Baby Boomers Spending More Cash On Their Family, Than On Their Own Future

 (Photo credit: Tax Credits)In a study, released today by Ameriprise Financial, 93% of Baby Boomers have provided financial support to their adult children and 58% have assisted their aging parents.

This is a subject that I can relate to and confirm in my own life. I have parents in their 80's who do not suffer financially or health wise, thank God. But I do have the adult children side of the problem. With three in college, thankfully almost done, it has been a strain on our finances. As the study confirms the casualty of this financial help is my own retirement plans.

My income has suffered, along with many others, because of our country's economic problems. This left us scrimping and budgeting like never before. We find it difficult to save for retirement at a reasonable rate. It will definitely effect us when we are in retirement.

The study also reveals, in 2007, when the original Money Across Generations study was conducted, 44% of boomers claimed they were trying to grow their savings. Now only one in four (24%) say they’re putting away money for the future and just as many (24%) report simply trying to maintain what they have.

Many boomers have to assist their parents financially. More than half (58%) report assisting their aging parents in some way, including helping them purchase groceries (22%) or pay medical (15%) and utility bills (14%).

No one can ever say Boomers are not generous people. The Money Across Generations study says most boomers surveyed (93%) say they have provided some kind of support to their adult children. A majority have helped them pay for college tuition or loans (71%) or helped them buy a car (53%). Many are also helping their kids pay for car and health insurance, as well as cover basic expenses like rent, utility and car payments.

Impact on their retirement goals

Only 10% of boomers admit that helping their parents has slowed down their retirement savings, while one-third (34%) feel the same about the support they’ve provided their adult children.

If the Boomers aren't digging into their retirement accounts, then where are they getting this cash to help their families? Most say they are just using their income and normal cash flow. Unfortunately, they are short changing their own retirement savings plans which will only come back to bite them when they are well into their retirement.

But the problem for many boomers is that they may not have a choice in helping their families. Health care costs for their aging parents are on the rise and what child would turn down a parents request for help.

During this time of year when many college students are graduating they are finding a shortage of jobs. This is forcing many of our children to come home. With no means of support, mom and dad have to step up with financial support and even help paying back college loan debt.

Boomers are generous and do not mind helping

Despite uncertainty around meeting their own financial goals, a majority of boomers (86%) say that if they had to do it again, they would still support their adult children financially. Meanwhile, 20% express guilt about not being able to provide financial assistance to their adult children who currently need it.

What's a parent to do? Is it our job to offer unconditional financial support which can devastate our own goals and plans? It's hard to say no to a family members request for help. Part of any discussion of financial need is first the boomer should talk openly about how any financial help would effect the boomer's plans and goals. By putting all the cards on the table the party in need of help may learn their request will cause negative repercussions down the line for the other party. Openness is the key to any for any financial discussion.

Link to original discussion at Ameriprise.com

Baby Boomers Dole Out Cash to Family Members Despite Uncertainty About Their Own Financial Future

For Many 67 Is The New 65 When It Comes To Retirement

A new poll By Gallup has found 26 percent of people expect to retire before age 65, with 27 percent expecting to retire at age 65 and 39 percent after age 65.

The percentage that expects to retire after age 65 was up from 21 percent in 2002 and 12 percent in 1995. 

The Gallup poll found an increase in the average age at which retirees actually retired -- from age 57 in 1991 to age 60 today. The average retirement age first reached 60 in 2004 and has generally held there since.

That average should increase in future years if current non-retirees delay retirement, as they say they will.

The younger non-retirees were more optimistic about being able to retire at an earlier age than those closer to retirement. Those currently age 40 and under expect to retire at age 65, compared with an expected retirement age of 68 for those 40 and older

The survey also indicated a new low of 38 percent of non-retirees who said they will have enough money to live comfortably in retirement, down slightly from 42 percent last year and 59 percent in 2002.


It's easy to conclude that the dream of retirement is going to stay just a dream for many. The majority of retiree's  in their 60's, 70's, and 80's will continue to be employed out of necessity.

Korean Baby Boomers In Worse Shape Than American Counterparts

retirement (Photo credit: 401K)

A lot has been said about growing government and household debt and its risks. In a Bank of Korea study it was found that Koreans age 50 and up are responsible for fifty percent of all consumer debt.

The baby boomer generation, which refers to people born in Korea between 1955 and 1963, is falling into the poverty trap of old age. With a people that prides itself on strong family bonds, the 50-somethings are the most squeezed financially because they have to support both their parents and children.

The Bank of Korea study reaffirms the troubles confronting the retiring baby boomer. Most of them require help because of falling home prices or those that need loans to start their own businesses in the latter years of life.

Like most retirees, Koreans struggle to work longer. People with doctoral degrees and former managers at large firms, now stand in line to work as supermarket cashiers, that pay $800 a month.

Studies indicate Koreans retire at 54 years old on the average, but work until 71 years. Little wonder the nation’s notorious old-age poverty rate of 45.1 percent is more than three times higher than the world average of 13.5 percent. (In the United States the poverty rate of the elderly is at 10 percent.) If nothing is done, the baby boomer problem will provide an added source of inter-generational conflict, adding to the unemployed youth problems in Korea.

To their credit, the government isn't ignoring the situation, but it has fallen far short of solving the problem.

The Korean government has encouraged people to work longer and take a more active roll in their retirement financial needs. These are meaningful steps, but fall far short of a fundamental remedy, which is raising the retirement age. The time has long pasted for Korea to gradually extend its current age limit of 55-58 to 60-65, as is the case in Japan and many European countries.

Businesses, particularly large companies, are the strongest opponents to a prolonged working age, mentioning the high jobless rate among the young. "You are taking away the jobs of your children,” they say. But labor experts find little direct relationship between retirement age extension and the youth unemployment rate, as most companies do not fill the void left by retirees with fresh workers. These are two different employment issues to be tackled separately.

This is the first Korean generation that supported their parents but do not expect similar services from their children. Koreans and their government are facing the same kinds of retirement funding problems that we in the U.S. face. Koreans face an unrealistic reliance on the governments efforts to supplement everyone's retirement. It's interesting that the Koreans are just as unprepared for retirement as Americans are.

Prepaid Card Use Is On The Rise [Infographic]

For most people the checking and savings accounts that the banking industry provides for us is sufficient. But for a small and ever growing percentage of Americans it doesn't work. For people with a steady income and an ability to maintain a subjective balance, the banking system provides a decent product. For some it just doesn't work. Enter prepaid cards.

Prepaid cards allow the unbanked to have a way to participate in the banking systems requirement for plastic cards. It also allows people to have an amount of money saved that is easy to access through ATM's. While there are still banks that provide a free checking accounts, if you follow their rules, the prepaid card user enjoys no such thing. The unbanked is subject to a slew of fees, which are mostly excessive.

The infographic below demonstrates the statistics of a growing use of prepaid cards.

Infographic courtesy of  caxtonfx.com

Debt Relief Options in Canada

Many consumers have spent time in recent weeks and months researching different debt relief options available to them in Canada. Credit card debt is among the biggest challenges people face with their budgets today. High account balances create high monthly payments. This is coupled with high interest rates, which make those high monthly payments fairly ineffective at reducing debt balances quickly. Different debt programs are available to help consumers more quickly eliminate debt. However, before choosing a debt program, consumers should take time to explore these options in detail.

Two Main Types of Relief Options
There are two main types of debt programs available to assist consumers with their financial situation today. These include debt consolidation loans and debt settlement. Through a consolidation loan, all credit card debt is refinanced into a single loan. No debt is eliminated through the refinance process, but the new loan is structured to provide faster repayment results. Credit cards are difficult to pay off because they typically have a high interest rate as well as a revolving term. Most consolidations loans have a lower interest rate and a fixed term, which allows account balances to be paid off within a few years. The other option to consider is debt settlement. This solution can create an immediate reduction in debt balances. Through this process, a consumer first must provide a lump sum of cash to be used as a negotiation tool. A professional debt negotiator contacts creditors to request a reduction in account balances, and the lump sum of cash is used as an incentive for them to agree to a balance reduction. If they agree to reduce the balance, they will receive a portion of that lump sum for immediate repayment of some of the debt.

Which Relief Option Is Best?
The two options are quite different, but both can have significant and beneficial results on a consumer's financial situation. Consolidation loans may require a consumer to have good credit scores initially, so this may be more suitable for a consumer who has managed to pay most bills on time despite struggling with debt. Debt settlement, on the other hand, does not require a consumer to have a certain credit score. It is more suitable for those whose credit has already been affected by their debt situation. Further, a lump sum of cash is necessary for this strategy to be successful, so a consumer will need access to cash either through equity in a home, by saving for it or through another option. There is no solution that is best for everyone, so a consumer will need to review the options and choose the solution that is right for him or her.

Estimating the Results
Consumers can utilize a debt calculator to estimate monthly payments with each solution. This can help a consumer to determine which relief option is more affordable. Further, these calculators can help a consumer to determine the results of each program and see how quickly debt may be paid off. Using a calculator can help a consumer to determine which solution may be best. 

It can be difficult for a consumer to pay high account balances off on his or her own. These different relief options are available to make repaying debt and becoming debt free a faster and easier goal to accomplish.

How Credit Cards Cost Us More Money

 (Photo credit: Wikipedia)

Some of us grew up in the days before credit cards were terribly prevalent. Forty years ago, you might have had a department store credit card, or perhaps a credit card for a gas station. Visa and MasterCard were around, but they didn’t have the kind of widespread acceptance they do today.

While the days of cash may be dwindling, some new research is shedding light on just how this shift has affected consumers. The method we choose to use for payment has a significant impact on what we choose to buy. Some new research from Professors Promothesh Chatterjee and Randall Rose of University of Kansas and University of South Carolina respectively suggests that this impact is significant, and even affects how we remember a purchase after the fact.

Cash means a focus on cost

In the study, customers who were primed to use cash for a given purchase came out as much more concerned about cost than they were concerned about benefits. For example, here are some of the observations in the study

• Cash customers responded more quickly to cost-related words.
• Cash customers had greater recall of cost-related aspects after the fact.
• Cash customers exhibited recall problems with benefit-related words.
• Cash customers often choose less expensive products, even those with inferior benefits.
• Cash customers were more likely to identify a wide range of cost factors beyond just price, such as installation or delivery costs, warranty costs, and even delivery time.
• Cash customers experienced more of the pain of payment. Every time a transaction takes place, money goes away while the consumer watches.

As you might expect, the opposite is often true when it comes to those customers who use credit cards.

Credit cards mean a focus on benefits

Those customers who were primed to use credit cards weren’t nearly as focused on costs as cash customers. Here are some observations from the study about credit card customers:

• Credit card customers responded more quickly to benefit-related words.
• Credit card customers had greater recall of cost-related aspects after the fact.
• Credit card customers exhibited recall problems with cost-related words.
• Credit card customers often chose indulgent or high-image products.
• Credit card customers made more cost errors than cash customers.
• Credit card customers experienced less pain of payment, because the process of consumption is decoupled from the payment process.

What this means, at least in part, is that customers using credit cards came out of the study as being much less concerned with cost than they were with what the given product could do for them.

Choosing the right payment method at the register

What does this mean for older Americans? Really, it reinforces something we probably already know: using credit cards can cost us more money. This is true not only because of the interest or fees we often face with credit cards, but because of the way paying with a credit card affects our choices as consumers.

If you want to make smart financial choices, let payment method be a factor in how you shop.

David Rodwell is an experienced writer who covers everything from business to personal finance. Check out his site CreditCardProcessing.net for similar articles.