Share
Preview
PLUS: The latest on Grandparent 529s.
 ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌
 
 
HerMoney Podcast Episode 320:
The Four-Day Workweek
HerMoney is made possible by Edelman Financial Engines
 
This Week In Your Wallet:
Summer Jobs, Target Date Funds
& Student Loans


I hope all of you had a lovely Memorial Day. For those remembering loved ones who gave their lives serving, my thoughts are with you, and to all who served — thank you so much.  We spent our weekend at the beach. And while I love the sun and sand, my dog Norman still isn’t so sure, but he’s getting there. (Although if you have any tips for how best pups can get used to a new place other than copious treats and cuddles, I’m all ears.)


But the biggest thing I noticed this weekend wasn’t Norman’s barking, it was the sheer number of “We’re Hiring” signs in the window of nearly every shop or restaurant we passed. This summer’s job market is shaping up to be a hot one for teens, which is good news for high school and college students alike, who can be choosier with what they do, and expect better pay than they’ve seen, well, maybe ever, writes Ann Carnes in The New York Times.

Teen employment — expected to be 33% this year for those between the ages of 16 to 19, the highest since 2007 —  is rebounding after plummeting in the summer of 2020 when the pandemic shuttered many of the kinds of businesses (restaurants, ice cream shops, etc.) that teens have long depended on for income. To attract applicants, many retailers are offering $18 per hour, lifeguards are being paid $20 an hour in some cities, and restaurants, in an effort to ensure servers make more money, will increasingly be adding the tip into diners’ bills as an 18% service charge. (Something to keep an eye out for before you automatically add on your 20%.) And other places are offering some pretty creative money-saving perks, like gas cards to help workers with increasing fuel prices on their commute.

So to the teens searching for the perfect summer job (or to parents eager for them to earn as much as they can in order to defray college costs) consider this an opportunity to ask for a higher salary, on-the-job training that you can then put on your resume, and more responsibility if you want it.  And even for teens — who often snag the first job that comes their way — this is the time to be a little pickier, and search for the position that best fits you.  Restaurants, summer camps, and childcare centers, in particular, are all in need.

And while we’re on the topic of teens and money, I’d be remiss if I didn’t suggest our new book, How to Money, which just came out earlier this month. Yes, we may be biased, but we think it’s pretty much the perfect handbook for all things jobs, resumes, salary negotiation, saving money, and so much more.

Is Student Loan Debt Cancellation On The Horizon?

The latest news on the rumblings of student debt cancellation is that the White House may be nearing a final plan that could cancel $10,000 in federal student loan debt for each borrower who qualifies, after months of uncertainty and internal deliberations. According to sources speaking on anonymity to the Washington Post (no official word from the White House yet), borrowers earning less than $150,000 in the previous year, or less than $300,000 for married couples filing jointly, would qualify for $10,000 in debt forgiveness. Even by capping forgiveness at $10,000, the Biden administration could help people who are arguably most in need of cancellation — those in default on their loans. Defaults and delinquencies on student loans were concentrated among borrowers with less than $10,000 in debt before the pause of federal student loan payments, according to the Federal Reserve. Economists at the Fed say borrowers with the least amount of debt often have the most difficulty repaying their loans, in part because they often did not complete the degree needed to improve their earnings.

This news comes on the heels of the announcement that the The Biden administration will wipe out $18.5 billion in loans for more than 750,000 borrowers by temporarily expanding or streamlining existing forgiveness programs, including those designed to help public servants and borrowers defrauded by their colleges. Timing of this latest likely announcement is still unclear, and we’re not sure if it might have any impact on the Biden administration’s plan for the end of August when the student loan payment pause is scheduled to end. What is clear, though, is that the acknowledgment of a broken system at the national level is a step in the right direction.

We’re continuing to report about the federal response to the student loan crisis, the burden of working through student loan debt for over 40 million Americans, and its crippling effects on American households (more than even credit card and auto debt), so we’ll keep you updated as news breaks.

And About Those Grandparent 529s…

While we’re on the topic of college, there’s another favorable change underfoot. Grandparents (as well as godparents, aunts, uncles and other non-parent family members) can now give to 529’s without penalizing their student’s eligibility for federal money. For many years, any money saved in these accounts would be considered as part of an “expected contribution” from family, which would (because of how the financial aid formulas worked) count against a student applying for need-based financial aid. No more. Now, that money will be treated just like money in parent 529s.  
This rule change is part of a broader overhaul of the Free Application for Federal Student Aid, (FAFSA), which will go into effect for the 2024-2025 school year.  The form itself is also — thankfully — getting a complete overhaul in terms of length and complexity.  It will be far easier to fill out than it has been in years past, which will hopefully encourage more students to use it and make sure they aren’t leaving money on the table. If you’re curious about these changes, we broke many of them down (along with some great strategies for when you have to borrow) on the HerMoney podcast.

Missing The Target

Finally, those of you nearing retirement may be more exposed to the stock market slide than you know. Over the last decade, many Americans have been putting their retirement money into target-date funds, a type of set-it-and-forget-it investment product that works by shifting stocks to bonds over time, becoming more conservative as retirement draws near. But today, many of these funds hold more stocks and less bonds than they did a decade ago. Why? Some fund managers began shifting more into stocks several years ago, as part of a strategy that sought to help investors build more wealth for retirement, since stocks returned more than bonds over long periods, Ann Tergesen explains in the Wall Street Journal. Portfolios for the youngest workers now invest 92% in stocks, up from 85% a decade ago. Meanwhile, mid-career workers (those around 45) now have portfolios containing 82% stocks, up from 69% a decade ago. And at retirement, the median exposure is now 46%, up from 43% in 2011.

So, what to do if you’re not comfortable with this level of exposure? First, take a pause to consider whether your feelings are for the long haul or if you’re just reacting to today’s downtrending market. If it’s the latter, you may want to wait it out. But if it’s the former, you can switch to a different fund that’s more in line with your risk tolerance (a target date fund with a date that’ll be hit sooner will likely be more conservative). Or, if you’re feeling like you’ve set-it-and-forget it for too long and you’re looking to be more hands-on, you can change to a fund that offers more active management. No matter what you do, it’s time to take a peek and see where you stand — even set-it-and-forget-it investments (and chickens) need a good look every so often.

Have a great week!

Jean


 
The HerMoney podcast is proudly supported by Edelman Financial Engines. Get sophisticated wealth management for all aspects of your financial life. See more at EdelmanFinancialEngines.com.
Sponsored by Edelman Financial Engines – Modern wealth planning.
All advisory services offered through Financial Engines Advisors L.L.C. (FEA), a federally registered investment advisor. Results are not guaranteed. AM1969416
 

We maintain a strict editorial policy and a judgment-free zone for our community. We strive to remain transparent in everything we do. Website posts and newsletters may contain advertisements, links and mentions of products from our partners. Learn more about how we make money.

Facebook
 
Twitter
 
Linkedin
 
Instagram

Email Marketing by ActiveCampaign