Website helps youth say "NO" to debt

by Christina Lovato, University of New Mexico-Talk Radio News Service

A new health and financial site focused towards young adults from ages 18-34, gives resources and information that they won’t learn in school.

Anna Greenburg, the Senior Vice President of Greenberg Quinlan Rosner Research, said that younger people are suffering worse from the economic situation than older people except in regard to retirement and investment income because they don’t have any.

“Even though this recession is affecting everybody the way it affects young people has the potential impact to affect what their financial lives look like 20, 30 and 40 years from now.”

Greenburg also said that younger people are facing the highest unemployment rate out of every group.

“You got sort of a double whammy with younger people. Their both more likely to be unemployed, more likely to work part time and if you work part time, more likely to have your hours cut back and your wages cut.”

In the study “Young People: Trying to Weather a Recession” conducted by Greenburg Quinlan Rosner Research and Qvisory.org, 19% of young adults say they are unemployed or looking for work compared to only 7% of adults ages 30 and over.

The study also found that in 2008, 37% of young people reported having more than $5,000 in debt, excluding amounts from mortgages and student loans.

A new website called Qvisory.org, that was launched in October 2008, is hoping to provide resources and information for young adults that they are not learning in the classrooms.

Gina Glantz, the Qvisory Treasurer said that America’s younger generation is in jeopardy.

“They don’t feel well represented in the halls of power and they like most Americans have grown to distrust their financial institution.”

Glantz said that now more than ever young adults need guidance because they are suffering the most.

“They need trusted resources and a navigation system to help them secure their health and financial well being and have a chance at the American dream.”

Qvisory is a non-profit organization that has a $36 per year membership fee that includes services like the distribution of pre-paid cards, a COBRA (Consolidated Omnibus Budget Reconciliation Act) information center, a low-cost dental insurance program, a combination of employee assistance programs, and free telephone and online services.

“There is a no more important time for young people to find the resources and information they need to survive the situation they find themselves in,” concluded Glantz.

Retirement plans don't work

Rep. George Miller (D-Calif.) said that the current "go-go, wild west style approach to governing" is severely affecting citizens' retirement security.

In a hearing held by the House Education and Labor Committee, Miller said, "63 percent of Americans are worried that they will not have enough savings for retirement." He continued, "one in five middle-aged workers stopped giving funds to their retirement plans in the last year." In addition, he said $500 billion has been lost from current 401(k) plans in the last year.

Director of the Congressional Budget Office Dr. Peter Orszag said that the current economic crisis is affecting state and local pensions as well. He said $300 billion were lost from those pension between the second quarter of 2007 and the second quarter of 2008. He said workers are taking "unnecessary risk" in that 90 percent have 401(k) plans in their own company's stock. He said workers need to be given "a strategy of diversification."

Research Director of the Employee Benefit Research Institute Jack VanDerhei said there are "fundamental flaws" in our current retirement plans. He said that the last few weeks have proven that even large companies can go bankrupt and retirement plans are always at risk. He added that he hopes workers don't "overreact" to the economic downturn and continue to contribute money to their retirement plan.

Rep. Yvette Clark (D-N.Y.) said that the public is "in a state of shock." "We're in the midst of a reorganization of the financial system," said Clarke in reaction to the failing economic system.

Is 70 the new old?

The American Academy of Actuaries held a media briefing in which members of the academy discussed Social Security's long-term financial soundness. Thomas Terry, vice president and chairman of the Pension Practice Council at the academy, said Social Security will go into debt in 2017 and be completely exhausted of finances in 2041 without legislation that alters the system.

Terry said baby boomers, who begin qualifying for Social Security in 2008, are only part of the problem. According to Terry, the current age of retirement is frozen at 67, an increase of two years since President Franklin Roosevelt enacted Social Security in 1935. Terry said a major way to reduce strain on Social Security is to raise the age of retirement. Terry said Americans' life expectancy continues to rise, causing more people to claim benefits for longer periods of time.

Bruce Schobel, chairman of the Retirement Security Principles Task Force at the academy, gave statistics that show American longevity. He said in 1940, the average person outlived the age of retirement by 12 to 13 years. He countered that data with 2008 statistics in which people, on average, outlive retirement by 16-19 years. Schobel gave a hypothetical situation whic proposes that if the age of retirement is increased by two months annually until retirement reaches the age of 70, half of Social Security's long-term deficit would be eliminated. Schobel reiterated that raising the age of retirement is not an all-inclusive solution to Social Security's long-term finances. He did say, however, that any future legislation should include changes in the age of retirement. He also noted that this particular proposal would not affect those born prior to 1960.

The middle class can expect big retirement troubles

A study from Ernst and Young on the likelihood of new retirees outliving their financial aspects was discussed in a conference call this afternoon. Joe Reali, chairman of Americans for Secure Retirement, claimed the study found that the majority of middle class retirees will outlive their retirement benefits.

According to Tom Neubig, who represented Ernst and Young, 6 of ten new retirees will not be able to maintain their current standard of living when drawing from available retirement resources, and many will be forced to cut their spending during retirement by about one third. He went on to say that those retiring with a guaranteed source of income like a structured payment package will fare much better than others.

Larry Mitchell, director of legislative affairs for the American Corn Growers Association, added that many who work in farming are forced to take on additional jobs to earn income due to financial worries. Most of these jobs offer little or no retirement benefits. As such, farm workers across the nation are having an increasingly difficult time earning adequate retirement benefits, and with the release of this new study the situation appears only to be getting worse.

Light shed on reservists’s “gray area”

Congressman Bob Latta (R-Ohio) held a press conference in support of the TRICARE Continuity of Coverage for National Guard and Reserve Families Act of 2008. The bill proposes to expand coverage for retirees of the National Guard and Reserve to include the “gray area.” The TRICARE program supplies medical coverage to members of the Retired Reserve who are qualified for retirement benefits but are not age sixty.

The “gray area” refers to those retired members who have given twenty or more years of service, but are not yet old enough to qualify for benefits. Latta said that there are about 220,000 members who are in this “gray area”, with 12,100 members entering this status this year. Latta also said that many retirees in this status are uninsured. The bill states that those who are between retirement and age sixty will receive coverage on or after October 1, 2009.