This document summarizes a webinar on current personal finance issues for financial practitioners in 2014. It discusses key findings from 2014 personal finance studies and government data, including rising bank fees and health care costs, low savings rates, increasing retiree debt, and growth of inexpensive financial advisors. It also outlines significant financial events in 2014 like health care reform and the launch of MyRA retirement accounts. The objectives and agenda of the webinar are provided.

1. Welcome to the
Military Families Learning Network
Webinar
Current Personal Finance Issues for
Financial Practitioners
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This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture,
and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award Numbers 2010-48869-20685 and 2012-48755-20306.

2. Welcome to the
Military Families Learning Network
Research and evidenced-based
professional development
through engaged online communities.
eXtension.org/militaryfamilies
This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture,
and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award Numbers 2010-48869-20685 and 2012-48755-20306.

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4. Connect with the Personal
Finance Team
Facebook: PersonalFinance4PFMs
Twitter: #MFLNPF

5. Additional Resources Available:
learn.extension.org/events/1714

6. Current Personal Finance
Issues for Financial
Practitioners
Barbara O’Neill, Ph.D., CFP®, AFC®, CHC
Rutgers Cooperative Extension
oneill@aesop.rutgers.edu

7. Webinar Objectives
Present a 2014 “Financial Year in Review”
•Key findings from 2014 personal finance studies (non-academic)
•Key findings from 2014 government data
•Key 2014 financial events and trends and products
•Key government legislation/policies affecting personal finances
•Implications of 2014 events for financial practitioners
•New or revised financial education resources in 2014
•Preview of expected 2015 personal finance changes

8. What Do You Think
Was the MOST
Significant Personal
Finance Event of 2014?

9. Key Findings From
2014 Personal
Finance Studies
(Non-Academic)

10. Bank Fees
• 2014 Bankrate.com Survey:
http://www.npr.org/2014/09/29/352393388/survey-atm-checking-• Average fee for out-of-network ATM rose 5% over
past year to $4.35 per transaction
• Overdraft fees surged to record high of $32.74 (16th
consecutive year of increasing)

11. Payday Loans
• Pew Charitable Trusts Survey:
http://www.pewtrusts.org/~/media/Assets/2014/10/Payday-Lending-Report/Fraud_and_Abuse_Online_• Online loans much worse than storefront
counterparts
• Online payday loans are 1/3 of the market but 90%
of complaints
• More abusive tactics than storefront lenders
• More likely to make unauthorized withdrawals from
consumer bank accounts
• Claim immunity from individual state laws

12. Credit Card Interest and Fees
• 7/14 CreditCards.com study: 2/3 of cardholders who
asked credit card company for lower interest rate got it
• People in peak earning years had best chance of
getting breaks on fees
• 89% of 30-64 year olds who asked for late fee
forgiveness got it vs 16% of 18-29 year olds and 13%
of those age 65+
• http://www.fa-mag.com/news/want-a-better-credit-card-rate--

13. Millennial Credit Card Use
• Millennials are far more likely than older adults to
make due without credit cards.
• Princeton Survey Research Associates Summer
2014 study: More than 60% of millennials (age 18 to
29) said they did not have a single major credit card
vs 35% of adults age 30+
• Reasons cited include CARD Act restrictions on
young adults and fear of debt, especially on top of
student loans
http://www.nytimes.com/2014/09/10/your-money/the-pros-and-cons-of-avoiding-credit-cards.

14. Cost of Health Care
• 3% increase in employer health plan cost (Kaiser)
• Average family plan premium: $16,834 in 2014
– 29% of family plan premium ($4,823) paid by employees
http://online.wsj.com/articles/cost-of-employer-health-coverage-shows-muted-growth-• 22% of large employers offered ONLY high-deductible
plans in 2014; predicted to be almost 1/3 in 2015
• Employers want to curb costs and motivate workers to
“shop around” for medical services; very hard to do
http://www.nytimes.com/2014/09/02/business/increasingly-high-deductible-health-

15. ALICE Studies
• First studies in CT, FL, IN, MI, and NJ released in
2014:
http://www.newark.rutgers.edu/news/united-way-launching-national-alice-study-• National research project sponsored by United Way
to study % of Americans who can’t meet basic needs
• ALICE = Asset Limited, Income Constrained,
Employed (a.k.a., “the working poor”)
• NJ Example: 38% of households (1.2 million) are ALICE:
http://www.nj.com/news/index.ssf/2014/09/struggling_to_survive_38_percent_

16. Savings Rates
• 8/14 Report: Just 45% of upper-middle-class
households (income from $75,000 to $99,999) saved
anything in 2012, according to Fed study
• That means the other 55% didn’t save for a house,
retirement, or education
• About 16% spent more than they earned and went
further into debt
• Only half of these households had enough savings to
finance three months of living expenses if they lost
their job or couldn’t work
http://finance.yahoo.com/tumblr/blog-more-than-half-of-the-upper-middle-class-saves-

17. Savings Plans
• 2/14 Annual Savings Survey (CFA): Proportion of
Americans with a savings plan slipped from 55% in
2010 to 51% in 2014
• Those with a plan save much more effectively than
those without one
• Sharp differences between middle class households
with incomes above and below $50,000
http://www.consumerfed.org/news/752

18. Increased Interest in Prize-
Linked Savings
• D2D Fund: 10 weeks, 101 winners, one $25,000
prize: https://www.saveyourrefund.com/home/
• 2014 campaign yielded $2,603,019 in savings
• Average amount saved: $890
• Median amount saved: $220
• Created a savings experience that was fun and
aspirational

19. Retirement Savings
• A third of people in the U.S. have NOTHING saved
for retirement including 14% of those age 65+ and
26% of those age 50 to 64 (8/14 Bankrate.com survey)
http://www.usatoday.com/story/money/personalfinance/2014/08/18/• 2014 EBRI Retirement Confidence Survey (RCS):
36% of workers have < $1,000 in retirement
savings excluding house and DB pension:
http://www.ebri.org/pdf/surveys/rcs/2014/EBRI_IB_397_Mar14.RCS.

20. Retirement Savings
Calculations
• EBRI (4/14): Less than half (44%) of 2014 RCS
respondents reported that they or spouse had ever
tried to calculate retirement savings need
• Workers with higher income are significantly more
likely to complete a needs calculation
• People who have done a retirement needs
calculation tend to have higher levels of savings
http://www.ebri.org/pdf/FF.276.Ests.10Apr14.pdf

21. Retirement Plan Savings and
Health Behavior Study
• Published in Psychological Science in 2014:
http://pss.sagepub.com/content/early/2014/06/25/0956797614540467.abstract
• An employee’s decision to contribute to a 401(k) predicted
action to correct poor physical health indicators that were
revealed during an employer-sponsored health examination
• Employees who saved for the future in a 401(k) showed
improvements in abnormal blood-test results and health
behaviors about 27% more often than non-contributors did
• Findings were attributed to individuals’ time-discounting trait
that predicts long-term behavior

22. Retirement Stock Exposure
• Kitces & Pfau (4/14 AAII Journal): Allowing equity
exposure to increase in retirement actually improves
outcomes
• A portfolio that starts 30% in equities and finishes
70% in equities has 95.1% probability of success
over 30-year period
• Recommended framing rising equity glide path to
clients as a “bucket strategy”
http://www.aaii.com/journal/article/reduce-stock-exposure-in-retirement-

23. Retirees Living on Less
• July 2014 T.Rowe Price Study: Many recent retirees
receive < 2/3 of what they earned when working
• Nearly 3 years into retirement, retirees report living
on 66% of their pre-retirement income, on average
• Living standards lowered; 4 out of 10 described it as
“adjusting a great deal”
http://www.marketwatch.com/story/t-rowe-price-new-retirees-and-those-approaching-http://squaredawayblog.bc.edu/squared-away/retirees-live-on-less/

24. PISA Study
(Youth Financial Literacy)
• PISA = OECD (Organization for Economic
Cooperation and Development) Program for
International Student Assessment
• Only 9.4% of U.S 15-year olds were able to answer
the most difficult questions on an international test of
financial knowledge and skills
• > 1 in 6 U.S. students did not reach baseline level of
proficiency in financial literacy
• U.S. ranked in the middle of 18 countries studied
http://bigstory.ap.org/article/us-students-middle-pack-financial-knowhow

25. Any Other Interesting
2014 Financial Surveys
That You Remember?

26. Key Findings From
2014 Government
Data

27. Federal Reserve Survey of
Consumer Finances
• Triennial survey: Examined 2010 to 2013 trends
• Published in 9/14: http://www.federalreserve.gov/pubs/bulletin/2014/pdf/scf14.pdf
• Median income fell 5% from $49,000 to $46,700
• Mean income increased 4% from $84,100 to $87,200
• Median net worth fell 2% to $81,200
• Mean net worth effectively unchanged at $534,600
• Decreasing rates of home ownership and retirement
plan participation.

28. Federal Reserve Survey on
Economic Well-Being of U.S.
Households (7/14)
http://www.federalreserve.gov/econresdata/2013-report-economic-•25% of households “just getting by”; 13% struggling
•31% of people not retired had no savings or pension,
including 19% age 55 to 64

29. Retiree Debt
• 2014 CFPB Analysis: Nearly a third (30%) of
homeowners age 65+ had a mortgage in 2011, up
from 22% in 2001
• Debt burden of $79,000 vs. inflation-adjusted
$43,400 debt in 2001
• Delinquency rate increased five-fold from 2007-2011
http://www.consumerfinance.gov/newsroom/cfpb-spotlights-mortgage-

30. Tax Refund Identity Theft
• 2/14 article: 1.6 million taxpayers affected in first six
months of 2013 vs 271,000 for ALL of 2010
• Billions of dollars in potentially fraudulent refunds
• Drug dealers and gangs and prisoners are doing for
easy money; working on volume (even if IRS stops
9 of 10 attempts, they are making money on 10% !)
• Legitimate taxpayers expecting tax refunds face
months of delays
http://www.bostonglobe.com/news/nation/2014/02/16/identity-theft-taxpayer-information-

31. Key 2014 Financial
Events and Trends
and Products

32. Health Care Reform
• About 8 million people picked plans through
exchanges in 2014; estimate of 13 million in 2015:
http://online.wsj.com/articles/health-law-coverage-expansion-gets-• “Some of this population has never had insurance.
They may not even know the term copay”
• About 85% of people who enrolled in private
coverage through the ACA obtained premium
subsidies, according to HHS:
http://online.wsj.com/articles/hundreds-of-thousands-face-health-

33. More on Health Care Reform
• Penalty for lack of health coverage could be as high as
$12,240 for family of 5 for 2014 tax year (maximum payment
cap = average cost for family of 5 in an approved Bronze Plan)
• Penalty will rise sharply in 2015 and 2016
• Penalty payable with income tax on 4/15/15
• Flat amounts of $95 or 1% of income, whichever is GREATER
(+ half of flat amount per child)
• “Income” = AGI + retirement plan contributions + other items
but not itemized deductions + foreign and muni bond income
http://online.wsj.com/articles/penalty-for-not-having-health-coverage-

34. More on Health Care Reform
Key dates for health insurance marketplace
•11/15/14- 2/15/15- Open enrollment period for people
to apply for, keep, or change coverage
•12/15/14- Last date to enroll for new coverage that
begins on 1/1/15
https://www.healthcare.gov/blog/key-dates-for-the-health-• Can enroll anytime if life circumstances change

35. More on Health Care Reform
• Large employer mandate (to provide coverage)
penalties postponed in 2/14 to 2016 (50-99
workers) or 2015 (100 + workers):
http://online.wsj.com/news/articles/SB10001424052702304558804579375213074082656
• Insurers and employers will be required to send the
IRS files to determine health law compliance in
2016 (for 2015 tax year returns)
• IRS can’t enforce health care penalty with liens but
can withhold if from future tax refunds:
http://online.wsj.com/articles/penalty-for-not-having-health-coverage-can-be-

36. MyRA Accounts
• 2/14 presidential memo instructing U.S. Treasury
Department to create government-backed retirement
accounts for LMI Americans lacking employer plans
• Savers invest after-tax dollars and make tax-free
withdrawals in retirement
• Roll it over to private sector Roth IRA when balance
reaches $15,000
http://www.treasurydirect.gov/readysavegrow/start_saving/

37. DB Pension Transfers
• Insurance companies are taking over pension
responsibilities for large private sector companies
(e.g., Motorola to Prudential Insurance in 2014; GM
and Verizon previously)
• Companies avoid rising PBGC premiums and risk
of having enough assets to cover future obligations
• Employees/retirees no longer have backstop PBGC
protection; only state guaranty funds
http://www.bloomberg.com/news/2014-09-25/motorola-solutions-moves-4-2-billion-

38. Growth of Inexpensive
Financial Advisors
• Example: Vanguard Group: 0.3% annual fee for most
clients vs. 1% typically charged by advisory firms
• Other examples: Charles Schwab, Fidelity (0.5%
annual fee)
• “Robo-advisor” Examples: Wealthfront, Bettermint
that manage investments via unique algorithms for
0.25% fee ($25 per $1,000 invested)
http://www.businessinsider.com/robo-advisors-vs-financial-advisors-2014-7
http://online.wsj.com/articles/the-rise-of-ultracheap-financial-advisers-1411164756

39. Boomerang Kids
• 9/14 MONEY Magazine article: Among adults 40 to
59 with at least one grown child, 73% said they’d
helped support an adult child in the prior year
• Nearly a quarter of 25 to 34 year olds are now living
with parents or grandparents vs.11% in 1980
• “It’s not at the margins. It’s kind of everybody”
http://time.com/money/page/parents-adult-children-financial-

40. Employment Trends
• 62.8% labor force participation rate (8/14) vs. 66%
in 12/07 (start of Great Recession)
• 3.2% difference = 8 million workers
• If “dropouts” were looking for work, unemployment
rate would be nearly twice as high
http://online.wsj.com/articles/william-galston-saving-the-vanishing-

41. Student Loan Defaults
• 9/14 Education Department report: drop in Americans
defaulting on student loans
• 13.7% default rate for 2011 those leaving school or
graduating in 2011 vs. 14.7% in 2010
• Still, that’s 1 in 7 borrowers!
• Drop attributed to enrollment in income-based
repayment plans
http://online.wsj.com/articles/defaults-on-federal-student-

42. Student Loan Debt of Seniors
• 3% of households headed by those age 65+ carry
student loan debt- about 706,000 households
• A portion of Social Security benefit can be claimed
to repay student loans
• From 2002-2013, the number of people whose SS
benefits were offset increased five-fold from about
31,000 to 155,000
http://www.gao.gov/products/GAO-14-866T (9/14 GAO Report)

43. Credit Scoring Change
• 8/14 Announcement re: FICO credit scores: Fair
Isaac Corp will stop including in FICO score
calculations any record of a bill if it has been paid or
settled with a collection agency
• They will also give less weight to unpaid medical
bills with a collection agency
http://online.wsj.com/news/articles/SB20001424052702304070304580077903072682306

44. More Free Credit Scores
• More credit card companies touting offers for free
credit scores to draw applicants: Discover IT card,
Barclaycard, First Bankcard, etc.
• Citi credit cards in 1/15 (FICO score online):
http://blogs.wsj.com/totalreturn/2014/10/17/millions-of-consumers-• Aggressive marketing of free credit scores through
sites such as CreditKarma.com, Credit.com, and
CreditSesame.com

45. White House Summit on
Working Families (6/14)
http://workingfamiliessummit.org/?elq=~~eloqua..type--emailfield..syntax--recipientid~~&elqCampaignId=~~•Good statistics on working families
•“The summit wasn’t just a single day; it was the
beginning of a larger movement. It’s a movement
about creating change-in our laws, in our business
policies, and in our society. Because all Americans
should be able to have both a job and a family.”

46. Stock Market: 5th Birthday
of Bull Market (3/14)
• Bottom of great bear market: 3/09/09
• S&P 500 index fell 57% from 2007 peak
• Despite LOTS of pessimism, stocks eventually
turned around
• One of most powerful market rallies in recent history
• S&P 500 rose 203% from 3/07 to 12/31/13
http://www.kiplinger.com/article/investing/T038-C000-S002-5-lessons-

47. Increased Use of ETFs
• ETFs have been stealing market share from mutual
funds for past decade
• ETFs have about 11% of assets in “mutual fund
space”
• ETFs are winning market share because they are
cheaper and more tax-efficient
http://connection.ebscohost.com/c/articles/97363811/mutual-funds-are-dead-here-(Journal of Financial Planning, 8/14)

48. Any Other Interesting
2014 Financial Events,
Trends, or Products?

49. Key Government
Legislation and
Policies Affecting
Personal Finances

50. 2014 Financial Literacy
Legislation
• Prepared by National Conference of State
Legislatures
• State-by-state list of legislation introduced or
pending in 2014
• http://www.ncsl.org/research/financial-services-and-commerce/

51. Social Security Benefit
Estimates
• Agency resumes mailing SS benefit statements
• Once every 5 years for most workers (25, 30, etc.);
those not getting benefits and not registered online
• SSA still encouraging online accounts through
http://www.ssa.gov/myaccount/
• Expects to mail 48 million statements vs. >14 million
online accounts
• SS statement is a valuable retirement planning tool
http://www.investmentnews.com/article/20140917/BLOG05/140919930/social
-security-resumes-mailing-statements

52. Reverse Mortgages
• As of 1/14, lenders are required to assess the
financial condition of prospective borrowers to
determine if their income is sufficient to pay future
property taxes and insurance;
http://www.onefpa.org/journal/Pages/MAR14-Retirement-Trends,-Current-
Monetary-Policy,-and-the-Reverse-Mortgage-Market.aspx
• $625,000 lending limit (amount of home value that
can be used to calculate eligible loan amount) for
2014: http://reversemortgagedaily.com/2013/12/06/fha-keeps-reverse-mortgage-
loan-limits-unchanged-for-2014/

53. IRS Policy on Taxation of
Bitcoins (3/14)
• Bitcoins are a virtual currency made by computer
algorithms and sold in unregulated exchanges
• Operate like currency; pay for goods and services
• IRS will treat Bitcoins as property, not currency
• Wages paid in Bitcoin are subject to withholding
• Bitcoin traders are subject to capital gains tax
http://www.irs.gov/uac/Newsroom/IRS-Virtual-Currency-Guidance
http://www.usatoday.com/story/money/business/2014/03/25/irs-says-bitcoin-is-property/
6873569/

54. Any Other Interesting
2014 Financial
Legislation or Policies?

55. Implications of 2014
Events for Financial
Practitioners

56. Tips for Practitioners
• Incorporate 2014 trends and research findings into
outreach efforts
• Correct previous misperceptions and outdated
information (i.e., things that you said “Who Knew?” to)
• Make all of your outreach efforts “actionable” (e.g.,
Web links, application forms, 1:1 counseling sessions)
• Review new (2014) financial education resources

57. Tips for Clientele
• Don’t automatically elect to stay on company plan
through COBRA if unemployed; check out policies
available on www.healthcare.gov and online
• Calculate retirement savings need for better planning
accuracy and as motivation to save
• Plan for a constrained retirement lifestyle, if needed
• Understand that using an ATM not affiliated with your
bank can result in TWO fees: one charged by lender
and one charged by owner of ATM

58. Beware of ATMs Like This

59. Tips for Clientele
• Develop a spending and savings plan for increased
financial discipline and motivation to save
• Understand the financial implications of long-term
dependency by adult children
• Negotiate with credit card companies for lower
interest and waived fees
• Consider ETFs as an investment vehicle for goals
• Avoid large tax refunds that can be held up by identity
theft; adjust W-4 form accordingly

60. New or Revised
Financial Education
Resources in 2014

61. Annual Limits Publication
“The Bible”:
Annual Limits Relating to Financial Planning
(College for Financial Planning):
http://www.cffpinfo.com/annual-limits/

62. New and Archived MFLNPF
Webinars

63. Sallie Mae: The College
Planning Toolbox
https://www.salliemae.com/plan-for-college/college-planning-
toolbox/
•Includes information on grants and loans,
scholarship searching, student loan calculators,
award letter analyzer (for comparisons), and more

64. Healthcare.gov

65. OCC Financial Literacy
Resource Directory (4/14)
http://www.occ.gov/topics/community-affairs/resource-directories/
financial-literacy/index-financial-literacy.html

66. Jumpstart Coalition: Making the
Case for Financial Literacy- 2014
http://jumpstart.org/assets/files/Making%20the
%20Case%202014_2.pdf
•8 pages of current statistics about financial
knowledge, attitudes and behaviors

67. 2014 Survey of the States
http://www.councilforeconed.org/news-information/
survey-of-the-states/
•Tells which states require economic and
personal finance education in K-12 schools

68. Financial Literacy Summit 2014
• Sponsored by Federal Reserve of Chicago and Visa
• Archived at
http://www.practicalmoneyskills.com/summit2014/
“Providing Financial Literacy Resources to the
Unbanked and Underbanked”
April 2, 2014

69. COHEAO Financial Literacy
Awareness White Paper (3/14)
• Sponsored by the Coalition of Higher Education
Assistance Organizations (COHEAO)
http://www.coheao.com/wp-content/
uploads/2014/03/2014-COHEAO-Financial-
Literacy-Whitepaper.pdf
• Focus on best practices in financial literacy education
for college students
• Good resource list with links

70. Rutgers Cooperative Extension
Personal Health and Finance Quiz
http://njaes.rutgers.edu/money/health-finance-quiz/
• Believed to be FIRST combined online health
and personal finance behavioral practice
assessment tool; IRB approved at Rutgers
• Three distinct uses:
– Stand-alone self-assessment tool for users
– To collect data for ongoing research
– For educators to use for SSHW program
evaluation (pre- and post-program score)

71. Any Other New Financial
Education Resources
Developed in 2014?

72. Preview of Expected
2015 Personal
Finance Changes

73. 2015 Personal Finance
Announced Changes
• 1.7% COLA for Social Security recipients in 2015
• 2015 maximum taxable earnings: $118,500 ($117,000 in 2014)
• 2015 earnings limit under FRA: $15,720 ($15,480 in 2014)
• Increase in elective deferral limit for employer retirement
savings plans to $18,000 ($17,500 in 2014)
• Increase in catch-up contribution limit for workers age 50+ to
$6,000 or $24,000 total ($5,500 and $23,000 in 2014)

74. 2014 Military-Specific Personal
Finance News and Issues
• 9/14 Law: Changes the default option in TSP to the
L fund (Lifecycle) from the G fund (effective
Summer 2015): http://www.govexec.com/pay-benefits/2014/09/senate-approves-
bill-default-new-hires-riskier-higher-yielding-tsp-fund/94358/
• 3/14 CFPB Report on Servicemember Debt:
http://files.consumerfinance.gov/f/201403_cfpb_snapshot-report_complaints-received-
servicemembers.pdf
• Other?

75. Key Take-Aways
• A third of U.S. workers have no retirement savings
• Tax refund identity theft is increasing significantly
• Health care reform affects both insurance coverage
and income taxes
• Free credit scores are becoming more commonplace
• Mailed Social Security benefit estimates are returning
• Tax-deferred plan limits are increasing in 2015

76. Key Take-Away Applications
• Encourage people to save something for retirement
• Encourage people to file taxes early and avoid a large tax
refund that can be held up by thieves
• Encourage people with ACA health insurance to accurately
estimate income for subsidies
• Encourage people to seek out free credit scores
• Encourage people to read SS benefit estimates and get online
account at http://www.ssa.gov/myaccount/
• Encourage people to save more for retirement in 2015

77. Comments? Questions?

78. Next Personal Finance Webinar
Year End Tax Planning Strategies
Tuesday, December 9, 11 a.m. ET
• https://learn.extension.org/events/1675
• Speaker: Dr. Barbara O’Neill
• 1.5 CEUs for AFC-credentialed participants

79. Military Families Learning
Network
Find all upcoming and recorded webinars covering:
Family Development
Military Caregiving
Personal Finance
Network Literacy
http://www.extension.org/62581
This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture,
and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award Numbers 2010-48869-20685 and 2012-48755-20306.