There was a very interesting article (Pitching 401(k)s to Generation Y is a Tough Sell) in today’s Wall Street Journal about how 401(k) firms are having a hard time getting Generation Y to save for retirement. In my opinion, here’s why retirement planning is such a tough sell to Generation Y:
They Have Too Much Debt. Too many young people are worried about getting out of debt (or at least that’s what they say). Student loans and credit card debt are the culprits.
They Earn a Low Income. Young people are at the beginning of their careers, which means their incomes are lower.
They Either Have No Budget or Low Budgeting Skills. Without a budget, it is hard to prioritize spending. If everything that comes in, goes right back out, saving for retirement will be impossible.
They Are Worried About Today. When you are 25, it is VERY HARD to think about retirement, which is 30+ years away! With retirement so far away, a lot of young people believe that they can put off saving for it until they are older. As this post suggests (a MUST READ in my opinion), putting off saving for retirement just ONE year can have a tremendous negative impact on a retirement plan.
They Don’t Understand the Power of Compounding on Investment Returns. Although a young person may not have a lot of disposable income, one thing they do have is TIME! Don’t waste it. Not convinced? Take a look at How Much You Can Save in a Lifetime?
We knew this was going to happen.
The members of OPEC have gotten used to $70 oil. Now that prices have fallen, OPEC wants to cut oil production in hopes of keeping the price propped up. This statement from the article doesn’t make sense to me:
OPEC President Edmund Daukoru told Reuters on Tuesday the slide in prices was harming investment and that “something needs to be done.”
“We are already talking among ourselves in the OPEC fold. The price is very low, and it’s not good for investors,” he said after a meeting with diplomats in Abuja, the capital of Nigeria.
The price is very low? It’s still at least 100% HIGHER than the $30 per barrel that OPEC was happy with just a few years ago. Now $60 per barrel is too low?
For 2006, the contribution phaseout for Roth IRA Contributions using the following Modified Adjusted Gross Income (MAGI) ranges are:
For those filing Married Filing Jointly:
MAGI of $150,000 to $160,000 (for 2007 this range is expected to be $156,000 to $166,000)
For most Single Filers:
MAGI of $95,000 to $110,000 (for 2007 this range is expected to be $99,000 to $114,000)
What this means is that if you are married filing jointly and your MAGI is LESS THAN $150,000, you can contribute the maximum to a Roth IRA ($4,000 or $5,000 if you are over 50 years old). If your MAGI is over $150,000 but less than $160,000, your contribution will be phased out. If your MAGI is over $160,000, you CANNOT contribute to a Roth IRA (but you can still contribute to a non-deductible traditional IRA).
There’s no doubt that moving your money from one broker to another can be a royal pain. According to Ron Lieber’s Green Thumb column ($) in this weekend’s Wall Street Journal, there are several reasons why it takes so long to transfer accounts:
1. The account transfer forms must be double-checked at both ends in order to make sure the accounts can be transferred as requested, which is a time-consuming process. If you are transferring an IRA account, it can take even longer.
2. Brokers don’t communicate with the clients, so if there is a problem with the transfer, you may not know about it. So, it is best for you to keep on them to make sure things are going as planned.
3. Wrong numbers (usually caused by mergers of the brokerage firms) on the account forms can REALLY slow things down.
4. The article also mentions that some firms have internal account designators that are different from the those on the account statements, which can lead to rejected account transfer requests.
Anyway, as the article states, the good thing is that the NASD is trying to figure out a way to speed things up and to make sure brokerage firms aren’t making things harder than they need to be.
Oh, and here are three guides that might help you move your money:
NASD – Understanding the Brokerage Account Transfer Process
SEC – Transferring Your Account
NYSE – Moving Financial Assets (PDF)
If you want to compare brokers, check out this Smart Money article.
Wendy Boswell over at Lifehacker has written a pretty nice tutorial on finding free online college courses. The economics course from the University of Nebraska looks interesting.
I’m sorry if this sounds preachy, but I have to get this off my chest.
I have read on a couple of blogs this morning about this year’s Christmas craze: Tickle Me Elmo. I’m of the opinion that there should NEVER be a craze for a TOY! The idea of paying $100 or more for a toy that normally sells for $40 is pure insanity. Why can’t people tell little Johnny that Tickle Me Elmo is too expensive and that they need to pick out something else? Will that scar little Johnny for life? Not to mention the fact that like almost all other toys, once the “newness” has worn off, these $100+ Elmos will be found in the backs of closets across America.
One blogger (I had a change of heart) talked about rushing to Toys R Us to buy as many Elmos as he could get his hands on so that he could turn around and sell them on eBay once people found out that all the stores were sold out. He’s of the opinion that once kids start asking for them, parents will have no other option but to pay out the nose on eBay. There’s that old Christmas Spirit!