Money, Credit, and Retirement
Modified: 2023-11-14 (9:38 pm CST)
It is never too early to think about handling money, establishing credit, and planning for retirement. At this point money is probably scarce but after you graduate and get a job you must know how to deal with it. The same is true for establishing credit. That will help in buying a vehicle and, later, a house. While retirement may seem far off the time to that point will pass more quickly than you might imagine. Preparing for retirement early will pay enormous dividends when that time comes.
Money
- Salary
- Negotiation
- Do your research (What do similar jobs pay? Is the offer a lowball? What kind of organization, public or private?)
- A simple negotiation technique (Demo)
- O*Net Online
- Good site to find salary information
- Career Paths
- Academic: Assistant Professor, Associate Professor, Full Professor, Administrator?
- Professional: Private Practice or Institutional
- Hang a shingle
- Work for someone
- Business: Institutional or Entrepreneurial
- Work for established firm
- Work for a start up
- Office or Work from Home?
- Washington Post, November 27, 2022
- "Although there are nearly two job openings for each applicant when it comes to on-site work, the opposite is true for remote jobs: There are two active applicants for each available work-from-home job on LinkedIn."
- "Work-from-home opportunities in sectors such as education, tourism, sports and agriculture have fallen markedly since last year, as schools, gyms and other establishments reopen, according to data from ZipRecruiter. In other areas, such as manufacturing, finance and insurance, remote-job listings have plateaued in recent months, as businesses and employees navigate broader shifts in the economy."
- One worker added:
- “Now that I’ve started working remotely, it’s definitely what I prefer,” said Schrauth, 25, who also works part-time at a Walmart store. “If I want to work in pajamas, I can. If I have a doctor’s appointment, I can work around that. There’s a lot more flexibility.”
- But, Fortune reports that the number of workers at home has dropped
- "The push by employers to get American workers back into the office appears to be working. Fewer than 26% of US households still have someone working remotely at least one day a week, a sharp decline from the early-2021 peak of 37%, according to the two latest Census Bureau Household Pulse Surveys. Only seven states plus Washington, DC, have a remote-work rate above 33%, the data shows, down from 31 states and DC mid-pandemic."
- How many of you wish to work remotely or take online classes?
- I like Schrauth's comments above (as I sit in my gym shorts and tee shirt at night at home)
- At the same time, I miss the face-to-face contact of the classroom and office
- This Honors Seminar class is face-to-face on purpose
- In the spring, I'll teach two PSYC classes face-to-face and one online
- New Job?
- When to Switch Jobs?
- US News (see below) suggests:
- after 10 years in same job
- when you are really good at your job
- when you are not good at your job
- when you do not like your colleagues
- after a big success on your part
- at the fiscal year
- after a vacation
- when your goals conflict
- when you are misused
- when you are happy
- Always keep up your resume!
- Promotion and Advancement
- Promotions usually change work and job title
- Promotions usually signal advancement
- Research how promotions work in your job
- Apply for them?
- Role of time
- Fast track
- Advancements
- May not be promotions (e.g., no increase in salary, for instance)
- Moving to better shift might be advancement
- Relocation
- Will you work in the same place or will you need to move to other sites?
- Mentoring vs. Sponsorship
- Mentors
- Mentors provide aid for newer or younger employees (teaching them the ropes)
- Sponsors
- Sponsors advocate for their proteges to others in organization
- Gender Differences
- Harvard Business Review: "women tend to be over-mentored and under-sponsored"
Retirement
- When to Retire
- Retirees and Non-retirees (Gallup)
- I get asked the retirement question often
- Right now my answer is "I don't know."
- Rules of Thumb
- Save 15% per year (starting at the beginning!)
- Base your investment portfolio on your age
- More in Stock Market when you are younger
- More in Bonds as you near retirement
- 4% Rule
- To make savings last 30 years
- Withdraw 4% first year of retirement
- Withdraw that plus annual rate of inflation from then on
- 80% chance retirement money will last 30 years
- Why begin early?
- Compound Interest Example ($200/month or $2400/year) beginning at ages shown:
| Earning Rate |
Age 20 |
Age 30 |
Age 40 |
Age 50 |
| 2% |
$174,931 |
$121,510 |
$77,764 |
$41,943 |
| 6% |
$551,199 |
$284,942 |
$138,599 |
$58,164 |
| 8% |
$1,054,908 |
$458,776 |
$190,205 |
$69,208 |
Types of Retirement Plans
- Research Employer Plans
- SAU's Plans
- Arkansas Teacher Retirement System
- TIAA/CREF (but handled by Mustard Seed)
- Portfolio
- Basic: Stocks and Bonds
- Other: Real Estate, Foreign Investment, Green Companies, Conservative, Speculative
- Tax Deferred Money
- Pay tax when money is taken from portfolio (e.g., during retirement when tax burden may be less)
- Social Security
- Must earn 40 quarters (e.g., 10 years) with minimum income of $1,200/quarter
- PIA or Primary Insurance Amount
- Retirement Age and Benefit (reduced if taken before Full Retirement Age)
- Must take by age 70
- Spousal Benefits to those married 10 years or more (do not affect your own benefit)
- At current level of funding system will work until 2033
- Full Retirement Age
- Born after 1960: 67 years old
- Privatize Social Security?
- Three-legged Stool of Retirement
- Social Security
- Pension
- Individual Savings (IRAs or Savings Accounts)
Credit
- Establishing Credit
- FICO Score
- Payment History (35%)
- Amounts Owed (30%)
- Length of Credit History (15%)
- New Credit (10%)
- Type of Credit in Use (10%)
- Credit Scores
- First Steps
- Bank Account
- Jobs
- Residence History
- Utilities in Your Name
- Pitfalls
- Beware of Hype (What is APR?, Fees?, Why will you need card?)
- Read the Fine Print
- Make more than the minimum payment
- Don't take cash advances
- Always review your statements (look for things you did not buy)
- Don't max out your cards
- Pay on time
- Don't chase points or travel miles
Useful Links
- The 10 Best Times to Switch Jobs (US News)
- Why men still get more promotions than women (Harvard Business Review)
- FICO Score
- Credit Pitfalls (US News)
- United States Social Security Administration
- Privatizing Social Security
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