Tag Archives: kids

How $1,000 Invested at Birth Could Change Everything

 

KidSave’ accounts may be part of a long-term solution to the retirement income problem.

In the presidential debates, we’ve heard more about Donald Trump’s anatomy than what may be the most pressing financial issue directly in front of millions of boomers: Where will they find monthly retirement income that is guaranteed for life?

The retirement industry can talk about almost nothing else, which in hindsight seems a predictable turn. Did we really believe Americans would manage their 401(k) plans well enough to stash away 25 years of post-career financial security? We haven’t come close, and in this sense the 401(k) has been a colossal failure. Now the first wave of pensionless retirees is about to land, and politicians have almostnothing to say on the subject.

One reason is that there are no quick fixes, which is why it may be time to dust off a long-term solution first floated in the 1990s and still championed by one of its architects, Bob Kerrey, the former democratic senator from Nebraska. He would like every child born in the U.S. to receive $1,000 in a “KidSave” account that would compound over 65 years before being tapped. “For most people it’s not income that matters,” says Kerry, now with investment firm Allen & Co. “It’s wealth accumulation.”

In other words, retirement security is less about what you earn and more about how much and how soon you save. Compound growth over seven decades can do a lot of heavy lifting.

Kerrey reiterated his support for what he calls “wealth accounts” last week during a discussion on the financial impact of longevity, hosted by Bank of America Merrill Lynch at the Museum of American Finance in New York. These wealth accounts would be funded at every child’s birth through a government loan, to be repaid when the child enters the workforce some 25 years later.

The initial $1,000 by itself wouldn’t make a huge difference: at 6% a year over 65 years it would produce just $44,145 in tax-deferred savings. But the existence of a wealth account from birth would encourage more saving, Kerrey believes. These accounts would be strictly off limits for 65 years and in his estimation could be enough to guarantee adequate income that will never run out later in life. If parents or grandparents, say, kicked in $20 a month for 20 years the nest egg would swell to more than $240,000 at the child’s retirement.

KidSave accounts enjoyed bipartisan support years ago but stalled amid efforts to boost other types of savings accounts and shore up Social Security. As previously envisioned, the initial deposit might be $2,000, indexed annually for inflation. That alone might produce $250,000 at age 65, Heritage Foundation found in its assessment of the program nearly two decades ago. Another version of the program called for $1,000 at birth and five annual payments of $500, which could generate a nest egg of nearly $140,000.

Why dust off KidSave accounts now? They are a relatively painless way to address a retirement income shortfall in the, yes, distant future. But as the youngest boomers and then Gen Xers retire with virtually no guaranteed income other than Social Security, the shortfall will only grow. Everything is on the table now as policymakers try to fix the retirement income issue via things like expanded Social Security, guaranteed retirement accounts, 401(k) annuities, better home reverse mortgages, and breaking down legal barriers to working longer.

Kerrey noted that without change every American now under age 40 will receive a 25% cut in Social Security benefits at retirement. We need interim steps. But we also need a long-term plan. The candidates have touched on ways to fix Social Security and cut ballooning student debt.

How to Create More Mind-Blowing Moments and Memories

A great article…..

How to Create More Mind-Blowing Moments and Memories

9 Things You Should Never Tell Your Kids

Here are some good reminders for us parents…most are obvious or should be. Some seem obvious but many can benefit.

Good to refresh though…

FROM: 9 Things You Should Never Tell Your Kids By Woman’s Day

I know you can try harder. Frustrated by a daughter who you know is capable of much more in school, sports, music, etc.? Any comment that makes it seem as though you’re not satisfied with her efforts can not only be discouraging to your child, but can also do the opposite of motivating her to try harder, says Amy McCready, founder of Positive Parenting Solutions and author of If I Have to Tell You One More Time… If your “try harder” has to do with tasks or chores, then be clear about what you expect: “When you have your room cleaned up, then you can go out and play.”

You always… or You never… “At the heart of these statements are labels that can stick for life,” says Jenn Berman, Ph.D. and author of The A to Z Guide to Raising Happy, Confident Kids. “Telling your child that he ‘always’ forgets to call makes him more likely to be the kid who, you guessed it, never calls.” Instead, ask your child how you can help him or her change: “I notice you seem to have trouble remembering to bring home your textbooks. What can we do to try to help?

Because I said so! This phrase puts all the control in your hands, and dismisses your child’s growing sense of autonomy and ability to figure things out, says Berman. It also leaves out a potential teaching moment. Let’s say your kids don’t want to visit their aging great-aunt on a sunny day when they’d rather play. Instead of “Because I said so” try, “I know you’d rather ride your bike, but Aunt Clara really loves seeing you, and we try our best to honor our family.”

I told you waiting until the last minute was a mistake! You’ve repeatedly told your son that if he played video games all afternoon, then he’d have less time to study for the math test. And guess what? Unprepared, he didn’t do well on the exam. But saying “I told you so” tells your child that you’re always right and that, by contrast, he’s wrong, says McCready. Instead, point out positive outcomes when he follows through, says McCready. If he cleans his room when asked, say, “Isn’t it easier to find all your stuff when your room’s tidy?” This puts the control and the credit with him.

You’re the best at soccer! “Say you always tell your child how smart she is. She may, over time, become scared of trying new things or more challenging work, for fear she won’t be ‘smart’ anymore if she gets a B instead of an A,” says McCready. It can also backfire if your child is struggling with work and you say, “But you’re so smart!” She may only feel worse for not living up to the label you’ve given her. Focus instead on her hard work: “You show up to every practice and try your best” or “What a fantastic job you did on this science project!”

Don’t worry—the first day of school will be fine. What’s wrong with trying to soothe an anxious kid out of worry? “If you tell your child not to worry, then you’re dismissing her feelings,” says Berman. “So now she’s still worried about the first day of school, and she’s worried that she’s worried, or that you’re upset over her worry.” Same goes for “Don’t cry” and “Don’t be angry.” Instead, say, “I can see you’re worried. Can you tell me what you’re most concerned about, so we can talk about it?”

I wish you didn’t hang out with Jack; I don’t like that kid. Yeah, a lot of parents don’t like “that kid,” for whatever reason, but “the moment you tell your child that ‘that kid’ is not your favorite, he becomes more appealing,” says Berman. Keep the lines of communication open between you two to hopefully spark discussion about values, right and wrong, and so on. “Ask your child some open-ended questions,” says Berman. “Such as, ‘What do you like about hanging out with Jack?’ ‘What do you guys do?'”

That’s not how you do it! Here, let me. You asked your child to help you with a task—but then she does a not-so-great job. It can be tough to hold yourself back from just jumping in and taking the task back, “but that’s a mistake, because then she never learns how, and is less likely to try anything else you ask down the line,” says Berman. If you must, then you can step in—but in a collaborative rather than dismissive way: “Here, let me show you a neat trick my mom taught me about folding towels!” Let the child do it!

Why can’t you be more like your sister/brother? Siblings and rivalry go hand in hand—and anything you say that sets up comparisons only fuels that natural flame, says McCready. “Comparisons slot siblings into categories—the smart one, the athlete—and discourage kids from trying the thing their sibling is ‘good’ at.” Try instead to encourage each child in whatever pursuits are “his” or “hers,” while avoiding comparisons.

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