Introduction
- Mainly $$$
- Other resources
Problems
• Credit crunch & depreciation of home values
• Inflation
• Shrinking nest eggs
“But as the financial markets have ravaged retirees’ savings and investments, Laursen has put his retirement on hold. On top of a big hit to his retirement savings, his former employer just eliminated health care coverage for Laursen and his wife.”
“Despite big penalties, many are cashing in or borrowing against retirement”. A Hewitt Associates’ survey found that 6.2 percent of retirement account participants at large corporations had taken an early withdrawal as of Sept. 30, compared with 5.1 percent who reported taking early withdrawals in 2006. .. A separate October survey by the American Association of Retired Persons found that 13 percent of Americans 45 and older had tapped into their retirement investments early.
- 10%penalty if withdraw funds from your retirement account before reaching age 59½, even if you decide to retire early!
- Are there any exceptions? Yes. For example, with an IRA, you may be able to avoid the fine if you are using the money to buy a home, you are unemployed and need to pay health care premiums or you are using the money for higher education. If you have a 401(k), you may avoid the fee if you lost your job and are over age 55.
- Risks: Double whammy of losing that investment in your retirement and losing out on the chance for that investment to grow. That could mean that you have to work longer or live with less in retirement.
- What about borrowing against my retirement account? The IRS allows people to borrow against their 401(k) plans but not their IRAs. Borrowing money against your retirement funds, rather than withdrawing the funds outright, can be a better option for getting cash now and still saving for retirement. You will still likely pay interest on the loan, however. If you default on the loan, the IRS will consider that as an early withdrawal, which means you may be subject to penalties.
… comments:
- The good news is that Obama is trying to set up a universal health coverage that is supposed to cover 95% Americans. However, with the inherited national debt of $10.5 Trillion (and growing by about $3.8 billion every day) and other problems, we are uncertain on whether this program will take precedence over other programs. Consumer’s view: The government isn’t alone in borrowing too much money. American consumers have borrowed $11.5 trillion in mortgages and another $2.5 trillion in credit card, car loans and other debts. Banks and Wall Street investment firms borrowed tens of trillions of dollars more to create complex investments that now are worth a lot less than everyone thought.
- For the youth nowadays, they have to inherit this national debt. Later, when this generation grows up, they have to support the baby boomers’ Social Security & Medicare benefits, a new scenario in public financial transfer … GAO’s estimate: another $40 trillion. With the current health trends and longevity, it doesn’t look good – living longer while sicker. … So far, it hasn’t come up with a solution.
- Free Lunch!!!
• Increased unemployment rate
• NM-specific: State budget shortfall due to declining in the energy prices and weakened economy.
- National
- NM-specific
Solutions
1. Education
a. Motivation: Make them see the problem – the two situations.
b. The extend to which we educate depend of the costs and benefits (could be perceived)
i. For some, it may be beneficial
ii. For others, they may be better off following an expert opinion almost blatantly.
1. Consistent with human capital theory!!!
c. Family finance management, retirement planning, time management, technological use, family-own business.
i. Bureau of Business and Economic Research
ii. http://www.unm.edu/~bber/
iii. Consistent with Vision 2040 – downtown revitalization project
2. Marketing techniques.
a. Current extension programs have produced so many useful literatures related to family resource management.
b. The concern is that whether the targeted population got the intended messages, utilize them, and continue to take advantage of these programs and information.
i. An ideal extension route is to have these people to be our extension agents by promoting our programs, sharing the information … .
c. Youth are special groups. They are not like us when we were younger. In general, they are more tech-savvy and quick to make decisions (short attention span).
i. Use facebook, utilizes i-phone, you-tubing, like to feel in-control, and like interactive sessions.
ii. Idea: Utilize the youths interest in Fantasy Football or Poker for fantasy investment … updated in facebook or myspace.
iii. Unique ads: Table outside movie shows, viral marketing, product placement (ask athletes to wear clothes with our website),
d. Take advantage of latest findings in the field of marketing – to youth, elderly – to our advantage.
e. Map studies with GIS – People with same socioeconomic background tend to live together
3. Corporation with other departments or programs. Many programs are related to financial management. For instance, the decision to get involved in health prevention and treatments programs may be affected by the main family resources: education, time, and financial resources, as reflected in Gary Becker’s Household Time Allocation Model, an extension of Human Capital Model.
We may also take advantage of other programs that might be able to obtain more findings. Obesity prevention programs, for instance, may be easily funded.
4. Ask them what they really want. Ask them directly (interview, focus group) or social immersion. For instance, money may not be the primary resource concern for Navajo people. Perhaps, they are more concerned of regaining their land.
5. Outcome studies to help understand the impact of our programs on the betterment of society. Input-output or Cost-benefit analysis.
a. Experiments, variables, data-based, survey.
b. For our benefits and publications.
c. Look into marketing research and child development where the money tends to be.
6. Others:
a. Translations – blunders
b. Make the extension futuristic: Greener, internet, YouTube, Facebook, blogs, less cheesy, social gathering, public libraries
i. Get the younger people involved, .e.g. Big Brothers Big Sisters
ii. Especially those who are interested in extension work even from different departments.
c. Consumer protection: Advertisement directed towards kids, Free Lunch.
d. Anticipation: Look into other nations to see possible FRM-related problems.
i. Be the first to come out with solutions.
ii. E.g.: Cell-phone boom
Conclusion
***********
Focus:
- Research-based findings
- High percentage of workforce in the federal jobs. Better benefits.
- Spanish-speaking population: 44%
- High percentage of Native Americans: One cannot assume that they are highly concerned about financial issues.
- Youth
- Marketing
Native Indians have many issues with finances since much of their income comes from gov’t subsidies and also from Indian/reservation casinos. You might like to check out USA.gov’s tribal pages to see if there’s information there specifically about NM tribes. I know they’re listed alphabetically but I don’t know if there’s a way to find tribes in a specific state. There’s somewhat of a push to get Native Americans to start their own businesses so there might be some implications there for money management and ways to go about helping them get startup capital, how to manage the money once they start making it. It seems to me that there’s a link between this and how farm families manage their resources – balancing between the farm and the family. Regarding the federal employees – they are probably most like the “every day person” who needs to worry about budgeting, saving for retirement, getting the most out of their health care benefits, long term planning. Also, since the federal workforce is aging so dramatically they probably have a need for information about spending down their retirement savings, reverse mortgages, estate planning, and other aging issues. Military folks are pretty different from the typical federal worker since there are a lot of special programs that target them. Check out USA.gov’s page for Active Military Personnel to get an idea of them. NM might also have a lot of soldiers returning from war so they might need information about finding a job and getting by without any income, if you’re disabled, etc.
Reference
Resource Management for Daily Life, U of MN
http://www.extension.umn.edu/ResourceManagement/
Benefits of Federal jobs
Government Employee Benefits – Federal workers enjoy top-flight benefits
http://usgovinfo.about.com/blbenefits.htm
Working for the Federal Government – Benefits
http://media.newjobs.com/opm/www/usajobs/pdf/ei-61.pdf
For Federal Employees
http://www.usa.gov/Federal_Employees/Federal_Employees_Gateway.shtml
Resources in NM
http://ehe.nmsu.edu/financial-management.html
Family Resource Management
Management is using what you have (resources) to achieve what you want (goals and objectives). Family resources are all the resources the individual or family has available to help them reach their goals. These include human resources such as knowledge, skills, health, time and energy; material resources such as housing, money and investments; and community resources such as the library, Cooperative Extension Service and various agencies. Through educational programming, we can help individuals and families recognize resources they may be unaware of, and increase their skills in managing all resources available.
Objectives
• Provide basic financial education for limited resource audiences and general audiences including credit management and debt reduction
• Encourage financial planning for retirement and increased savings and investments
• Promote the use of all family resources including time, energy, skills and money to improve the quality of life management including organization
• Support money management skills for youth audience
Martin 2007 Justin Smith Morrill Lecturer
Michael V. Martin, president of New Mexico State University (NMSU) delivered the Morrill Lecture, “Induced Innovation: The Story of Land-Grant Universities,” on November 11 in New York City at the annual meeting of the National Association of State Universities and Land-Grant Colleges.
The Morrill lecture honors Justin Smith Morrill, the father of the 1862 Morrill Act. Signed by Abraham Lincoln, the act established federal funding for higher education in every state of the country; it is also known as the Land-Grant Colleges Act.
Martin is a recognized leader in New Mexico, being named a powerbroker by the New Mexico Business Weekly in 2006. He has written numerous book chapters and articles for academic journals, trade publications, and the popular press. Named the Outstanding Alumnus of Minnesota State University Mankato in 2006, Martin also received the NMSU Social Justice Award in 2005. Martin completed a bachelor’s degree in business and economics and a master’s degree in economics at Mankato State College (Minnesota State University). He received his Ph.D. in applied economics from the University of Minnesota in 1977.
Complete lecture text is available on the CSREES Web site.
From Sommer
LOGIC MODEL
http://www.uwex.edu/ces/pdande/evaluation/evallogicmodel.html
The Logic Model
http://www.uiweb.uidaho.edu/extension/LogicModel.pdf
Financial Security – CREES
http://www.csrees.usda.gov/financialsecurity.cfm
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