Resolutions to getting back on track financially a catalyst for positive change

Published on December 27, 2021 in RINewsToday

With the continuing COVID-19 pandemic, we will see a scaled back Times Square celebration where the ball swiftly drops as 15,000 people, in a viewing area that holds around 58,000 revelers, will loudly count down to one at the stroke of midnight. At this time, we traditionally make New Year Resolutions to accomplish in the coming year – to perform acts of kindness, take steps to ensure our financial security, or for self-improvement.

Experts say that making resolutions can help us set goals and provide us with time for reflection as to what is important to us in the coming year. They can serve as catalysts for positive change and increase our self-esteem and sense of accomplishment. Here are the findings of two resolution studies, recently released by Voya Financial, Inc. and Fidelity Investments that may well be good for your physical health and well-being, and financial health.

Many Seek to Re-Focus Their Life Priorities

As we approach 2022, Voya Financial, Inc. released its latest study with findings indicating that nearly one-third (31%) of survey respondents say they are not planning to make any new year’s resolutions in 2022. According to researchers, the results suggest that nearly two years into the COVID-19 pandemic, many Americans might be seeking to re-focus their life’s priorities. 

However, Voya’s latest consumer research survey also revealed that when asked specifically what resolutions individuals do plan to make in 2022, more than half (60%) noted an interest in improving their overall well-being, with 44% noting a focus on physical health and 31% on their mental health.

“For many, it may seem refreshing to see that perhaps many Americans are taking a more holistic view of what’s valuable to them as we approach almost two years of pandemic life, and we understand that the impacts of the pandemic have shifted priorities for many individuals,” said Heather Lavallee, CEO of Wealth Solutions for Voya Financial, in a Dec. 9 statement announcing the study’s findings. “With the much-needed focus on what is most important and valuable, it seems that a good number of Americans are ready to take a pass on the resolution ritual this year. That said, it is reassuring to see that those who are planning to do so are most focused on their physical and mental health,” says Lavallee.

However, surviving the financial impact of the ongoing COVID-19 pandemic has many of the survey recipients say that they are monitoring financial changes that might be occurring in 2022, thus indicating that financial security continues to be a priority resolution. 

Voya’s research shows a large number of individuals are likely or extremely likely to: save more for emergencies (76%); reduce or pay down their overall debt (72%); and save for retirement (72%). The researchers also say that these numbers are even higher for those generations who might have been impacted financially more during the pandemic, with Generation Z (89%) and millennials (83%) noting that they are likely or extremely likely to save more in the coming year. 

“We continue to see interest in making changes to feel more financially secure, which is something we have found consistently since the beginning of the pandemic. But what’s most encouraging is the continued interest in saving for those generations who may have been impacted from job loss or furloughs throughout the pandemic,” added Lavallee. “And we’re seeing this shift to more positive savings behaviors in our own data as well — as more than 60% of Generation Z and millennial workers who changed their savings rates in their workplace retirement plan during the third quarter of 2021, increasing their contribution,” he said.

As individuals continue to begin building back savings and improving their overall financial well-being, many also appear to be seeking support from their employer. When asked about the importance of employer-offered benefits, Voya’s survey revealed that the majority of individuals rank the following benefits as important or extremely important: employer-sponsored retirement savings (82%); flexible work hours (77%); mental health benefits (72%); short-term/long-term disability income insurance (76%); and whole life or term life insurance (69%).

“With these findings in mind, and for those employers who are looking to help their employees as we approach the new year, we recommend considering reminding employees of the benefits and resources that are available to them at the workplace, whether that may be an employee assistance program, a resource for helping with elder or child care, or making the most of their benefits to achieve those more financially focused resolutions,” said Rob Grubka, CEO of Health Solutions for Voya Financial. “The reality is that we often find many individuals don’t recognize how many great resources are available to them — and many without cost — directly from their employer,” he says.

Fidelity Survey’s Take on 2022 Resolutions  

According to Fidelity’s 2022 Financial Resolutions Study released just weeks ago, Americans are feeling a little bit more hopeful about their finances in the upcoming year. More than 62% of Americans feel optimistic about their future, despite the unknowns of the continuing COVID-19 pandemic, and 72% are confident they’ll be in a better financial shape. Sixty-eight percent are considering making a financial resolution for the new year.

Despite the optimism reflected in this survey, respondents noted that inflation (43%), unanticipated expenses (43%) and COVID-19’s impact on the economy (36%) are their top concerns for the upcoming year. 

Like the Voya’s study, the respondents indicated that they are also making resolutions around physical (74%), mental health (61%)  and general well-being (73%) at higher levels than in the past year. The researchers note that this may be the result of achieving success in 2021 with goal-setting, as greater numbers of people report being able to stick to resolutions in 2021 in all areas; notably, 71% of respondents were able to stick with their 2021 financial resolutions, up from 58% in 2020.

“The country has been through a seemingly unrelenting roller coaster over the past two years, so it’s encouraging to see people feeling more hopeful about the coming year and placing a priority on themselves,” said Stacey Watson, senior vice president of Life Event Planning, Fidelity Investments in a Dec. 9 statement announcing the study’s findings. “This study confirms that actions taken at the start of the pandemic – such as budgeting better and replenishing that emergency savings fund – are becoming permanent habits for many,” she said.

What silver linings did American’s experience during the past two years of the ongoing COVID-19 pandemic?  Respondents say they became more thoughtful about savings and spending (42%), followed by “becoming closer to family” (39%) and “becoming stronger as a person” (34%). 

The survey respondents also noted they will be taking a more thoughtful approach to finances next year, taking a more practical view toward creating their financial resolutions. 38% say they are considering more conservative goals, a number that is even higher (46%) among the next generation. The top three financial resolutions, identified by this study were saving more money (43%), paying down debt (41%) and spending less money (31%). 

For those looking to save more in 2022, the objectives are somewhat split—51% plan to save for the long term, while 49% are looking at shorter-term objectives, such as boosting emergency savings or saving for a mortgage. Among the next generation, 62% plan to increase their retirement contribution in the year ahead, at a far higher level than older Americans (34%).

And what do people say they want to do once they’ve paid off the bills and set aside money for the future? By far, Americans are looking to get away if it’s safe to do so, as travel tops the list for where people plan to spend their extra dollars.

Compared to last year’s Financial Resolution Study, however, the latest study suggests stress levels—those things keeping people up at night—have significantly decreased. When stress is present, it involves finding money to save after paying monthly bills, the ability to simply pay bills and saving for retirement, say the researchers. Part of this stress reduction may be attributed to acceptance, as 84% of Americans say after living through the pandemic, they’ve learned to let go of worrying about that which can’t be controlled.

With New Year’s Day just five days away, if you have not done it, it’s time for you to write your resolutions for 2022.  Have a great year…

Seniors with student loans: AARP’s new online tool to manage debt

Published in RINewsToday on April 5, 2021

Over the years, AARP Public Policy Institute (PPI) has tracked the staggering amount of student loan debt that seniors are shouldering to help their children and grandchildren finance their higher education. Many people age 50 also take on student loan debt themselves, seeking more education at colleges and universities to sharpen up their skills to get a raise or a higher paying job.  

AARP national CEO, Ann Jenkins, in a July 3, 2019 blog posting, “Student Loan Debt is Crippling too Many Families,” urged Congress and state legislatures to increase public investment in colleges and universities. “The cost of attending a four-year college more than doubled, even after adjusting for inflation, as state and local funding for higher education per student has decreased,” she said, noting that family incomes haven’t come close to matching that increase.” 

Jenkins warned that the rising cost of student loan debt is “crippling too many families” and “threatens to crush the financial security of millions of Americans over age 50.” According to a PPI report, released May 2019, entitled “The Student Loan Debt Threat: An Intergenerational Problem,” cited by Jenkins in her blog article, Americans of all ages owed $1.5 trillion dollars in student loan debt as of Dec. 2018. Compare this to people ages 50 and older who owed 20 percent of this debt, or $289.5 billion of that total, up from $47.3 billion in 2004, she said, noting “that’s a fivefold increase since 2004.”

Most troubling, this 2019 PPI analysis, found that 25 percent of private student loan cosigners age 50 and older had to make a loan payment because the student borrower failed to do so.

The 2019 PPI analysis findings also indicated the obvious – that is, taking on student loan debt  can quickly deplete a senior’s retirement egg nest. The data revealed that many older student loan borrowers racked up debt by running a balance on a credit card (34 percent) and taking out a Parent PLUS loan, federal money borrowed by parents (26 percent). Other types of borrowing included taking out a home equity loan (12 percent), refinancing of their homes (10 percent), and taking out a loan against their retirement savings (8 percent).

Jenkins also noted that for seniors who defaulted in paying their monthly student loan payments, the federal government can recoup this money by taking a number of steps to collect, among them taking a portion of federal or state income tax refunds, withholding a percentage of Social Security retirement or disability benefits, or even garnishing some of the borrower’s wages.

Today, America’s seniors are still feeling the overwhelming financial weight of having to pay off student loan debt.  

Updated Student Loan Data Released 

Last week, AARP’s PPI released a new report updating data on older student loan borrowers. Like its 2019 analysis, the newly released data in the report, “Rising Student Loan Debt Continues to Burden Older Borrowers”, revealed that student loan debt is still a staggering problem across generations: Americans 50 and older held $336.1 billion, or 22 percent, of the $1.6 trillion in student loan debt in 2020. In 2004, older borrowers accounted for 10 percent of the $455.2 billion student loan debt.

“Student loan debt is becoming a burden for all generations, ensnaring more older adults and delaying or battering the retirement plans for many,” said Gary Koenig, AARP Vice President, Financial Security, in an AARP statement released on March 31, 2021. “Paying for higher education was never meant to last a lifetime.

That is why AARP is helping individuals take charge of their debt and financial security,” he said.

AARP’s newly released PPI analysis found that millions of borrowers – including as many as seven million individuals ages 50-plus – have had their payment suspension extended through September due to the pandemic. However, around a fifth of student loan debt – more than $300 billion – is not included in the current suspension.

Managing Your Student Loan Debt

To help individuals manage their student debt, AARP and Savi unveiled last week a new student loan repayment tool to help individuals identify the best payment options, with special features for the 50-plus population. The Savi Student Loan Repayment Tool provides a free, personalized assessment of student loan repayment options. It can also help individuals identify loan forgiveness opportunities based on employment, and assistance in preparing and filing paperwork.

“We’ve seen the generational impact of student loan debt, and we’re excited to work with AARP in helping older borrowers access immediate and long-term relief,” said Tobin Van Ostern, co-founder of Savi. “This is about changing the narrative and providing freedom from the burdens of student debt to those who need it most,” he notes.

“This new AARP resource provides a means for Rhode Islanders to form a clearer picture of student loan repayment that could help many clear up uncertainties and avoid potential additional costs,” said AARP Stated Director Kathleen Connell. “I urge older Rhode Islanders to get the Information they need, especially those whose retirement savings might be impacted.” 

Any adult with student loans may use the on-line tool at no cost, after registering at AARP.org/studentloans. AARP worked with Savi to customize the tool for older borrowers and includes: Options for dozens of national and state repayment and forgiveness programs; synchronized federal and private loans across all loan servicers easily with industry standard security; support from student loan experts; and access to free educational resources.

According to AARP’s statement announcing the new online tool, the Washington, DC – based aging advocacy group has worked with Savi to provide this resource to low-income older adults at no cost through the AARP Foundation. As older adults are the largest growing age group of student loan borrowers, AARP, and Savi are committed to helping them access the tools they need to begin tackling their student loan debt.

AARP’s statement makes it very clear that its collaboration with Savi does not involve or promote student loan refinancing of any.