MONEY Kids and Money

This App Will Have the Kids ‘Beg’ for More Chores

sisters doing dishes
Marcelo Santos—Getty Images

Here's how to keep the kids busy this summer, and teach them a thing or two about money and responsibility.

Any website that promises “your kids will beg to do their chores” deserves a skeptical eye. What might they promise next? They’ll eat all their vegetables? Floss after every meal?

Yet while the designers at ChoreMonster may be given to hyperbole, they also just might have hit on an answer to getting the kiddos to make their bed and empty the dishwasher without being asked for the thousandth time—and learn something about money and responsibility in the process.

Online chore charts are nothing new. You might even say the space is getting overcrowded for websites and apps that let parents assign chores to youngsters, tweens and teens, monitor progress and bestow awards for a job well done. The family can get organized at MyJobChart, ChoreBuster and FamilyChores. Places that connect allowance to household duties include Famzoo, iAllowance, allowance manager, Tykoon, GetPiggyBank and Threejars. The idea is to get the kids to pitch in, without all the nagging. That means doing it online and offering an incentive.

What makes ChoreMonster different is its engaging platform, which has plenty to offer parents and kids alike—like a timely list of seasonal chores you may not have considered, and funny little sounds and animated monster rewards. This is especially welcome as the dog days of summer roll in, and the kids are home all day and there are so many extra things that need to get done around the house. You know: cut the grass and wash the car.

Through a tie-in with Disney, ChoreMonster parents were able to reward kids with exclusive pre-release clips of the Pixar movie Inside Out in May and June. The company says it was a popular reward, and that other partnerships and unusual tie-ins will follow. In the meantime, rewards like TV and other screen time as well as cold hard cash should work just fine.

For this summer, ChoreMonster suggests having the kids clean the barbecue grill and the wheels on the family car, in addition to things you are more likely to have considered, like watering the garden and sweeping out the garage. Cash rewards should come with a money discussion, according to the site, which suggests 25% be set aside for a new game or book, 25% for a trip or other outing, and 50% for a future car or college. This conversation may be the most important one you have with your kids this summer, as it should get them thinking about concepts like wants vs. needs, budgeting, and saving. You might also have them consider carving out 10% for chartable giving.

The average allowance comes to $65 a month, according to a study from the American Institute of CPAs. Six in 10 parents pay allowance, half start the kids at age 8, and 89% expect their kids to work around the house at least one hour a week. There is a big debate about whether allowance should be tied to chores. Most of the sites and apps make it easy to keep track of which chores have been done and how much has been earned—whether it’s for allowance or straight pay.

What are the most popular rewards? Half of parents grant screen time (typically one hour); 14% pay cash; 11% give ice cream or some other treat; 6% buy a toy; and 3% pay for an outing. The top chores assigned are brush your teeth, make the bed, feed the pets, organize your laundry, and clean your room.

Monday is the best day for chores being completed and Friday is the worst, according to ChoreMonster. More assigned chores get completed on the West Coast than any other region, the company found. So much for that laid back California culture. Their kids probably eat their vegetables, too.

 

 

 

 

 

 

MONEY Social Security

This Surprising Sign May Tell You When to Claim Social Security

old woman facing younger woman in profile
Liam Norris—Getty Images

For aging Americans, the condition of your skin can be a barometer of your overall health and longevity.

Skin is in, and not just for beach-going millennials. For boomers and older generations, the condition of your skin, especially your facial appearance, is a barometer of your overall health and perhaps your life expectancy, scientists say. And as the population ages—by 2020 one in seven people worldwide will be 60 or above—dollars are pouring into research that may eventually link your skin health to your retirement finances.

What does your skin condition have to do with your health and longevity? A skin assessment can be a surprisingly accurate window into how quickly we age, research shows. Beyond assessing your current health, these findings can also be used as to gauge your longevity. This estimate, based on personalized information and skin analysis, may be more reliable than a generic mortality table.

All of which has obvious implications for financial services companies. One day the condition of your skin—your face, in particular—may determine the rate you pay for life insurance, what withdrawal rate you choose for your retirement accounts, and the best age to start taking Social Security.

Skin health is also a growing focus for consumer and health care companies, which have come to realize that half of all people over 65 suffer from some kind of skin ailment. Nestle, which sees skin care as likely to grow much faster than its core packaged foods business, is spending $350 million this year on dermatology research. The consumer products giant also recently announced it would open 10 skin care research centers around the world, starting with one in New York later this year.

Smaller companies are in this mix as well. A crowd funded start-up venture just unveiled Way, a portable and compact wafer-like device that scans your skin using UV index and humidity sensors to detect oils and moisture and analyze overall skin health. It combines that information with atmospheric readings and through a smartphone app advises you when to apply moisturizers or sunscreen.

This is futuristic stuff, and unproven as a means for predicting how many years you may have left. I recently gave two of these predictive technologies a spin—with mixed results. The first was an online scientist-designed Ubble questionnaire. By asking a dozen or so questions—including how much you smoke, how briskly you walk and how many cars you own—the website purports to tell you if you will die within the next five years. My result: 1.4% chance I will not make it to 2020. Today I am 58.

The second website was Face My Age, which is also designed by research scientists. After answering short series of questions about marital status, sun exposure, smoking and education, you upload a photo to the site. The tool then compares your facial characteristics with others of the same age, gender, and ethnicity. The company behind the site, Lapetus Solutions, hopes to market its software to firms that rely heavily on life-expectancy algorithms, such as life insurers and other financial institutions.

Given the fledgling nature of this technology, it wasn’t too surprising that my results weren’t consistent. My face age ranged between 35 and 52, based on tiny differences in where I placed points on a close-up of my face. These points help the computer identify the distance between facial features, which is part of the analysis. In all cases, though, my predicted expiration age was 83. I’m not taking that too seriously. Both of my grandmothers and my mother, whom I take after, lived well past that age—and I take much better care of my health than they ever did.

Still, the science is intriguing, and it’s not hard to imagine vastly improved skin analysis in the future. While a personalized, scientific mortality forecast might offer a troublesome dose of reality, it would at least help navigate one of the most difficult financial challenges we face: knowing how much money we need to retire. A big failing of the 401(k) plan—the default retirement portfolio for most Americans—is that it does not guarantee lifetime income. Individuals must figure out on their own how to make their savings last, and to be safe they should plan for a longer life than is likely. That is a waste of resources.

I plan to live to 95, my facial map notwithstanding. But imagine if science really could determine that my end date is at 83, give or take a few years. It would be weird, for sure. But I’d have a good picture of how much I needed to save, how much I could spend, and whether delaying Social Security makes any sense. I’m not sure we’ll ever really be ready for that. But not being ready won’t stop that day from coming.

Read next: This Problem is Unexpectedly Crushing Many Retirement Dreams

MONEY real estate

This Problem Is Unexpectedly Crushing Many Retirement Dreams

150625_RET_CrushedDreams
Peter Goldberg—Getty Images

Housing is most Americans' most important source of retirement security. So a sharp reduction in the rate of ownership, coupled with rising rents, is taking a toll.

The housing bust of 2008 touched every homeowner. The subsequent recovery has been selective, mainly benefiting those with the resources and credit to invest. This has had a more damaging effect on individuals’ retirement security than many might expect.

For a quarter century, home equity has been the largest single source of wealth for all but the richest households nearing retirement age, accounting for 44% of net worth in the 1990s and 35% today, new research shows. The home equity percentage of net worth is greatest among homeowners with the least wealth, reaching 50% for those with median net worth of $42,460, according to a report from The Hamilton Project, a think tank closely affiliated with the Brookings Institution.

By comparison, the share of net worth in retirement accounts is just 33% for all but the wealthiest households, a figure that drops to 21% for low-wealth households. So a housing recovery that leaves out low-income families is especially damaging to the nation’s retirement security as a whole.

There can be little doubt that low-income households largely have missed the housing recovery. Homeownership in the U.S. has been falling for eight years, down to 63.7% in the first quarter from a peak of over 69% in 2004, according to a report from Harvard University’s Joint Center for Housing Studies. Former homeowners are now renters, frozen out of the market by their own poor credit and stricter lending standards.

Meanwhile, rents are rising, taking an additional toll on many Americans’ ability to save for retirement. On average, the number of new rental households has increased by 770,000 annually since 2004, making 2004 to 2014 the strongest 10-year stretch of rental growth since the late 1980s.

The uneven housing recovery is contributing to an expanding wealth gap, the report suggests. Among households near retirement age, those in the top half of the net worth spectrum had more wealth in 2013, adjusted for inflation, than the top half in 1989. Those in the bottom half had less wealth.

Housing is by no means the only concern registered in the report. Much of what researchers point to is fairly well known: Only half of working Americans expect to have enough money to live comfortably in retirement; longevity is putting a strain on retirement resources; half of American seniors will pay out-of-pocket expenses for long-term services and supports; the percentage of dedicated retirement assets in traditional defined-benefit plans has shrunk from two-thirds in 1978 to one third today.

All of this diminishes retirement security. Individuals must adapt, and with so much riding on our personal ability to manage our own financial affairs it is surprising that the report goes to some lengths to play down the importance of what has blossomed into a broad financial education effort in the U.S.

Financial acumen is generally lacking among Americans and, for that matter, most of the world. Just half of pre-retirees, and far fewer younger folks, can correctly answer three basic questions about inflation, compound growth, and diversification, according one often-cited study. Yet researchers at The Hamilton Project assert that it is an “open question” as to whether public resources should be spent on educational efforts, citing evidence of its effectiveness as “underwhelming.”

I have argued that we cannot afford not to spend money on this effort. Yet I also understand the benefits of promoting things like automatic enrollment into 401(k) plans and automatic escalation of contributions, which The Hamilton Project seems to prefer. The truth is we need to do all of it, and more.

MONEY couples and money

The Surprising but Essential Thing You Don’t Know About Your Spouse

couple sitting in separate chairs
Steve Hix—Corbis

Many people don't even know how much their partner earns.

If you harbor any doubt that money remains a taboo subject around the household, consider these findings from the 2015 Fidelity Investments Couples Retirement Study:

  • 43% of couples do not know how much their spouse earns annually, and of those, 10% cannot guess within $25,000;
  • 36% of couples disagree on the amount of their household’s investable assets;
  • 60% of couples have no idea how much their Social Security benefits might be worth, including 49% of boomer couples—a group in or on the cusp of retirement.

Not talking about money around the house can have broad reaching repercussions. Without discussion, odds are there is little financial planning. Nearly half of couples say they have no idea how much they will need to retire, and a similar number disagree over the amount, Fidelity found. Those with a plan are twice as likely to expect to live comfortably in retirement. Other surveys also have found that people who have a plan are more confident about their future.

On another level, the taboo around money conversations may be passed down generationally. We do our children no favors by making the subject mysterious. Young people are coming of age in a period of diminishing social safety nets and would benefit immeasurably from discussions around the house about budgeting and saving. That such conversations do not take place in many households has given rise to a broad effort to require money management courses in schools.

Among the more confounding aspects of the money conversation is the misperception that it is actually taking place. Some 72% of couples in the Fidelity survey say they communicate exceptionally well with each other, and 90% say that starting a conversation about budgets, savings and investments, and estate planning is not difficult. Yet these are some of the same respondents who said they don’t know how much their mate earns.

Meanwhile, nearly half of parents say they strongly encourage their kids to talk to them about money, but only one in five kids strongly agree that this is the case, a T. Rowe Price survey found. Nearly three-quarters of parents say they talk regularly with their children about spending and saving, but just 61% of the kids agree. A third of kids believe their parents are leaving them in the dark about money issues.

Clearly, money is a tougher family topic than most of us realize. But it has never been more essential to talk about. This quiz might help you get started. And here are four questions that can help you and your spouse get on the same page when it comes to household finances.

  • What are the next big goals? Buy a house? Save for college? Identify what you want to achieve in the next three to five years, and make saving a habit.
  • Do you have an emergency fund? What if you get laid off? What if the car breaks down? You should have three to six months of living expenses safely tucked away, just in case.
  • Do you share a vision for retirement? Travel the globe or tend the garden? Downsize and live near the kids or move to a warmer climate? Make sure you see eye to eye.
  • Are your documents in order? Plan for the inevitable by having an estate plan, a durable general power of attorney, and a health care proxy. Designate beneficiaries for investment accounts and insurance policies. To do this as a team you will need to talk about things like inheritance, estate planning and eldercare.

Read next: How to start a money conversation with your mate

MONEY Ask the Expert

Can Debt Collectors Go After My Retirement Savings in Court?

Ask the Expert Retirement illustration
Robert A. Di Ieso, Jr.

Q: My wife retired late last year and we are thinking about rolling some of her 401(k) assets into an IRA account. We live in California and understand that the protections from creditors and in bankruptcy vary. Does this move make sense for us? —Max Liu

A: There are a lot of good reasons to roll money from a 401(k) plan into an IRA after retiring. In an IRA, you have greater control over your assets. You can own individual stocks, ETFs, or even real estate, and not be bound to the often-limited menu of investment options in your company’s plan. Since you are not working any longer, there is no concern over getting an employer match. If the fees seem high or you just don’t like maneuvering the plan’s website, a rollover may make sense.

But you are right to consider protection from creditors. In general, all assets inside a 401(k) plan are out of reach of creditors, both inside or outside of bankruptcy. That’s often true of 401(k) assets rolled into an IRA, as well—though you may be required to prove that those assets came from a 401(k). For that reason, never co-mingle rolled over assets with those from a self-funded IRA, says Howard Rosen, an asset protection attorney in Miami, Fla. He advises opening a new account for the roll over.

Federal law sets these protections. But through local bankruptcy code, 33 states have put their own spin on the rules—and California is one of those. “You need to understand that when you move assets from a 401(k) plan to an IRA, you are moving from full protection to limited protection,” says Jeffrey Verdon, an asset protection attorney in Newport Beach, Calif.

States like Texas and Florida make virtually no distinction between assets in a 401(k) and those rolled into an IRA, he says. Assets are fully protected from creditors in both types of retirement account. Further, in such states the distributions from such accounts are also protected.

But in California, creditors may come after any IRA assets not deemed necessary for living expenses. They may also come after any distributions you take from your IRA. You can protect up to $1.25 million through bankruptcy, a figure that resets every three years to account for inflation. But that is a total for all IRA assets, not each account, says Cyrus Amini, a financial adviser at Charlesworth and Rugg in Woodland Hills, Calif. And note, too, that a critical ruling last year determined that inherited IRAs are no longer protected.

To understand IRA protections in other states, you may need to speak with the office of the state securities commissioner or state attorney. Many of the state rules have been shaped through case law, and so you may want to consult a private attorney, says Amini. Another good starting point is the legal sites Nolo.com and protectyou.com.

MONEY 401(k)s

The Painless Way New Grads Can Reach Financial Security

150612_FF_GradPainfreeSecurity
Steve Debenport—Getty Images

You don’t need to be sophisticated. You don’t need to pick stocks. You don’t need to understand diversification or the economy. You just need to do this one simple thing—now.

A newly minted class of college graduates enters the work world this summer in what remains a tough environment for young job seekers. Half of last year’s graduates remain underemployed, according to an Accenture report. Yet hiring is up this year, and as young people land their first real job they might keep in mind a critical advantage they possess: time, which they have more of than virtually everyone else and can use to build financial security.

Saving early is a powerful force. But it loses impact with each year that passes without getting started. You don’t need to be sophisticated. You don’t need to pick stocks. You don’t need to understand diversification or the economy. You just need to begin putting away 10% of everything you make, right away. And 15% would be even better.

Consider a worker who saves $5,000 a year from age 25 to 65 and earns 7% a year. Not allowing for expenses and taxes, this person would have $1.1 million at age 65. Compare that to a worker who starts saving at the same pace at age 35. This worker would amass half that total, just $511,000. And now for the clincher: If the worker that started at age 25 suddenly stopped saving at age 35, but left her savings alone to grow through age 65, she would enjoy a nest egg of $589,000—more than the procrastinator who started at age 35 and saved for 30 more years.

That is the power of compounding, and it is the most important thing about money that a young worker must understand. Those first 10 years of a career fly by quickly and soon you will have lost the precious early years of saving opportunity and squandered your advantage. That’s why, if possible, I advise parents to get their children started even before college.

Once you start working, your employer will almost certainly offer a 401(k) plan. More than 80% of full-time workers have access to one. This is the easiest and most effective way to get started saving immediately. Here are some thoughts on how to proceed:

  • Enroll ASAP Some companies will allow you to enroll on your first day while others require you to be employed for six months or a year. Find out and get started as soon as possible. Most people barely feel the payroll deductions; they quickly get used to making ends meet on what is left.
  • Have you been auto enrolled? Increasingly, employers automatically sign you up for a 401(k) as soon as you are eligible. Some also automatically increase your contributions each year. Do not opt out of these programs. But look at how much of your pay is being deferred and where it is invested. Many plans defer just 3% and put it in a super safe, low-yielding money market fund. You likely are eligible to save much more than that and want to be invested in a fund that holds stocks for long-term growth.
  • Make the most of your match A big advantage of saving in a 401(k) is the company match. Many plans will match your contributions dollar for dollar or 50 cents on the dollar up to 6% of your salary. This is free money. Make sure you are contributing enough to get the full match.
  • Keep it simple Choosing investment options are where a lot of young workers get hung up. But it’s really simple. Forget the noise around large-cap and small-cap stocks, international diversification, and asset allocation. Most plans today offer a target-date fund that is the only investment you’ll ever need in your 401(k) plan. Choose the fund dated the year you will turn 65 or 70. The fund manager will handle everything else, keeping you appropriately invested for your age for the next 40 years. In many plans, such a target-date fund is the default option if you have been automatically enrolled.
  • Take advantage of a Roth Some plans offer a Roth 401(k) in addition to a regular 401(k). Divide your contributions between both. They are treated differently for tax purposes and having both will give you added flexibility in retirement. With a Roth, you make after-tax contributions but pay no tax upon withdrawal. With a regular 401(k), you make pre-tax contributions but pay tax when you take money out. The Roth is most effective if your taxes go up in retirement; the regular 401(k), if your taxes go down. Since it’s hard to know in advance, the smart move is to split your savings between the two.
  • Get help An increasing number of 401(k) plans include unbiased, professional third-party advice. This may be via online tools, printed material, group seminars, or one-on-one sessions. These resources can give you the confidence to make decisions, and according to Charles Schwab young workers that seek guidance tend to have higher savings rates and better ability to stay invested for the long haul in tough times.

Read next: 6 Financial Musts for New College Grads

 

 

MONEY Retirement

What Italy and Germany Show Us About the Future of Social Security

woman holding Italian and German flags
Shutterstock

Families, not government, may be what rescues retirement.

One of the big questions facing retirement planners is how much to count on Social Security in the decades ahead. The number of Americans past age 65 will double by 2050, part of the longevity revolution that threatens to leave Social Security insolvent by 2033.

That doesn’t mean benefits would stop abruptly. Under the current system, enough funding would be in place to continue benefits at 77% of the promised level. Of course, anything is possible if laws change. But cuts probably are coming.

Most Americans get that. Among those that have not yet retired, just 20% believe they will receive full benefits when they retire, according to a Pew Research report. Some 31% expect reduced benefits and 41% expect no benefits at all. Presumably, these findings skew along age lines. Most experts believe benefits adjustments will be phased in. Those currently 55 or older likely will see minimal change to their benefits while those under 30 likely will see big change.

The longevity revolution is a global phenomenon, and government pensions are in trouble around the world. Two of the oldest nations on the planet are Germany and Italy and, demographically speaking, they are now where the U.S. will be in 35 years: a fifth of their population is older than age 65. If you think Americans are glum about prospects for collecting Social Security, these nations offer a glimpse of what’s coming.

In Germany, just 11% think they will receive benefits at current levels, 45% think they will receive benefits at reduced levels and 41% expect to get no benefits at all, Pew found. In Italy, only 7% believe they will get full benefits, 29% expect benefits at reduced levels and 53% think they will get no benefits at all. Interestingly, Germans and Italians are twice as likely as Americans to believe this is primarily a problem for government to solve. In the U.S., there is a strong belief that this is a problem for families and individuals to fix, Pew found.

Just 23% of Italians are putting anything away for retirement, vs. 56% of Americans and, perhaps because austerity is in their DNA, 61% of Germans. The most important statistic, though, may be the percentage of young adults (ages 18-29) that are saving. This is the group most likely to see reduced or no benefits in retirement but which still has 40 years or more to let savings grow. In the U.S., 41% of young adults are saving for retirement. In Germany, the figure is 44%. In Italy, just 13% are saving.

What will fill the gaps? Pew found a strong sense of families as backstops in all three countries. Nearly nine in 10 Italians view financial assistance for an aging parent in need as their responsibility. The figure is 76% in the U.S. and 58% in Germany. This sense runs deepest among young adults, perhaps because their parents are now assisting them through an extended period of dependence known as emerging adulthood.

In all three countries, financial help is more likely to flow down to adult children than up to aging parents: about half or more of adults with grown children have helped them financially in the last 12 months. That many or more have assisted grown children in non-monetary ways as well, helping with errands, housework, home repairs or child care. The vast majority says this assistance is more rewarding than stressful; they value the time together.

So family support looms as a large part of future retirement security for many people in graying nations, and that’s fine for families with the wherewithal. But young adults, especially, don’t have to feel victimized by the decline of government pensions. They have many opportunities for tax-advantaged saving through an IRA or 401(k) plan, and decades to let compound growth solve their problems. Workers past 50 can take advantage of catch-up contributions, and for guaranteed lifetime income use a portion of their savings to buy a fixed annuity. Like it or not, personal savings is the key to retiring comfortably—self security in place of Social Security.

 

 

MONEY real estate

The Surprising Way to Snag a House in a Bidding War

couple taking keys to house
Getty Images

Bidding wars are back. Here's how to win.

Homes are selling faster, and getting more multiple offers and bids above the asking price than just before the financial crises, new research shows. Yet with the typical home still selling for less than it did in 2006, it is difficult to call this a bubble.

Some 28% of homes this year and last year sold within two weeks of being put on the market, up from just 19% pre-recession, according to a survey from Coldwell Banker Real Estate. Meanwhile, 47% of recent home sales saw multiple offers, vs. 42% pre-recession; and 27% got offers above the asking price, vs. 25% preceding the recession.

This data, however, may be somewhat misleading. For starters, the median home nationally sold for $219,400 in April, up 9% from the year earlier and a robust 42% from the market bottom in 2011-2012. But that remains shy of the $230,400 median price reached in July 2006, and after the sharp bounce back price gains now seem to be leveling off, says Budge Huskey, CEO of Coldwell Banker Real Estate.

And most of the heated activity is taking place in desirable neighborhoods, where obstacles to new construction put a premium on existing homes. The bidding wars generally are occurring on move-in-ready homes that are priced to sell. “The vast majority of markets around the country reflect more balanced inventories and rates of appreciation which have decelerated from the pace of the last two years,” Huskey says.

Still, in many ways this is a seller’s market, fueled in part by rising interest rates. Mortgage rates remain low at just above 4% for a 30-year fixed rate. But the trend has been up since January, and many expect rates to continue climbing. That brings in buyers from the sidelines that want to act before the cost of money goes higher.

Even if sellers fail to entice an offer above the asking price, they may take advantage of the conditions and be exceptionally choosey about a buyer. Just 46% of sellers take the first offer they get, down from 59% during the recession, the survey shows. A record 36% of sellers since 2013 say they chose a buyer based on emotion in addition to their ability to pay—up from 19% pre-recession.

Keep that in mind if you are buying. A downsizing baby boomer may not get the price they had counted on before the recession. But they may want to be sure the house where they raised their kids goes to a family they like. “It’s increasingly common for buyers in competitive situations to provide extensive information on why they would prove the perfect owners and neighbors,” Huskey says.

 

MONEY Kids and Money

The Risky Money Assumption Millennials Should Stop Making Now

man walking tightrope
Kazunori Nagashima—Getty Images

Nearly half of millennials believe family will ride to the rescue if they don't save enough to retire. Here's a better plan.

As if we needed more evidence that millennials have been slow to launch, new research shows that a heart-stopping 43% are counting on financial assistance from loved ones if things go poorly with their retirement savings.

It’s not clear exactly who these loved ones may be—their boomer parents, or perhaps successful friends or even their own children. But counting on others for retirement security is almost always a mistake. No other generation has anywhere near this level of expectation for family aid, according to a Merrill Edge survey of Americans with investable assets of $50,000 to $250,000. Just 9% of those outside the millennial generation are counting on a friends-and-family backstop, the survey found.

Boomers are famously under-saved; many will struggle themselves to keep from becoming a financial burden to others. Yet their millennial offspring, accustomed to unprecedented support from Mom and Dad that spawned a new life phase called emerging adulthood, continue to believe they have a rock-solid back-up strategy. In a MONEY poll this spring, 64% of millennials said before marrying it is important to discuss any potential inheritance with a mate. Only 47% of boomers agree.

Certainly, some millennials will inherit financial security. Wall Street estimates about $30 trillion will flow in their direction the next few decades. But the average millennial will receive almost 10 times less than they expect—and many won’t receive a thing, and So the best retirement backstop is one they build for themselves.

Fortunately, the current crop of retirees has left a blueprint, according to the Merrill Edge report. Both retirees and pre-retirees overwhelmingly describe the ideal retirement as one that is stress free and financially stable. Yet 66% of Americans expect to be stressed about money in retirement because of the way they have saved during their working years. Those who are already retired express less concern; nearly three quarters believe they will have enough money to last through retirement. Only 57% of folks still working feel that way.

Retirees say that contributing to a retirement account (63%) and paying down debt (68%) while working were among the most important parts of their life strategy. Working Americans today are engaged in these activities at a lower level: 57% contribute to a retirement account and 54% are paying down debt, Merrill Edge found. Meanwhile, 42% of today’s retirees also invested outside their retirement accounts, vs. just 24% of workers today.

Another source of stress: Workers today have less confidence in a government solution, probably reflecting their more pessimistic view of Social Security. Only 28% of workers are counting on help from the government when they retire, vs. 41% of retirees who now say they rely on government assistance.

Three quarters of workers say they will rely on their own savings to fill financial gaps in retirement. Yet it is unclear they will have enough to make a big difference. In the survey, about one in three workers say they would be embarrassed if close friends knew the details of their finances. Much of this points to millennials’ overriding belief that Mom and Dad will make it all okay—and that might be the case for some. But to be safe, young workers should start now saving 10% of everything they earn. Four decades of compound growth is the only backstop they’ll ever need.

 

MONEY Love + Money

How to Win a Money Fight With Your Spouse

man and woman arm wrestling
iStock

Keep money spats from turning into all-out wars.

Married 38 years, Ron and Carol Beck are the picture of financial compatibility: They split the money chores (he pays the bills, she invests), decide together on big purchases (like their new Corvette), and align their savings goals (retirement has long been No. 1). But the San Jose couple haven’t always been so fiscally united.

Unlike many young couples today, they didn’t discuss money before marrying. So just months after taking their vows, they took their lumps. One day Ron came home with papers for Carol to sign. It was the first she’d heard of the $35,000 rental property he planned to buy. “We had a huge argument,” recalls Carol, 65, a community college counselor. What upset her most was not that their mortgage payments would go up 50%, but that Ron acted without her: “I should have been part of the process,” she says.

“I knew I overstepped, and I haven’t done it since,” says Ron, 65, who retired last year from a job as an educational technology supervisor. That night the couple resolved to always act together on major money decisions.

The Becks figured out early on just how critical it is to work as a team when it comes to finances. And a new survey by MONEY underscores the lesson. The poll, which compares the perceptions and behaviors of some 500 millennials and 500 boomers when it comes to their relationships and money, reveals distinct differences in their approaches to financial matters. But one theme crosses generations: Couples who are in sync on issues like saving and budgeting feel more financially secure, argue less about money—and have hotter sex lives. In other words, financial synchronicity can help you achieve not only greater financial stability but greater marital satisfaction.

But let’s face it, even if you and your partner are constantly improving your financial compatibility and see eye to eye on things like the budget and savings goals, you’ll still occasionally argue about money. How you handle the disagreements is what matters most. Carol and Ron Beck’s first marital money fight may not have felt good at the time, but they dealt with it healthily: They talked it out.

A Fidelity survey found that 38% of money arguments are never resolved in a way that makes both people happy. And no wonder: Some 16% of millennials and 15% of boomers in MONEY’s poll say they resort to the silent treatment; 12% of millennials and 8% of boomers say someone walks away.

That’s not good for your marriage or your money. Not talking about the problem compounds the stress and makes it more likely the argument will recur, says Kim Olver, a relationship coach and the author of Secrets of Happy Couples. Plus, leaving the situation unresolved can put stress on your finances. “Do you want to be right?” Olver asks. “Or do you want a strong union? That takes compromise.”

Here’s how you can keep money tiffs from becoming money wars.

Acknowledge the argument. If you need to cool off, fine. But don’t go more than 24 hours before touching base with your partner. Consider starting with an apology even if you don’t think you need to. “Accept that you are 50% of the problem,”says Brad Klontz, a financial psychologist and the author of Mind Over Money. (Remember, the goal is not to “win” but to achieve agreeable resolution.) And rather than hijacking your spouse, ask for an appointment. You might say, “Honey, I’m sorry I pushed back when you mentioned buying a new car. Can we set aside time to talk more about it?”

Focus on the fear, not the fight. Klontz suggests that before meeting, you each write down the money worry prompting the argument, then face each other for a discussion. The ground rules: One person talks uninterrupted about his or her fears, avoiding blame and concentrating on facts. The other must repeat back what is said until the speaker is satisfied he or she was heard correctly. Then switch and repeat.

After Carol Beck blew up at Ron about the condo, they sat down, and “he explained to me why he thought it was a good decision.” She agreed to sign the papers. “After the property got rented, I relaxed a bit and saw that Ron was right,” she says. “Now we talk about everything together. We handle investments very differently than we did that time.”

More from the Love & Money survey:
What to Do When Financial Opposites Attract
Why Couples Need to Get Financially Naked
The Single Most Important Money Talk for Couples

Your browser is out of date. Please update your browser at http://update.microsoft.com