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How are People (Age 50-Years and Older) Affected by the Financial Crisis?
How are People (Age 50-Years and Older) Affected by the Financial Crisis?
By Lil Waldner
Pension funds have lost about 5 trillion dollars worldwide during 2008. And the disastrous losses do not stop at that amount because the stock exchanges have started the year with further grave losses. The financial crisis will have a serious impact on the way of life of the generations in an age of 50 years and older. The problems have to be differentiated between following main groups: the critical age near before retirement and the retirement age. The age near before retirement lasts from 50 to the statutory pension age between 58 and 65 years in most of the industrialised countries and the retirement age begins after the statutory retirement from work and the beginning of pension payments.
The risks for the population between 50 and retirement from work
This part of the population lives in an uncertain situation. Most of the pension funds have suffered serious losses. The liabilities exceed the assets of most of the pension funds. Thus pensions could be cut and be lower than expected in the future. This could result in a weaker purchasing power for the next generation that reaches the pension age within the next 10 to 15 years.
If the people have saved money besides the pension funds of their employer or if they do not have joined a corporate pension insurance and rely on other retirement schemes, they also have experienced losses on their assets in stocks, funds or real estate. It is difficult to catch up serious financial losses within a few years.
It makes matters worse if they lose their job a few years before reaching the pension age. They still are not eligible to receive a pension income and they have trouble getting a new job in an advanced age. Some employers might provide them with a compulsory retirement but this kind of schemes always mean a shortage on pension payments.
These people even can lose their own homes if their income does not longer enable them to pay the mortgages on their real estate. The situation gets worse if they have to pay back interest rates and redemption rates on other debts.
How to cope with such a horrible prospect
There is no easy solution:
1. The best and simple way would be to invest about a quarter of the savings in gold. Gold seems to become a durable currency that can be converted in any paper currency if needed. There is no confidence in stock investments and there are doubts in the future value of the money. Many experts forecast inflation.
2. People need to be flexible and even to learn something new after many years of professional experience in order to get another job after they have been dismissed. This will be a very tough task, because jobs get very rare. People are in a favourable position, if they have acquired some practical skills and crafts. There is always a chance to get something to do for people who can repair machines and equipment, can do plumbing, are able to amend cloths, can cook for catering services or care for elderly people. Such jobs could help to gap the time until a person gets eligible to receive a national or corporate pension or both of them. The high time is over for bank clerks and investment bankers. It is better to acquire professional skills that can be applied on a variety of jobs than to stick to a highly specialised profession that skills are of no use elsewhere.
3. Cash is king. People should use the opportunity to use all kinds of tax deferred saving schemes. There is a great choice of such saving schemes that banks and insurance companies of western countries offer. And it is recommendable to save much higher amounts than tax exemption rules provide for. The more savings can be accumulated the better. People should start saving in a young age and intensify it after their children are grown up and educated.
4. Saving money is better than purchasing a luxurious car that consumes much fuel and high maintenance costs.
5. Health insurance is a proven prevention against poverty. Most of the European countries know compulsory health insurance systems. The American should grasp the chances of getting an overall health insurance system.
6. Debts are a dangerous poverty trap. People should budget their monthly consumption according to their income. They should restrain from using loans and overdrawing credit cards and bank accounts.
7. It is favourable to live in own property, either a house or a condominium if affordable according to the regular income. It is recommendable to use savings for mortgage redemption in order to lower the liabilities before the pension age is reached.
How to cope with the financial crisis after reaching the retirement age
Most of the above hints are valid for people who already have retired from work. Only few tips have to be added:
1. It is tough if the people still are compelled to work in order to earn their living because their pension income and savings are insufficient. Some legislation and pension fund rules allow a deferred retirement and subsequently a higher pension income. This opportunity to receive later a higher pension should be used if the labour market situation allows it. It is fine, if elderly people still can work voluntarily. Work also means to join the social live and to interact with the younger generation. It is, however, difficult to find a job for elderly people while masses of younger people line up in front of the labour offices.
2. Flexible people with some skills for crafts might still get paid by doing some work: e.g. either helping farmers during the harvest season or doing some gardening for landlords. They could assist wards at office buildings. They could help if others are on vacation. Baby sitting or pet sitting are also popular occupations in order to generate some side income. More about how to make money can be read at Make Money Tip. The website also offers free tools for personal finance and a link to the best free online course about financial markets.
Liliane Waldner
Liliane Waldner is a business economist. She has attended the board of several public entities companies and pension funds, some of them dealing with the financial markets. Her website is: http://www.makemoneytip.com
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Filed under: cheaper living, economy
Financial Mistakes to Learn From
Financial Mistakes to Learn From
By Martin Lukac
In this day and age, there really shouldn’t be any reason to make certain financial mistakes. Do a search of the internet and you will find that there are thousands of articles out there that warn you of the pitfalls of certain choices. Advice for living a financially stable life is everywhere. What are you waiting for?
Here are the most common mistakes that I’ve seen people make. I’ve even made a few of them myself. These are the financial mistakes that you can learn from. You’ve probably made a few of them yourself, they are very common.
Mistake #1: Using that little plastic card to get what you want.
We’ll just start off with the number one mistake out there. This is probably the most common mistake in the country. Almost every person in the US today has a credit card. It is almost like a right of passage when you turn eighteen. There are even people out there that aren’t eighteen yet that have them.
Credit card debt is the fastest way to ruin your finances. It is easy to acquire and difficult to pay off. The minimum balance doesn’t pay off enough of your outstanding balance to help you very much. You will be paying on your balances for decades. Even a $500 balance can take you over a decade to pay off if you simply make the minimum payment.
Add in the interest rate, which rarely goes down. If you miss a payment, you will really be paying the bank. Thirty percent interest is common on a credit card once a payment has been missed. And you only have to miss that payment by a day — which can happen in the mail or processing if you don’t plan ahead well enough.
Mistake #2: Buying more home than you can afford.
With the real estate market in the state it is today, many people are regretting their housing decisions. Adjustable rate mortgages are acceptable loan products for some people. But only if they can afford the maximum rate that the loan can hit if interest rates go up. Too many people only consider that introductory rate. They stretch and purchase as much as they can afford. Then, when rates go up and their rate adjusts, they can’t afford the payment. Add that to a slowing housing market, and you may have a foreclosure on your hands.
If you are going to buy a home, make sure that you purchase what you can afford. Take out a fixed-rate mortgage so that you know what your payments will be. If rates go drastically down in the next couple of years, you can always refinance. If rates go up, you are protected. Try to aim for a 15-year mortgage over a 30-year. It will save you hundreds of thousands in interest. But if you can’t do it, a 30-year fixed-rate mortgage is an acceptable loan choice for the purchase of a home.
Mistake #3: Not controlling your money.
Too many people live paycheck to paycheck. They have no savings. They have no retirement plan. They have nothing to back them up in the case of an emergency. They have no control over their money.
You have to take control of your finances if you want to retire someday. You have to learn how to budget, save, invest and spend. All it takes is a little time. And once you get in the habit, you will notice that your life has more control. You should say where your money goes, not lenders or creditors or anyone else.
Mistake #4: Not saving for retirement.
There are more seniors in the work place now than there were twenty years ago. And even more than there were fifty years ago. If you want to retire with enough money to live comfortably, you have to start putting something back today. Start an IRA. Contribute to your employer’s 401(k) plan. Figure out how much you need to invest and find a way to do it. This is your future. You don’t want to reach sixty and realize that you can’t afford to stop working. There is no guarantee that you will be able to draw social security or other forms of assistance then. What if you become ill and have to retire? What if you get hurt? Prepare for the future. Start saving for retirement today.
Martin Lukac represents RateTake Refinance Rate mortgage marketplace. RateTake matches consumers with multiple lenders offering low Refinance Rates from our network of accredited lenders
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http://EzineArticles.com/?Financial-Mistakes-to-Learn-From&id=346218
Green Collar Jobs in Today’s Economy
Green Collar Jobs in Today’s Economy
By Jarell Mikell
The market for Green Collar Jobs is growing despite the credit crunch and financial turmoil that is hitting markets around the globe. Green Collar jobs are usually found in areas of sustainable engineering, renewable energy and social responsibility. The skyrocketing prices of oil, concerns about global warming and just general uncertainty about our resources all have contributed to a boom in green collar jobs. Below are some of the hottest areas for green jobs in today’s marketplace.
- Travel and Tourism - While tourism is the world’s largest sector, ecotourism is growing at a rate of three times the regular tourism industry and there is an increasing need for workers knowledgeable in this area
- Urban Planning – With society becoming increasingly more and more urbanized, the need is great for planners to assist local governments with ecofriendly planning and design solutions.
- Medicine and Health – The number of people turning to alternative methods of health care has been steadily increasing since 2002 according to the National Center for Complementary and Alternative Medicine (NCCAM). Professionals will be needed to prescribe and administer these alternative forms of health care which many times produce better results with much less side effects than traditional medicine.
- Renewable Energy – As we all know, fossil fuel costs have been soaring with supplies decreasing, so the demand for wind, solar and biofuels have increased substantially so this industry is primed for tremendous growth and expansion.
- Legal – As interest in things environmental increases, the need for sound legal counsel will be critical to help businesses and individuals ensure that they are within the bounds of the law when it comes to conservation, pollution, exploration and utilization of resources.
- Green Education – As the demand for more “green collar jobs” increases, so does the need for people skilled in the areas of sustainability, renewable energy and energy-efficiency to educate the new wave of job seekers looking to break into the green workforce.
- Green Construction and Building – More and more construction and building designs are centered on having very ergonomic spaces while having minimal impact on the environment so energy-efficient building is posed to be a very lucrative field in the near future. A great resource for green building standards and practices can be found at U.S. Green Building Council (USGBC).
- Corporate Citizenship – Corporations as part of their effort to be a responsible and effective corporate citizen will look to people or firms to help them ensure that they are adding value to the environment, neighborhoods and cultures that they impact. In a global economy, it is critical to understand how their strategy will affect customers, suppliers and employees.
- Farming and Agriculture – This is one of the best sectors because it involves creating not just more organically grown products but identifying better ways to bring products to market and finding additional uses for crops as well.
Jarell Mikell – Avid supporter of all things Green! — Engineer and Internet Marketer Extraordinare – Visit our latest site for all things Green at ShopGoingGreen.com
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http://EzineArticles.com/?Green-Collar-Jobs-in-Todays-Economy&id=1328487
Filed under: economy
How to Make Your Mortgage Work For You, Instead of You Working For It
How to Make Your Mortgage Work For You, Instead of You Working For It
By Ed Wacaster
We work so hard for our money these days, it just makes sense to use it wisely. Even as the world’s wealthiest nation, we still use antiquated money management techniques, when in today’s economy, we should be using state-of-the-art, up-to-date techniques. Our Grandparents, God bless them all, lived in a very difficult time in our Countries history. Their main goal in that era was to get their home paid off as soon as they could so the bank wouldn’t take it from them. Back then when the bank needed money, they could knock on your door and demand that you pay your mortgage off right now while they waited for you get the money out of your wallet. Obviously the poor homeowner very rarely had that kind of cash in their wallet, so they lost their home.
In today’s economy, you literally have to quit paying for your home in order for the bank to foreclose. Even then it takes roughly four months for them to do so. Of course with all of the upheaval going on with such huge foreclosure rates, you might be able to stretch it out much longer and perhaps even get back on your feet and catch up before they’re allowed to take your home. So paying your home off as fast as possible is no longer a valid concern. As you read further you will find out that I am not telling you to never pay off your house, but there is a proper time to do so.
Let me share with you current up-to-date, state-of-the-art money management thinking. OPM (Other Peoples Money) is big now days, perhaps you’ve heard about it. However, every time I make that statement I’m a little surprised at the number of people who have not. So bear with me for a moment while I bring everyone onto the same page. Instead of accelerating our mortgage payments in order to decrease the amount of interest we pay on our mortgage, we’re literally better off taking those same dollars and giving them to our investment person, Financial Planner, or whatever professional you have do that for you.
Accelerating our mortgage payments robs you of money you could actually be investing and earning money on. And here’s the kicker in this entire situation: you actually earn assets quicker than you pay off debt. I know that sounds counter-intuitive, but bear with me. As we pay on our mortgage, we are paying our mortgage in arrears. In other words, we’re paying last months interest. So if we’re pay Decembers payment, we’re really paying for the interest accrued in November. So thinking about paying down the interest on the mortgage may have merit, but not entirely. Think about this for a moment, every time you make a larger mortgage payment, you will always be paying last months interest, regardless of how much you pay down the loan. It’s the very nature of the beast if you will. But, if you are investing those dollars, you are increasing the amount of money in your account every day that money is in the investment account. Paying off the mortgage may decrease the amount of interest you are paying, but it will always be last months interest.
Don’t run away just yet, the best is coming up right now. While you are investing that same amount of money you would usually use to accelerate your mortgage payments, you will be earning interest. I know Ed you said that already). Each month your account statement will grow and you will smile each time you see that bigger number. But what if you were to lose your income because you work for the State of California, or worse, the mortgage industry. Since you were smart enough to save your money, you now have cash available to you in order to pay your house payment, your car payment, college tuition, kids braces and so on and so on it goes. Had you taken that money and put it into your mortgage; when you lost your income you no longer qualify for a mortgage with today’s underwriting guidelines.
Stated income loans are basically gone at this point. Now you have equity in your home, but you can’t get to it. It’s trapped, and your tapped. Now you may not have money to pay your mortgage, your car payment, college tuition and the kids braces. and take it from me personally; broke women are flat out vicious! You may develop a case of marital discord for which there never ever will be an antibiotic created. Conversely, if you had invested that money instead, you won’t need a pill, your wife will love you even more because you’re so smart and handsome. She may even bake you a cake with your favorite frosting, or your favorite pie and even put ice cream on it for you while you weren’t looking.
If this hasn’t made sense to you yet, and it ‘t may not have if you haven’t seen this strategy before, you will want to check back frequently to this article as I go deeper with it. But one final thought here. You actually are paying compounding interest on your mortgage. Each month you don’t pay off the entire principal amount, you are charged interest for every day that principal isn’t paid. That’s why it takes s darn long to pay the thing off. If you invest that same dollar, you are now earning compound interest every day that money is in the account. When it comes to using your dollars to increase your wealth, OPM makes a terrific difference in your plan. Use it as often as possible, but do it wisely. Investing will always make you more money than paying down debt ,as we acquire assets at a quicker rate than paying off debt. It’s an absolute for which there is no argument. The numbers don’t lie as math is a science, not an art, unless you’re doing your taxes.
Until next time
Ed Wacaster CMPS works for RPM Mortgage in Fair Oaks California. He earned his CMPS designation in April of 2007. Less than 1% of Mortgage Originators nationwide have earned that designation setting him apart from the rest of the Mortgage Industry. For more information about CMPS (Certified Mortgage Planning Specialist) go to http://www.CMPSInstitute.org There you will find out why this designation is such a huge undertaking and brings credibility to the industry. Testing is required each year in order to keep this designation.
Ed lives in Grass Valley California with his wife Paggy and dog Angel on 2 acres. Together they have 6 children, all of them boys, except 4. 11 Grandchildren and two Great Grandchildren.
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http://EzineArticles.com/?How-to-Make-Your-Mortgage-Work-For-You,-Instead-of-You-Working-For-It&id=2019104
Will the Country Cut Back? I.O.U.S.A. takes top awards.
I.O.U.S.A., the movie has made the Oscar’s short list for Best Documentary, having already taken that award at the New Hampshire 2008 Film Festival.
The book I.O.U.S.A.: One Nation. Under Stress. In Debt by Addison Wiggins and Kate Incontrera reached No. 1 on the Best Sellers List on Election Night.
Watch the movie trailer then read the book
Filed under: economy
Tip of the Day: Put Away the Credit Cards
One Spokane family is living a stress-free life financially with a simple idea that took some getting used to: They don’t have a single credit card and pay cash for everything. KXLY4’s Annie Bishop reports.
Duration : 0:2:11
Filed under: living on less
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