The Partners Circle

The mission of the Partners is to empower all of us to go directly to each other with our expertise. FiduciaryFirst is considered an industry leader and our knowledge and informative blogs can help you gain an understanding about key topics within the industry.

Average Credit Card Debt by Age

Average Credit Card Debt by Age
A report by Federal Reserve economist Joanna Stavins combined Equifax data with the 2015-2016 Federal Reserve Bank of Boston’s Survey of Consumer Payment Choice(SCPC)on how consumers pay for purchases. Comparing self-reported measures with objective data, she found that people tend to have fewer credit cards with higher limits than they report. According to her research, it’s estimated that 44% of adults have revolving credit that they don’t pay off in full each month with an average balance of $6600. The study also included average credit card balances for various age brackets. Debt is becoming an increasingly larger part of the financial planning landscape. And it has different implications at different ages. Here are the average balances for each age group in the study and how carrying debt can impact them at each phase of life. Age <25: The average credit card debt for this age group is $2340*. You may...
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3 Ways to Save for College Explained: Prepaid Tuition Plans, 529 Plans and ESAs

3 Ways to Save for College Explained: Prepaid Tuition Plans, 529 Plans and ESAs
According to collegeboard.org, the average yearly full-time student budget for tuition and fees, room and board, books, and other incidentals at an in-state public four-year college is currently more than $25,000. For a private four-year college, that costs skyrockets to more than $50,000. With the potential total price of an undergraduate degree now topping $200,000, parents are understandably concerned about how they’re going to handle such a daunting expense. Fortunately, there are a number of options available for parents trying to fund the dream. Here’s a comparison of three popular plans. Prepaid Tuition Plans If you’re fortunate enough to live in a state that still offers a prepaid plan, then you may be able to save ahead and lock in tuition at current rates at eligible schools. Plans may cover two-year community college, four-year programs or even graduate school in some cases. It’s important to note that they do not,...
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Loss Aversion: Fighting the Fear

Loss Aversion: Fighting the Fear
Loss aversionsounds like a good thing — trying to avoid losing. What could be wrong with that? Unfortunately, if taken too far, it can actually be a threat to your long-term financial health. Loss aversion is the tendency to prefer avoiding potential losses over acquiring equal gains. We dislike losing $20 more than we like getting $20. Yet, this common bias can come with a heavy cost. Excessive risk avoidance can hurt you when, for example, it keeps your money out of the market and tucked away in low-risk, low-interest savings accounts — where purchasing power can be eroded by inflation over time. Delaying enrollment in your employer-sponsored 401(k) plan due to fear of market downturns can cripple opportunities for future growth. Loss aversioncan also lead to undue stress and anxiety. You stay invested, but worry constantly, which can create health and other problems. Finally, it can result in shortsighted...
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What Age Should You Retire?

What Age Should You Retire?
When we think retirement age, 65 is often the first number that comes to mind. But that doesn’t mean it should be your final answer. While it’s often a starting point for consideration, there are several factors that could make another age a better choice for you. Here are eight considerations to keep in mind when making this very important decision. 1. Your plans.If you want to start a business, run a charity or create a foundation — those could take a while to get off the ground. Make sure you allow enough time for your dreams to come to fruition. 2. Your money.While you may want to retire by 60, you might not be able to afford to given your current savings. In that case, delaying retirement and working a few extra years may be well worth the wait. 3. Your health.Do you have any chronic or progressive health...
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The 1% Change That Can Really Make a Difference

The 1% Change That Can Really Make a Difference
Sometimes small moves can yield big results. If you want to plan for a better, more secure retirement, start by increasing your 401(k) contribution by just 1%. You might be thinking that 1% can’t possibly make that much of a difference — but you’d be wrong.Here’s what Fidelity Investments found when they ran the numbers on the effect of a 1% retirement account increase for employees at different ages and salary levels. Example #1: Suzi, age 35, earning $60,000 per year.If she put less than $12 more into her retirement account each week, Suzi could accrue over $85,000 more by retirement.* What could that money buy her?According to cars.com the average new car payment is now $523 per month. With her additional savings, Suzi could ride in style for 162 months during retirement — that’s more than 13 years of new car smell! Example #2: Andrew, age 45, earning $70,000...
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TDF Investors Hang Tough in Down Markets

TDF Investors Hang Tough in Down Markets
Target date funds (TDFs) have grown increasingly popular since their inception over two decades ago. In fact, 72% of retirement plans have TDFs as their default option and more than 40% of retirement plan account holders use a TDF. With so many employees invested in Target date funds, it’s important to understand how they tend to behave in markets under pressure and their likelihood to adhere to a long-term investment strategy. The good news for plan sponsors with TDFs under management is that those invested in them tend to stay put — even during volatile and declining markets. A recent study by Fidelity examined the behavior of their TDF investors during two particularly volatile periods of the stock market: the 2007-2009 bear market and the 2015 downturn. They found that TDF investors tended to maintain consistent savings behavior and retain their market exposures during both of these declines. Interestingly, even...
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Missing Participants: Are You Doing Enough to Find Them?

Missing Participants: Are You Doing Enough to Find Them?
Recent Department of Labor (DOL) letters have threatened sanctions against plan fiduciaries for potential Employee Retirement Income Security Act (ERISA) violations regarding the handling of missing participants. The DOL also cited potential violations involving the timeliness of required minimum distributions for participants nearing the age of 701/2. This occurred despite a lack of clear-cut guidance from the DOL regarding best practices and appropriate administrative procedures for handling instances where prior employees cannot readily be located. As a result, plan sponsors have been required by Labor Department auditors to follow procedures regarding required minimum distributions (RMDs) not documented from any previous formal guidance. In response to concerns expressed by plan sponsors, the Internal Revenue Service, DOL and Pension Benefit Guaranty Corp. (PBGC) have released guidance regarding the steps plan sponsors and administrators should take when attempting to locate separated participants, including: Searching plan, employer, sponsor or other publically available sources of...
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ERISA Lawsuits Highlight Risks for Fiduciaries

ERISA Lawsuits Highlight Risks for Fiduciaries
Recent class action suits filed against Home Depot, First Group America, Aon Hewitt, Financial Engines and Alight seek millions in restitution. Two class action suits — one involving Home Depot and the other FirstGroup America — allege that failure to adequately perform oversight of outside fund advisors violated the sponsors’ fiduciary duties and ask for millions in restitution. According to the complaint, the Home Depot action alone, if certified, would incorporate more than 300,000 current and former employees. The Home Depot complaint names not only Home Depot Inc., but also its Administrative and Investment committees and their members. Outside advisors Financial Engines Advisors and Alight Financial Advisors and plan record keeper Aon Hewitt are also named. The 98-page complaint lays out an exhaustive case, which alleges a number of failures in performance of fiduciary duties, including: Home Depot allowed plan participants to pay unreasonable fees to the advisors. The advisors...
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