Thursday, July 27, 2023

Barbservations From TEDx Salons

While most people associate the word “salon” with a hair styling establishment or a nail technician, it also has another meaning. According to the Merriam-Webster dictionary, a salon is also an assembly of notable people, i.e., those with special expertise or accomplishments.

I first became acquainted with this alternative definition of salon when it was used by the National Endowment for Financial Education to invite personal finance educators/researchers to convenings related to retirement decumulation, financial education, and other topics.

I recently attended four TEDx salons that discussed a wide range of topics including cultural diversity, solar and nuclear energy, addictions, and the relationship between gratitude and happiness. The participants were all older adults in the Florida community where I live.

TEDx talks are locally organized events that feature short, carefully prepared presentations, typically with curated slides in the background. TEDx talks require licensing from the TED Conference organization that was created in 1984. TEDx salons are events where participants gather to have informal discussions about recorded TEDx talks that they view together.

Below are some Barbservations about the TEDx Ocala salons that I attended:

Enforced Rules- There was a two-minute limit for participant comments and a timekeeper with a cell phone clock to keep track. Participants raised a sign with their name on it to be recognized. Another rule, to refrain from discussing religion or politics, was strictly enforced. Conversation was quickly cut off when the current Florida governor was mentioned and even the seventh U.S. President Andrew Jackson (in office 1829-1837) was off limits.

Cordial Discussions- People were respectful of each other’s comments and sometimes “piggybacked” off each other’s ideas. Some shared articles with additional information about discussion topics or described relevant personal experiences (e.g., people with solar panels for discussion about solar energy) and current events (e.g., banned textbooks in Florida).

Noteworthy Insights- I heard the phrase “long termism” for the first time. It means thinking beyond generations you are familiar with (children, grandchildren) to those yet unborn and what you can do today to help them. In addition, I learned that three states (CA, TX, FL) basically decide textbooks for the entire U.S. and that there are few Native American restaurants in the U.S. due to loss of their land and cultural identity starting almost 200 years ago. Another interesting insight was that solar energy takes 450x more land than nuclear to generate power.

Memorable Quotes- These are some quotes from the TEDx talk videos and salon participants:

¨    When people know better, they do better.

¨    If you control your food, you control your destiny.

¨    Science can be factual, but interpretations of it, sometimes not so much.

¨    Generations have different “lenses” on change (older adults: “we won’t be around to see it”).

¨    Nothing records the effects of a sad life than the human body. The body keeps score.”

¨    Suffering makes people seek relief through addictions; find out the source of their pain.

Financial Education Applications- I can easily see the TEDx Salon format adapted to personal finance education. There are a number of excellent TED talks on financial topics that can be viewed in a group setting and then discussed by group members.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.



Thursday, July 20, 2023

Flipping a Switch: Lessons for Younger Adults

 In 2020, I wrote the book Flipping a Switch to describe 35 transitions experienced by older adults. The target audience was clearly the age 55+ set, but occasionally I am asked if younger adults can also benefit. My answer: an enthusiastic Yes!

Below are eight ways that Flipping a Switch content may be useful to younger readers:


Understanding Your Parents Time Horizon- An insightful chapter is Green Bananas, ROLE Calculations, and Lasts, which describes the changed time orientation of older adults who have lived more years than they have left to live. Understanding this mindset is critical.


Tax Diversification- Sprinkled throughout the book are references to required minimum distributions (RMDs) and their impact on older adults’ taxes. Younger adults are advised to save for retirement in a combination of tax-deferred, taxable, and tax-free accounts.


Savings Check-Ups- Chapter #1 describes “super saver” ants who accumulate large sums during their careers and have difficulty “spending down.” Young adult ants may want to do periodic savings reviews and enjoy bucket list experiences early in life if they can afford it.


Bridge Activities- Several chapters in Flipping a Switch talk about keeping busy and finding fulfillment in later life, including continued work in some capacity. Young adults can lay the groundwork for this with side hustle “bridge jobs” and/or volunteer activities.


Social Security Benefits- Younger adults can plan proactively to boost this important source of income in later life by limiting work history gaps and through side hustle income sources for government workers in jobs that do not participate in Social Security.


Family Story-Telling- In Flipping a Switch, older adults tasked with sharing family stories were advised to groom a “successor storyteller” to transfer stories, photos, and documents (e.g., reports and birth/death certificates) to. Interested younger adults should step up.


Good Health- Good health is a constant theme as people gain about 2,500 “free” hours when they are no longer working: time for nutritious meal preparation, physical activity, etc. Young adults need to practice good health habits, also, to increase their likelihood of a healthy old age.


A Good Ending- The last chapter of Flipping a Switch describes things that older adults can do to assure a peaceful and orderly end to their life. Unfortunately, not all people make it to their golden years, so planning is important at any age. Key tasks include the preparation of legal documents (will, living will, durable power of attorney) and organizing financial records.


In summary, a book written for older adults has many useful insights for people in their 20s, 30s, and 40s. The overall message is that everyone has "switches to flip" and that planning ahead for future life transitions is useful. 

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

Thursday, July 13, 2023

SECURE 2.0 Act Financial Planning Opportunities in 2023 and Beyond

The SECURE 2.0 Act of 2022, passed last December, has financial planning opportunities for both the accumulation and distribution phases of retirement planning. Below is a brief summary of a few key retirement savings provisions from about 100 changes contained in this legislation:

RMD Changes- Effective January 1, 2023, the starting age for required minimum distributions (RMDs) for people born from 1951 to 1959 is now 73 instead of 72 and the starting age for those born in 1960 or later is now 75. Also, the penalty for missing or insufficient RMD withdrawals was reduced from 50% of the amount that should have been withdrawn, but wasn't, to 25% and 10% if withdrawals are taken in a timely manner.

529 Plan to Roth IRA Transfers- To encourage use of 529 college savings plans, there is a limited opportunity for long-term (at least 15 years) 529 plan owners to directly transfer account funds to a Roth IRA if the money is not needed for college. This rule takes effect in 2024 and Roth IRA income limits do not apply. Transfers count toward the annual limit for Roth IRA deposits ($6,500 in 2023). Do your homework on this savings transfer strategy because several other very specific rules also apply.


New Catch-Up Limit- Currently, additional catch-up savings ($7,500 in 2023) in employer retirement plans is available for workers age 50+. Starting in 2025, there will be new catch-up contribution limits for workers aged 60, 61, 62, and 63. The limit will be the greater of $10,000 or 150% of the standard catch-up amount for 401(k)s and similar salary reduction plans.


Employer Match for Student Loan Payments- Starting in 2024, employers can match retirement plan participants’ student loan payments using the same vesting and matching schedule as retirement plan deposits. The match money goes into a worker’s retirement plan, not to pay off debt. Employers will rely on employees’ self-certification of loan payments.


Employer Retirement Plans- A “starter 401(k)” plan for employers with no current retirement plan will take effect in 2024. No employer contributions are required and plans will be easy to administer. Generally, all employees must be enrolled at a 3% to 15% deferral rate (starting at a minimum of 3% and increasing by 1% per year) with the same limit on contributions as IRAs (currently $6,500 under age 50 and $7,500 age 50+).


Auto Enrollment and Escalation- Before SECURE 2.0, auto enrollment and escalation (automatic savings increases) were optional. After 2024, auto-enrollment/escalation must be offered by employers establishing new 401(k) retirement savings plans. Existing plans without these features are “grandfathered” and employers with less than 10 employees are exempt.


Early Withdrawal Penalty Exceptions- SECURE 2.0 provided new exceptions to the 10% early withdrawal penalty for retirement accounts including natural disasters, terminal illness, emergency withdrawals, and self-certified domestic abuse. In addition, effective 2024, Roth (after-tax dollar) emergency savings accounts linked to employer retirement savings can allow up to $2,500 of contributions per year. Funds can be used penalty- and tax-free for self-attested hardship situations.


Thursday, July 6, 2023

Useful Information from Recent Webinars- Part 3

During the past two months, I summarized information from various recent webinars that might be useful to others. Below are seven more information tidbits in my final installment:

Back-Door IRAs- This is where people who earn too much income to qualify for a Roth IRA contribution put money into a non-deductible traditional IRA because there are no income limits for non-deductible traditional IRAs. They then convert the traditional IRA balance to a Roth IRA within a short time. The converted amount, plus any pro-rated earnings for the short time money is in the traditional IRA, are taxed at ordinary income tax rates.


Super Savers- It is unlikely that people who saved for retirement for decades in tax-deferred plans will die without leaving some money in an IRA, 401(k), or other tax-deferred asset. This speaks to the importance of beneficiary planning, especially for non-spouse beneficiaries who must withdraw all money from an inherited account within 10 years after the owner’s death.


Financial Education Mandates- By mid-June 2023, 22 states passed laws that require graduating students to take a personal finance course. Financial literacy is one of few topics today that has bipartisan support, as evidenced by state legislature voting and bills signed by Republican and Democratic state governors. There is little cost as schools generally reallocate existing teachers and free curricula and teacher professional development are widely available.


Financial Trauma- This was defined as the cumulative harm to a person’s wealth-building capability and relationship with money over time. As a result of financial trauma, many people feel shame about their finances. Financial educators and others in helping roles were advised to “meet people where they are” without any judgment and to use empathy by connecting to the emotions than underpin people’s lived experiences. Start with “What can I help you with?”


Estate Planning Triggers- The following events often increase interest in estate planning: birth/adoption of a child or grandchild, marriage, divorce, illness/disability, a large debt, a large change in the value of assets, purchase of a major asset (e.g., house), a major life or career change, receipt of an inheritance, and a required change in a guardian, executor, or trustee.


Gen Z Investing- A high school-age webinar presenter spoke about opening a Roth IRA at age 14 with earned income and the early compound interest gained by starting to save for retirement almost a decade earlier vs. waiting until college graduation. She also recommended a “set it and forget it” approach by combining a target date mutual fund with automatic deposits.


Portfolio Rebalancing- Left alone, an investment portfolio can go wildly off track, especially during stock market peaks and dips. Rebalancing is recommended and it is easier to rebalance regularly than wait for long periods of time. Rebalancing can be done by selling overweighted assets (do this within tax-deferred accounts) or with new cash deposits to underweighted assets.


Financial knowledge is power. I hope that you found these information tidbits useful.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.


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