SACRAMENTO, Calif. — California Gov. Gavin Newsom said Friday he will call a special session of the state Legislature in December to pass a new tax on oil company profits to punish them for what he called “rank price gouging.”
Gas prices soared across the nation this summer because of high inflation, Russia’s invasion of Ukraine and ongoing disruptions in the global supply chain.
But while gas prices have recovered somewhat nationwide, they have continued to spike in California, hitting an average of $6.39 per gallon on Friday — $2.58 higher than the national average, according to AAA.
California has the second-highest gas tax in the country and other environmental rules that increase the cost of fuel in the nation’s most populous state. Still, Newsom said there is “nothing to justify” a price difference of more than $2.50 per gallon between California’s gas and prices in other states.
“It’s time to get serious. I’m sick of this,” Newsom said. “We’ve been too timid.”
The oil industry has pointed to California’s environmental laws and regulations to explain why the state routinely has higher gas prices than the rest of the country. Kevin Slagle, vice president of the Western States Petroleum Association, said Newsom and state lawmakers should “take a hard look at decades of California energy policy” instead of proposing a new tax.
“If this was anything other than a political stunt, the Governor wouldn’t wait two months and would call the special session now, before the election,” Slagle said. “This industry is ready right now to work on real solutions to energy costs and reliability — if that is what the Governor is truly interested in.”
Several states chose to suspend their gas taxes this summer, including Maryland, New York and Georgia. Newsom and his fellow Democrats that control the state Legislature refused to do that, opting instead to send $9.5 billion in rebates to taxpayers — which began showing up in bank accounts this week.
It’s unclear how the tax Newsom is proposing would work. Newsom said he is still working out the details with legislative leaders, but on Friday said he wants the money to be “returned to taxpayers,” possibly by using money from the tax to pay for more rebates.
The state Legislature briefly considered a proposal earlier this year that would have imposed a “windfall profits tax” on oil companies’ gross receipts when the price of a gallon of gasoline was “abnormally high compared to the price of a barrel of oil.”
That proposal would have required state regulators to determine the tax rate, making sure it recovered any oil companies’ profit margins that exceeded 30 cents per gallon. The money from the tax would then have been returned to taxpayers via rebates.
Newsom did not comment on that proposal when it was introduced in March, and lawmakers quickly shelved it. It could, however, act as a blueprint for the new proposal being negotiated between Newsom and legislative leaders.
The Legislature’s top two leaders — Senate President Pro Tempore Toni Atkins and Assembly Speaker Anthony Rendon — said in a joint statement that lawmakers “will continue to examine all other options to help consumers.”
“A solution that takes excessive profits out of the hands of oil corporations and puts money back into the hands of consumers deserves strong consideration by the Legislature,” they said. “We look forward to examining the Governor’s detailed proposal when we receive it.”
California Republicans — who do not control enough seats to influence policy decisions in the Legislature — have called the tax “foolhardy.”
“Who here thinks that another tax is going to bring down your gas prices? Is going to bring down any costs in this state? It’s not going to happen,” Assembly Republican Leader James Gallagher told reporters on Wednesday.
Last month, regulators at the California Energy Commission wrote a letter to five oil refiners — Chevron, Marathon Petroleum, PBF Energy, Phillips 66 and Valero — demanding an explanation for why gas prices jumped 84 cents over a 10-day period even as oil prices fell. The commission wrote that the oil industry had “not provided an adequate and transparent explanation for this price spike, which is causing real economic hardship to millions of Californians.”
On Friday, Scott Folwarkow, Valero’s vice president for state government affairs, responded that “California is the most expensive operating environment in the country and a very hostile regulatory environment for refining.” He said that has caused refineries to close and tightened supply because California requires refineries to produce a specific fuel blend.
He declined to provide details about the company’s operations based on the same anti-trust concerns. But he said the company makes appropriate arrangements to source supply when some refineries are down for maintenance.
Newsom dismissed those arguments, saying that still doesn’t account for a $2.50 difference between California’s gas prices and those in the rest of the country.
“These guys are playing us for fools. They have for decades,” Newsom said.
The California Legislature usually meets between January and August, where they consider bills on a variety of topics. The governor has the power to call a special legislative session at any time by issuing a proclamation. When convened in a special session, lawmakers can only consider the issues mentioned in that proclamation.
The last time a California governor called a special legislative session was in 2015, when then-Gov. Jerry Brown asked lawmakers to pass bills about health care and transportation.
The application for President Joe Biden’s student loan forgiveness plan is expected to go live as soon as this week.
Announced in late August, the plan will deliver federal student loan forgiveness to millions of low- and middle-income borrowers.
Individuals who earned less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 annually in those years will see up to $10,000 of their federal student loan debt forgiven.
If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual is eligible for up to $20,000 of debt forgiveness.
In addition to federal Direct Loans used to pay for an undergraduate degree, federal PLUS loans borrowed by graduate students and parents may also be eligible if the borrower meets the income requirements.
Facing mounting legal challenges to the student loan forgiveness policy, the Biden administration announced some last-minute changes to the program last week. Borrowers are still awaiting final details on the policy.
The Department of Education regularly updates the Federal Student Aid website with information on the forgiveness program.
Here’s what we know so far:
The application has not been released yet but the Biden administration has said it will come out sometime in October.
The online application will be short, according to the Department of Education. Borrowers won’t need to upload any supporting documents or use their Federal Student Aid ID to submit the application.
“Once you submit your application, we’ll review it, determine your eligibility for debt relief and work with your loan servicer(s) to process your relief. We’ll contact you if we need any additional information from you,” the department said an email to borrowers last week.
Borrowers will have more than a year to apply. The deadline will be December 2023.
About 8 million people are expected to receive student loan forgiveness automatically because the Department of Education already knows what their income is, likely due to previously submitted financial aid forms or income-driven repayment plan applications.
It’s unclear when exactly debts will be discharged. But due to ongoing lawsuits, the government has agreed in court to hold off canceling any federal student loan debt before October 17.
The Biden administration scaled back eligibility for the program last week, as it faces mounting legal challenges to the policy.
The program will now exclude borrowers whose federal student loans are guaranteed by the government but held by private lenders. The administration has said the change could affect about 700,000 people.
The Department of Education initially said these loans, many of which were made under the former Federal Family Education Loan program and Federal Perkins Loan program, would be eligible for the one-time forgiveness action as long as the borrower consolidated his or her debt into the federal Direct Loan program.
But the agency has reversed course after six Republican-led states sued the Biden administration, arguing that forgiving the privately held loans would financially hurt states and student loan servicers.
Now, privately held federal student loans must have been consolidated before September 29 in order to be eligible for the debt relief.
The White House clarified last week that borrowers will be able to opt out if they don’t want to receive the debt forgiveness.
The Biden administration’s announcement came hours after a borrower sued, arguing that he would be forced to pay state taxes on the amount canceled – an expense he would otherwise avoid.
There are a handful of states that may tax the debt discharged under Biden’s plan if state legislative or administrative changes are not made beforehand, according to the Tax Foundation.
There are currently at least three significant lawsuits aiming to block the Biden administration from implementing its student loan forgiveness plan.
Republican states are leading the charge. In addition to the lawsuit filed by six Republican-led states that say they could be hurt financially by the forgiveness plan, Arizona Attorney General Mark Brnovich also filed a lawsuit last week.
Brnovich, a Republican, argues that the policy could reduce Arizona’s tax revenue because the state code doesn’t consider the loan forgiveness as taxable income, according to the lawsuit. The complaint also argues that the forgiveness policy will hurt the attorney general office’s ability to recruit employees. Currently its employees may be eligible for the federal Public Service Loan Forgiveness program, but some potential job candidates may not view that as a benefit if their student loan debt is already canceled, the lawsuit argues.
A federal judge has already denied the request in the third lawsuit – from a borrower who sued arguing that they would incur a bigger state tax bill due to the loan forgiveness. The plaintiff, a public interest lawyer at the Pacific Legal Foundation, has until October 10 to file a revamped lawsuit.
The nonpartisan Congressional Budget Office said in a report released last week that the student loan cancellation could come at a price of $400 billion but noted that those estimates are still “highly uncertain.”
The Biden administration argues that the CBO’s cost estimate should be viewed over a 30-year time period and came out with its own analysis two days later. It said the program will cost an average of $30 billion per year over the next decade and $379 billion over the course of the program.
The Department of Education is warning borrowers of scams related to the student loan forgiveness program that ask for payment in return for help getting debt relief.
“Make sure you work only with the US Department of Education and our loan servicers, and never reveal your personal information or account password to anyone,” it said in an email to borrowers.
Portfolio managers who’ve traditionally used a 60/40 stocks-to-bonds split for clients say that now is the time to consider buying more heavily into fixed income to weather volatility and economic weakness ahead. Both asset classes have had a rough year. Bond yields have rebounded lately, and some areas of the market are showing solid income for investors. Yields move opposite bond prices. “Bonds are more attractive than they’ve been in a while, probably over a decade,” said Barry Gilbert, an asset allocation strategist for LPL Financial, adding that they make the most sense for investors who are more conservative or looking to pad income in their portfolio. At the same time, stocks have been volatile and are likely to continue to whiplash. That’s already prompted investors to sell out of the riskier assets in exchange for the safety of fixed income. The ratio between equities and bonds has fallen since mid-August, Credit Suisse analyst David Sneddon wrote in a Monday note. “This suggests that we may be seeing a more decisive turn lower and a more sustainable downtrend as investors move out of equities further and finally start moving into bonds, with the equity downtrend itself expected to gather pace,” he said. Which bonds make sense The threat of a potential recession is spurring movement into bonds, especially as continued high inflation and rate hikes from the Federal Reserve weigh on stocks. “We think equities have further room to fall particularly as earnings are at further risk in a recession scenario,” said Michael Reynolds, Glenmede’s vice president of investment strategy. In such an economic environment, being underweight market risk makes sense. It also seems sensible to turn to fixed income for some protection. Historically, bonds mitigate risk and blunt volatility that equities usually see. Although this year has been rough on both asset classes, it hasn’t changed that fact, according to Anthony Saglimbene, chief market strategist at Ameriprise Financial. “What has changed this year is that income is looking more attractive today with yields coming back up,” he said. “When you start getting 4% for the two-year and near 4% on the 10-year, those are attractive yields.” Currently, the yield on the two-year U.S. Treasury is about 4.14%, while the yield on the 10-year is 3.75%. Shorter duration bonds are popular with investors right now due to these higher yields. For instance, rates on the U.S. one-year and three-year bonds are above 4%. “Right now, we are putting our over weights into short duration fixed income,” said Reynolds. “We’re also less exposed there to rise in interest rates.” He noted that the firm’s sweet spot is in the two-to-three-year range, as that’s where they’re finding the best value. Those with more bonds in their portfolio would want to lean more heavily on the shorter end of the yield curve for the most protection and income, according to LPL’s Gilbert. However, investors with a more traditional 60/40 split would probably want to hold duration around six or seven years, he said. Of course, if there is a recession in the next few years, there will come a point when it makes sense to beef up on bonds even more and look for investments farther out on the yield curve. “In recession environments you want to have a little bit of duration and if interest rates come in you can get a big payoff on those bets,” said Reynolds of Glenmede. Now, he noted, that bet is a little premature because interest rates are likely to go a bit higher. Other areas of fixed income To be sure, investors may be wary of bonds as they’ve also been hit hard this year, resulting in price declines on both sides of the 60/40 portfolio. For those that are looking for income but don’t want to play too heavily in bonds, there are some other options, according to Rob Burnette, CEO and financial advisor at Outlook Financial Center in Troy, Ohio. That includes blue-chip stocks that pay solid dividends like IBM or looking at other investments such as preferred securities or structured notes. Preferred securities are fixed income instruments that hold some qualities of stocks and bonds and generally offer higher yields, while structured notes are debt issued by financial institutions. It may also make sense to have a larger cash holding on the sidelines ready to go back into equities. “It’s good to have some dry powder on the sidelines in the environment like this, you never really know what sort of opportunities will arise,” said Reynolds. It may also be a good time to buy stocks and bonds now and move back toward a 60/40 split, said Gilbert. “You should be looking at opportunities when it feels the worst to do it,” he said. It might make sense to rebalance Investors who want to position appropriately for the coming months may not have to do much to bring their portfolios in line, given the sell-off in equities year to date. Still, it makes sense to regularly reassess the balance of bonds, stocks and cash to make sure your allocation meets your goals. Many investors may find that even if they haven’t seen great gains this year, they’re still set up for success in the long term and shouldn’t make any emotionally driven changes. “A well-diversified portfolio continues to be the best path forward for investors,” said Saglimbene.
Daniel Kelly and his wife bought a 1977 doublewide mobile home in May for about $83,000 at Tropicana Sands, a community for people 55 and older in Fort Myers, Florida. But he ran into roadblocks when he tried to insure it.
Managers at Tropicana Sands told him he likely wouldn’t be able to find a carrier who would offer a policy because the home was too old. He said he checked with a Florida-based insurance agent who searched and couldn’t find anything.
“I can insure a 1940s car, why can’t I insure this?” Kelly said.
Kelly was lucky that his trailer was largely spared by Hurricane Ian aside from some flood damage. But for many Floridians whose homes were destroyed, they now face the arduous task of rebuilding without insurance or paying even steeper prices in an insurance market that was already struggling. Wind and storm-surge losses from the hurricane could reach between $28 billion and $47 billion, making it Florida’s costliest storm since Hurricane Andrew made landfall in 1992, according to the property analytics firm CoreLogic.
Even before Ian, Florida’s home insurance market was dealing with billions of dollars in losses from a string of natural disasters, rampant litigation and increasing fraud. The difficult environment has put many insurers out of business and caused others to raise their prices or tighten their restrictions, making it harder for Floridians to obtain insurance.
Those who do manage to insure their homes are seeing costs increase exponentially. Even before Hurricane Ian, the annual cost of an average Florida homeowners insurance policy was expected to reach $4,231 in 2022, nearly three times the U.S. average of $1,544.
“They are paying more for less coverage,” said Florida’s Insurance Consumer Advocate Tasha Carter. “It puts consumers in dire circumstances.”
The costs have gotten so high that some homeowners have forgone coverage altogether. About 12% of Florida homeowners don’t have property insurance — or more than double the U.S. average of 5% — according to the Insurance Information Institute, a research organization funded by the insurance industry.
Florida’s insurance industry has seen two straight years of net underwriting losses exceeding $1 billion each year. A string of property insurers, including six so far this year, have become insolvent, while others are leaving the state.
As of July, 27 Florida insurers were on a state watchlist for their precarious financial situation; Mark Friedlander, the head of communications for the Insurance Information Institute, expects Hurricane Ian will cause at least some of those to tip into insolvency.
The insurance industry says overzealous litigation is partly to blame. Loopholes in Florida law, including fee multipliers that allow attorneys to collect higher fees for property insurance cases, have made Florida an excessively litigious state, Friedlander said.
Florida currently averages about 100,000 lawsuits over homeowners’ insurance claims per year, he said. That compares to just 3,600 in California, which has almost double Florida’s population.
The Florida Office of Insurance Regulation said the state accounts for 76% of the nation’s homeowners’ insurance claims lawsuits but just 9% of all homeowners insurance claims.
“Plaintiff attorneys in Florida have historically found ways of circumventing any efforts at reining in legal system abuses, making it likely that ongoing reforms will be needed to further stabilize the insurance marketplace,” said Logan McFaddin of the American Property Casualty Insurance Association.
But Amy Boggs, the property section chair for the Florida Justice Association — a group that represents attorneys — said the insurance industry is also at fault for refusing to pay out claims. Boggs said homeowners are driven to attorneys “as a last resort.”
“No policyholder wants to be embroiled in years of litigation just to get their homes rebuilt,” she said. “They come to attorneys when their insurance company underpays their claim and they can’t rebuild.”
Rampant fraud — particularly among roofing contractors — has also added to costs. Regulators say it’s common for contractors to go door-to-door offering to cover homeowners’ insurance deductible in exchange for submitting a full roof replacement claim to their property insurance company, claiming damage from storms.
Things have gotten so bad with insurance that Florida Gov. Ron DeSantis called a special session in May to address the issues. New laws limit the rates attorneys can charge for some property insurance claims and require insurers to insure homes with older roofs — something they had stopped doing because of rising fraud claims.
The legislation also includes a $150 million fund that will offer grants to homeowners to make improvements to protect against hurricanes. But that program has yet to be launched, and experts say it will take years to reverse the damage to Florida’s insurance market.
In the meantime, the crisis has pushed more homeowners to Citizens Property Insurance Corp., the state-backed insurer that sells home insurance for those who can’t get coverage through private insurers.
Citizens had more than 1 million active policies as of Sept. 23, before Ian hit, according to Michael Peltier, a spokesman at Citizens. In 2019, that number was roughly 420,000. He said the company had been writing 8,000 to 9,000 new policies per week, double compared with a few years ago. Citizens has $13.4 billion in reserves and predicts it will pay 225,000 claims from Ian worth a total of $3.7 billion.
Even if they have homeowners’ insurance, many Floridians could still be facing financial ruin because of flooding. Flood damage isn’t typically covered by homeowners’ insurance but can be costly; Florida’s Division of Emergency Management says 1 inch of floodwater can do $25,000 in damage.
Friedlander said just 18% of Florida homeowners carry flood insurance, either through the federal government’s National Flood Insurance Program or private insurers. In some coastal areas, more than half of homeowners have flood insurance, but in inland areas — where flood waters continued to rise even after the storm had passed — it’s closer to 5%.
Kelly, whose trailer in Fort Myers was saturated in 4 feet of salt water and sewage after Hurricane Ian, could have benefitted from flood insurance. He thought he might not be able to get it because he didn’t have homeowners insurance, but that’s not the case — flood insurance is completely separate and can even be purchased by renters, experts say.
“I kinda let it lie when I originally couldn’t find someone to insure it,” he said. “It’s a costly oversight on my part.”
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Associated Press writer Steve LeBlanc in Boston contributed to this report.
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For more coverage of Hurricane Ian, go to: https://apnews.com/hub/hurricanes
When the stock market has jumped two days in a row, as it has now, it is easy to become complacent.
But the Federal Reserve isn’t finished raising interest rates, and recession talk abounds. Stock investors aren’t out of the woods yet. That can make dividend stocks attractive if the yields are high and the companies produce more cash flow than they need to cover the payouts.
Below is a list of 21 stocks drawn from the S&P Composite 1500 Index SP1500, +3.12%
that appear to fit the bill. The S&P Composite 1500 is made up of the S&P 500 SPX, +3.06%,
the S&P 400 Mid Cap Index MID, +3.18%
and the S&P Small Cap 600 Index SML, +3.80%.
The purpose of the list is to provide a starting point for further research. These stocks may be appropriate for you if you are looking for income, but you should do your own assessment to form your own opinion about a company’s ability to remain competitive over the next decade.
Cash flow is key
One way to measure a company’s ability to pay dividends is to look at its free cash flow yield. Free cash flow is remaining cash flow after planned capital expenditures. This money can be used to pay for dividends, buy back shares (which can raise earnings and cash flow per share), or fund acquisitions, organic expansion or for other corporate purposes.
If we divide a company’s estimated annual free cash flow per share by its current share price, we have its estimated free cash flow yield. If we compare the free cash flow yield to the current dividend yield, we may see “headroom” for cash to be deployed in ways that can benefit shareholders.
For this screen, we began with the S&P Composite 1500, then narrowed the list as follows:
Dividend yield of at least 5.00%.
Consensus free cash flow estimate available for calendar 2023, among at least five analysts polled by FactSet. We used calendar-year estimates, even though fiscal years for many companies don’t match the calendar.
Estimated 2023 free cash flow yield of at least double the current dividend yield.
For real-estate investment trusts, dividend-paying ability is measured by funds from operations (FFO), a non-GAAP figure that adds depreciation and amortization back to earnings. Adjusted funds from operations (AFFO) takes this a step further, subtracting cash expected to be used to maintain properties. So for the two REITs on the list, the FCF yield column makes use of AFFO.
For many companies in the financial sector, especially banks and insurers, free cash flow figures aren’t available, so the screen made use of earnings-per-share estimates. These are generally considered to run close to actual cash flow for these heavily regulated industries.
Here are the 21 companies that passed the screen, with dividend yields of at least 5% and estimated 2023 FCF yields at least twice the current payout. They are sorted by dividend yield:
Any stock screen has its limitations. If you are interested in stocks listed here, it is best to do your own research, and it is easy to get started by clicking the tickers in the table for more information about each company. Click here for Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.
For the “estimated FCF yields,” consensus free cash flow estimates for calendar 2023 were used for all companies except the following:
For the REITs, (Uniti Group Inc. UNIT, +7.36%
and Macerich Co. MAC, +8.18%
), consensus AFFO estimates were used.
Consensus EPS estimates were used for Prudential Financial Inc. PRU, +5.66%,
Invesco Ltd. IVZ, +6.76%
and Franklin Resources Inc. BEN, +4.37%.
NEW YORK — More than half of Americans believe it’s unlikely younger people today will have better lives than their parents, according to a new poll from the University of Chicago Harris School of Public Policy and The Associated Press-NORC Center for Public Affairs Research.
Most of those polled said that raising a family and owning a home are important to them, but more than half said these goals are harder to achieve compared with their parents’ generation. That was particularly true for younger people — about seven in 10 Americans under 30 think homeownership has become harder to achieve.
About half of those polled also said it’s hard for them to improve their own standards of living, with many citing both economic conditions and structural factors.
Josean Cano, 39, a bus operator in Chicago who is Hispanic, said he’s had a harder time economically than his parents. He mentioned inflation, high housing costs, and the recent baby formula shortage as examples.
“Things have doubled and tripled in price, ” he said. “We’re not talking about gym shoes or concert tickets. We’re talking about essentials. Six months ago, you couldn’t find PediaSure. And if you could find it, it would be $20. It used to be $11 at Target.”
Cano also pointed to the fact that the real purchasing power of the minimum wage was higher for previous generations and that rents and the cost of education were more reasonable.
According to the Economic Policy Institute, the federal minimum wage in 2021 was worth 34% less than in 1968, when its purchasing power peaked.
“Many people perceive their options are less than what they had in the past,” said University of Chicago professor Steven Durlauf, who studies inequality and helped construct the study. “A lot of sense of well-being has to do with relative status, not absolute status.”
The study also showed marked partisan disagreements over whether structural factors contribute to social mobility.
Democrats were more likely than Republicans to say that factors such as parents’ wealth, the community one lives in, college education, race and ethnicity, and gender greatly affect one’s social mobility. Black and Hispanic adults were also more likely than white adults to say a college education, race and ethnicity, and gender are very important factors.
Acacia Barraza, 35, who lives in Las Lunas, New Mexico and works as an employee services coordinator, said she was more optimistic about social mobility for Hispanic Americans before the election of former President Donald Trump. Barraza is Hispanic and Native American.
“Before, I would have thought we had made progress,” she said. “That we’d be able to have more and be more. But we’re battling the same battles our parents did. Trump brought it back to the forefront.”
Barraza said that student debt, which she and her husband both have, has made raising a family and working towards buying a house more difficult.
According to Department of Education data, average student loan debt has increased for all generations, reaching record highs. Of adults under 30 who have a bachelor’s degree or higher, 49% have student loan debt. Federal borrowers 24 and younger owe an average of $14,434, those aged 25 to 34 owe an average debt of $33,570, and those aged 35 to 49 owe an average federal debt of $43,208.
Mark Claffey, 52, who is disabled, white, and lives in Logan, Ohio, said that “everything costs more” now than it did for his parents’ generation.
“Back then you could make something on a limited budget,” he said. “You could do more with less. Bread cost less than a dollar.”
Now, Claffey says he and his wife find themselves squeezed at the end of the month on their fixed income budgets. He also thinks the country is more divided and polarized along partisan lines than in previous eras.
Compared with younger people, Americans aged 60 or older are more likely to believe it’s easier for them to achieve a good standard of living compared with their parents, the poll found.
Only 35% of adults over 60 said it is “much or somewhat harder” to achieve a good standard of living, compared with 54% of adults aged 18-29.
The poll also found that Black Americans have a more positive outlook on upward mobility for future generations than white Americans.
Poll respondent Glen McDaniel, 70, who is Black and works as a medical laboratory scientist in Atlanta, said he has “a certain amount of optimism” about the prospect of future generations having a better standard of living because he “knows for a fact it’s possible, not something you read in a book.”
“I’ve seen a lot of history through these eyes,” he said. “There were times when even someone looking like me going to college didn’t seem possible. We would have to think, going on vacation — would people who look like us be safe, or would we be harassed? It’s incredible to think that was during my lifetime.”
McDaniel said his mother started college, but dropped out, and that he went to the University of Toronto. He said seeing technological advances also contributes to his feeling that future generations may make gains.
McDaniel added that his optimism is “a little constrained by the political climate right now.”
“There’s still a climate of people coming out from under rocks motivated by their worst fears,” he said. “It’s not as blatant as when I was a kid. But it’s still part of the American ethos.”
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The poll of 1,014 adults was conducted Aug. 25-29 using a sample drawn from NORC’s probability-based AmeriSpeak Panel, which is designed to be representative of the U.S. population. The margin of sampling error for all respondents is plus or minus 4.3 percentage points.
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Follow AP’s coverage of financial wellness at https://apnews.com/hub/financial-wellness
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The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
This summer I was at a gathering in the weeks after the Supreme Court decision striking down Roe v Wade. A senior executive from one of the country’s largest corporations was asked about his company’s reproductive rights benefits. As is befitting of his company’s size and stature, he sketched out, with some pride, its top-of-the-line health care benefits. He went on to describe how pleased–and relieved–his senior leadership team was when they confirmed that their health insurance already covered travel for medical procedures. This means that it covers travel from states that restrict reproductive rights to those that provide abortions.
He was pleased because the travel provisions were in place, yes. He was also pleased because it meant his company did not have to take any action in those immediately post-Roe days. Instead of having to “make a statement,” they could keep their proverbial corporate head down and not risk “becoming part of the story.”
Crisis averted. Sigh of relief.
Except maybe not. Because sometimes remaining silent is not a bullet dodged, but rather a cost postponed.
And the cost, in this case, can be many of the women who work for–or buy from, or invest in–your company.
Women cannot afford to stay where they do not have support
Ellevest recently introduced its proprietary Ellevest Women’s Financial Health Index. The index is the first-of-its-kind, quantitative measure of the financial health of women in the U.S. It includes inputs like the gender pay gap, the availability of paid family leave, inflation, and women’s representation in government and corporate leadership. Also included is a measure of reproductive rights, given that they have a fundamental financial impact on women and their families.
This year, the index has been declining rapidly, in part due to restrictions on reproductive rights for women, as well as the increase in inflation and the tanking of consumer confidence, indicating that the financial health of women in the U.S. has also been heading south. In fact, by the index’s measure, women are in worse financial shape today than they were in the depths of the pandemic.
We also shared the results of our second annual Ellevest Financial Wellness Survey. It is perhaps not surprising that this survey showed that more than half of women–and more than 60% of millennial and Gen Z women–said that the overturning of Roe v. Wade has had a significant impact on their mental health.
But make no mistake: They are also making the connection to their pocketbooks. Millennial women rank the restriction of reproductive rights as one of their top five financial worries. For Gen Z women, it featured in second place behind inflation–interestingly, though perhaps not surprisingly, a tie with climate change. And lest you write this off as youthful “wokeness,” climate change was a top-five financial worry for women across all age demographics.
There are three main takeaways for corporate executives:
Silence can cost you women employees
Women report that they want to work at companies whose values align with theirs: Some 44% of women say they would look to leave an employer whose views on reproductive rights do not align with their own. That also goes for 56% of millennial women, 53% of Latinas, and 45% of Black women.
So how are women reacting to this rapidly shifting landscape? Well, they’re sending their resumes out. That’s right: A full 55% are looking for a new job. And 38% report that they are saving money so they can leave their job.
This could hurt.
Silence can also cost you women customers
But the economic cost of your company’s silence may not stop there. It can hit the revenue line: 59% of women–and two-thirds of younger women–say it’s important for them to invest and spend with companies that stand for reproductive rights. In other words, they may in fact want you to “become part of the story.”
That could hurt even more.
Companies are focusing on men’s top financial priority
A final insight for corporate leaders, from the survey: The Ellevest survey revealed that men’s top financial priority is growing their retirement savings. Fair enough. And here your corporate benefit plans–with their heavy emphasis on 401(k)s–tend to be on target.
Women’s top financial priority? “Supporting my family.” And understandably so, given that our society expects women to shoulder a disproportionate share of the family care responsibilities. This feels particularly acute, coming out of a pandemic in which women were the social safety net, and given ongoing economic uncertainty.
Corporate benefits plans are supposed to help… well, not so much. Only 5% of the country’s lowest paid workers, most of whom are women of color, had access to paid parental leave in 2020. And even among the nation’s top 10% of earners, it’s only 36%. Not to mention flexible work policies, child, and family care support, and so on. It’s another version of silence on an issue that matters to every woman–in this case, her primary financial priority.
So, corporate executives: Just as your women employees and customers may misinterpret your silence, don’t let her current silence lull you.
Sallie Krawcheck is the CEO and co-founder of Ellevest, the wealthtech company built by women, for women. Previously, she led Merrill Lynch, Smith Barney, and Citi Private as CEO and was CFO of Citi.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
Stocks declined again on Friday, closing out September with large losses across the board as the rally from the June lows partway through August faded into memory.
The S&P 500 SPX, -1.51%
fell 1.5% on Friday. The benchmark index slumped 9.3% for September, leading to a 2022 loss of 24.8%. The Dow Jones Industrial Average DJIA, -1.71%
gave up 1.7% on Friday, for a September decline of 8.8%. The Dow has now fallen 20.9% for 2022. The Nasdaq Composite Index COMP, -1.51%
pulled back 1.5% on Friday for a September drop of 10.5% and a year-to-date plunge of 32.4%. (All price changes in this article exclude dividends.)
Below is a list of stocks in the S&P 500 that fell the most during September.
Nike Inc. NKE, -12.81%
was down 13% on Friday for a September decline of 22%, after the company warned that discounting to clear inventory would continue to affect its earnings performance. Here’s how analysts reacted.
Most financial planners advise young people to start saving early — and often — for retirement so they can take advantage of the so-called eighth wonder of the world – the power of compound interest.
And many advisers routinely urge those entering the workforce to contribute to their 401(k), especially when their employer is matching some portion of the amount the worker is contributing. The matching contribution is – essentially – free money.
New research, however, indicates that many young people should not save for retirement.
The reason has to do with something called the life-cycle model, which suggests that rational individuals allocate resources over their lifetimes with the aim of avoiding sharp changes in their standard of living.
Put another way, individuals, according to the model which dates back to economists Franco Modigliani, a Nobel Prize winner, and Richard Brumberg in the early 1950s, seek to smooth what economists call their consumption, or what normal people call their spending.
According to the model, young workers with low income dissave; middle-aged workers save a lot; and retirees spend down their savings.
Source: Bogleheads.org
The just-published research examines the life-cycle model even further by looking at high- and low-income workers, as well as whether young workers should be automatically enrolled in 401(k) plans. What the researchers found is this:
1. High-income workers tend to experience wage growth over their careers. And that’s the primary reason why they should wait to save. “For these workers, maintaining as steady a standard of living as possible therefore requires spending all income while young and only starting to save for retirement during middle age,” wrote Jason Scott, the managing director of J.S. Retirement Consulting; John Shoven, an economics professor at Stanford University; Sita Slavov, a public policy professor at George Mason University; and John Watson, a lecturer in management at the Stanford Graduate School of Business.
2. Low-income workers, whose wage profiles tend to be flatter, receive high Social Security replacement rates, making optimal saving rates very low.
Middle-aged workers will need to save more later
In an interview, Scott discussed what some might view as a contrary-to-conventional wisdom approach to saving for retirement.
Why does one save for retirement? In essence, Scott said, it’s because you want to have the same standard of living when you’re not working as you did while you were working.
“The economic model would suggest ‘Hey, it’s not smart to live really high in the years when you’re working and really low when you’re retired,’” he said. “And so, you try to smooth that out. You want to save when you have relatively high income to support yourself when you have relatively low income. That’s really the core of the life-cycle model.”
But why would you spend all your income when you’re young and not save?
“In the life-cycle model, we are assuming you are getting the absolute most happiness you can out of income each year,” said Scott. “In other words, you are doing your best at age 25 with $25,000, and there is no way to live ‘cheaply’ and do better,” he said. “We also assume a given amount of money is more valuable to you when you are poor compared to when you are wealthy.” (Meaning $1,000 means a lot more at 25 than at 45.)
Scott also said that young workers might also consider securing a mortgage to buy a house rather than save for retirement. The reasons? You’re borrowing against future earnings to help that consumption, plus, you’re building equity that could be used to fund future consumption, he said.
Are young workers squandering the advantage of time?
Many institutions and advisers recommend just the opposite of what the life-cycle model suggests. They recommend that workers should have a certain amount of their salary salted away for retirement at certain ages in order to fund their desired standard of living in retirement. T. Rowe Price, for instance, suggests that a 30-year-old should have half their salary saved for retirement; a 40-year-old should have 1.5 times to 2 times their salary saved; a 50-year-old should have 3 times to 5.5 times their salary saved; and a 65-year-old should have 7 times to 13.5 times their salary saved.
Scott doesn’t disagree that workers should have savings benchmarks as a multiple of income. But he said a high-income worker who waits until middle age to save for retirement can easily reach the later-age benchmarks. “Savings for retirement probably is more in the zero range until 35 or so,” Scott said. “And then it is probably faster after that because you want to accumulate the same amount.”
Plus, he noted, the home equity a worker has could count toward the savings benchmark as well.
So, what about all the experts who say young people are best positioned to save because they have such a long timeline? Aren’t young workers just squandering that advantage?
Not necessarily, said Scott.
“First: saving earns interest, so you have more in the future,” he said. “However, in economics, we assume that people prefer money today compared to money in the future. Sometimes this is called a time discount. These effects offset each other, so it depends on the situation as to which is more significant. Given interest rates are so low, we generally think time discounts exceed interest rates.”
And second, Scott said, “early saving could have a benefit from the power of compounding, but the power of compounding is certainly irrelevant when after-inflation interest rates are 0% – as they have been for years.”
In essence, Scott said, the current environment makes a front-loaded lifetime spending profile optimal.
Low-income workers don’t need to save either
As for those with low income, say in the 25th percentile, Scott said it’s less about the “income ramp that really moves saving” and more that Social Security is extremely progressive; it replaces a large percentage of one’s preretirement income. “The natural need to save is not there when Social Security replaces 70, 80, 90% (of one’s preretirement income),” he said.
In essence, the more Social Security replaces of your preretirement income, the less you’ll need to save. The Social Security Administration and others are currently researching what percent of preretirement income Social Security replaces by income quintile, but previously published research from 2014 shows that Social Security represented nearly 84% of the lowest income quintile’s family income in retirement while it only represented about 16% of the highest income quintile’s family income in retirement.
Source: Social Security Administration
Is it worth auto-enrolling young workers in a 401(k) plan?
Scott and his co-authors also show that the “welfare costs” of automatically enrolling younger workers in defined-contribution plans—if they are passive savers who do not opt-out immediately—can be substantial, even with employer matching. “If saving is suboptimal, saving by default creates welfare costs; you’re doing the wrong thing for this population,” he said.
Welfare costs, according to Scott, are the costs of taking an action compared to the best possible action. “For example, suppose you wanted to go to restaurant A, but you were forced to go to restaurant B,” he said. “You would have suffered a welfare loss.”
In fact, Scott said young workers who are automatically enrolled into their 401(k) might consider when they’re in their early 30s taking the money out of their retirement plan, paying whatever penalty and taxes they might incur, and use the money to improve their standard of living.
“It’s optimal for them to take the money and use it to improve their spending,” said Scott. “It would be better if there weren’t penalties.”
Why is this so? “If I didn’t understand that I was being defaulted into a 401(k) plan, and I didn’t want to save, then I suffered a welfare loss,” said Scott. “We assume people figure out after five years that they were defaulted. At that point, they want their money out of the 401(k), and they are optimally willing to pay the 10% penalty to get their money out.”
Scott and his colleagues assessed welfare costs by figuring out how much they have to compensate young workers at that five-year point so that they are OK with having been inappropriately forced to save. Of course, the welfare costs would be lower if they didn’t have to pay the penalty to cash out their 401(k).
And what about workers who are automatically enrolled in a 401(k)? Are they not creating a savings habit?
Not necessarily. “The person who is confused and defaulted doesn’t really know it’s happening,” said Scott. “Maybe they’re getting a savings habit. They’re certainly living without the money.”
Scott also addressed the notion of giving up free money – the employer match — by not saving for retirement in an employer-sponsored retirement plan. For young workers, he said the match isn’t enough to overcome the cost of, say, five years of below-optimal spending. “If you think it’s for retirement, the match-improved benefit in retirement doesn’t overcome the cost of losing money when you’re poor,” said Scott. “I’m simply noting that if you are not consciously making the choice to save, it is hard to argue you are making a saving habit. You did figure out how to live on less, but in this case, you did not want to, nor do you intend to continue saving.”
The research raises questions and risks that must be addressed
There are plenty of questions the research raises. For instance, many experts say it’s a good idea to get in the habit of saving, to pay yourself first. Scott doesn’t disagree. For instance, a person might save to build an emergency fund or a down payment on a house.
As for the folks who might say you’re losing the power of compounding, Scott had this to say: “I think the power of compounding is challenged when real interest rates are 0%.” Of course, one could earn more than 0% real interest but that would mean taking on additional risk.
“The principle is about, ‘Should you save when you are relatively poor so you can have more when you are relatively rich?’ The life-cycle model says, ‘No way.’ This is independent of how you invest money between time periods,” Scott said. “For investing, our model does look at riskless interest rates. We argue that investment expected returns and risks are in equilibrium, so the core result is unlikely to change by introducing risky investments. However, it is definitely a limitation of our approach.”
Scott agreed there are risks to be acknowledged, as well. It’s possible, for instance, that Social Security, because of cuts to benefits, might not replace a low-income worker’s preretirement salary as much as it does now. And it’s possible that a worker might not experience high wage growth. What about people having to buy into the life-cycle model?
“You don’t have to buy into all of it,” said Scott. “You have to buy into this notion: You want to save when you’re relatively rich in order to spend when you’re relatively poor.”
So, isn’t this a big assumption to make about people’s career/pay trajectory?
“We consider relatively rich wage profiles and relatively poor wage profiles,” said Scott. “Both suggest young people should not save for retirement. I think the vast majority of median wage or higher workers experience a wage increase over their first 20 years of working. However, there is certainly risk in wages. I think you could rightly argue that young people might want to save some as a precaution against unexpected wage declines. However, this would not be saving for retirement.”
So, should you wait to save for retirement until you’re in your mid-30s? Well, if you subscribe to the life-cycle model, sure, why not? But if you subscribe to conventional wisdom, know that consumption might be lower in your younger years than it needs to be.
This week Freddie Mac said the average interest rate on a 30-year mortgage loan in the U.S. had climbed to 6.70% from 6.29% the week before and 6.02% two weeks ago. The average rate a year ago was 3.01%.
Would-be sellers who have low-rate mortgage loans are reluctant if it means they need to take out a new loan to fund their next home. Would-be buyers are forced out of the market, as the monthly principal and interest payment for a new 30-year loan, based on Freddie Mac’s figures, has increased 53% from a year ago.
Home-sale contracts are being canceled at a record pace in some areas.
The dollar has strengthened as the Federal Reserve has taken the lead among central banks in raising interest rates. This is reverberating across the world, making it more costly for countries to make interest payments on dollar-denominated debt and increasing the cost of any commodity traded in dollars.
The rising dollar lowers prices on imported goods for Americans and can also lower their international travel costs. But Michael Wilson, Morgan Stanley’s chief equity strategist, warns that earnings for the S&P 500 SPX, -1.51%
would decline as a direct result of the strong dollar and called the current foreign-exchange backdrop an “untenable situation” for the stock market.
This is what happens when bearish sentiment runs high
Michael Brush interviews David Baron, co-manager of the Baron Focused Growth Fund BFGFX, -0.76%,
who describes opportunities cropping up as institutional investors dump stocks. He also explains his winning long-term strategy, which has included a very long-term investment in Tesla Inc. TSLA, -1.10%.
When interest rates rise, bond prices fall. But it also means that if you have money to put to work, bond yields have become much more attractive.
Khuram Chaudhry, a European equity quantitative strategist at JPMorgan in London, makes the case for buying bonds now.
What about preferred stocks?
Getty Images/iStockphoto
Preferred stocks feature stated dividend yields and prices that move the same way bond prices do. That means prices for many issues are now heavily discounted to face value and that current yields are much higher than they were at the end of 2021. Here’s an in-depth guide on how to research preferred stocks and make your own selections.
Stanley Druckenmiller predicted a “hard landing” in 2023 for the U.S. economy while speaking at CNBC’s Delivering Alpha Investor Summit on Sept. 28.
Bloomberg
Stanley Druckenmiller predicted a U.S. recession in 2023 as a result of monetary policy tightening by the Federal Reserve. That may not be much of a stretch, considering that the U.S. economy contracted during the first half of 2022, according to revised GDP figures from the Bureau of Economic Analysis.
After the new U.K. government of Prime Minister Liz Truss announced a massive tax cut along with a new spending program to help counter rising fuel costs and new borrowing, the pound hit a new low against the dollar on Sept. 26 as investors and money managers panicked and sold-off U.K. government bonds. Steve Goldstein explains how and why the Bank of England came tot the rescue.
After Tesla CEO Elon Musk said the upcoming Cybertruck would be sufficiently waterproof to “serve briefly as a boat,” the San Francisco Bay Ferry offered this advice to patrons.
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New York Yankees star Aaron Judge hit his 61st home run of the season Wednesday night, tying the American League record — but leaving at least one person with good reason to frown, despite having just witnessed baseball history firsthand.
A Toronto Blue Jays fan sitting in the left-field stands at Toronto’s Rogers Centre, where Judge blasted the home run that tied fellow Yankees slugger Roger Maris for the league single-season record, was almost ideally positioned — and even equipped — for this once-in-a-lifetime opportunity. Unfortunately, the ball glanced off his glove and landed in the Blue Jays bullpen below.
And a potentially huge payoff slipped through his fingers.
The fan was later revealed to be a 37-year-old Toronto restaurant owner, who reportedly gave his name as Frankie Lasagna to the Canadian Press. He said normally he “would never ever bring a glove other than this situation,” with his left-field seat a reasonably likely landing spot for a home run by the right-handed-hitting Judge and history on the line.
In video footage, the fan appears visibly upset after missing the ball and his chance to be a bit player in baseball history. “The disbelief comes over you and just the shock and the amazement,” he said. “I was like, ‘Oh my God, I almost had it.’ “
David Kohler, CEO of California auction house SCP Auctions Inc., estimated the value of a ball hit for Judge’s home 61st home run could be between $200,000 and $250,000. And if this was Judge’s last home-run ball of the season, it could end up being valued at more than $1 million.
“The Yankees are beloved,” Kohler said. “Aaron Judge is beloved. There’s no negativity here like the steroid era in the past.” (The only players to have hit more than 61 home runs in a season have been linked with performance-enhancing drugs and played for National League clubs.)
The moment went viral on Twitter after the game.
The historic ball landed in the Blue Jays bullpen and eventually made its way to Judge. The Yankees star didn’t keep it for long, however, as a video of Judge gifting the ball to his mother was posted on Twitter TWTR, -1.18%
after the game.
“It’s a moment that I’ll never forget. I’ll cherish it,” the Yankees right fielder said. “Having my mom here supporting me — she’s been here through it all. That’s for sure. The Little League days. Getting me ready for school. Taking me to my first couple of practices and games. Being there for my first professional game and being there when I debuted and now getting chance to be here. This is something special. We’re not done yet.”
Judge tied the AL record held since 1961 by Maris, who also manned right field in the Bronx. Maris made $32,000 during that 1961 season with the Yankees, which would be worth around 10 times that today, according to Saving.org. Judge is considered undercompensated with his 2022 season salary of $19 million, according to contract data from Spotrac.
This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news.
The numbers: Mortgage rates continue to march towards 7%, continuing to pressure potential homeowners looking to buy a home.
The 30-year fixed-rate mortgage averaged 6.7% as of Sept. 29, according to data released by Freddie Mac FMCC, +0.75%
on Thursday.
Mortgage rates are up as the Federal Reserve pushed key interest rates up to deal with the worst inflation the country has seen in 40 years.
That’s up 41 basis points from the previous week — one basis point is equal to one hundredth of a percentage point, or 1% of 1%.
The rise in rates is bad news for prospective buyers, as it potentially adds hundreds of dollars to their mortgage payments.
Mortgage rates are now at highs last seen since mid-2007. To put the latest rate in perspective: A year ago, the 30-year was at 3.01%.
“Mortgage rates are now at highs last seen since mid-2007. To put the latest rate in perspective: A year ago, the 30-year was at 3.01%.”
Bloomberg’s chief economist Michael McDonough said a $2,500 monthly mortgage payment — with 20% down — would have gotten a buyer a $758,000 home last year.
This year? You’d get a lot less house — with $2,500 per month, you’d only be able to afford a $476,000 home, he wrote on Twitter TWTR, -1.12%.
The median price of an existing home in the U.S. was $389,500 in August, down from $403,800 the previous month, the National Association of Realtors said.
The average rate on the 15-year mortgage also rose over the past week to 5.96%. The adjustable-rate mortgage averaged 5.3%, up from the prior week.
“The uncertainty and volatility in financial markets is heavily impacting mortgage rates,” Sam Khater, chief economist at Freddie Mac, said in a statement.
Khater added that Freddie Mac’s survey of lenders revealed a large dispersion in rates, so home buyers should shop around with lenders to find a good quote.
Mortgage applications also fell in the latest week, as cautious buyers continue to pull back as rates march towards 7%.
The yield on the 10-year Treasury note TMUBMUSD10Y, 3.784%
rose slightly above 3.8% in morning trading on Thursday.
Got thoughts on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at aarthi@marketwatch.com
Data also reveals the significant toll the war in Ukraine, the pandemic, and rampant fraud have had on their retirement certainty
Press Release –
Jun 21, 2022
CAMBRIDGE, Mass., June 21, 2022 (Newswire.com)
– A new survey on senior finances shows that 33% of seniors have been victims of financial fraud, and 27% have less than $10K saved for retirement. These and other findings were revealed in The Sagewell Senior Certainty Index produced by Sagewell Financial, the first online banking platform designed specifically for digital seniors.
The survey also shined a light on the gender gap in retirement savings, as nearly one-third of women have less than $10K saved for retirement, and more than 60% are concerned they will run out of money.
Nearly three-quarters of all seniors were concerned that the war in Ukraine could impact their retirement planning and savings, while only 45% felt the same way about the pandemic. More than seven out of 10 are planning to or willing to work in retirement, and 29% are using or interested in crypto as an investment.
Other Key Findings
Digital Seniors Plan To Retire Differently Than Previous Generations
39% plan to retire after 65.
69% plan to or would like to age in place.
44% said their confidence about sticking to their retirement plan has changed over the past 12 months.
Only 23% were confident they are prepared if Social Security runs out.
“While the pandemic changed the way Americans work, the Baby Boomers have changed the way they retire,” said Jeffrey Wright, COO and co-founder of Sagewell Financial. “They are planning to retire later, and many are planning to work in some capacity. They’re concerned about Social Security being available to them and if it will be enough to cover their skyrocketing healthcare, housing, and cost of living expenses due to inflation.”
Paying For Retirement
27% have less than $10K saved for retirement, and 40% have less than $50K.
57% are concerned that they will run out of money.
82% do not feel confident about their access to cash or liquidity in retirement.
73% said they welcome some income smoothing (receiving consistent income in the form of one or two consolidated monthly checks.)
“It is disheartening to learn that more than a quarter of Baby Boomers have less than $10K saved for retirement — that number jumps to 32% among women,” said Sam Zimmerman, co-founder and CEO of Sagewell. “Nearly 60% of seniors expect to live on less than $3K a month in retirement. We are at a crisis point now, and it will worsen unless we take drastic steps to improve the way our seniors plan for and live in retirement.”
Gender Inequity
42% of women expect to receive less than $3K monthly in retirement (27% of men).
15% expect less than $1K (6% of men).
32% have less than $10K saved for retirement (18% of men).
47% have less than $50K saved for retirement (30% of men).
15% have more than $500K saved for retirement (28% of men).
“The disparities revealed in this survey are striking and clearly show the long-term implications of the four ‘women’s financial gaps,’” Marcia Mantell of Mantell Retirement Consulting, Inc. shares. “Most women on the cusp of retirement have faced a wage gap, mom gap, care gap, and/or widow gap. Each of these gaps results in significantly lower Social Security checks and fewer opportunities to save enough for a secure retirement.”
The Sagewell Senior Certainty Index
The Sagewell Senior Certainty Index is an online, random sample survey of 1,004 Americans between 55-67 who are approaching retirement or recently retired. The survey was conducted in May 2022 to gauge how seniors, particularly those who are online (“digital seniors”), view the certainty of their retirement planning in a post-pandemic world.
A complete copy of the survey results that include additional findings regarding seniors’ opinions on Social Security, the economy, financial technology, retirement income, planning, and savings can be found here: https://www.sagewellfinancial.com/sagewell-press-and-media/.
About Sagewell Financial
Based in Cambridge, Massachusetts, Sagewell is a team of technology and financial services professionals passionate about changing the financial lives of digital seniors in this country. Our team has created new products for some of the world’s biggest banks and insurance companies and even NASA. They’re using that experience to solve one of the most glaring problems of our time — the financial crisis faced every day by nearly 60 million Americans. Learn more at www.sagewellfinancial.com.
Media Contact: Elizabeth Yekhtikian for Sagewell Financial ey@earnedmediaconsultants.com
HelloPrenup has been featured as the prenuptial agreement (prenup) thought leader on The Knot’s blog for ‘What Is a Prenup? Here’s How to Get One’
Press Release –
May 26, 2022
BOSTON, May 26, 2022 (Newswire.com)
– HelloPrenup has been featured as the prenuptial agreement (prenup) thought leader on The Knot’s blog for “What Is a Prenup? Here’s How to Get One.” The article reviews what a prenup is, why couples should invest in one, and how to actually get one (without ever leaving their couch).
In addition to covering the tremendous benefits of prenups for separating premarital assets, debt, property, inheritance, gifts, etc, the featured article reveals the power a prenup has to “correct unequal power dynamics” that can occur in a marriage. In particular, the overwhelming statistics that show women as the most likely spouse to risk their peak career years for childbearing, rearing, and household management.
“The loss of financial opportunity for [women] and the widening wealth gap over time create an unbalanced power dynamic in a marriage that is almost impossible to recover from in the event of a divorce without a prenuptial agreement. A prenup can correct the course of the wealth gap by allowing parties to contract to financial obligations that help even the financial playing field in a marriage,” said HelloPrenup’s CEO and family law attorney, Julia Rodgers.
HelloPrenup is the first online platform to offer prenuptial agreements at a fraction of the traditional cost, access within hours instead of months, and promotes a collaborative process that greatly improves a couple’s prenup experience.
Prenuptial agreements provide overwhelming benefits for couples no matter how big or small their assets and debts are. By getting on the same page prior to marriage (literally), couples propose opportunities to mitigate some of the leading causes of divorce (like money and kids) and obligations during the marriage (like financial responsibilities, property division, etc). Visit HelloPrenup.com to learn more. Use code “TheKnot” at checkout for a limited time offer of $50 off your prenup.
HelloPrenup has been featured on Shark Tank, in CNN Business, Forbes, The Boston Globe, GeekWire, among others.
Money manager Matt Patsky stood at the window of his hotel on the Portuguese island of São Miguel in March last year, looking out over the Atlantic, and thought: I’m not sure we can retire here after all.
He told his husband, “I don’t know [if] we could live here. It looks like the people are crazy. There are people going in the water, swimming in the ocean. How crazy do you have to be to go swimming in the Atlantic in March?”
Patsky, 56, mentioned this to a local real-estate agent later that day. The man didn’t understand the issue. The water, he said, was probably no cooler than 65 degrees.
How these Americans save money in retirement: They live in Spain
As Boston-based Patsky adds: In New England you’re lucky if the water gets that warm in August.
It’s “one of the great selling points of the Azores,” he says. “It is rarely below 60. It is rarely above 80. And the water temperature tends to be steady between 65 and 75 degrees.”
Patsky says he and his husband, a retired businessman who’s 66, are “80%” sure they are going to live outside the United States when they retire. They are tired especially of the politics and the racial tensions.
The No. 1 thing that attracted them to the Azores — which lie barely more than twice as far from Boston as from Lisbon — wasn’t the weather. It was the emigration.
Portugal, they discovered, offers the all-round fastest, cheapest, easiest way to get a so-called golden visa, putting the recipient on a fast track to permanent residence and citizenship.
You have to have means, but this is not purely for Rockefellers. If you want to get Portuguese residency, and a passport, you need to buy a home in the country and generally to put at least some money into fixing it up, and spend at least seven days a year in the country for the next five years.
After six months, you get a residency card. After five years, a passport.
The threshold prices vary, depending on the type of home you buy and where you buy it, but they start at €280,000 (about $310,000).
As part of the deal, says Patsky, you have to buy the home with cash. You can’t take out a Portuguese mortgage. But you can always raise the cash by remortgaging a U.S. home. The money thresholds are lower than in many other countries. And the seven-day requirement lets Patsky continue his job in Boston, as the CEO of socially responsible investing company Trillium, during the five years.
Europe is by far the most popular destination by continent, with about a quarter of a million U.S. retirees, based on Social Security direct deposits. That includes nearly 13,000 in Portugal.
“Portugal has been so welcoming to the LGBT community, that you are seeing a huge number of LGBT couples looking at Portugal,” reports Patsky. On their trips to the Azores, Patsky says he and his husband have been bumping into other LGBT couples from the U.S. looking at golden visas as well.
On a recent trip they overheard four American women at the next table in a restaurant. It was “two lesbian couples from Philadelphia, looking at the ‘golden visa’ and looking at property in the Azores. We ended up sitting with them with my iPad open looking at property.”
You can see the islands’ attraction. There are regular flights from various North American and European cities, Patsky says. “It’s a 4½-hour flight from Boston, and, because of our large Azorean population [in New England], there are actually daily flights,” he says.
Pretty much everyone on the island speaks some English, which is taught in schools as a compulsory second language.
“It’s like living in a Portuguese fishing village,” Patsky says of Ponta Delgada, the main city on São Miguel. “It has a lot of the same feel as Provincetown [on Cape Cod], in terms of being a fishing village. It’s quaint.” The population is about 70,000. “It’s a good size, and it’s got a very vibrant economy.”
Thanks to some spectacular cliffs, São Miguel — one of the nine islands that the Azores comprise — has hosted the Red Bull World Cliff Diving World Series on several occasions, including last year.
Patsky and his husband love the island’s natural beauty. “January, we were swimming, we were at the hot springs. Incredible. This really is nice weather year round. There is no traffic. There is no rush hour.” The longest distance you could drive on the island, from one point to another, would take you an hour, he says.
And unlike in Boston, he adds with a laugh, you don’t see snow.
Both members of the couple are equally eager to retire abroad, Patsky says, in no small part to flee America’s rising racial tensions and poisonous politics. Last year Patsky’s husband, originally from the Philippines, was run over at a pedestrian crossing in Boston, Patsky recalls, and was left lying on the pavement with multiple fractures. When a policeman arrived at the scene, he asked the prone 65-year-old for his Social Security number to determine whether he was in the U.S. illegally, Patsky says.
“My husband and I want to make sure that our retirement is spent in a country that respects the dignity of every person,” Patsky says, “and that treats access to health care as a human right.” Portugal has a public health service, modeled after Britain’s National Health Service, which is available to all residents.
They are hardly alone in looking at the Azores. This is starting to turn into a well-trodden exit route. “There are hotel chains that are selling villas at exactly the price point you need to get the golden visa,” Patsky says. They’ll even rent the villa out for you to tourists, to generate income, and say they’ll buy it back after the five years are up.
Patsky says the couple won’t be moving for at least five years. Patsky’s remaining at the helm of Trillium following its takeover by Australia’s Perpetual Ltd. PPT, -1.13%.
He says one of the key appeals of Portugal’s visa program is that he can carry on working full time in the U.S. while at the same time completing the steps needed to get his Portuguese passport.
Naturally, there are forms to fill out. You’ll need the usual financial and employment records. You’ll also need an FBI report to prove you have a clean rap sheet. (Pro tip from Patsky: Don’t get your fingerprints done at the police station on card. Get them done electronically at the post office and apply online. It will save you weeks.)
As for that major retirement headache, health care, you will need to prove you have health insurance in your home country every year during the initial five years, Patsky says. Medicare counts.
And when you finally retire to the country full time? After your five-year period you’ll have a Portuguese passport. And that means an EU passport. And so you can move anywhere in the EU, including those places with the most lavish, generous public health insurance.
“You can pick wherever you want to retire because it’s the EU,” Patsky says.
Biden had announced the student loan forgiveness program last August, but it never took effect, having been tied up in the courts for months.
Later Friday, the president announced that his administration will pursue another pathway to providing some student debt relief, which is based on a different law than the one the now-defunct student loan forgiveness program was linked to.
This pathway requires the Department of Education to undertake a formal rule-making process, which typically takes months. Details were not released Friday on who might benefit if that process is successful.
Biden also announced that the administration will take steps to ease the transition period for borrowers when monthly student loan repayments resume in October. This “on-ramp” period will help borrowers avoid penalties if they miss a payment during the first 12 months.
The Biden administration has made it easier for many borrowers to seek federal student loan forgiveness from several existing debt cancellation programs.
New rules set to take effect in July could broaden eligibility for the Public Service Loan Forgiveness program, which is aimed at helping government and nonprofit workers.
And a new income-driven repayment plan proposal is meant to lower eligible borrowers’ monthly payments and reduce the amount they pay back over time. The administration said this plan was finalized Friday and borrowers will be able to take advantage of it this summer, before loan payments are due.
The Department of Education has also made it easier for borrowers who were misled by their for-profit college to apply for student loan forgiveness under a program known as borrower defense to repayment, as well as for those who are permanently disabled.
Altogether, the Biden administration has approved more than $66 billion in targeted loan relief to nearly 2.2 million borrowers.
Regardless of the way the Supreme Court ruled on the one-time forgiveness program, the Biden administration had said that student loan payments will be due starting in October.
Most student loan borrowers have not been required to make payments on their federal student loans since March 2020, when Congress passed a sweeping aid program to help people struggling financially because of the Covid-19 pandemic.
Since then, the pause has been extended eight times – under both the Trump and Biden administrations.
A law passed in early June that addresses the debt ceiling prohibits another extension of the pause.
But the Biden administration said Friday that it will provide a 12-month on-ramp period for borrowers reentering payment.
“Borrowers who can make payments should do so as payments will resume and interest will accrue,” Education Secretary Miguel Cardona said in a statement.
“But the on-ramp to repayment will help borrowers avoid the harshest consequences of missed, partial, or late payments like negative credit reports and having loans referred to collection agencies,” he added.
Borrowers will not be reported to credit bureaus, be considered in default or referred to collection agencies for late, missed or partial payments during the on-ramp period, according to a fact sheet from the White House.
Student loan experts recommend that borrowers reach out to their student loan servicer with any questions about their loans as soon as possible.
After such a long pause, many borrowers may be confused about how much they owe, when to pay and how. Millions of borrowers will have a different servicer handling their student loans since the last time they made a payment.
Borrowers should also reach out to their servicer if they are worried they will not be able to afford their monthly payment. They may be eligible for an income-driven repayment plan, which set payments based on income and family size, but require borrowers to submit some paperwork.
Federal student loan borrowers can check the FSA website for updates on resuming payments.
Borrowers will also have to reauthorize the automatic debit from their accounts to pay their monthly loan bill even if they authorized the withdrawals before the pause began.
The National Association of Student Financial Aid Administrators warns that borrowers may need to have patience when contacting their student loan servicer, which might be overwhelmed with a high volume of inquiries at this time.
“It is possible you may not reach your servicer via phone the first time you call, and you may need to call a few times before getting connected,” the group says.
No debt had been canceled, even though the Biden administration had received about 26 million applications for relief last year and approved 16 million of them.
The forgiveness program, estimated to cost $400 billion, would have fulfilled a campaign promise of Biden’s to cancel some student loan debt. But a group of Republican-led states and other conservative groups took the administration to court over the program, claiming that the executive branch does not have the power to so broadly cancel student debt in the proposed manner.
Critics also point out that the one-time student loan forgiveness program does nothing to address the cost of college for future students and could even lead to an increase in tuition. Some Democrats joined Republicans in voting for a bill to block the program. Both the Senate and the House passed the measure, but Biden vetoed the bill in early June.
Under Biden’s student loan forgiveness proposal, individual borrowers who made less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 a year would have seen up to $10,000 of their federal student loan debt forgiven.
If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual would have been eligible for up to $20,000 of debt forgiveness.
Pell grants are awarded to millions of low-income students each year, based on factors including their family’s size and income and the cost charged by their college. These borrowers are also more likely to struggle to repay their student debt and end up in default.
The administration estimated that roughly 20 million borrowers would have seen their entire federal student loan balance wiped away.
An independent analysis from the Penn Wharton Budget Model found that about two-thirds of the student debt cancellation would have gone to households making $88,000 a year or less.
This story has been updated with additional information.
The Biden administration’s one-time student loan forgiveness program is facing a fresh threat from House Republicans while it awaits a ruling from the Supreme Court about whether the proposal can take effect.
The House voted Wednesday to pass a resolution seeking to block the forgiveness program as well as end the pandemic-related pause on federal student loan payments.
Two Democrats, Rep. Jared Golden of Maine and Rep. Marie Gluesenkamp Perez of Washington, joined Republicans in voting for the bill.
The proposed forgiveness program, which promises up to $20,000 in federal student debt relief to millions of low- and middle-income borrowers, was halted by lower courts late last year before any student debt was canceled. The pause on payments, which has been in place since March 2020, is set to end later this year.
President Joe Biden has pledged to veto the Republican-led resolution if it passes in both the House and Senate. The administration said that the resolution would “weaken America’s middle class.”
“The president’s plan is a good one. It’s a popular one. And it will help prevent borrowers from default when loan payments restart this summer,” said White House press secretary Karine Jean-Pierre earlier Wednesday.
But Republicans argue that the student loan forgiveness program is unlawful and shifts the cost of the debt to taxpayers who chose not to go to college or already paid off their student loans. Blocking the program could reduce the deficit by nearly $320 billion, according to the Congressional Budget Office.
“President Biden’s so-called student loan forgiveness programs do not make the debt go away, but merely transfer the costs from student loan borrowers onto taxpayers to the tune of hundreds of billions of dollars,” said Rep. Bob Good, a Republican from Virginia, in a statement released when he introduced the resolution in March.
Even though Biden has pledged to veto the bill, votes in the House and Senate could force more moderate members of the Democratic Party to take a public stance regarding the student loan forgiveness program. Some lawmakers have been critical of the proposal in the past.
The Senate has yet to schedule a vote on the resolution, but nearly all of the 49 Republican senators have signed on as sponsors.
Republican lawmakers introduced their joint resolution in late March, using the Congressional Review Act, which allows Congress to roll back regulations from the executive branch without needing to clear the 60-vote threshold in the Senate that is necessary for most legislation.
If the student loan forgiveness program is allowed to move forward, individual borrowers who made less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 a year could see up to $10,000 of their federal student loan debt forgiven.
If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual is eligible for up to $20,000 of debt forgiveness.
While the debt relief would help borrowers with student loans now, the program wouldn’t change the cost of college in the future – and some critics argue that it could even lead to an increase in tuition.
In February, the Supreme Court heard two legal challenges to Biden’s student loan forgiveness program. One was filed by six Republican-led states, and the other was brought by two student loan borrowers who did not qualify for the full benefits of the program. The individuals are backed by the Job Creators Network Foundation, a conservative organization.
The lawsuits argue that the Biden administration is abusing its power and using the Covid-19 pandemic as a pretext for fulfilling the president’s campaign pledge to cancel student debt.
The White House has said that it received 26 million applications before a lower court in Texas put a nationwide block on the program in November, and that 16 million of those applications have been approved for relief.
No debt has been canceled yet. But if the Supreme Court allows the program to take effect, it’s possible the government moves quickly to forgive those debts.
If the justices strike down Biden’s student loan forgiveness program, it could be possible for the administration to make some modifications to the policy and try again – though that process could take months.
The Supreme Court is expected to issue its ruling in late June or early July.
Biden has extended the pause on federal student loan payments several times. Accounts have been frozen and most federal borrowers have not been required to make a payment for more than three years.
But the pause is set to end later this year. The Biden administration has tied the restart date to the litigation over the separate student loan forgiveness program. Payments are set to resume 60 days after the Supreme Court issues its ruling or 60 days after June 30, whichever comes first.
But the Biden administration has also made some lesser-known but potentially longer-lasting changes to the federal student loan system.
New rules set to take effect in July could broaden eligibility for the Public Service Loan Forgiveness program, which is aimed at helping government and nonprofit workers. And a new income-driven repayment plan proposal is meant to lower eligible borrowers’ monthly payments and reduce the amount they pay back over time. Parts of that new repayment plan are expected to go into effect later this year.
The Department of Education has also made it easier for borrowers who were misled by their for-profit college to apply for student loan forgiveness under a program known as borrower defense to repayment, as well as for those who are permanently disabled.
Altogether, the Biden administration has approved more than $66 billion in targeted loan relief to nearly 2.2 million borrowers.
This headline and story have been updated with additional information.
Editor’s Note: A previous version of this story ran in early June.
CNN
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All eyes are on the Supreme Court for its final week, as the justices will release cases on issues such as affirmative action, student loan payments, election law and LGBTQ rights.
Of the 10 cases remaining, several that most capture the public’s attention are likely to lead to fiery opinions and dissents read from the bench.
In addition, they will come down as the court finds itself in the center of a spotlight usually reserved for members of the political branches due to allegations that the justices are not transparent enough when it comes to their ethics disclosures, most recently with Justice Samuel Alito last week.
Here are some of the remaining cases to be decided:
The court is considering whether colleges and universities can continue to take race into consideration as a factor in admissions, a decision that could overturn long standing precedent that has benefited Black and Latino students.
At issue are programs at Harvard and the University of North Carolina that the schools say help them to achieve diversity on campus.
During oral arguments, the right side of the bench appeared ready to rule against the schools. Such an opinion would deliver a long-sought victory for opponents of affirmative action in higher education who have argued for decades that taking race into consideration – even in a limited manner – thwarts the goal of achieving a color-blind society.
John Roberts skewers Harvard attorney’s comparison of race and music skills as qualities in applicants
At the center of another case is a graphic designer, Lorie Smith, who seeks to expand her business and create custom websites to celebrate weddings – but does not want to work with gay couples out of religious objections to same-sex marriage.
Smith has not yet moved forward with her new business venture because of Colorado’s public accommodations law. Under the law, a business may not refuse to serve individuals because of their sexual orientation. Smith, whose company is called 303 Creative LLC, said that she is willing to work with all people, regardless of their sexual orientation, but she draws the line at creating websites that celebrate same-sex marriage because expressing such a message would be inconsistent with her beliefs.
The state and supporters of LGBTQ rights say that Smith is simply seeking a license to discriminate.
The conservatives on the court were sympathetic at oral arguments to those put forward by Smith’s lawyer. They viewed the case through the lens of free speech and suggested that an artist or someone creating a customized product could not be forced by the government to express a message that violates her religious beliefs.
Moore v. Harper has captured the nation’s attention because Republican lawmakers in North Carolina are asking the justices to adopt a long dormant legal theory and hold that state courts and other state entities have a limited role in reviewing election rules established by state legislatures when it comes to federal elections.
The doctrine – called the Independent State Legislature theory – was pushed by conservatives and supporters of Trump after the 2020 presidential election.
The North Carolina controversy arose after the state Supreme Court struck down the state’s 2022 congressional map as an illegal partisan gerrymander, replacing it with court-drawn maps that favored Democrats. GOP lawmakers appealed the decision to the US Supreme Court, arguing that the North Carolina Supreme Court had exceeded its authority.
They relied upon the Elections Clause of the Constitution that provides that rules governing the “manner of holding Elections for Senators and Representatives” must be prescribed in “each state by the legislature thereof.”
Under the independent state legislature theory, the lawmakers argued, state legislatures should be able to set rules with little to no interference from the state courts.
The justices heard oral arguments in the case last winter and some of them appeared to express some support for a version of the doctrine. The justices could, however, ultimately dismiss the dispute due to new partisan developments in North Carolina.
After the last election, the North Carolina Supreme Court flipped its majority to Republican. In April, the newly composed state Supreme Court reversed its earlier decision and held that the state constitution gives states no role to play in policing partisan gerrymandering. After that decision was issued, the justices signaled they may dismiss the case.
Anita Hill: America “has lost confidence in the Supreme Court”
Republican-led states and conservatives challenging the program say it amounts to an unlawful attempt to erase an estimated $430 billion of federal student loan debt under the guise of the pandemic.
At the heart of the case is the Department of Education’s authority to forgive the loans. Several of the conservative justices have signaled in recent years that agencies – with no direct accountability to the public – have become too powerful, upsetting the separation of powers.
They have moved to cut back on the so-called administrative state.
In court, Chief Justice John Roberts as well as some other conservatives seemed deeply skeptical of the Biden administration’s plan.
A former mail carrier, an evangelical Christian, seeks to sue the US Postal Service because it failed to accommodate his request not to work on Sundays.
A lower court had ruled against the worker, Gerald Groff, holding that his request would cause an “undue burden” on the USPS and lead to low morale at the workplace when other employees had to pick up his shifts.
There appeared to be consensus, after almost two hours of oral arguments, that the appeals court had been too quick to rule against Groff.
