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Overdraft U: Student Bank Accounts Often Loaded With High Overdraft Fees

May 22, 2015 Comments off

Overdraft U: Student Bank Accounts Often Loaded With High Overdraft Fees
Source: Center for Responsible Lending

Some colleges and banks enter into exclusive agreements to offer students checking accounts – usually these accounts come furnished with a debit card that prominently displays the school logo and can sometimes be used as student ID.

For banks, these exclusive agreements mean a captive audience for their bank products (checking accounts, credit card accounts) and usually a customer for life. Studies suggest that banks are a “sticky” product – once a consumer chooses one, they’re unlikely to change.

For colleges, these exclusive agreements mean increased revenue. These partnerships may include revenue sharing (based on the number of accounts opened by their students) and/or in-kind benefits (like the bank offering to manage the school’s financial aid disbursement).

The benefits to students are unclear at best. Some schools negotiate for some reductions in up-front costs (like waiving monthly maintenance fees), but – as this report shows – many of these accounts do not have better terms than what a student could find on their own.

Payday Mayday: Visible and Invisible Payday Lending Defaults

May 22, 2015 Comments off

Payday Mayday: Visible and Invisible Payday Lending Defaults
Source: Center for Responsible Lending

This paper’s findings highlight that the lack of underwriting for payday loans creates economic distress for borrowers from the very first loan:

  • Nearly half of all payday borrowers defaulted within two years of their first loan.
  • Of borrowers who defaulted, nearly half did so within the first two payday loans.
  • Default does not necessarily signal the end of payday borrowing, with many defaulters going on to repay their loan and even borrow (and possibly default) again at a later date.
  • Nearly one in five borrowers had a loan charged off by the lender.
  • One-third of payday borrowers experienced at least one invisible default in which their account was overdrawn on the same day that they made a payment to a payday lender.
  • For payday borrowers, overdrafts and bounced transactions frequently occurred close in time to the use of payday loans. Nearly half of payday borrowers incurred an overdraft or NSF fee in the two weeks after a payday loan transaction, and 64% paid overdraft or NSF fees at some point.

Workforce Development in the United States: Lessons Learned for Older Workers

May 22, 2015 Comments off

Workforce Development in the United States: Lessons Learned for Older Workers
Source: AARP Public Policy Institute

This report by workforce experts Stephen A. Wandner, David E. Balducchi, and Christopher J. O’Leary undertakes a selective review of public workforce development programs in the United States over the last eighty years with a special emphasis on their importance to older Americans.

Particular attention is paid to services benefitting dislocated workers—that is, experienced adults permanently separated from their prior employers. The Employment Service and the Workforce Investment Act Dislocated Worker programs serve the greatest number of older workers.

The Senior Community Service Employment Program and the very small Alternative Trade Adjustment Assistance program (now called Reemployment Trade Adjustment Assistance) are the only programs targeted specifically to older workers.

The policy options presented in the paper go beyond changes to the public workforce system embodied in the Workforce Innovation and Opportunity Act of 2014.

2015 Retirement Confidence Survey — 2015 Results

May 22, 2015 Comments off

2015 Retirement Confidence Survey — 2015 Results
Source: Employee Benefit Research Institute
From press release (PDF):

American workers and retirees are expressing higher confidence about their ability to afford retirement this year, even though there is little sign they are taking the necessary steps to achieve that goal, according to the 25th annual Retirement Confidence Survey—the longest-running survey of its kind.

A key factor in American’s outlook on retirement is whether or not they have a retirement savings plan. The 2015 RCS by the nonpartisan Employee Benefit Research Institute and Greenwald & Associates finds that as the nation’s retirement confidence continues to rebound from the record lows experienced between 2009 and 2013, the increasing optimism is a result of those who indicate they and/or their spouse have a retirement plan, such as a defined contribution (401(k)-type) plan, defined benefit (pension) plan, or individual retirement account (IRA).

A Look at the End-of-Life Financial Situation in America

May 21, 2015 Comments off

A Look at the End-of-Life Financial Situation in America
Source: Employee Benefit Research Institute

  • This report takes a comprehensive look at the financial situation of older Americans at the end of their lives. In particular, it documents the percentage of households with a member who recently died with few or no assets. It also documents the income, debt, home-ownership rates, net home equity, and dependency on Social Security for households that experienced a recent death.
  • Significant findings include that among all those who died at ages 85 or above, 20.6 percent had no non-housing assets and 12.2 percent had no assets left. Among singles who died at or above age 85, 24.6 percent had no non-housing assets left and 16.7 percent had no assets left.
  • Data show those who died at earlier ages were generally worse off financially: 29.8 percent of households that lost a member between ages 50 and 64 had no assets left. Households with at least one member who died earlier also had significantly lower income than households with all surviving members.
  • The report shows that among singles who died at ages 85 or above, 9.1 percent had outstanding debt (other than mortgage debt) and the average debt amount for them was $6,368.
  • The report also shows that the importance of Social Security to older households cannot be overstated. For recently deceased singles, it provided at least two-thirds of their household income. Couple households above 75 with deceased members received more than 60 percent of their household income from Social Security.

Retirement Throughout the Ages: Expectations and Preparations of American Workers

May 21, 2015 Comments off

Retirement Throughout the Ages: Expectations and Preparations of American Workers
Source: Transamerica Center for Retirement Studies

The 16th Annual Transamerica Retirement Survey finds American workers are continuing to recover from the Great Recession and its aftereffects. While the economy is recovering, the U.S. retirement landscape is also continuing to evolve, with increases in life expectancies, the need for Social Security reform, and an even greater need for individuals and families to plan and save for their future financial security. Most workers are rising to the challenge by savings, but are they saving enough? Are they properly planning?

Workers of all ages face opportunities and challenges for improving their retirement outlook. As we progress through our working lives, our circumstances change over time with age. While workers in their twenties are embarking on their careers with decades to plan and save, retirement for workers in their fifties and sixties is much closer on the horizon, with many needing to shore up the size of their nest eggs.

This study examines workers in their twenties, thirties, forties, fifties, and sixties and older to compare and contrast their retirement preparations and shed light on how they can navigate the future and improve their retirement outlook.

Family Support in Graying Societies

May 21, 2015 Comments off

Family Support in Graying Societies
Source: Pew Research Center

The United States is turning gray, with the number of people ages 65 and older expected to nearly double by 2050. This major demographic transition has implications for the economy, government programs such as Social Security and families across the U.S. Among adults with at least one parent 65 or older, nearly three-in-ten already say that in the preceding 12 months they have helped their parents financially. Twice that share report assisting a parent with personal care or day-to-day tasks. Based on demographic change alone, the burden on families seems likely to grow in the coming decades.

Germany and Italy, two of the “oldest” nations in the world, after only Japan, are already where the U.S. will be in 2050: a fifth of the population in each country is age 65 or older. Compared with the U.S. today, a higher share of adults in Germany and Italy report helping their aging parents with basic tasks, and more in Italy have also provided personal care. However, in both countries, fewer adults than in the U.S. say they have provided financial assistance to their aging parents.

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