investors with less than half their money in stocks should probably withdraw less than 4% while new retirees in their 70s can probably withdraw more.


¨       Prepare a Retirement Budget- Track current living expenses for several months before you exit the work force. Next,  identify expenses that will end or decrease in retirement (e.g., commuting costs and mortgage payments) and those that are likely to increase (e.g., travel, medical and dental expenses, and health insurance premiums).


¨       Prepare for Non-Financial Aspects of Retirement- Consider the three pillars of retirement life: leisure activities, work, and volunteerism. Experts caution against retiring without giving thought to the type of lifestyle desired and activities that will fill the time that a job once occupied. A successful retirement requires much more than money.


¨       Get Help- Check out retirement planning worksheets and online calculators. Monte Carlo analysis is a simulation of possible investment outcomes used to predict the likelihood of sustaining a certain withdrawal rate for, say, 30 years. Consider hiring a certified financial planner® on an hourly basis to review your plans and answer your questions.


¨       Try to Pay Off Housing Debt Before Retiring- Entering retirement free of a mortgage and/or home equity loan provides financial “breathing room” by eliminating a household’s largest monthly expense. Various online calculators can help you time your last mortgage payment with your anticipated retirement date.


¨       Consider Downsizing to a Smaller Home- Moving to a smaller, less expensive home provides a number of financial benefits including profit from the sale of a larger, higher-priced home as a source of savings, lower property taxes, lower utility costs, and less home maintenance.


¨       Consider “Geographic Arbitrage”- Moving from a high-cost area to one with lower taxes and living costs is another way to cut expenses. This is a very personal decision, however. For many people, family and/or community ties trump tax breaks, better weather, and other advantages. COVID-19 has definitely added a new “lens” to relocation decisions.


There are many other decisions to make and factors to consider in later life. A detailed description of 35 later life transitions can be found in my book Flipping a Switch: Your Guide to Happiness and Financial Security in Later Life. The book is organized into three sections for financial, social, and lifestyle transitions with many topics that people don’t often talk about such as determining if certain purchases are “lasts.”

 Flipping a Switch is available from Amazon (print and Kindle versions) and in many bookstores.

Thursday, January 7, 2021

Identity Theft Risk Reduction Practices from a Twitter Chat


I recently participated as a panelist in an Experian #creditchat about identity theft, which is the stealing people’s personal identification information (PII) to defraud them in some way. 

Identity theft is typically not a “stand-alone” crime but, rather, part of another crime such as credit card, bank account, health care, or income tax fraud. 

Commonly stolen pieces of PII include Social Security numbers, credit card numbers, and driver’s licenses.

Since much of Americans’ PII is in the hands of employers, government agencies, and merchants, it is virtually impossible to eliminate the risk of becoming an identity theft victim. This risk can be reduced, however, by following prudent risk reduction practices. 

Below are ten ideas that were shared:

¨      Break Risky Habits- Avoid “over-sharing” personal information on social media, leaving personal information within view and accessible for misuse by others, unsafe internet connections (e.g., public wifi), weak passwords, and not shredding documents with sensitive data (e.g., Social Security and account numbers).

¨      Guard Your Mail- Use a locked mailbox or promptly remove mail from the mailbox following delivery and deposit outgoing mail at the Post Office or in collection mailboxes- not in unsecured mail receptacles.

¨      Just Say No- Never provide personal information over the phone to unsolicited callers. Ditto for e-mailed requests with suspicious links. Tell yourself “no, this is not a legitimate request” and simply hang up or delete.

¨      Know the Warning Signs- Take immediate action if any of the following events: a request for payment for purchases you did not make, suspicious entries in a credit report, contact from the IRS, declined credit cards, denied medical services, and erroneous bank or credit card statements.

¨      Pay Cash in High-Risk Situations- Do not let your credit card out of your sight and let anyone take it away from you to swipe it and possibly skim, photograph, or record the numbers. Similarly, consider paying cash for gas to avoid the risk of having a skimming device attached to the pumps.

¨      Travel Light- Empty your wallet and do not carry around extra credit cards and unnecessary ID cards. Do not carry around a Social Security number or passwords in a wallet or purse. Memorize them and/or leave them at home in a secure location. Some people also use a password manager program to secure their data.

¨      Review Your Credit Report- Contact each of the “Big Three” credit bureaus (Experian, Equifax, and TransUnion) annually for a copy of your credit report that might provide evidence of identity theft (e.g., accounts opened in your name and fraudulent purchases).

¨      Keep Good Records- Save credit card purchase receipts and match them against monthly bills. Ditto for bank deposit and withdrawal slips to check against monthly statements. Make a list of credit card billing dates. If a billing statement is late, follow up promptly with the creditor.

¨      Be “Internet Cautious”- Never enter PII on a public wifi system (e.g., at an airport) and always check for the letters “htpps” in a web site address and a closed lock icon to indicate that a web site is secure. If you absolutely must get a message with personal data out immediately, activate the wifi hotspot on your cell phone.

¨      Consider a Credit Freeze- This is an anti-fraud measure that restricts access to your credit report to thwart fraudulent accounts. Credit inquiries are denied so fraudsters typically cannot get new credit in your name. Remember, however, that you will need to “thaw” your credit for new credit, bank accounts, and utilities.

A key take-away is that effects of identity theft can last years, even decades, including a drop in a victim’s credit score and the emotional effects of feeling “violated.” The bottom line is that we can never let out guard down. 

Risks for identity theft will always surround us and vigilance is required at all times.

Wednesday, December 30, 2020

Reflections on the State of Financial Education

I recently participated as a guest on the Next Gen Personal Finance (NGPF) speaker series with Laura Levine, CEO of the Jump$tart Coalition for Personal Financial Literacy (a.k.a., national Jump$tart). Our topic was “The State of Financial Education” and changes over time as national Jump$tart recently celebrated its 25th anniversary.

Below are ten key take-aways from the thoughts that I gathered to prepare for this online presentation:

¨      Teacher PD is Plentiful- Quality financial education requires teachers to be competent and confident with respect to personal finance content and pedagogy. Compared to 1995, there are many more professional development methods (face-to-face and virtual) and content providers for teachers including NGPF, Take Charge Today, the Council for Economic Education (CEE), and national Jumpstart and its state affiliates.


¨      Tech Tools are Useful- Perhaps at no time ever before was technology as important to teaching as 2020, when  schools went virtual. Among the tools teachers have relied on are the free 37-module MoneySKILL online course, Khan Academy videos, and various online calculators, video, and quizzes for personal finance topics.


¨      Course Penetration Needs Work- According to the 2020 CEE Survey of the States, 21 states require high school students to take a financial education course. While this is an increase of four states since 2018, it still means that students in more than half of the U.S. do not receive any formal personal finance instruction.


¨      Teachers Can Get Certified- Teachers can enhance their subject matter expertise with certifications including Certified Personal and Family Financial Educator (CPFFE) from AAFCS, the Personal Finance Certification for Educators from W!SE, and nine subject-matter specific certifications from NGPF.


¨      Collaboration is Amazing- There are so many ways that teachers share ideas and resource materials these days instead of remaining “siloed” alone in their own schools. Examples include the “FinLit Fanatics” Facebook group organized by NGPF, interactive virtual and face-to-face (pre-COVID) workshops, and informal networking facilitated via e-mail, Twitter chats, video chats, and other electronic methods.


¨      Outcome Research has Improved- Recent studies of financial education with rigorous methods have confirmed positive impacts on knowledge and downstream behaviors. An example is a 2020 meta-analysis of 76 randomized experiments that found meaningful treatment effects realized from financial education.


¨      New “Lenses” are Emerging- Following an increased focus on wealth inequality and social justice, some developers of financial content and curriculum standards are conducting bias reviews to make sure that their materials do not unintentionally perpetuate stereotypes or use culturally insensitive content or case examples.


¨      Education is Cumulative- The earlier students receive formal financial education, the more courses in later life can build upon. An example: my Personal Finance class students at Rutgers University arrived more knowledgeable after New Jersey passed a financial education graduation requirement for high school seniors. New Jersey now has a middle school mandate which will give pre-teens more background for high school.


¨      Teachers Overcame Challenges- Personal finance content developers were “all hands, on deck” in 2020 to equip teachers for online and/or hybrid learning. Among the challenges teachers successfully addressed were technology challenges (theirs and students’), virtual teaching engagement, and frequent changes in teaching methodology plans (e.g., virtual and hybrid classes).


¨      Teachers Make a Difference- I found a quote about teachers using a classroom analogy: “The influence of a good teacher can never be erased.” Here is another: “To teach is to touch a life forever.” Alicia Keys and the One Voice Children’s Choir have just two words for teachers (and other essential workers): “Good Job.”


If this were a state of the union (SOTU) address for financial education, I would note that there are encouraging signs, as described above. There are also challenges to address including financial fragility exhibited by many U.S. households and a lack of access to financial education in 29 states + Washington, DC. 

It will take a “village” of advocates, content creators, financial educators and practitioners, researchers, and financial media (shout out to FinCon)  to bring financial education to every American student, as well as adults of all ages. I am happy to be a small part of this effort.

Thursday, December 24, 2020

Twelve Tax-Saving and Planning Tips

One week remains to take advantage of 2020 tax-saving opportunities. Now is also a good time to look ahead and make income tax adjustments that will affect your taxes in 2021. 

Below are twelve tips to reduce your tax bite for 2020 and start planning for next year:

¨      Donate to Charity- As a result of the CARES Act, cash donations of up to $300 to qualifying charitable organizations are deductible if they are made before December 31, 2020. The $300 tax deduction is available to the almost 90% of U.S. taxpayers who elect to take the standard deduction instead of itemizing deductions.


¨      Donate a LOT to Charity- The CARES Act raised the limit for itemized charitable deductions on taxpayers’ Schedule A from 60% of a donor’s contribution base (typically the donor’s adjusted gross income or AGI) to 100% for 2020 only. This limit applies only to cash contributions to qualifying organizations.


¨      Make a Qualified Charitable Distribution (QCD)- Taxpayers age 70 ½ and older can make a QCD to a qualified charity that counts toward their required minimum distribution (RMD) for a traditional IRA. While mandatory RMDs were suspended for 2020, withdrawals can still be taken if taxpayers choose to do so.


¨      “Bunch” Deductions- This means paying two- or three-year’s worth of deductible expenses by the end of 2020 so you can itemize on your 2020 tax return. Since state and local taxes have a $10,000 cap and 2020 standard deductions are $12,400 (single) and $24,800 (married couples), plus $1,300 extra if taxpayers are age 65+, this often involves making large charitable donations.


¨      Create a Donor Advised Fund (DAF)- A DAF is set up with a custodian such as Schwab, Vanguard, and Fidelity for future charitable giving. Donors deposit funds (typically in excess of their standard deduction amount so they can itemize) and receive a deduction for the tax year in which a DAF deposit is made.


¨      Consider a Roth IRA Conversion- With a Roth conversion, taxpayers move all or part of their money held in a tax-deferred Traditional IRA to a tax-fee Roth IRA. Taxes are due in the year of the conversion. If 2020 was a year with reduced income, a conversion may make sense for someone in a lower tax bracket.


¨      Consider “Tax Loss Harvesting”- The term “tax loss harvesting” refers to the practice of proactively selling investments that have lost value during the past year by December 31 and using the capital loss to offset investment gains and up to $3,000 of ordinary income on federal income taxes.


¨      Review Income Tax Withholding- Estimates can be done for both 2020 and 2021 whether you have tax withheld from your pay and/or make estimated quarterly payments. The fourth quarter 2020 estimate is due on January 15, 2021. Use the IRS Tax Withholding Estimator tool to help determine how much to set aside.


¨      Use Up Flexible Spending Account (FSA) Funds- Money set aside pre-tax in an FSA must generally be used by the end of the calendar year or be forfeited. Some employer plans allow a short grace period (up to 2.5 months) to spend FSA funds or the ability to roll over up to $500 to 2021. Check on the specifics of your plan.


¨      Review Voluntary Retirement Savings Plan Contributions-  Now is the time to make changes for savings plan deposits from 2021 paychecks. If your income is stable or increased in 2020 and you have at least six month’s of expenses stashed away for emergencies, consider making a larger retirement savings deposit. Even 1% more of pay in savings can translate to thousands of extra dollars saved at retirement.


¨      Try New Tax-Savings Techniques- Many people experienced a drop in income in 2020 related to the pandemic. As a result, they may qualify for tax breaks that they always had “too much income” for before. Examples include the earned income tax credit (EITC) and the retirement saver’s credit.


¨      Be Realistic About 2021 Tax Refunds- This has not received much attention amidst stories about COVID-19 deaths, vaccines, stimulus payments, and food banks, but it is another looming issue. Low-wage taxpayers who count on tax refunds the most may be less likely to receive them. Refunds only occur when people earn an income and over-withhold for taxes. Unemployed workers who did not do either in 2020 may get less money back than before (depending on personal income tax variables such as tax credits and unearned income).

COVID Fatigue: Expert Tips to Release Helplessness, Frustration, and Anxiety

  I recently attended two programs about COVID-19, one by a large investment company about financial impacts and the second by a hospice edu...